In an opinion filed December 18, 2018, and later ordered published on January 10, 2019, the First District Court of Appeal affirmed a judgment denying appellant citizen groups’ writ petition challenging the City of St. Helena’s approval of an 8-unit, multifamily housing project and related demolition and design review.  McCorkle Eastside Neighborhood Group, et al. v. City of St. Helena, et al. (2019) _____ Cal.App.5th _____.  The decision applied the basic principle that CEQA does not apply to ministerial project approvals, and further clarified that CEQA does not apply to “mixed” discretionary/ministerial approvals where the “discretionary component” does not give the agency the authority to mitigate environmental impacts.  It held that because the City’s discretion under its local design review ordinance does not extend to addressing environmental effects it does not implicate CEQA, and therefore the City’s reliance on the CEQA Guidelines’ Class 32 exemption was unnecessary.

Factual and Procedural Background

In 2016, the City amended its zoning ordinance to comply with its prior general plan commitment to eliminate the conditional use permit (CUP) requirement for multi-family dwellings within its High Density Residential (HR) districts.  By eliminating the need for a discretionary CUP approval, the zoning change effectively made multiple-family dwellings, apartments and dwelling groups that are consistent with its zoning code’s density requirements permitted – i.e., “by right” – uses in the HR district, subject only to design review.

Real Party McGrath bought a large tract of land, part of which contained a dilapidated single-family home and lead-contaminated soil, within the HR district, intending to build multi-family dwellings.  McGrath committed to remediating the contamination with Napa County, and applied to City for a demolition permit and design review plan for the proposed 8-unit structure on a portion of the property.  Following a staff report concluding the project fell within CEQA’s Class 32 infill exemption (Guidelines, § 15332) and met design review criteria, the Planning Commission voted 2-1 on that basis, after a public hearing and over neighbor opposition, to approve the necessary demolition and design review permits.

The neighbors’ (and appellants’) opposition was based on numerous grounds, including the contamination, the project’s location in a historical district and alleged inconsistency with nearby homes’ designs, flooding problems, alleged lack of sufficient public open space, and inadequate firetruck turnaround area.  (The Court of Appeal’s opinion observed in a footnote that some of the neighbors’ “arguments challenge the existing environment’s effect on future users of the project” and that “[a]nalysis was not required under CEQA for this purpose[,]” citing California Bldg. Industry Assn. v. Bay Area Air Quality Management District (2015) 62 Cal.4th 369, 386.  My post on that landmark Supreme Court decision can be found here.)  The City Attorney advised that because no CUP was required, the Commission was required to approve the project if it met design review criteria, and that it could not consider use-related issues such as parking, traffic, safety and soil remediation.

The City Council voted 3-2 after a hearing to reject appellants’ administrative appeal.  It adopted a resolution making detailed findings in support of the design review approval, finding the project consistent with the general plan’s infill development and housing goals, and finding the Class 32 CEQA categorical exemption applied consistent with the City Attorney’s advice, which indicated that even if the exemption did not apply the City’s discretion – and consequently the scope of CEQA review – was still limited due to the absence of a CUP requirement.  The Council found that “[m]ulti-family residential land uses are permitted by right in the HR District” and that the City’s authority and “discretion during design review [is restricted by ordinance] to the general form, spatial relationships and appearances of the project’s proposed design” and a project cannot be disapproved for “non-design related reasons.”  The Council further expressly found “the City’s discretion, and thus scope of its CEQA review, is limited to design issues such as scale, orientation, bulk, mass, materials, and colors, and it has no authority or ability to meaningfully address non-design related issues or impacts by imposing conditions of approval or mitigation measures.”  Thus, it found that even if the Class 32 infill exemption did not apply, “and some level of CEQA review were thus required, the City would nevertheless be allowed to undertake only limited review based on design-related environmental issues, not the use-related issues asserted by the appellants’ argument.”  It reasoned that under these circumstances existing law rendered its decision essentially ministerial such that either “CEQA does not apply or CEQA review is limited to the extent of the [design-review] discretion” and found “that City staff has demonstrated that the project will not result in any significant impacts, whether design-related or otherwise, and the appellants have not provided any substantial evidence to the contrary.”

