Articles Tagged with California Supreme Court

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Forty years after the California Supreme Court addressed vested rights in its oft-quoted “Avco” decision, a simple two-part question often is asked to determine whether, in the face of changes to land use regulations, the right to complete a project has vested: “Has a building permit been issued and has a foundation been poured?” Sometimes, the question is framed “Are there sticks in the air?” There are, however, circumstances where vesting may occur without sticks in the air, the pouring of a foundation, or even the issuance of a building permit. One of those arises under what Avco Community Developers v. South Coast Regional Commission called “rare situations.” Another is where a local ordinance provides its own vesting standards.

Avco Grading-CaptionThe Decision. Avco arose from the 1972 adoption by California’s voters of the Coastal Zone Conservation Act (the “Act”), the precursor to California’s Coastal Act. The County of Orange had approved a final tract map and issued a grading permit for a planned community. The developer began grading, installed subdivision improvements, and incurred substantial liabilities in reliance on the County approvals – all before the effective date of the Act. In the end, the Court concluded that the developer needed a permit from the newly-created Coastal Zone Conservation Commission because building permits for individual structures had not been issued before the Act became effective. This has led to a common, though incorrect, perception that Avco held that in all cases a building permit – and more – is needed to vest a project against changing land use regulations.

The words most often associated with Avco are “if a  property owner has performed substantial work and incurred substantial liabilities in good faith reliance upon a permit issued by the government, he acquires a vested right to complete construction in accordance with the terms of the permit.” Those words, however, did not foreclose a less rigid vesting analysis. The Court also stated that its decision was “not founded upon an obdurate adherence to archaic concepts inappropriate in the context of modern development practices or upon a blind insistence on an instrument entitled ‘building permit’.” The Court even commended the Commission for conceding that a building permit is not “an absolute requirement under all circumstances for acquisition of a vested right”  before noting that there may be “rare situations” where vesting is based upon a different type of approval, one that provides “substantially the same specificity and definition to a project as a building permit.” This crack in the Avco door can lead to an alternative path for acquiring vested rights to shield an approved project from new regulations.

The “Rare Situation.” Not long after Avco, a “rare situation” emerged from the application of changed land use regulations to another Orange County planned development. In San Clemente Estates v. City of San Clemente, a federal bankruptcy judge addressed the vesting of a development for which grading permits had not been issued and building permits applications had not been filed at the time the new laws were adopted. The court concurred with the holding in Avco, but seized upon Avco’s “rare situations” discussion. The court found that the City Council was “intimately familiar with the project,” including details regarding the location, elevation, and appearance of each lot, the type of single family home to be built on each lot, and the specific locations of condominiums, a club house, and an equestrian center. As a result, the court concluded that the City Council knew “exactly what it was approving” and found that the project was insulated from the City’s newly-adopted land use regulations.

Local Ordinances.  The Avco Court also noted that Orange County’s Building Code prohibited issuance of a building permit unless it conforms to “other pertinent laws and ordinances.” The Court saw that language as reflecting “the general rule that a builder must comply with the laws which are in effect at the time a building permit is issued, including the laws which were enacted after application for the permit.”

DP 9.61.040(f)-SnipBut what if local ordinances, as sometimes is the case, expressly counter that “general rule” by providing that a developer has the right to complete a project pursuant to planning and zoning regulations in effect when an application is deemed complete? It is difficult to foresee any situation in which Avco would override the express vesting provisions of local ordinances, such as the example to the right from the City of Dana Point. Therefore, rather than meekly conceding to a rigid application of Avco, it is necessary to evaluate vested rights in the context of sometimes obscure local ordinances which might operate in the developer’s favor.

Without a doubt, Avco is alive and well at age forty. It continues to strongly suppress the vesting of development rights in California. Indeed, there have been harsh applications of Avco which have denied vesting to projects that arguably could have been “rare situation” exceptions. While, in virtually all cases, development agreements will remain the best protection against new land use regulations, developers should be aware that “rare situations” and local ordinances do exist which may present project-saving opportunities. Those opportunities should not be overlooked simply because foundations have not been poured and sticks are not in the air.

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The need for “reform” of the California Environmental Quality Act is acknowledged by development interests and environmental groups alike. The challenge is that these stakeholders have very different ideas of what that reform should look like.  As a result, despite the extraordinary costs of CEQA implementation and litigation, there appears to be little prospect for meaningful CEQA reform from the State Legislature. This article examines whether there is any prospect for meaningful CEQA “reform” from California’s Supreme Court.

California Supreme Court

The California Supreme Court

CEQA is 46 years old, yet CEQA litigation remains remarkably unpredictable. State and local agencies still cannot be confident that the courts will uphold their actions. The chances that an EIR will be upheld in court remain close to a coin-flip, even lower for a negative declaration. That level of uncertainty remains the great cost of CEQA—greater even than the enormous expense of trying to comply with CEQA.

