In IBC Business Owners for Sensible Development v. City of Irvine et al. (2023) 88 Cal.App.5th 100, the Fourth District Court of Appeal held that the City of Irvine (“City”) violated CEQA when it relied on an addendum to approve a project proposing to redevelop a parcel within the Irvine Business Complex (“the IBC”). The Court held that the environmental impacts of the Project were not within the scope of the 2010 Programmatic Environmental Impact Report (“the PEIR”) for IBC, nor was the project exempt from the CEQA environmental review. Applying the substantial evidence standard of review, the Court found that the evidence was insufficient to show that the project’s greenhouse gas (“GHG”) emissions were within the scope of the PEIR, or to show that the project’s GHG emissions were less than significant under any other threshold. The Court also held that the Class 32 Infill Exemption did not apply to the project because it involved unusual circumstances which may cause significant environmental effects.
The IBC was originally developed in the 1970s as a regional economic and employment base with mainly office, industrial, and warehouse uses. In 2010, the City amended its General Plan and adopted the IBC Vision Plan and Mixed Used Overlay Zoning Code (“the Vision Plan”) to create a mixed-use community with urban neighborhoods in the IBC. The Vision Plan capped the total development within IBC at full buildout (post-2030). To stay within this cap, each parcel in the IBC was assigned a development budget. The Vision Plan allowed the City to approve transfer of development rights (“TDRs”) from one parcel to another within the IBC upon finding that the project would not result in adverse effects to the City’s infrastructure and services and will not cause “adverse impact on the surrounding [traffic] circulation system.”
The City also prepared the PEIR concurrently with the Vision Plan in 2010 to study the environmental effects of the Vision Plan’s buildout post-2030. The PEIR’s environmental analysis made several land use assumptions for development within the IBC, including assuming certain sites to be redeveloped and others not to be further redeveloped. The PEIR envisioned that as long as the future site-specific development within IBC would not result in new environmental effects or require additional mitigation measures than those identified in the PEIR, no additional environmental review would be required for the project. However, the PEIR acknowledged that a future project inconsistent with the PEIR assumptions would potentially require additional environmental review.
In 2019, Gemdale 2400 Barranca Holdings, LLC (“Gemdale”) proposed a project to replace an existing two story, 69,780-squre foot (“sf”) building with a 275,000-sf office complex, consisting of five- and six-story office buildings and a seven-story parking structure (“the Project”). In order to approve the Project, the City considered and ultimately approved a TDR twice the size of any other previously approved TDR in the history of the Vision Plan
Initially, City staff thought that Project may be exempt from CEQA under the Infill exemption, but later they decided to prepare an addendum to the PEIR (“the Addendum”). The Addendum concluded that no further environmental review was required because all the Project’s significant environmental impacts were within the scope of the PEIR and would be avoided or mitigated pursuant to mitigation measures adopted for the Vision Plan. The City also prepared a Traffic Impact Analysis (“TIA”) for the Project analyzing the study area intersections and roadways, and found that the Project would not have “adverse impact on the surrounding circulation system” with the inclusion of project design features (“PDFs”).
The City approved the Project and the petitioners filed suit. The trial court issued a writ setting aside the Project approval. The City and Gemdale appealed and the Court of Appeal affirmed the lower court.
Appellate Court Ruling
Consistency with the PEIR
The Court held that the City’s finding that the Project’s environmental impacts were within the scope of the environmental impacts of the prior PEIR was not supported by substantial evidence for purposes of GHG impacts, but the Court upheld the City’s findings regarding traffic impacts.
For traffic impacts, the petitioner argued that the Project’s TIA was inadequate because the TIA relied on the level of service methodology and failed to perform a mandatory vehicle miles traveled (“VMT”) analysis, as required under CEQA Guidelines section 15064.3. The Court found that the Guidelines did not apply to the Addendum because the VMT requirement applied only prospectively “to steps in the CEQA process not yet undertaken” by July 1, 2020. While the City did not approve the Addendum until July 14, 2020, the Project’s addendum process started in 2019, well before the effective date of the Guidelines section 15064.3.
Regarding GHG emissions, the Addendum concluded that because the Project would incorporate all the PDFs and mitigation measures from the PEIR, not change the overall development intensity within IBC, and comply with the South Coast Air Quality Management District (“SCAQMD”) thresholds, the Project would comply with the PEIR’s significance threshold of “net zero” GHG emissions. The Court found that substantial evidence in the record did not support the City’s finding that mere transfer of development intensity from one site in IBC to another would not result in a substantial increase in GHG emissions. The Court noted that the Addendum failed to even quantify the GHG emissions for the Project, and pointed out that the City had prepared a draft GHG emissions analysis of the Project, which was not ultimately included in Addendum, finding that the Project could have significant GHG impacts that could not be mitigated to less-than-significant levels.
The Court also rejected the City’s alternative argument that the Project was an infill project and categorically exempt from CEQA. The Court held that the exemption did not apply because there is a reasonable possibility that the Project will have a significant environmental impact due to unusual circumstances.
Because the City failed to make any express findings regarding the unusual circumstances exception to categorical exemptions, the Court was constrained in affirming the City’s implied findings that no exceptions applied. Relying on Respect Life South San Francisco v. City of South San Francisco (2017) 15 Cal.App.5th 449, the court explained that in order to affirm the City’s implied findings for exemption for the Project, it “must assume that the [City] found that the [P]roject involved unusual circumstances and then conclude that the record contains no substantial evidence to support either (1) a finding that any unusual circumstances exist. . . [,] or (2) a fair argument of a reasonable possibility that any purported unusual circumstances identified by the petitioner will have a significant effect on the environment . . . .” The Court could not affirm under either of those findings.
First, the Court found that the record demonstrated that unusual circumstances existed because the Project is much larger than neighborhood development and significantly increases the development intensity budgeted for the Project site that was allocated in the Vision Plan. In fact, the TDR for the Project would be the largest of the 29 approved TDRs in the history of the Vision Plan. Thus, due to the size and the scale of the Project and magnitude of the requested TDR, the Court found sufficient evidence to support a finding of unusual circumstances. Second, the Court found that the record showed that there was a reasonable possibility of the Project’s significant environmental impacts because the Project could have potentially significant GHG impacts that could not be mitigated below the level of significance. The City and Gemdale failed to point to any evidence in the record that clearly refuted the contradictory record evidence and demonstrated that the Project is consistent with the PEIR’s goal of net zero GHG emissions. Thus, the Court found that the unusual circumstances exception precluded application of the infill exemption.
- The Court applied the substantial evidence standard of review to determine whether a project is consistent with a prior program EIR, and it presents no new significant, unstudied adverse effect.
- Here, the Court found in favor of the petitioners on GHG issue because the record did not contain any evidence in the record to directly contradict other evidence in the record showing that the Project may result in unmitigated, significant GHG impacts. The Court expressly stated that this does not necessarily mean that the Project will need to prepare subsequent environmental review, it just demonstrates that the evidence was lacking to support the City’s findings for an Addendum. This ruling underscores the importance of including all the key evidence supporting the lead agency’s decision in the administrative record.
- Where an agency relies on a categorical exemption for a Project, it is important for the lead agency to make express findings regarding the application of categorical exemptions and any exceptions to the exemption that might apply.