The trial court thereafter denied appellants’ writ petition challenging City’s project approvals based on alleged CEQA and local zoning violations, and they appealed.

The Court of Appeal’s Opinion

In affirming the judgment, the Court of Appeal’s opinion set forth a number of significant points and holdings, including the following:

  • “CEQA applies only to “discretionary projects proposed to be carried out or approved by public agencies….” (Citing Pub. Resources Code, § 21080, emph. added.)  “The “touchstone” for determining whether an agency is required to prepare an EIR is whether the agency could meaningfully address any environmental concerns that might be identified in the EIR[.]”
  • To serve its goal of minimizing the adverse effects of new construction on the environment, CEQA “requires assessment of environmental consequences where government has the power through its regulatory powers to eliminate or mitigate one or more environmental consequences a study could reveal. [¶] Thus the touchstone is whether the approval process involved allows the government to shape the project in any way which could respond to any of the concerns which might be identified in an environmental impact report.  And when is government foreclosed from influencing the shape of the project?  Only when a private party can legally compel approval without any changes in the design of its project which might alleviate adverse environmental consequences.’” (Citations omitted.)
  • “When a project involves both discretionary and non-discretionary actions, it will be deemed discretionary. [citation]  However, the discretionary component of the action must give the agency the authority to consider a project’s environmental consequences to trigger CEQA.  [citations]”
  • Appellants’ argument that the City improperly delegated the elected City Council’s decision-making authority to the non-elected Planning Commission lacked merit because the Council held a full de novo hearing, and issued findings on the administrative appeal which was provided by City’s ordinances. There was no decision by “default” due to a tie-vote deadlock leaving an unelected body’s decision in place, as in Vedanta Society of Southern California v. California Quartet, Ltd. (2000) 84 Cal.App.4th 517, 527; rather, the Council acted, but properly limited the scope of its review as the final decision-making body as required by its Municipal Code.
  • The Court rejected appellants’ arguments that the City was required (by the terms of the Class 32 infill exemption) to determine whether the project would “result in any significant effects relating to traffic, noise, air quality or water quality” and to also determine whether the “unusual circumstances” exception to the exemption applied before denying their appeal. With regard to the first argument, and “[a]ssuming the City Council did not consider traffic, noise or air and water quality for purposes of the Class 32 exemption despite its findings to the contrary, it nonetheless properly found that its discretion was limited to design review, given that no use permit was required for multi-family housing in HR districts.”  (Citing Friends of Davis v. City of Davis (2000) 83 Cal.App.4th 1004, 1010-1011.)
  • A city is not required to have a design review ordinance, and if it chooses to have one it may properly determine the scope of review thereunder; further, the CEQA “Guidelines recognize that the application of CEQA to a local ordinance is dependent upon the scope and interpretation of the local ordinance, rather than vice versa…. CEQA does not grant an agency new powers independent of the powers granted by other laws. [citation]  Rather, the exercise of an agency’s authority under a particular law must be within the scope of the agency’s authority provided by that law and must be consistent with express or implied limitations provided by other laws.”  (Citing Friends of Davis, at 1014-1015.)
  • Applying those principles, the Court held the City Council correctly found that its own “design review ordinances prevented it from disapproving the project for non-design related matters[,]” quoting from the ordinances at length and concluding the Council’s extensive findings that the project met all their elements “were supported by substantial evidence and must be upheld on appeal.” (Citing Breneric Associates v. City of Del Mar (1998) 69 Cal.App.4th 166, 175-176.)
  • The Court also cited Bowman v. City of Berkeley (2004) 122 Cal.App.4th 572, 592-594, as supporting its conclusion that City’s design review process could not be used to impose environmental conditions. That case held that, absent a “‘particularly sensitive’ context[,]” CEQA was not “intended to require an EIR where the sole environmental impact is the aesthetic merit of a building in a highly developed area.”  Further, such “aesthetic issues… are ordinarily the province of local design review, not CEQA.”  (Quoting at 592-593.)  While St. Helena is not as urbanized as Berkeley, the Court still found Bowman’s principles relevant to St. Helena’s design review process, “which cannot be used to impose environmental conditions.”
  • In rejecting appellants’ argument “that because the City had discretion to conduct design review the entire project was discretionary and subject to CEQA[,]” the Court recognized a significant limitation on this principle: “[T]his rule applies only when the discretionary component of the project gives the agency the authority to mitigate environmental impacts.”  (Citing Sierra Club v. Napa County Bd. of Supervisors (2012) 205 Cal.App.4th 162, 179 [my April 23, 2012 post on which can be found here]; San Diego Navy Broadway Complex Coalition v. City of San Diego (2010) 185 Cal.App.4th 924, 934.)
  • Ultimately, because the City lacked any discretion to address environmental effects, it did not need to rely on the Class 32 categorical exemption and it was unnecessary to resolve appellants’ claim that the “unusual circumstances” exception to that exemption applied; in any event, the Court observed “[n]othing about the proposed project was “unusual[.]”” Finally, the City’s detailed findings that the project was consistent with its general plan were supported by the evidence and not an abuse of discretion.

