The
California Supreme Court Takes a Closer Look at the Applicability
of CEQA to Development Agreements
Summary:
In Save Tara v. City of West Hollywood, the California
Supreme Court clarified the circumstances in which a public agency
may enter into a conditional conveyance and development agreement
with a private party prior to complying with CEQA. Although the
Court invalidated the City of West Hollywood's entry into a development
agreement prior to CEQA review, the Court did not foreclose such
a sequence in all circumstances. In fact, the Court specifically
noted that in some circumstances, “a CEQA compliance condition can
be a legitimate ingredient in a preliminary public-private agreement
for exploration of a proposed project.”
The Court applied the following test to arrive at its decision that
the City should have conducted CEQA prior to entering into its development
agreement: “before conducting CEQA review, agencies must not take
any action that significantly furthers a project in a manner that
forecloses alternatives or mitigation measures that would ordinarily
be part of CEQA review of that public project.” In applying this
standard, the Court directs future courts to consider the terms
of the agreement as well as the surrounding circumstances to determine
if, as a practical matter, the lead agency has committed itself
to the project as a whole or to any particular project feature so
as to effectively preclude any mitigation or alternative, including
the no project alternative.
Specifics of the Case:
This decision involved a conditional agreement between the City
of West Hollywood and two private non-profit housing developers
collectively called Laurel Place. The City owned property with a
large colonial revival style house constructed in 1923 that was
later converted to four apartments. Laurel Place intended to redevelop
the occupied property into low-income senior housing. Laurel Place
applied for a grant from the U.S. Department of Housing and Urban
Development (HUD) and described what Laurel Place intended to build.
The City then granted Laurel Place an option to purchase the property,
and also notified City residents that HUD had approved Laurel Place's
grant application.
On May 3, 2004 the City entered into a “Conditional Agreement for
Conveyance and Development of Property” with Laurel Place. In July
of 2004, Save Tara filed a complaint and petition for writ of mandate
alleging that the City had violated CEQA by failing to prepare an
EIR before approving the May 3 agreement. On August 9, 2004, the
City and Laurel Place entered into a revised agreement which conditioned,
among other things, the City's conveyance of the property on compliance
with CEQA.
The Court determined that the City's agreement, which consisted
of both the original May 3 and revised August 9 agreements, amounted
to the City's approval of the redevelopment project pursuant to
CEQA. The Court noted the following nine facts in its analysis of
the agreement.
•
Both versions of the agreement stated that their
purpose was to “cause the reuse and redevelopment” of the subject
property in accordance with the project outlined in Laurel Place's
application to HUD.
•
The City council resolution accompanying approval
of the May 3 agreement identified its intent as being to “facilitate
development of the project” while allowing further public input
on “the design of project elements.”
•
In aid of Laurel Place's application to HUD,
the City manager informed the federal agency that the City “has
approved the sale of the property” and “will commit” up to $1 million
in financial aid. Moreover, after award of the grant, the City's
mayor announced to City residents that the grant money “will be
used” for Laurel Place's project and a City newsletter stated that
the City and Laurel Place “will redevelop the property.”
•
During the May 3 meeting on the agreement, the
City's housing manager stated that while there were “options to
consider” regarding project design, options for alternative property
uses had already been ruled out i.e. park, library, cultural center.
•
The City proceeded with relocating the property's
tenants on the assumption the property would be redeveloped, a process
the Court considered to be irreversible.
•
With no mention of CEQA, the City promised to
loan Laurel Place approximately half a million dollars that would
be repaid from project receipts, which loan would not be repaid
if the City disapproved the project.
•
Although the May 3 agreement did condition conveyance
of the property on CEQA being “satisfied”, the agreement did not
provide that the City could still reject the project on substantive
environmental grounds.
•
The agreement provided the City Manager the authority
to determine if CEQA was satisfied and did not provide any mechanism
for appealing the City Manager's decision to the City Council.
•
While the August 9 agreement addressed the
May 3 agreement's CEQA flaws, the Court gave little weight to
the new agreement because the City Council had already shown its
willingness to relinquish any CEQA compliance authority in favor
of the City Manager's decision.
