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In Ocean Street Extension Neighborhood Assn. v. City of Santa Cruz (2021) 73 Cal.App.5th 985, the Fourth District Court of Appeal upheld the trial court’s determination that the City of Santa Cruz (City) had complied with CEQA in approving a 32-unit residential project (Project) and overturned the trial court’s ruling that the City had violated its own municipal code in doing so.

In 2010, the Project proponent applied to the City for a planned development permit (PDP) for a 40-unit residential complex. In 2016, the City prepared an initial study (IS) which identified two potentially significant biological impacts that would be reduced to less than significant impacts with required mitigation measures, and the City then released a draft EIR that included the IS as an appendix. The City issued a partially recirculated EIR in response to public comments about traffic and transportation, and approved alternative #3, reducing the Project from 40 to 32 units, along with adopting a resolution which amended the GP, rezoned the Project parcel, and approved the design permit and PDP applications.

The Ocean Street Extension Neighborhood Association (Petitioners) filed a petition with the court challenging the City’s approval of the Project on the grounds that the City violated CEQA and the City’s municipal code. While the trial court found that the City had complied with CEQA, it concluded the City violated its municipal code by approving the PDP without also requiring the Project to comply with slope modification regulations, and issued a limited writ prohibiting the Project from proceeding until it complied with the City’s municipal code. Petitioners appealed, arguing that the trial court erred in finding that the City complied with CEQA, and the City cross-appealed the trial court’s ruling that it violated the municipal code.

Biological Resource Mitigation Measures in the Initial Study

On appeal, Petitioners argued that the EIR was deficient because the analysis of biological resource impacts and the associated mitigation measures were contained in the IS, and were not analyzed in the EIR itself. But “rather than elevate form over function,” the Court observed that the IS was an appendix to the EIR, and found that the EIR was adequate as an informational document.

Petitioners also argued that the discussion of biological impacts in the IS was substantively inadequate as it failed to differentiate or analyze the potential impacts to individual types of birds. The Court found the discussion in the IS to be adequate to inform both the public and decision makers. The Court also held that case law prohibiting the use of mitigation measures to render a project categorically exempt did not also prohibit incorporation of mitigation into an IS, as Petitioners suggested, particularly as the mitigation here had also been incorporated into the Mitigation Monitoring and Reporting Program adopted by the City.

Finally, Petitioners argued that the mitigation measures, which required a preconstruction survey to determine if protected species were on site, were vague and impermissibly deferred whether to implement the measures until a later date. The Court found these arguments had been waived for failure to exhaust administrative remedies on the subject or raise them at trial. Nevertheless, it also found the contentions to be meritless. The mitigation was adequate and not improperly deferred because the measures identified specific treatments and actions to be taken based on the findings of required preconstruction surveys.

Project Objectives

Petitioners argued that the Project’s objectives were too narrow because they prevented serious consideration of smaller projects and failed to foster informed decision-making. However, the Court found that Petitioners had not challenged the range of alternatives selected and that the range of alternatives (assessing from nine to 32 units) was adequate. In response to Petitioners’ concerns regarding the analysis of alternatives and the City’s selection, the Court noted that the EIR provided information about each alternative and its environmental impacts, and, although no alternative met all of the Project’s objectives, the City’s approval of an alternative with lower density than the proposed 40-unit Project indicated that the City earnestly considered lower density options. Petitioners questioned whether the 32-unit alternative truly met the stated objectives of providing affordable housing opportunities and housing for people with disabilities. But the Court rejected this too, finding that the selected alternative exceeded the City’s affordable housing requirements and included ADA-accessible units. Lastly, contrary to Petitioners’ arguments, the Court found that the affordable housing objectives and the objective to provide housing opportunities “in the free market” were not mutually exclusive. Ultimately, the Court held that the decision to reject or approve alternatives was a decision only for the decision makers, and substantial evidence supported the City’s decision.

Cumulative Impacts

Petitioners argued that the EIR drew incorrect conclusions regarding the significance of the Project’s cumulative impacts to the water supply and that the EIR’s analysis of traffic impacts was inadequate. The Court disagreed on both counts. The Court rejected Petitioners’ contention that the EIR’s cumulative water supply impact analysis improperly focused on the Project’s individual contribution to the City’s water supply shortage and failed to consider its impacts in light of other projects and the magnitude of the City’s shortfall because the Project’s contribution to the shortage was already accounted for in the City’s water management plan. Further, because the Project implements and funds its share of measures to reduce water supply demand, the Court found that Guidelines section 15130(a)(3) allowed for the EIR to conclude that the Project’s contribution to the City’s water shortage was not cumulatively considerable. With regard to cumulative traffic impacts, the Court found the issue to be mooted by recent amendments identifying vehicle miles travelled (VMT) as the proper metric for analyzing traffic impacts and no longer requiring a “level of service” analysis. The Court also held that the EIR’s additional VMT analysis was adequate.

Municipal Code Compliance

On cross-appeal, the City challenged the trial court’s ruling that the City had erroneously modified slope regulations applicable to the Project through the PDP process, rather than relying on municipal code provisions governing slope regulation modifications. The City argued that the relevant language in the municipal code was ambiguous and, as such, the trial court failed to properly defer to the City’s interpretation of its municipal code. The Court agreed and found the City’s interpretation of the provisions consistent with their code, and that deference to the City was appropriate. The Court found that the legislative intent of the PDP, allowing for deviation from conventional zoning in a number of areas, aligned with the City’s interpretation that the process could modify applicable slope regulations, and the Court concluded that the City did not violate its municipal code by doing so. As such, the Court reversed the trial court’s judgment granting the writ.

Key Points:

  • CEQA does not prohibit discussion of environmental impacts that are less than significant with mitigation in an initial study appended to the EIR, so long as the EIR complies with its purpose as an informational document.
  • Where statutory language is ambiguous, courts will defer to a city’s interpretation of its own municipal code.