Conclusion and Implications

CEQA applies only to discretionary project approvals.  This is because CEQA review would be an idle act where the lead agency’s decision is ministerial, and it thus lacks the authority under the governing law to deny or condition a project in a way that could meaningfully address any significant environmental effects such review might disclose.  Whether the process applicable to particular project approvals is ministerial or discretionary depends on the authority granted by the particular ordinance or law governing the approval, and an evolving body of case law has delineated the limits of CEQA’s scope in various contexts under this fundamental “ministerial/discretionary” distinction.  (See, e.g., Sierra Club v. County of Sonoma (2017) 11 Cal.App.5th 11, my April 24, 2017 post on which can be found here.)

The First District’s McCorkle decision adds to that body of case law in the context of a “by right” housing project requiring no discretionary CUP, and subject only to a design review scheme conferring discretion limited to purely aesthetic non-environmental and “non-use” issues.  CEQA plaintiffs frequently (albeit incorrectly) argue that any discretion as to any issue is sufficient to trigger CEQA review, overlooking the important qualification that such discretion must be meaningful and relate to environmental issues.  The Court’s decision helpfully and importantly clarifies that, despite a local ordinance and project involving both discretionary and non-discretionary actions, CEQA is not triggered unless the discretionary component gives the agency the authority to consider the project’s environmental consequences.  CEQA cannot expand the nature or scope of the discretionary authority granted by a local ordinance.

Another aspect of the decisions is notable.  In treating design review discretion as not implicating CEQA (in what obviously was not deemed to be a “particularly sensitive” aesthetic context), the decision stands in contrast to two recent published decisions – one from the Third District (see my December 18, 2018 post here) and another from the First District (see my August 20, 2018 post here) – which treated aesthetic issues subject to local design review as nonetheless requiring CEQA analysis in an EIR when the project was located in a “particularly sensitive” context (i.e., an officially designated and mapped historic district or a historic landmark) and there was substantial evidence its appearance would conflict with that of surrounding structures. While it is not clear from those two decisions whether a CUP was required for project approval, it does not appear that anyone contended the agency’s scope of discretion was so limited that CEQA did not apply; moreover, both prior decisions involved a project located in an extremely sensitive context – in one, an officially designated and mapped historic district, and in the other a downtown that was itself a Gold-rush era “historic landmark.”  While those facts may serve to distinguish those cases from McCorkle, the ostensible tension between the analysis in those decisions and that in McCorkle will likely result in more CEQA litigation on aesthetic effects (at least in official historic districts or areas), and practitioners dealing with such issues would be well advised to closely scrutinize both the Project’s environmental setting and (as the McCorkle Court of Appeal did) the provisions of the specific relevant ordinances to ascertain the scope and limits of the local agency’s discretionary authority.

 

Questions? Please contact Arthur F. Coon of Miller Starr Regalia. Miller Starr Regalia has had a well-established reputation as a leading real estate law firm for more than fifty years. For nearly all that time, the firm also has written Miller & Starr, California Real Estate 4th, a 12-volume treatise on California real estate law. “The Book” is the most widely used and judicially recognized real estate treatise in California and is cited by practicing attorneys and courts throughout the state. The firm has expertise in all real property matters, including full-service litigation and dispute resolution services, transactions, acquisitions, dispositions, leasing, financing, common interest development, construction, management, eminent domain and inverse condemnation, title insurance, environmental law and land use. For more information, visit www.msrlegal.com.