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SF Redevelopment Project Survives CEQA, Blight Challenges

In a case that touched on redevelopment law, the California Environmental Quality Act and general plan compatibility, an appellate court has upheld San Francisco's handling of a project on the site of the historic Emporium department store. The court found that the city had proven the existence of blight adequately enough to place the site in a redevelopment project area, that the city had complied with CEQA and that the project was compatible with the city's general plan. A unanimous three-judge panel of the First Appellate District, Division Three, rejected every argument that historic preservation advocates threw at the project. The case is important because it is the first published case in a while that upholds a city's decision to place territory in a redevelopment project area, said Michael Zieshke, the city's attorney. Over the last two years, courts have rejected cities' blight findings four times in Graber v. City of Upland, 99 Cal.App.4th 424 ,CP&DR Legal Digest August 2002; Beach-Courchesne v. City of Diamond Bar (2000) 80 Cal.App.4th 388, CP&DR Legal Digest, June 2000; Friends of Mammoth v. Town of Mammoth Lakes Redevelopment Agency, (2000) 82 Cal.App.4th, 511, CP&DR Local Watch and Legal Digest, August 2000; and County of Riverside v. City of Murrieta, (1998) 65 Cal.App.4th 616, CP&DR Legal Digest, August 1998. "This case shows that if you have a good, solid record with ground investigations, you can prove blight exists," Zieshke. But Susan Brandt-Hawley, the attorney for preservationists, said the CEQA aspects of the case were foremost. Specifically, she said the court made a mistake by upholding the city's decision to rely on an in-house report regarding the economic feasibility of project alternatives, rather than placing a feasibility study in the environmental impact report. "If you are going to deny alternatives to a project based on economic feasibility, then you have to discuss that feasibility in the EIR," said Brandt-Hawley, who requested a rehearing on that point. "This court went way too far. I think they are out of line with 30 years of case law." But Zieshke said all the court did was confirm that a city can rely on an economic feasibility study that is in the administrative record. There is no basis in CEQA for Brandt-Hawley's argument, he contended. At issue was a major office and commercial project on Market Street in downtown San Francisco, near the Moscone Center. In 1996, the Emporium department store chain went out of business. That meant the closure of the store in San Francisco, which was rebuilt in 1908 after the earthquake and fire. The Beaux Arts building – which featured a three-story rotunda topped by a glass dome -- was one of the city's most treasured historic structures, and was eligible for a number of preservationist listings. However, the building sat vacant after the department store closed. The building's owner, Federated, joined with Forest City and the city's redevelopment agency on a proposal to build the whole block, tearing down 11 structures and keeping just the façade of the Emporium building (see CP&DR Economic Development, November 2000). They planned to build a Bloomingdale's department store, other retail and office space, and a hotel. During the later part of 2000, the city certified an EIR, adopted a statement of overriding considerations and amended the Yerba Buena Center Redevelopment Plan to include the project site. Preservationists urged the city to keep more of the Emporium building in tact, but they lost in the planning process. They filed a lawsuit based on numerous grounds, but San Francisco Superior Court Judge James Robertson ruled for the city. The First District upheld the decision. On appeal, the project opponents contended the EIR should have included an economic feasibility of project alternatives, should have considered more alternatives, and should ignored the impacts of a projected parking shortage. The appellate court found no reason to put the economic feasility study, which was prepared by Sedway Group and reviewed by Keyser Marston Associates, in the EIR. "[A]lthough CEQA plainly provides that a reasonable range of alternatives must be included in the EIR, the statute does not require the EIR itself to provide any evidence of the feasibility of those alternatives, much less an economic or cost analysis of the various project alternatives and mitigating measures identified by the EIR," Presiding Justice William McGuiness wrote for the court. "Instead it does require the public agency to make findings and determinations as to the feasibility of such alternatives or mitigation measures with respect to each significant environmental impact which the EIR identifies, based on substantial evidence set forth anywhere ‘in the record.'" The court dismissed the contention that there were feasible alternatives the project proponents ignored, pointing to the economic feasibility study that was in the administrative record. The court further said that the city could properly decide that a lack of parking spaces was not an environmental impact, and ruled that the city's "transit first" was sufficient mitigation for the environmental impacts of the lack of parking, such as increased air pollution. "That is important to cities," Zieshke said of the parking ruling. "You don't have to provide parking under CEQA." In their challenge to the redevelopment aspects of the project, opponents contended the area was not "blighted." But the court found that the city had proven both physical and economic blight existed. "On the basis of their seismic condition alone, eight of the twelve buildings in the Emporium Site Redevelopment Area are particularly susceptible to extensive damage or collapse in an earthquake, and meet the first statutory criterion for physical blight, namely of being ‘unsafe or unhealthy for persons to live or work,'" McGuiness wrote, citing Health and Safety Code Section 33031. "In addition, deteriorated and obsolete design conditions of the existing buildings in the project area ‘prevent or substantially hinder' their ‘economically viable use' as indicated by the high incidence of vacant, abandoned or underutilized buildings." Zieshke noted that unlike the cases from Mammoth Lakes, Diamond Bar, Upland and Murrieta, in this case there was never any question about the area being "substantially urbanized." Plus, in the other cases there was a perception of cities abusing redevelopment for financial gain. But in the Bloomingdale's project, there was no question it was true redevelopment, he said. The court also ruled that the project was compatible with the city general plan regulations regarding historic preservation. The Case: San Franciscans Upholding the Downtown Plan v. City and County of San Francisco, No. A095827, 02 C.D.O.S. 10062, 2002 DJDAR 11417. Filed September 30, 2002. The Lawyers: For plaintiffs: Susan Brandt-Hawley, (707) 938-3908. For the city: Michael Zischke, Morrison & Foerster, (415) 268-6718; and Jonathan Bass, Coblentz, Patch, Duffy & Bass, (415)
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