By Janell M. Bogue

As cities and developers look inward for new development opportunities, the dark cloud of CEQA is never far away. The legislature has attempted to facilitate infill opportunities by narrowing CEQA’s application. This case illustrates how far this infill exemption can reach. In Banker’s Hill, Hillcrest, Park West Community Preservation Group v. City of San Diego (May 8, 2006) 2006 Cal.App.Lexis 684, developers proposed an urban infill project in the City of San Diego (“City”) near the northwest corner of Balboa Park. The project, a fourteen-story, fourteen-unit multi-family residential building, was approved by the City and found to be exempt from CEQA pursuant to Guidelines section 15332. A neighborhood preservation group filed for a writ of mandate and after losing at the trial court level, the neighborhood group appealed, claiming that the project was not exempt from CEQA and that the City reviewed the project in a piecemeal fashion.

Guidelines section 15332 grants a categorical exemption from CEQA for infill development projects. Section 15300.2, though, lists blanket exceptions to the exemption and subsection (c) says, “A categorical exemption shall not be used for an activity where there is a reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances.” The Fourth District Court of Appeal determined that there were two issues in this case. First, did the urban infill exemption apply to this project? And second, did the exception to the exemption apply, thus requiring CEQA review for the development?

The appellate court first analyzed the legal standards to be used in reviewing the City’s determination that the exception (Guidelines section 15300.2(c)) did not apply and that the CEQA exemption (Guidelines section 15332) did apply. The court noted that there is a split of authority regarding the standard for the exception, with some courts applying the “fair argument” standard used in negative declaration analysis, while other courts would apply the “substantial evidence” standard. Under the fair argument approach, “the court would review the record to determine whether it contained evidence of a fair argument that the project may have a significant effect on the environment.” Using the substantial evidence standard, the court “will uphold an agency’s decision if there is any substantial evidence in the record that there will be no significant effect on the environment.” In light of the close similarities between section 15300.2 and Public Resources Code section 21151, where the fair argument standard originated, and the policies underlying its use, the court held that the fair argument standard should be used when considering the exception to the exception (Guidelines section 15300.2(c)).

The court noted that the standard for reviewing the exemption is the more straightforward “substantial evidence” standard, with one slight twist. Guidelines section 15332(d) states that it applies when “approval of the project would not result in any significant effects relating to traffic, noise, air quality, or water quality.” The court reasoned that because there is no “may” or “reasonable possibility” language in the statute, the fair argument standard does not apply. The court said, “. . . the urban in-fill exemption simply directs the agency to determine if a project “would not” have a significant effect. The use of this language leads us to conclude that the fair argument standard does not apply.”

After establishing the proper standard of review, the court analyzed the City’s application of the categorical exemption. The City made several findings in support of the exemption. First, the City found that the project was substantially surrounded by urban uses, pursuant to Guidelines section 15332(b). Though the preservation group argued that Balboa Park is not urban in nature, the court determined otherwise because of its heavy landscaping, the proximity to densely populated areas, and because it contains theatres, museums, and restaurants. Accordingly, the court rejected the argument.

Second, the City found that the project was consistent with Uptown Community Plan, pursuant to Guidelines section 15332(a). The preservation group argued that the project would have inadequate setback and would affect views of Balboa Park. The appellate court held, though, that there was ample evidence in the record that the project setback complied with the Plan requirements and that the views of the park would not be affected.

Finally, the City found that the project would not have any significant effect on traffic, pursuant to Guidelines section 15332(d). The preservation group argued that the project would be located at a dangerous intersection, and thus would have a significant effect on traffic. There was evidence in the record of local residents’ observations that accidents occurred at the intersection, and the court noted that under Pocket Protectors v. City of Sacramento (2004) 124 Cal.App.4th 903, “relevant personal observations of area residents on non-technical subjects may qualify as substantial evidence.” But the court emphasized that “in the absence of specific factual foundation in the record, dire predictions by nonexperts regarding the consequences of a project do not constitute substantial evidence.” (citing Gentry v. City of Murrieta (1995) 36 Cal.App.4th 1359.) Here, the court noted that there was contrary evidence, including a study by a traffic engineer, stating that the project would not create a significant impact on the intersection and that there were no safety problems. The preservation group also argued that the project would significantly affect traffic because an alley providing access to the project’s parking lot was unsafe. Based on the City Manager’s explanation that traffic would not be significantly increased and that the Project would even improve congestion and safety in the alley, the court disagreed with the preservation group. Finally, the group contended that the availability of parking spaces in the area would be decreased. The court concluded that while there may be a small effect on parking space availability, “[t]he slight increase in parking congestion that may result from the project will not be “substantial” in relation to the preexisting parking congestion in the area as described in the record.”

Lastly, the court analyzed the City’s findings that there would be “no reasonable probability of a significant effect on the environment due to unusual circumstances” pursuant to Guidelines section 15300.2(c). The preservation group claimed that the project would have a significant effect on the environment by casting shadows on Balboa Park, by blocking views from neighboring buildings, by impacting community character, and by detrimentally impacting traffic. The court held that the record did not contain substantial evidence that would give rise to a fair argument that the project would have a significant effect on the environment. Thus, the City correctly found that exception to the categorical exemption did not apply.

The preservation group also maintained that the City “piecemealed” the project approval by issuing the grading and pad footing permits before it engaged in the CEQA exemption analysis. The court rejected the group’s argument because it failed to bring the objection to the City. Thus, the preservation group had not exhausted its administrative remedies pursuant to Public Resources Code section 21177(a). Because the argument was not fairly presented to the City, the preservation group cannot bring it up now.

Janell M. Bogue is a law clerk with Abbott & Kindermann, LLP. For questions relating to this article or any other California land use, environmental and planning issues contact Abbott & Kindermann at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.