Coming Full Circle in the Fifth—revisiting the Concept of "urban Decay" and Its Increasingly Limited Role in Ceqa

• Publication year: 2018
• Author: by Martin P. Stratte and Jonathan E. Shardlow

Coming Full Circle in the Fifth—Revisiting the Concept of "Urban Decay" and Its Increasingly Limited Role in CEQA

by Martin P. Stratte^* and Jonathan E. Shardlow^**

For the past decade or so, many of the environmental impact reports (EIRs) prepared for commercial projects have included an analysis of a project's potential to cause the phenomenon known as "urban decay."

Many attribute the presence of these urban decay analyses to the holding of Bakersfield Citizens for Local Control v. City of Bakersfield, 124 Cal.App.4th 1184 (2004) ("Bakersfield Citizens").

There, the California Court of Appeal, Fifth Appellate District, held that the EIRs that had been prepared for two large shopping centers violated the California Environmental Quality Act (CEQA) because the lead agency had failed to analyze the projects' potential to "cause urban/suburban decay by precipitating a downward spiral of store closures and long-term vacancies in existing shopping centers."¹

As a result of this holding, many lead agencies routinely receive comments alleging that the development of a certain project will supposedly cause the surrounding neighborhood to become "decayed." The submission of such comments by project opponents has become so routine that even small infill projects are being accused of being a potential cause of urban decay.

Many project opponents even cite Bakersfield Citizens in support of the proposition that urban decay impacts must always be analyzed in an EIR. Consequently, lead agencies have grown accustomed to analyzing urban decay in EIRs, despite the opinion of many that the speculative concept should be beyond the scope of CEQA.

Recently, in Visalia Retail, LP v. City of Visalia, 20 Cal.App.5th 1 (2017) ("Visalia Retail"), the Fifth Appellate District had the opportunity to revisit its prior holding in Bakersfield Citizens.

In its discussion, the court explained the scope and proper application of its prior holding in Bakersfield Citizens, and noted that the holding arose from very unique developmental circumstances. The court also articulated the primary principles to be gleaned from Bakersfield Citizens and confirmed that urban decay does not need to be analyzed in every EIR.

As discussed below, whatever remains of the need to analyze urban decay appears to be very limited in scope.

I. WHAT IS "URBAN DECAY"?

"[E]xperts are now warning about land use decisions that cause a chain reaction of store closures and long-term vacancies, ultimately destroying existing neighborhoods and leaving decaying shells in their wake."²

"'CEQA does not define urban decay' but some have defined it as 'visible symptoms of physical deterioration that invite vandalism, loitering, and graffiti that is caused by a downward spiral of business closures and multiple long term vacancies.'"³

The County of San Bernardino has further defined urban decay as follows:

This physical deterioration to properties or structures is so prevalent, substantial, and lasting for a significant period of time that it impairs the proper utilization of the properties and structures, or the health, safety, and welfare of the surrounding community. The manifestations of urban decay include such visible conditions as plywood-boarded doors and windows, parked trucks and long term unauthorized use of the properties and parking lots, extensive gang and other graffiti and offensive words painted on buildings, dumping of refuse on site, overturned dumpsters, broken parking barriers, broken glass littering the site, dead trees and shrubbery together with weeds, lack of building maintenance, abandonment of multiple buildings, homeless encampments, and unsightly and dilapidated fencing.⁴

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II. THE PROGRESSION OF THE CONCEPT OF URBAN DECAY THROUGH CASE LAW

Below is an overview of the case law that controls the application of the concept of urban decay and how the case law has developed over the years.

A. Bakersfield Citizens for Local Control v. City of Bakersfield, 124 Cal.App.4th 1184 (2004)

In 2003, the Bakersfield City Council approved the entitlements for two separate shopping centers that were to be constructed approximately 3.6 miles apart. The two shopping centers, which were analyzed in separate EIRs, were to each include a 220,000 square foot Wal-Mart Supercenter.⁵

One of the Supercenters was to be included within a 370,000 square foot shopping center that was to be constructed on approximately thirty-five acres of vacant land. The second Supercenter was to be included within a 700,000 square foot shopping center that was to be constructed upon seventy-three acres of vacant land. One of the Supercenters was to replace an existing Wal-Mart in the City.⁶

