The City of Santa Clara (City) approved a long and detailed “term sheet” for the development of a professional football stadium. The Petitioner challenged the approvals claiming the “term sheet” constituted approval of a project as defined by CEQA. The trial court found for the City, holding that no EIR was required because approval of the “term sheet” was not approval of the project. The Petitioner appealed to the Sixth District Court of Appeal, arguing that based on the details in the “term sheet,” the statements made by the city council, and the amount of money already invested in the project, the “term sheet” was an approval of the project. The Appellate Court rejected that argument. In affirming the lower court’s decision, the Court of Appeal looked to Save Tara v. City of West Hollywood (2008) 45 Cal.App.4th 116, which directs a court to consider whether an action “viewed in light of all the surrounding circumstances,” commits a lead agency to a project “as a practical matter,” requiring action under CEQA. The Court held the term sheet did not constitute such a commitment. The Court found that the “term sheet” clearly expressed that the parties were only bound to continue negotiating; no binding contractual obligations were made as to the development of the stadium. The Court also explained that the statements by the city council reinforced the language of the term sheet itself, but did not commit the City to the project. Lastly, the Court concluded that the money invested by the City did not create a legal obligation to build the project.
Term sheets are common preliminary agreements entered into between agencies and project developers during project formulation. An agency may enter into such agreements, without CEQA review, so long as it does not commit itself to a project as a whole or to any particular features, thereby effectively precluding from consideration any alternatives or mitigation measures that CEQA would otherwise require the agency consider.