A new environmental impact report is not required for a drastically modified high-rise project proposed in downtown Los Angeles, because there is substantial evidence that a 2005 addendum to a 1989 EIR was sufficient, the Second District Court of Appeal has ruled.

In its decision, the court makes two things perfectly clear: The "fair argument" test does not apply when the question concerns the need for a supplemental EIR, and the Third District Court of Appeal got a similar case wrong.

The decision came in a lawsuit over a long-planned project on 6.3 acres of parking lots next to the Harbor Freeway, near Staples Center. In 1990, nine years before Staples Center opened, the city approved a 2.7-million-square-foot development of three 30-story towers, a 36-story tower and a 7-story structure. Primarily office space, the project also was to have a hotel, some retail facilities and possibly a cultural center. The EIR, certified in 1989, concluded the project would result in unavoidable, significant impacts to traffic, air quality, water, sewer capacity, solid waste, and police and fire services.

Project approval was followed by litigation, a weak office market, numerous tweaks to the project — but no actual construction. Finally, in 2004, the developer proposed changing the project primarily to residential. In late 2005, after IDS Equities acquired the project, the city approved the 3.2-million-square-foot L.A. Metropolis project of four towers ranging from 350 to 620 feet in height. The towers would contain up to 836 residential units, a hotel of 480 rooms, 1 million square feet of office space and a small amount of ground-floor retail in all the buildings. The city also certified a 390-page addendum to the original 1989 EIR and a 2000 addendum. The 2005 addendum found that most of the earlier unavoidable impacts would be solved by the switch to a primarily residential project. Only air quality and construction noise were identified as significant unavoidable impacts.

In January 2006, Mani Brothers Real Estate Group, an office real estate investment company, filed suit arguing that the EIR addendum was inadequate for the revised project and that a supplemental EIR was required. Los Angeles County Superior Court Judge David Yaffe ruled that the 2005 environmental document was adequate except for its analysis of impacts to police services. He ordered the city to prepare an "SEIR that deals with the necessity for increased police services required by the new, predominately residential project."

Both sides appealed, and a unanimous three-judge panel of the Second District Court of Appeal, Division Two, upheld the lower court.

Mani Brothers relied heavily on Save Our Neighborhood v. Lishman, (2006) Cal.App.4th, 1288. In that case, the Third District Court of Appeal rejected the City of Placerville's use of an addendum to a negative declaration for a revised project. The court said the approach was not legal because the revised project was really a "new project" that was unrelated to earlier versions, except for the fact that they were proposed for the same site (see CP&DR Legal Digest, September 2006). By law, the court ruled, the new project required a fresh environmental review.

In the case at hand, the Second District called the analysis in Save Our Neighborhood "flawed" and not appropriately deferential to the governing body. What matters, the Second District said, is not the project details, but the environmental impacts.

"Labeling a project a ‘new' project, as distinguished from a ‘modified' project, and finding such a label determinative, as the court did in Save Our Neighborhood, imposes a new analytical factor beyond the framework of CEQA," Presiding Justice Roger Boren wrote for the court. "Particularly here where there is a previously certified EIR, changes in the size, ownership, nature, character, etc. of a project are of no consequence in and of themselves. Such factors are meaningful only to the extent they affect the environmental impacts of a project."

What matters, according to the court, is that there was substantial evidence supporting the city's decision to use an addendum. The lower-threshold "fair argument" test does not apply. In an instance such as this one, where the question concerns subsequent environmental review, the court views the record "‘in a light most favorable to the city's decision in order to determine whether substantial evidence supports the decision not to require additional review,'" Boland wrote, citing Friends of Davis v. City of Davis, (2000) 83 Cal.App.4th 1004 (see CP&DR Legal Digest, October 2000)

While most of the addendum passed the substantial evidence test, the analysis of impacts on police services failed. The mitigation measures in the 2005 addendum — private security guards, electronic surveillance equipment, card-key entry systems — were no different than mitigations identified in 1989, when the impact on police services was deemed unavoidable and significant, the court noted.

"[T]he 2005 addendum fails to explain how the mitigation measures, found unable to mitigate the original project's impacts in the 1989 EIR, are now magically able to mitigate the impacts of the larger and mostly residential modified project," Boren wrote.

An SEIR to evaluate the impacts on police services is required, the court concluded.

The Case:
Mani Brothers Real Estate Group v. City of Los Angeles, No. B194309, 07 C.D.O.S. 9317, 2007 DJDAR 11908. Filed August 2, 2007.
The Lawyers:
For Mani Brothers: Thomas Winfield, Brown, Winfield & Canzoneri, (213) 687-2100.
For the city: Siegmund Shyu, city attorney's office, (213) 978-8191.
For IDS Equities: Amy Nefouse, DLA Piper, (619) 699-2693.