In the first 40 years of CEQA, the California Supreme Court issued only about 40 decisions interpreting it. Then, a few years ago, the High Court started granting review in CEQA cases at an unprecedented pace. It rather quickly had nine cases on its docket for review. Many commentators speculated that the Court was going to undertake CEQA reform from the bench, perhaps recognizing that the Legislature seemed incapable of coalescing around any meaningful reform.

In the past year, the Court has issued four CEQA decisions, with five more pending. The early returns are mixed in terms of offering newfound certainty. But the Court will have several opportunities in the coming months and years to offer assistance to all participants in the CEQA process by resolving pending cases in a clear and decisive manner.

The Court considered various issues in its decisions over the past year. In Berkeley Hillside, it addressed the standard of review for categorical exemptions and adopted a somewhat tricky two-part test. It also held in City of San Diego v CSUSD that the state university system cannot limit its mitigation measures to those specifically funded by the Legislature, affirmed in Newhall Land that greenhouse gas (GHG) emission impacts can be measured against statewide GHG-reduction targets set out in AB 32, while at the same time finding the State’s GHG analysis lacking. In a key decision addressing  CEQA fundamentals, the Court held in CBIA v BAAQMD that CEQA generally applies to a project’s impact on the environment, not the environment’s impact on the project. While some might characterize this decision as “reform by court,” it really reflects a plain reading of the law, rather than reform. Continue reading →

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The California Supreme Court has scheduled oral argument on three land use and CEQA cases in early May in San Francisco. The Court has generally been moving to clear its calendar of pending CEQA and land use cases, of which there are many, but this is an unprecedented confluence of oral arguments on important cases. The three cases to be argued are as follows:

  • Property Reserve v Superior Court, Supreme Court Case No. S217738, scheduled for oral argument on Tuesday, May 3rd at 9:00 am. This case concerns whether requiring onsite geological or environmental testing is a physical taking of private property. The particular onsite testing at issue in this case is for the proposed twin tunnels project in the Delta.
  • Friends of the College of San Mateo College Gardens v. San Mateo County Community College District, Supreme Court Case No. S214061, scheduled for oral argument on Wednesday, May 4th at 9:00 am. This case concerns the legal standards that apply when an agency considers a further approval for a project that has already been reviewed under CEQA. The court will decide whether the decision to prepare a further EIR is subject to review under the deferential substantial evidence standard, as most cases have held, or whether the agency must first make a threshold determination whether there is a new project as a matter of law.
  • City of Perris v. Stamper, Supreme Court Case No. S213468, scheduled for oral argument on Thursday, May 5th at 9:00 am. This case concerns the determination of which issues are decided by a judge, and which issues are decided by a jury, in an eminent domain case. The specific issue is whether the constitutionality of a city’s dedication requirement is a legal issue, to be decided by a judge, or a factual issue, to be decided by the jury.

The decisions in these three cases should be issued by the court by late July or August.

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Does CEQA require an evaluation not only of a proposed project’s potential impacts on the environment, but also of the potential impacts of the existing environment on the proposed project and its future residents or users? If the answer is “both,” then public agencies will be required to expand what has been the traditional scope of environmental review under CEQA. The practical effects would likely include an increase in the cost of preparation of CEQA documents, an expansion of the scope and cost of project mitigation measures, greater reliance by agencies on statements of overriding consideration, and enhanced litigation opportunities for project opponents.

This issue, which has come to be known by the shorthand expression “reverse CEQA,” is now under consideration by the California Supreme Court in California Building and Industry Association v. Bay Area Air Quality Management District. Oral arguments were heard on October 7, 2015, and a decision is expected by the first week of January 2016. Cox, Castle & Nicholson Partner Andrew Sabey argued before the Court on behalf of the California Building and Industry Association.

While the specific context of this case involves air-quality issues, during oral argument the Justices focused on the broader question of whether CEQA requires evaluation of those existing environmental conditions that may affect future residents or users of a proposed project. Depending on the scope and direction of the Court’s upcoming ruling, many existing conditions could become subject to CEQA evaluation, such as degraded air quality, odors, shadows from existing buildings, urban blight, impaired views, loss of night sky, noise, and so forth. Continue reading →

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Are there circumstances where it would be possible to change, for example, the general plan land use designation of a 1,000 acre parcel from “open space” to “residential,” “mixed use,” and/or a hotel use without complying with the California Environmental Quality Act, even though potentially significant impacts could result from the change? In one of this year’s more important land use decisions, the California Supreme Court has answered that question with a clear and affirmative “Yes.”

The context of the Court’s decision is that of a “qualified” voter-sponsored ballot measure. For most local jurisdictions (i.e., a city or a county), a measure “qualifies” for the ballot when at least fifteen percent of the number of registered voters within the jurisdiction sign a petition to place the proposal on the ballot. Once sufficient signatures are confirmed, the legislative body of that jurisdiction (the City Council or the Board of Supervisors) has the choice of either placing the measure before the voters or approving the measure itself without change. Those are the only options. It has long been clear that if the measure is placed on the ballot and approved by voters, CEQA does not apply. However, the California Supreme Court has now determined that if the City Council or Board of Supervisors approves the measure itself rather than sending it to the voters, CEQA still does not apply. Continue reading →