Sixth District Court of Appeal Upholds Adoption of Environmentally Superior Alternative Project Including Reduced Percentage of Affordable Housing

June 3rd, 2021

By: Johannah Kramer



In Carmel Valley Ass’n v. County of Monterey (2021) 2021 Cal.App.Unpub. LEXIS 3286, the Sixth District Court of Appeal reversed a decision granting a petition of mandate against the County of Monterey’s (County) approval of an environmentally superior alternative to a proposed mixed-use residential subdivision project (Project). The decision was issued on May 19, 2021, so any request for publication under Cal. Rules of Court 8.1120 is due by June 8, 2021.

The Project was initially proposed in 2004 as a 281-unit mixed use residential subdivision project in Monterey County. Under the proposal, 50 percent of the residential units would be deed restricted affordable and workforce units. In 2010, the County adopted a General Plan update (2010 General Plan) which included a policy requiring 25 percent of new housing developments to be made available to low income households and adopted a specific plan for the Project area with a provision capping subdivisions at 190 units. The 2010 General Plan also called for the development of a Development Evaluation System by October 2011, but this had not occurred by the 2018 trial.

In 2016, following circulation of the EIR, which still described the Project as a 281-unit subdivision, the County’s Board of Supervisors approved a 130-unit project alternative with 20 percent set aside for moderate-income inclusionary units as the environmentally superior alternative. Conterminously, the Board of Supervisors amended the General Plan to reduce the minimum percentage of affordable housing in the Project area to 20 percent and rezoned most of the Project area to medium density residential. It also made findings to support exempting the Project from the County’s Inclusionary Housing Ordinance.

Petitioners filed suit, alleging that the EIR’s project description was unstable and shifting, that the developers had abandoned the initial 281-unit proposal in favor of the 130-unit alternative, and that the EIR failed to analyze a reasonable range of alternatives. Petitioners also alleged the County violated its General Plan policy related to inclusionary housing and new developments. The trial court granted the petition, reasoning that while the project description itself was stable, the Project history revealed that the 130-unit alternative effectively replaced the Project as the true project under consideration, and that the project description inaccurately described the proposed project. The court also ruled that the EIR’s analysis of project alternatives did not satisfy CEQA because “the EIR effectively examined only a single feasible alternative.”

Petitioners also challenged the County’s decision to exempt the Project from its Inclusionary Housing Ordinance, the County’s failure to bring its Inclusionary Housing Ordinance into compliance with the 2010 General Plan within a reasonable time, and the County’s failure to timely develop a Development Evaluation System. The trial court ruled in favor of Petitioners on the first two challenges, but rejected the challenge regarding the Development Evaluation System. Both Project developers and the County appealed, and Petitioners cross appealed.

Adequacy of the Project Description

Petitioners argued the project description, which described a 281-unit subdivision, violated CEQA because that version of the Project had essentially been abandoned in favor of the 130-unit alternative. Petitioners further argued that the project description conflated the 281-unit project and 130-unit alternative, which created confusion and a barrier to public participation.

Applying de novo review, the Court of Appeal explained that a project description must include the items mandated under CEQA Guidelines section 15124 and must provide an “accurate, stable and finite project description, [which] is the sine qua non of an informative and legally sufficient EIR,” citing South of Market Community Action Network v. City and County of San Francisco (2019) 33 Cal.App.5th 321, 332 (South of Market). Further citing South of Market, the Court stated that CEQA “not designed to freeze the ultimate proposal in the precise mold of the initial project” and emphasized that “‘[c]hanging a project to reduce or avoid environmental impacts, such as by reducing the number of residential units, is ‘one of the key purposes of the CEQA process.’” The Court then distinguished cases where the project description was found inadequate. In County of Inyo v. County of Los Angeles (1977) 71 Cal.App.3d 185, the actual project was “vastly wider” than that in the initial project description, “which ‘frustrated CEQA’s public information aims.’” In Washoe Meadows v. Department of Parks & Recreation (2017) 17 Cal.App.5th 27, there was no stable project description because 5 dramatically different projects were described in the DEIR. And in Stopthemillenniumhollywood.com v. City of Los Angeles (2019) 39 Cal.App.5th 1, 18 the project description was inadequate because it merely presented “different conceptual scenarios” for development.

Defining the Project as “a residential subdivision of approximately 40 acres including affordable housing and mixed uses, located on an approximately 80-acre portion of a former golf course in the Carmel Valley,” the Court found that the project description remained accurate and stable throughout the EIR process. The two changes in the adopted alternative simply reduced the number of units and reduced the percentage of affordable housing from 50 percent to 20 percent. This downsizing, in the Court’s view, reduced or avoided environmental impacts, meeting one of the key purposes of the CEQA process. The Court further found that Petitioners failed to demonstrate that a project description is inaccurate where the proposed project becomes potentially infeasible during the environmental review process and an environmentally superior project alternative is selected for approval.