Neither of the two EIRs analyzed the potential for urban decay to occur as a result of the projects. The project proponents alleged that "such an analysis was purely economic and therefore was outside the scope of CEQA."⁷

The approvals of the shopping centers were challenged through two separate lawsuits, both of which alleged violations of CEQA.⁸

"In both actions, the court concluded that CEQA required study of the question whether the two shopping centers, individually or cumulatively, could indirectly trigger a series of events that ultimately result in urban decay or deterioration."⁹

The trial court ordered that further environmental review be completed to determine: (1) the "cumulative impacts 'on general merchandise businesses' arising from operating both Supercenters"; and (2) "urban decay that could result from closure of the existing Wal-Mart" that was to be replaced by one of the new Supercenters.¹⁰

The subsequent appeals were consolidated by the Fifth Appellate District.¹¹

1. The Intersection of CEQA and Economic or Social Impacts

Before examining the merits of the appeals, the court explained the interplay between CEQA and the potential economic or social effects of a project.

"'CEQA is not a fair competition statutory scheme.' Therefore, the economic and social effects of proposed projects are outside CEQA's purview. Yet, if the forecasted economic or social effects of a proposed project directly or indirectly will lead to adverse physical changes in the environment, then CEQA requires disclosure and analysis of these resulting physical impacts."¹²

"Subdivision (e) of the [CEQA] Guidelines section 15064 [14 Cal. Code Regs., § 15064] provides that when the economic or social effects of a project cause a physical change, this change is to be regarded as a significant effect in the same manner as any other potential change resulting from the project."¹³

"Conversely, where economic and social effects result from a physical change that was itself caused by a proposed project, then these economic and social effects may be used to determine that the physical change constitutes a significant effect on the environment."¹⁴

The court then proceeded with a discussion of existing case law that examined the interplay between CEQA and economic or social effects.

2. Relevant Preexisting Case Law

"Case law already has established that in appropriate circumstances CEQA requires urban decay or deterioration to be considered as an indirect environmental effect of a proposed project. The relevant line of authority begins with Citizens Assn. for Sensible Development of Bishop Area v. County of Inyo (1985) 172 Cal.App.3d 151 [("Bishop")]."¹⁵

"There, the appellate court held that adoption of multiple negative declarations for different aspects of the same large regional shopping center violated CEQA. The court also agreed with appellant that on remand 'the lead agency must consider whether the proposed shopping center will take business away from the downtown shopping area and thereby cause business closures and eventual physical deterioration of downtown Bishop.'"¹⁶

"Next, [Citizens for High Quality Growth v. City of Mt. Shasta, 198 Cal.App.3d 433 (1988)], invalidated an EIR for a proposed shopping center for numerous reasons."¹⁷

"In relevant part, the court determined that the EIR was defective because it failed to 'consider the potential physical effect of the rezoning on the central business area. The EIR pointed out the proposed project may pose a significant economic problem for existing businesses, but offered little analysis of the issue.' The court [citing Bishop, 172 Cal.App.3d 151] rejected respondent's justification that 'no analysis of economic effects was required in the EIR.'"¹⁸

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"City of Pasadena v. State of California (1993) 14 Cal.App.4th 810 [("City of Pasadena")] addressed this issue as part of its determination whether a project to relocate a parole office was exempt from CEQA. In addressing whether the significant effect exception applied, the court discussed [Bishop, 172 Cal.App.3d 151]. It agreed that social and economic effects must be considered if they will cause physical changes but found Bishop distinguishable because appellant in this case had not made a 'showing or argument that [relocation of the parole office] would cause the physical deterioration of the area.'"¹⁹

Based on this precedent, the court explained that "when there is evidence suggesting that the economic and social effects caused by the proposed shopping center ultimately could result in urban decay or deterioration, then the lead agency is obligated to assess this indirect impact. Many factors are relevant, including the size of the project, the type of retailers and their market areas and the proximity of other retail shopping opportunities. The lead agency cannot divest itself of its analytical and informational obligations by summarily dismissing the possibility of urban decay or deterioration as a 'social or economic effect' of the project."²⁰

3. The Allegations of Urban Decay

The opponents submitted a report written by C. Daniel Vencill, a professor of economics at San Francisco State University. The report analyzed "the cumulative economic effects that will be caused by the two new Supercenters."²¹

"Together with two colleagues, Vencill...