The City of Visalia amended its general plan pertaining to neighborhood commercial districts, adding a limitation that no tenant could occupy more than 40,000 square feet. A shopping center owner submitted expert testimony regarding the potential for urban decay, but the court held it was insufficient to demonstrate that the limitation may have a significant environmental effect as a result of urban decay.

In 2010, Visalia launched a general plan update. Among other issues under consideration, one of the policy changes under review was a square foot limitation on tenants in neighborhood commercial centers. Staff prepared a white paper on this issue, outlining policy issues with the size, tenant mix, and walkability, along with the pros and cons of store size limitations. Following a city council workshop, staff amended the draft policy to limit store size and to set minimum separation requirements for neighborhood centers. The draft plan also included a map change reducing the acreage of a neighborhood center site by converting some of the property from commercial to medium density residential. The City then prepared and circulated a draft and final EIR (June 26, 2014). In October, the property owner submitted a letter thru legal counsel objecting to the changes, which included a report written by a broker who opined that most grocers would not build less than 40,000 square feet and that smaller stores had gone out of business. The broker also argued that substitution of less successful, lower volume tenants would eventually lead to physical decay in centers as a result of reduced investment. The letter also complained of the reduction in commercial designation for the one commercial center site. The owner filed suit, challenging the EIR and arguing a lack of internal consistency in the general plan. The trial court ruled for the City.

The appellate court affirmed, finding that none of the evidence offered by the property owner was substantial in character. It reasoned that the fact that some grocery stores would not build at 40,000 square feet or less was not evidence that no grocery store would be constructed. The evidence that Tesco was unsuccessful (building in the 10,000 to 20,000 foot range), did not foreclose that another grocer could build a larger store that meets the 40,000 square-foot requirement (and in fact, the evidence was that Walmart had recently constructed a 38,000 square-foot store in Visalia). Further, there was a lack of evidence that urban decay would occur, just speculation.

Regrettably, the appellate court applies the analytical tools reserved for judicial review of negative declarations, rather than an EIR, focusing instead on substantial evidence of a fair argument. While the decision does not discuss what substantial evidence supported the lead agency’s determination, the decision is useful in its close scrutiny of what constitutes substantial evidence offered by a project opponent.

Visalia Retail, LP v. City of Visalia, (January 24, 2018) 2018 Cal.App. LEXIS 84.