In Visalia Retail, LP v. City of Visalia (2018) 20 Cal.App.5th 1, the Fifth District Court of Appeal affirmed a trial court judgment maintaining a general plan amendment and accompanying EIR limiting commercial tenants to 40,000 square feet of space. A letter from a local commercial real estate agent predicting the cap would cause grocers to refuse to locate in the Neighborhood Commercial centers leading to a “downward spiral of physical deterioration” was insufficient to support a fair argument of an environmental impact.
On October 14, 2014, Visalia City Council approved a final EIR for the city’s general plan update establishing a 40,000 square foot cap on tenants in neighborhood commercial zones. Visalia Retail, LP brought suit claiming the potential for urban decay was not adequately addressed in the EIR. On May 9, 2016, the trial court denied the petition for writ of mandate. The property management company appealed the trial court decision.
Appellant claimed the EIR was insufficient for failing to consider potential for urban decay as large stores would be discouraged from establishing themselves in the neighborhood under the new restriction on square footage. The Court, unconvinced, found that CEQA is focused on significant environmental effects, not purely economic impacts. Relying on Joshua Tree Downtown Business Alliance v. County of San Bernardino (2016) 1 Cal.App.5th 677, the Court found CEQA environmental review of potential for urban decay is only appropriate where there is a potential for physical deterioration. Absent such a showing, CEQA is satisfied.
The primary evidence of urban decay submitted by Appellant was a letter prepared by a local commercial real estate agent who claimed the 40,000 square foot cap would discourage grocers from locating in neighborhood commercial centers, “which will cause vacancies, which in turn will result in urban decay.” The real estate agency offered the following support for these claims: (1) the real estate agent was personally unaware of any grocers willing to build new stores under 40,000 square feet; (2) a “typical” large grocer requires at least 50,000 square feet to profit at the site; (3) a recent line of 10,000 – 20,000 square feet stores was unsuccessful; and (4) three Visalia stores under 40,000 square feet went out of business.
The Court found the letter to be speculative, not raising to the level of substantial evidence on which a fair argument of urban decay could be predicted. First, the limit of the real estate agent’s personal knowledge does not preclude the existence of stores that may be willing to come into the area or have an atypical store size. Further, the fact that other stores were unsuccessful, some a quarter the size of the cap, is not evidence that stores will fail in the city in the future, especially absent discussion or explanation of why they failed. The letter demonstrated speculative causation and failed to show that urban decay would likely result from the cap.
Appellants also claimed the cap made the city’s general plan internally inconsistent for discouraging development in neighborhood commercial sites where the general plan encourages such infill. The Court, presuming the general plan amendment was correct under established precedent, clarified that “just because the general plan prioritizes infill development, avoiding urban sprawl, does not mean all of its policies must encourage all types of infill development. General plans must balance various interests and the fact that one stated goal must yield to another does not mean the general plan is fatally inconsistent.” Essentially, the general plan may give preference to infill that has a 40,000 square foot cap and still be internally consistent.
The Fifth District Court of Appeal affirmed the trial court judgement.
Evidence of economic impacts alone is insufficient to support a claim that a project will result in urban decay; urban decay need only be addressed by an EIR where there is potential for physical deterioration.
A single comment letter, unsupported by facts, explanation, or critical analysis, does not raise to the level of “substantial evidence of a fair argument” required by CEQA.