By William W. Abbott

One person’s misery can be someone else’s gain. This can also hold true when dealing with inter-jurisdictional disputes over impact fees. The recent case of Woodward Park Homeowners Association, Inc. v. City of Fresno (April 13, 2007) 2007 Cal.App.LEXIS 544 highlights a number of important CEQA practice issues. While these are not necessarily new concerns, the case daylights a key issue of first impression–namely, whose responsibility is it to calculate the nexus for impact fees to be set for impacts to state highway facilities? Is CalTrans responsible, or is it the responsibility of the city or county approving a development project which impacts state facilities? According to the Fifth Appellate District, the answer to the question is the lead agency.

The facts in this case involve a commercial shopping center approved by the City of Fresno ("City"). The project is situated near a state highway facility. The City prepared a project level DEIR, and neighbors and CalTrans (among others) submitted comments. The neighbors were concerned about the change and intensification of land uses. However, CalTrans was concerned with the impact to State Route 41 and provided detailed comments to the DEIR. The City had a long-standing practice of not imposing mitigation fees for impacts to state highway facilities. As the project moved forward for City Council action, the intensity of debate over traffic impacts increased. The developer eventually offered up voluntary mitigation in the amount of $45,000, whereas CalTrans thought the fair share number (in the form of mandatory mitigation) should be over $300,000. Following EIR certification, adoption of a statement of overriding considerations, and project approval, the local neighborhood group filed suit. It alleged a number of CEQA claims, as well as general plan inconsistency issues.  CalTrans did not sue. The trial court ruled for the City, but the appellate court reversed. 

As a young lawyer, you soon learn the phrase “bad facts make for bad law.” As a land use practitioner, you also learn that poor CEQA documentation makes for even worse outcomes. This court decision bears this out. The CEQA document contained several errors in the opinion of the appellate court. First, instead of evaluating the project impacts in comparison to the existing physical environment, the EIR compared the proposed project to the existing general plan and zoning. This error proved to be critical, as it understated the impacts. This fundamental strategy then infected much of the EIR and the statement of overriding considerations analysis.  

Next, the EIR included the mandatory evaluation of alternatives.  The “no project” alternative lacked a complete discussion of the existing physical conditions.[1]  However, the alternatives selected were largely more intensive land uses, thereby failing to meet the Guideline objective for alternatives which meet the basic objectives of the project, but which reduce or avoid the significant, unmitigated effects associated with the proposed development.  

The combined effect of the erroneous choice of baseline, coupled with an inadequate range of alternatives, had additional consequences as well. The statement of overriding considerations relied upon a miscalculation of project impacts (project-to-zoning analysis), as well as a flawed alternatives analysis. Thus, the statement of overriding considerations was similarly flawed as it was founded on improper CEQA considerations.[2] 

The importance of the case really lies in the court’s consideration of impacts to state highway facilities. The EIR documented project impacts to state highway facilities, and Caltrans provided intensive comments on the EIR. It challenged the baseline determination and provided a fair share number as a mitigation fee (although, in the opinion of the City, there was insufficient documentation to support the calculation). The court viewed the issue as being a straightforward one, because this case did not involve a fact pattern in which:

·                     impacts had not been identified, or

·                     the impacts were viewed as less-than-significant, or

·                     there was a failure to identify mitigation measures, or

·                     the mitigation was found to be the sole responsibility of a responsible agency.

Rather, the court viewed this as lead agency dissatisfaction with CalTrans, and on that basis, the City declined to impose a mitigation measure. On these facts, the City’s duties were clear. As correctly noted by the appellate court, lead agency frustration with a responsible agency is not recognized as a legal basis for refusing to impose an otherwise feasible mitigation measure.[3] 

As the City did not perform the nexus calculation, future cases will have to deal with issues like appropriate threshold of significance, allocation between existing, future baseline and project contributions, and selection of the time window for impact determination. 

What does this case mean? This case provides no incentive for state agencies to do much homework in the debate over nexus determinations. In the short term, expect EIR costs for project-level EIRs to increase as the document content is expanded to deal with fair share calculations on impacts to state highway facilities and potentially other publicly owned facilities. Expect mitigation fees to head northward as well.  Of course, the CEQA sword swings both ways. The next time a state project (highway, prison, state building) impacts local streets, it will be the state agency’s responsibility to perform the nexus calculation.   

It will be noteworthy to see if the League of California Cities, County Supervisors Association of California, and the development interests leave the results of this case unchallenged at the Legislature. Recognizing that, the Legislature may want to spend money someplace other than on road improvements. The legislative reception may be the equivalent to the proverbial road sign of “Wrong Way: Do Not Enter”.

[1] The no project evaluation focused on likely buildout under existing zoning, an analysis contemplated by the Guidelines for certain types of projects. This evaluation still requires consideration of the no-build scenario, characterized as a “double baseline”.

[2] As to economic benefits which were alluded to, the court held that while on one hand a generalized statement was insufficient, a full blown economic analysis was not required.

[3] The administrative record included a fair share fee calculated by the City. The City refused to require payment of the fee. However, as the City had used the improper baseline to calculate impacts, the formula upon which the fee was calculated was flawed in any event.

Bill Abbott is a partner 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.