The City of Fresno's policy of not requiring mitigations for developments' impact on state highways is illegal, according to the Fifth District Court of Appeal.

In an expansive ruling, the court stepped into the middle of the long-running feud between Fresno and Caltrans over mitigation fees. Fresno has refused to impose fees on new development to pay for highway improvements, because city officials said Caltrans could not justify the fees.

"The policy is illegal because CEQA [California Environmental Quality Act] does not allow agencies to approve projects after refusing to require feasible mitigation measures for significant impacts," Justice Rebecca Wiseman wrote for the court.

The unanimous three-judge panel also rejected the city's baseline for studying the project that brought about the litigation. The project is mix of offices, a shopping center and apartments on nearly 40 acres. In the environmental impact report, the city compared the impact of this project with impacts expected under full build-out of existing zoning for an office park, rather than comparing the project with the site's existing condition as vacant land. The court determined that the EIR was misleading.

In December 2004, the Fresno City Council amended the general plan and the Woodward Park community plan, rezoned property and approved Zinkin Development Company's proposal for a 39-acre site at North Friant Road and North Fresno Street, one block off Highway 41. The project called for 274,000 square feet of offices, a 203,000-square-foot shopping center and, tentatively, 20 apartments. The city certified an EIR for the project and adopted a statement of overriding considerations because a variety of significant impacts could not be mitigated.

The Woodward Park Homeowners Association and Valley Advocates sued, arguing that the city failed to require feasible mitigation for significant cumulative traffic impacts, performed an inadequate analysis of cumulative air quality impacts and project alternatives, rendered the general plan internally inconsistent and inconsistent with the community plan, and used an improper procedure to adopt the statement of overriding considerations. Fresno County Superior Court Judge Wayne Ellison rejected all of the project opponents' claims. The groups appealed a portion of the ruling, but the Fifth District actually expanded the issues.

The court started with the environmental baseline. The city and developer argued that the EIR was adequate because it evaluated the project's impacts in relation to the vacant land and a hypothetical large office park permissible under existing zoning. That approach would have been acceptable, the court ruled, but it wasn't what happened. Instead, the EIR used the comparison with hypothetical development to obscure the project's true impacts, the court found.

"[T]he EIR never presented a clear or complete description of the project's impacts compared with the effects of leaving the land in its existing state," the court ruled. "Readers who have been told that the air pollution impact is slight and that the traffic generated will be less than the given benchmark should not have to stop and puzzle it out that these conclusions are based on a comparison with a large office park that is not, in fact, there. Those who did puzzle it out were still left wondering whether the impacts would be slight or major in relation to vacant land."

The court found the EIR's required "no project" alternative invalid for similar reasons: The no project alternative was based on full build-out under existing zoning, not on leaving the site undeveloped.

The court continued the theme into its consideration of the statement of overriding considerations. The court found that the EIR presented project alternatives as substantially more intensive than the proposed project, yet the statement of overriding considerations dismissed the alternatives as smaller and less economically beneficial. This misled the public, the court determined.

The real difference between the project and alternatives was the inclusion of a shopping center in the Zinkin plan. "If the statement of overriding considerations had said accurately that the alternatives proposed ‘no shopping center or a smaller shopping center' instead of inaccurately ‘no development or development to a lesser degree,' it would have made a far different impression on the public. We do not have to look far to find a reason why the city might not have wanted to use the accurate language since many project opponents, especially neighbors, concentrated their fire on the shopping center component of the project," Justice Wiseman wrote for the court.

Moreover, the city did not make the statement of overriding considerations available to the public prior to the public hearing at which the City Council approved the project. At that hearing, a city planner "misrepresented the contents of the statement" to a skeptical councilman, the court found.

After identifying all of these legal inadequacies, the court considered the issue of highway mitigation. The city and Caltrans had argued about the number of peak hour trips the project would generate and the assessment of fees to fund offsetting Highway 41 improvements. Ultimately, Caltrans insisted on $306,000 to fund the project's fair-share of an $11 million southbound auxiliary lane. City staff members, however, advised the Planning Commission and the City Council that Caltrans had not provided adequate proof of a nexus between the project and the mitigation fee — and that charging such a fee would therefore be illegal. The city imposed no impact fee. In fact, the city has refused similar Caltrans' fee requests since at least 1998.

"Simply stated: The city's practice is illegal," the court ruled. "There is no foundation for the idea that the city can refuse to require mitigation of an impact solely because another agency did not provide information. The seed of the city's confusion, as evidenced in the city staff report to the Planning Commission and City Council, is its belief that the city needs to require mitigation of this category of impacts only if Caltrans proposes a mitigation measure and then proves to the city's satisfaction that the measure is legal. This is not how CEQA works."

"Here is another way of putting the point. The city may view this matter as a conflict between it and Caltrans. In referring to Caltrans in the context of this issue at oral argument, counsel for the city said it was ‘their issue' and argued that this court should not reach it because Caltrans had not appeared as a party. In reality, the conflict between the city and Caltrans is irrelevant to the city's obligation to require mitigation of impacts. The city's failure to resolve this conflict and require mitigation of these acknowledged impacts only punishes the public. CEQA does not permit this to happen," the court concluded.

Although it rejected the EIR, the court did not find the project in conflict with the general and community plans.

The Case:
Woodward Park Homeowners Association, Inc. v. City of Fresno, No. F049481, 07 C.D.O.S. 3914, 2007 DJDAR 4948. Filed April 13, 2007.
The Lawyers:
For the homeowners association: Richard Harriman, (559) 226-1818.
For the city: Geralyn Skapik, Burke, Williams & Sorensen, (951) 788-0100.
For Zinkin Development: James McKelvey, Motschiedler, Michaelides & Wishon, (559) 439-4000.