Adequacy of the Project Alternatives

The EIR included numerous alternatives to the 281-unit Project. Petitioners alleged the alternatives analysis was inadequate, arguing that the true project was the 130-unit alternative. They also argued that the EIR did not contain a reasonable range of alternatives since numerous alternatives exceeded the specific plan cap, which Petitioners argued made those alternatives infeasible. The Court rejected the argument that the 130-unit alternative was effectively the true project; therefore, the alternatives to the 281-unit project were adequate. The Court then rejected Petitioner’s infeasibility arguments because “the actual infeasibility of a potential alternative does not preclude the inclusion of that alternative among the reasonable range of alternatives.”

Compliance with the County’s Inclusionary Housing Ordinance

The Court upheld the County’s finding that “unusual or unforeseen circumstances” existed which allowed for modification of the requirements of the Inclusionary Housing Ordinance under the terms of the County’s Code of Ordinances. The record included letters from financial lenders expressly stating that financing would be infeasible if the existing low- and very low-income housing requirements were applied to the 130-unit project. The Court found these letters constituted substantial evidence supporting the County’s finding such that the County acted within its authority to exempt the Project from the affordable housing requirement in order to avoid “unusual or unforeseen circumstances” which would result in the Project’s financial infeasibility.

Failure to Amend the Inclusionary Housing Ordinance to be Consistent with the 2010 General Plan

The County’s 2003 Inclusionary Housing Ordinance provides a 20 percent inclusionary housing requirement, while the 2010 General Plan added a 5 percent workforce requirement, increasing the overall requirement to 25 percent. This inconsistency had not been resolved by the 2018 trial. The trial court viewed the seven-year delay in amending the ordinance to maintain consistency with the General Plan as arbitrary and capricious, and ordered the County to amend its Inclusionary Housing Ordinance to achieve General Plan consistency.

The County alleged that it exercised its discretion to take a comprehensive approach to updating its ordinances to comply with its numerous affordable housing General Plan policies, rather than simply amending the 2003 ordinance to add an additional 5 percent workforce affordability requirement. The Court agreed, after noting deference is afforded to decisionmakers in quasi-legislative proceedings and that the petitioner bears the burden of proof under Code of Civil Procedure section 1085 mandate proceedings to establish the agency’s decision was arbitrary, capricious, entirely lacking in evidentiary support, unlawful, or procedurally unfair. The County did not have a mandatory duty to amend the 2003 ordinance because, as a zoning ordinance concerning affordable or inclusionary housing, it was a legislative act. As such, the County was bound by the “reasonable time” provision of Government Code 65860, which requires a temporary inconsistency between a preexisting zoning ordinance and an applicable general plan to be resolved in a time appropriate based on the particular circumstances of the case. Here, the County was working to update other portions of its inclusionary housing policies as well as its General Plan Housing Element during the seven-year period after the 2010 General Plan was adopted. The Court found that the County’s delay in amending its Inclusionary Housing Ordinance was reasonable, given these ongoing updates, and held that Petitioners failed to show the County’s decision to delay was arbitrary, capricious, entirely lacking in evidentiary support, unlawful, or procedurally unfair.

Failure to Timely Establish a Development Evaluation System

On cross-appeal, Petitioners argued that the trial court erred in rejecting its claim that the County violated its mandatory duty under the 2010 General Plan to timely establish a Development Evaluation System (which would create a method for decisionmakers to evaluate developments of five or more lots or units, and specifies that certain projects must include 35 percent affordable/workforce housing). The Court rejected this argument. The Court explained that requirements relating to the time within an act must be done are directory, unless a “contrary intent is clearly expressed” or there is a penalty or consequence for noncompliance. Therefore, while the 2010 General Plan imposed a one-year deadline for establishing the Development Evaluation System, this was a directory, not mandatory provision. This distinction provided the County discretion to set its own timeline for establishing the Development Evaluation System.

Key Points: Adoption of an environmentally superior alternative furthers one of CEQA’s key purposes and does not render a project description inaccurate or unstable. When challenging an agency’s delay in undertaking a legislative act or meeting a directory (as opposed to mandatory) deadline, petitioners must meet their burden of establishing that the agency’s lack of action is arbitrary, capricious, entirely lacking in evidentiary support, unlawful, or procedurally unfair.