LOS ANGELES _ The California Supreme Court has heard oral arguments in two unrelated land use cases that could have profound impacts for planners, developers and property owners.
One case involves a City of Hanford zoning ordinance that restricts who may sell furniture; the second case concerns whether an airport land use compatibility plan is subject to environmental review. The court heard oral arguments in both cases on the same day in early April. Decisions are due by July 3.
The zoning case involves a four-year-old Hanford ordinance that prohibits the selling of furniture outside the downtown district. The ordinance contains a significant exception: Stores of at least 50,000 square feet located in an outlying planned commercial (PC) zoning district may devote up to 2,500 square feet to furniture sales.
Adrian and Tracy Hernandez, owners of Country Hutch Home Furnishings and Mattress Gallery, a 4,000-square-foot store in the PC zone, filed a lawsuit claiming that the ordinance violated the constitution's equal protection clause. A trial court judge ruled for the city, but the Fifth District Court of Appeal struck down the ordinance because the disparate treatment of large and small stores in the same zone "does not bear a rational relationship to the goal of preserving downtown Hanford" (see CP&DR Legal Digest, May 2006).
The Fifth District's ruling appeared partially at odds with the same court's decision, issued only one week earlier, to uphold a City of Turlock ordinance regulating big box stores' sale of groceries in Wal-Mart Stores, Inc. v. City of Turlock, (2006) 138 Cal.App.4th 273. Cities and counties urged the state Supreme Court to overturn the Hanford decision, saying it would hinder their planning abilities.
During oral argument, Steven Mayer, Hanford's attorney, said that the ordinance serves two goals: It protects the economic vitality of downtown and provides a "hospitable environment" for department stores such as Gottschalk's, Target and The Home Depot. He described the ordinance as "a sort of grandfather clause" for existing department stores. As long as restraining trade is not the only reason for an ordinance, it is reasonable and constitutional, argued Mayer, who cited the Turlock decision for support.
But Russell Ryan, the Hernandez's attorney, said there was no rational basis for the city to single out small stores, and that the ordinance was not a grandfather clause, as new department stores have moved in since the city adopted the law.
"They discriminated specifically against the smaller retailers," Ryan said of city officials. "They were encouraging the very people [large stores] who impact the city the most because of their buying power."
The seven justices appeared divided. Justice Joyce Kennard pressed Mayer about the importance of case law that says cities cannot use zoning to regulate competition. Mayer responded by arguing that previous cases say only that regulation of competition cannot be the sole purpose for an ordinance. In fact, Mayer said, the number of furniture stores has increased from nine to 14 since the city adopted the ordinance, and city officials tried to steer the Hernandezes to a prime location at the city's busiest intersection.
"If the city was into prohibiting competition, they did a very bad job of it," Mayer told the court.
Ryan met significant resistance from Chief Justice Ronald George, who said there was evidence that the city was trying to keep department stores which threatened to leave town if they were prohibited from selling furniture. Ryan responded that there was no suggestion in the record that such stores would not be allowed to sell furniture. He also repeated his contention that a "proliferation of big box stores" would hurt downtown more than small stores would.
Afterward, Ryan conceded, "Chief Justice George doesn't seem sympathetic to our arguments." Still, Ryan said he was able to make his two primary points — that the sort of furniture sold at the various stores is not different, and that his client offers no more threat to downtown than Wal-Mart does.
"The landowner always has a bit of an uphill battle because the city or county always has the discretion," said Ryan. "Obviously, every city and county in the state has an interest in what happens in this case."
Mayer agreed the case is crucial to local government. "If we prevail, the court will re-affirm the traditional deference given to cities and counties in land use zoning." But a ruling upholding the appellate court decision would be "a drastic change in the law," he said.
The second case concerns the Travis Air Force Base Land Use Compatibility Plan (TALUP). The Solano County Airport Land Use Commission adopted the plan in 2002. It essentially called for freezing existing general plan designations and zoning within a compatibility zone — based on airplane noise levels — covering hundreds of thousands of acres from Vallejo to Dixon. The commission concluded the plan was not a "project" under the California Environmental Quality Act and therefore was exempt from environmental review.
Muzzy Ranch Company, which owns 5,000 acres in the vicinity of Travis, sued, arguing that the Commission should have completed an environmental study. A Solano County Superior Court judge ruled for the Commission, but the First District Court of Appeal ruled that the Commission should have studied the plan's impacts, specifically the likelihood that the plan would displace housing development (see CP&DR Legal Digest, March 2005).
During oral argument, the state Supreme Court appeared ready to uphold the appellate court ruling. The justices hit Deputy County Counsel James Laughlin with numerous questions and interruptions. Several justices questioned the factual basis for the conclusion that the plan is not a project for CEQA purposes.
If the Commission freezes zoning in one area, "would that not impact the environment beyond the area of its control?" asked Justice Kathryn Werdegar. "If you can't build here, you're going to increase development there."
Laughlin said that Werdegar was making a supposition that reached past the Commission's control. He argued that the plan is merely advisory — not regulatory — because the county and four cities covered by the plan may choose to override the plan's recommendations. He also said the plan does nothing more than maintain the status quo, which could not be a project under CEQA.
The justices were clearly skeptical and several pressed Laughlin about whether a "common sense" exemption to CEQA could apply. Laughlin said there was evidence to support a common sense exemption, but Justice Marvin Baxter asked how such evidence could exist when the Commission undertook no analysis at all.
Richard Jacobs, the landowners' attorney, contended the plan is not merely advisory and actually trumps local general plans. "I think it's essentially a multi-jurisdictional general plan," he told the court, in that the compatibility plan guides the long-term development of the county.
The compatibility plan covers hundreds of square miles and, under state law, cities and the county must comply unless they make certain findings, he argued. "There are a number of conflicts between this plan and the general plans of Solano County and the four cities," Jabobs contended.
Afterward, Jacobs called this "the CEQA case of unintended consequences." It may appear that the Commission's plan is environmentally beneficial, when in fact it blocks development from logical infill areas near Travis, he said.
"In many ways, it's the opposite of smart growth and urban infill," Jacobs said. "They're forcing you to develop in suburban or more rural locations."
Jacobs questioned how a land use plan that cost more than $500,000 — and whose main purpose was to preclude development around Travis — could be exempt from environmental review. "It puts a very significant portion of the county off-limits to future residential development," he contended.
Laughlin said he was uncomfortable with the court's focus on a common sense exemption. "It's never been our position that it applied. We never briefed it, and the other side never briefed," he said.
A ruling that CEQA applies would make airport compatibility planning more expensive and weaken the commission's purpose, which is to ensure airport operations and protect the public, Laughlin said.
"They are supposed to protect people. But if they have to apply CEQA, does that mean they will have to water down their recommendations?" Laughlin continued, "Do we have to weigh the environmental impacts of a recommendation that schools shouldn't be located at the end of a runway?"
The state Supreme Court is considering the case after three recent appellate court rulings provided a less-than-clear definition of a "project" under CEQA (see CP&DR Legal Digest, April 2007).
The cases are Hernandez v. City of Hanford, No. S143287, and Muzzy Ranch Co. v. Solano County Airport Land Use Commission, No. S131484.