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Joshua TreeWhen cities and counties conduct CEQA review of a large-scale commercial development project including a major national chain like Wal-Mart or Costco, a common objection is that the project will displace existing, locally owned retail establishments, resulting in a significant impact on the environment, in the form of urban decay (or “blight”). This is generally understood to involve abandoned buildings or shopping centers physically deteriorating and becoming a magnet for graffiti, gang/drug activity, and illegal dumping. This claim is often brought in CEQA litigation resulting from approval of such retail projects.

Recently, Division Two of the Fourth Appellate District issued its decision in Joshua Tree Downtown Business Alliance v. County of San Bernardino (June 15, 2016; certified for partial publication on July 13, 2016), upholding a mitigated negative declaration and addressing a key issue for lead agencies and courts evaluating an urban decay claim: when do the comments or testimony of a lay witness constitute substantial evidence of an urban decay impact? The appellate court also rejected a claim of general plan inconsistency, affirming the broad discretion that local governments enjoy in interpreting their general plans.

In this case, the County of San Bernardino approved a 9,100 square foot general retail store in the rural community of Joshua Tree, which was intended for occupancy by national chain Dollar General. In approving the project and granting the applicant a conditional use permit, the County prepared and adopted a mitigated negative declaration. The Joshua Tree Downtown Business Alliance, an association of local business owners and residents (“Alliance”), filed a petition for writ of mandate, challenging the County’s decision on several grounds: (1) the County failed to adequately consider the Project’s potential to cause urban decay; (2) an EIR was required because substantial evidence supported a fair argument that the Project would cause urban decay; (3) the project was inconsistent with the various policies and goals contained in the Joshua Tree Community Plan (“Community Plan”), which was a part of the County’s general plan; and (4) the County improperly attempted to conceal the intended occupant’s identity.

The lower court held that the County had adequately considered urban decay, but had erred in failing to find the existence of substantial evidence to support a fair argument that the Project could cause significant urban decay. As such, the lower court issued a writ of mandate directing the County to set aside its approval until it prepared an EIR. The court rejected the Alliance’s other two claims. On appeal, the Fourth District Court of Appeal reversed the judgment, holding that the Alliance failed to establish any grounds for issuance of a writ of mandate.

The Fourth District affirmed the lower court’s ruling that the County had adequately considered whether the project had the potential to cause urban decay. At various stages of the CEQA process, the County had considered and responded to public comments regarding urban decay, and had concluded that there was no evidence that the project would have negative economic impacts – and therefore no evidence that it would cause urban decay.

However, the appellate court disagreed with the lower court’s holding that lay opinion evidence in the record regarding urban decay impacts required preparation of an EIR. One commenter—a local business owner who was a former assistant attorney general in the Oregon Department of Justice—had commented extensively on the project’s potential to cause urban decay. The lower court relied on this commenter’s opinions in finding substantial evidence of potential urban decay impacts requiring preparation of an EIR. The Fourth District reversed, holding that, although members of the public may provide opinion evidence where special expertise is not required, analysis of urban decay requires relevant expert opinion, such as from an economist. Because the commenter – as a business owner and lawyer – lacked expertise in any relevant area, she was not qualified to opine on urban decay, and her comments did not constitute substantial evidence. Moreover, the commenter “did not offer any particular factual basis” for her opinions – she did not claim that any business in Joshua Tree had suffered due to competition from a national chain, and she had not undertaken any surveys or studies. As such, “whether viewed as lay or expert opinions, her conclusions were speculative.”

The Fourth District also denied the Alliance’s claim that the Project was inconsistent with various policies and goals in the Community Plan. Applying the “abuse of discretion” standard of review that normally applies to general plan consistency claims – and rejecting the Alliance’s argument that CEQA’s “fair argument” standard was instead applicable – the court found that the County could reasonably have concluded that the Project was not inconsistent with the Community Plan’s policies and goals.

Finally, in the unpublished portion of the opinion, the appeals court agreed with the lower court that the County did not have a duty under CEQA to disclose the project’s end user.

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Although this decision does not fully define the scope of lay/expert opinion that would constitute substantial evidence of an urban decay impact, it does confirm that comments or testimony on this issue must be grounded in concrete factual analysis, such as surveys or studies. This is a key point, as opponents to retail projects often present comments and testimony asserting their opinion that local businesses will suffer and urban decay will ensue, but such opinions seldom include fact-based discussions that meet the standard set forth here by the appellate court.
The court’s analysis of the general plan consistency issue will also be of note to local governments facing similar challenges. Like the Fifth Appellate District in its recent opinion in Naraghi Lakes Neighborhood Preservation Association v. City of Modesto (which we discussed in a previous post), the Fourth Appellate District has reaffirmed that courts owe great deference to cities and counties when those entities interpret and apply their general plans.