California Appeals Court Upholds Legislative Workaround that Mooted CEQA Suit Targeting Development Project in Los Angeles

stratteGuest Commentary

By Martin P. Stratte, an Associate with Jeffer Mangels Butler & Mitchell LLP in the firm’s San Francisco, CA office.

Ed. Note: This article was first published on JMBM’s California Land Use Blog. Reprinted with permission.

In August 2018, the California Court of Appeal decided Citizens Coalition Los Angeles v. City of Los Angeles, 26 Cal.App.5th 561 (2018), commonly referred to as “Target II,” which arose from a years-long challenge by citizen activist organizations to the development of a Super Target in Hollywood, California.

As discussed below, the court was asked to resolve the following issue of first impression: what level of environmental review is required by the California Environmental Quality Act (CEQA) for a legislative action that re-designates a project site for the purpose of mooting pending litigation that was filed in opposition to an already approved project?

In essence, what the City of Los Angeles did was re-zone the site of a previously approved Super Target to remove the need for the variances that were adopted in support of the project, which the trial court had struck down in the litigation commonly referred to as “Target I.”

Background

Target applied to the City of Los Angeles (City) for land use entitlements to develop an approximately 75-foot high, three-story Super Target at the intersection of Sunset Boulevard and Western Avenue in Hollywood, California, the top floor of which would contain the 163,862 square foot “Superstore.”

The City certified an EIR for the Target project and granted eight exceptions (variances) so that the project could exceed height and parking-space restrictions, among others.  Thereafter, two citizen activist organizations filed a petition for writ of mandate alleging: 1) the project violated CEQA; and 2) the variances violated the City’s Municipal Code because they were not supported by substantial evidence.  Target proceeded with construction while the litigation was pending; that litigation is commonly referred to as “Target I.”

The trial court denied the petitioners’ CEQA claim in Target I, but found that six of the eight variances were not supported by substantial evidence.  Accordingly, the court ordered Target to stop construction.  Target filed an appeal and the petitioners filed a cross-appeal.

While the appeals were pending, the City enacted Ordinance No. 184,414 (Ordinance), which increased the height restriction of the underlying specific plan to 75 feet, among other things.

The City subsequently certified an Addendum to the Target-project EIR that analyzed the environmental impacts associated with the enactment of the Ordinance and “all construction activities needed to complete the existing structure and the operation” of the Super Target.  The City concluded that the environmental impacts “would ‘not require major revisions’ of the previously certified environmental impact report because the Amendment did not involve any ‘new significant environmental effects or a substantial increase in the severity of previously identified significant effects.’”

As a result of the Ordinance’s enactment, the Court of Appeal deemed moot and dismissed the Target I appeals.  That ruling is published as La Mirada Avenue Neighborhood Assn. of Hollywood v. City of Los Angeles, 2 Cal.App.5th 586 (2016).  The petitioners then filed a second writ of mandate alleging that the City violated CEQA by relying on the Addendum, rather than a “subsequent, supplemental, or new” EIR.  This litigation is referred to as “Target II.”

The trial court in Target II found in favor of the petitioners and concluded that the enactment of the Ordinance “was an ‘independent project’ from the Superstore, making it inappropriate to rely on an addendum that evaluated the environmental impact of only the Superstore.”  The court did not rule on the spot zoning allegation.   The City and Target both appealed the decision.

Analysis

According to the Court of Appeal, the parties’ arguments were “‘[s]hips that pass in the night,’” which is not uncommon in cases where a petitioner claims that “new” or further CEQA review is required, and the defendant and real party in interest claim that a project falls within the scope of previously completed environmental review, in accordance with Public Resources Code § 21166.  Here, the court sided with the City and Target and held that further environmental review was not required.

“The trial court held that section 21166 did not apply because the City Council’s [enactment of the Ordinance] . . . altered the method by which the Superstore was approved (that is, by amending the [underlying specific plan] rather than granting variances from it), and thus constituted a substantial change ‘with respect to the circumstances under which [the Superstore] is being undertaken,’ thereby falling into one of section 21166’s exceptions.”

However, the court of appeal explained that, “This analysis is incorrect because it ignores that the exception for changed circumstances by its terms only applies when that change ‘will require major revisions in the’ agency’s CEQA analysis[;] a change in circumstances, by itself, is not enough.”

Implications

This opinion appears to be the first instance in which a California Court of Appeal has determined what level of CEQA review applies to a legislative action that re-designates a project site (and thus the zoning standards that apply to it) for the purpose of allowing a half-built project stalled by zoning litigation to comply with newly enacted zoning standards.

Because the court of appeal upheld the City’s enactment of the Ordinance, the holding may inspire other lead agencies mired in land use and CEQA litigation to pursue a similar legislative workaround.  Agencies and developers, however, should recognize that even though the City’s enactment of the Ordinance mooted Target I, the citizen activists still received substantial attorneys’ fees pursuant to Code of Civil Procedure § 1021.5.  That ruling is published as La Mirada Avenue Neighborhood Assn. of Hollywood v. City of Los Angeles, 22 Cal.App.5th 1149 (2018).

Although Target II supports legislative workarounds as a means to potentially moot litigation, agencies and developers remain best served by a careful, proactive legislative strategy that proceeds during the initial entitlement of a project, rather than having to fight those battles once the project has begun.  The preparation and certification of an addendum to a previously certified EIR and updated technical studies require a substantial amount of time and resources.  This holds true especially in jurisdictions like the City of Los Angeles, where developers must always assume that activists will file CEQA litigation to oppose their projects.

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