September 30, 1991 - From the September, 1991 issue

Courts Ruled in August on La Vina EIR Case, Housing Linkage Fees

A semblance of certainty has fallen on the EIR process. In August 5, 1991, the Second District Court of Appeal ruled that "that the use of developer-prepared EIRs was permitted under the CEQA, so long as the agency indepdently reviews, evalautes, and exercises judgment over the documentation." This comes after a period of doubt as the result of Goleta II Decision in the last day of 1990. Jonathan C. Curtis, a land-use attorney at the law firm of Paul, Hastings, Janofsky & Walker, provides further detail on La Vina background and its impacts.

During August, two rulings emerged from the courts which, if not further appealed, bring some guid­ance and certainty to the debates over developer-prepared environmental impact reports (EIRs) and the permis­sible reach of impact fees on com­mercial development. 

La Vina Background 

In Friends of la Vina et al. vs. County of Los Angeles, 91 Daily Journal D.A.R. 9519 (August 5, 1991), the Second District Court of Appeal, in a two-to-one decision, ruled that the use of developer-prepared EIRs was permitted under the California Environmental Quality Act (CEQA), so long as the agency independently reviews, evaluates, and exercises judgment over the documentation. It then remanded the case for redetermination as to whether this standard had been met. 

The genesis of the La Vina deci­sion dates back to 1986 when a devel­oper applied to the County of Los Angeles for approval of a specific plan, the rezoning of its property and a general plan amendment to permit a residential and private school development in Altadena. Following established County procedures, the County determined that an EIR would be required and directed the developer to engage a private consultant to prepare the necessary documentation.

The consultant prepared an initial draft of the draft EIR, which the County released to other agencies and to the public for comment. After the Board of Supervisors considered the final EIR which included the draft EIR, the responses to comments, and proposed findings about the environmental issues raised in the review process, it ultimately approved a modified version of the proposed development.

Friends of La Vina, an ad hoc organization of residents who opposed the project, then commenced an action for writ of mandate and declaratory relief. It claimed, among other things, that under CEQA (Public Resources Code section 21082.1), an EIR must be “prepared directly by, or under contract to, a public agency,” not by a consultant retained by the developer. 

The Superior Court ruled in favor of the residents, later clarifying its decision and stating that an agency could treat a draft EIR prepared by a developer-retained consultant as an item of information for the agency’s own preparation of an EIR.

La Vina Appeal Decided

Last month, the Court of Appeal reversed this decision, holding that the lower court’s interpretation of Section 21082.1 conflicted with CEQA, the State CEQA Guidelines, and all relevant case law. The Court viewed Section 21082.1 as specifically authorizing a public agency to prepare an EIR by adopting materials drafted by a developer-retained consultant, because the section provides that “information or other comments may be submitted in any format… and may be included in whole or in part…”

The court also relied on Section 15084 of the State CEQA Guidelines, which allow as one of the five permissible methods of EIR preparation, “accepting a draft prepared by the applicant, a consultant retained by the applicant, or any other person.”

In its ruling, the Court of Appeal confirmed that the “preparation” requirements of CEQA and the Guidelines “turn not on some artificial litmus test of who wrote the words, but rather upon whether the agency sufficiently exercised independent judgment over the environmental analysis and exposition that constitutes the EIR.” It noted, however, that implicit in this requirement that the agency exercise independent judgment is a “heavy demand for independence, objectivity, and thoroughness.”

The Meaning of La Vina

This decision validates the procedures of the many public agencies which require project proponents to arrange for EIR preparation. It also recognizes that the public is protected through independent agency oversight and involvement.

A question remains, however, as to how a public agency is to meet and document this requirement of “heavy demand for independence, objectivity, and thoroughness.”

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At a minimum, a process of departmental review and standards for EIR preparation and documentation should be a part of each public agency’s procedures. But is independent verification of underlying facts required? The court appears to say no, but offers no guidance as to when independence has been met.

Guidance may be on the way. Because the case was remanded to the lower court to determine whether the County complied with this independence requirement, it may be back before the court on this issue.

Housing Linkage Fee Upheld

In Commercial Builders of Northern California vs. City of Sacramento, Council of the City of Sacramento, 91 Daily Journal D.A.R. 9609 (9th Cir. August 7, 1991), the Ninth Circuit, in a two to one decision, held that it was not an unconstitutional taking for a city to condition nonresidential building permits upon the payment of an impact fee for low-income housing.

In 1987 the City and County of Sacramento commissioned a consulting firm to study the need for low-income housing, the effect of nonresidential development on housing demand, and the appropriateness of exacting fees to pay for low-income housing.

Based upon the study, the City of Sacramento enacted the Housing Trust Fund Ordinance, finding that non-residential development was “a major factor in attracting new employees to the region” and the influx of new employees “create[s] a need for additional housing in the City.” The fee charged under the ordinance was characterized by the court as a small percentage of what the study calculated to be the cost of meeting new low-income housing requirements.

Commercial Builders, an association of builders, owners and developers, challenged the ordinance under Nollan vs. California Coastal Comm’n, 483 U.S. 825 (1987), which requires a close “nexus” between the exaction imposed and the need that the exaction was intended to remedy.

In upholding Sacramento’s ordinance, the court stated: “Nollan holds that where there is no evidence of a nexus between the development and the problem that the exaction seeks to address, the exaction cannot be upheld.” (emphasis added) The court did not accept Commercial Builders’ view that the articulated standard only permits an exaction if it can be shown that the development in question is directly responsible for the impact that the exaction is designed to alleviate.

The Decision’s Message

The Ninth Circuit is sending a clear message: a court will only overturn an exaction if the entity imposing it completely fails to produce evidence of a causal connection. The causality may even be indirect, though it is not clear how indirect a connection the court would permit. At some point, the connection could become so indirect that the “evidence,” would become too remote and speculative. 

With this decision, new impact fees for child care, healthcare and other community needs may be on the horizon. We can also expect that cities such as Los Angeles with “nexus” studies underway for housing linkage fees will look at this decision very carefully. While tough economic times may limit the feasibility of high impact fees, some cities may be tempted to adopt higher fees, given the new comfort that this decision offers.

Many cities and counties have been hesitant to impose impact fees such as the one at issue because of the difficulty of establishing a clear causal connection. With this decision, hesitancy may be a thing of the past and societal problems may increasingly become those of the developer.

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