Preservationists have won at least a temporary victory regarding a big-box home improvement store that is proposed for the site of an historic IBM building in San Jose.

The Sixth District Court of Appeal upheld a trial court’s decision to reject the City of San Jose’s environmental impact report for a proposed Lowe’s Home Improvement Warehouse because of an inadequate analysis of a reduced-size project alternative. The city had accepted Lowe’s contention that any modification to the proposed 162,000-square-foot, single-story, rectangular structure with an adjacent surface parking lot was not feasible.

But the Sixth District ruled, “Neither the FEIR [final environmental impact report] nor the administrative record contains any meaningful detail or independent analysis of the validity of Lowe’s claim that the reduced-sized alternative is infeasible, and the City Council made no specific finding validating that claim.”

More than three years ago, Lowe’s proposed one of its standard big boxes for an 18.75-acre site owned by IBM near Poughkeepsie and Cottle roads in south San Jose. The site contains Building 025, a 69,000-square-foot structure consisting of five wings connected by a narrow spine. Constructed during the mid-1950s, the building is considered an excellent example modern industrial architecture. In addition, IBM engineers invented the “flying head” disk drive, a major advance in computer technology, in Building 025.

Lowe’s proposed to demolish Building 025. The company would build its store, garden center and parking lot on 13 acres, and later develop additional retail space on the rest of the site. The San Jose Planning Commission voted to certify the EIR, but the Preservation Action Council (PAC) appealed to the City Council. The preservation group argued that the EIR did not consider project alternatives that would allow Lowe’s to build a full-sized store and garden center while still preserving Building 025. The City Council denied the appeal, certified the EIR and approved the project.

Preservationists then filed a lawsuit alleging the city had violated the California Environmental Quality Act (CEQA) by failing to analyze a reasonable range of alternatives, not adopting reasonable mitigation measures and alternatives, and not responding to comments suggesting feasible alternatives.

Santa Clara County Superior Court Judge Leslie Nichols ruled for PAC, finding that there was not substantial evidence to reject a reduced-scale project alternative, that an alternative presented by PAC was “substantially different” from alternatives in the EIR and deserved study, and that the city had not adequately responded to comments. In an appeal filed by Lowe’s, IBM and the city, the Sixth District affirmed the trial court’s decision.

The EIR had included a “project design alternative” that provided the square footage desired by Lowe’s but in a two-story configuration. The EIR also considered a couple variations of a “reduced-scale” store of 94,000 square feet. All of the alternatives would allow for retention of most or all of Building 025.

Lowe’s responded that it has only two project sizes — 162,000 square feet and 137,000 square feet — and that it builds only single-story facilities with surface parking. Because San Jose is a large city, it must have the 162,000-square-foot model. Anything else would be infeasible because it would put Lowe’s at a competitive disadvantage, the company contended.

The city apparently accepted Lowe’s contentions at face value. The City Council, which addressed only the two-story alternative, found that the project would cause “significant and unavoidable” impacts to historic resources but that no feasible alternatives had been proposed. The council also adopted findings of overriding consideration based on the project’s economic benefits.

The Sixth District found the city’s approach lacking.

“The sole basis mentioned in the FEIR to support the proposition that the reduced-size alternative was infeasible was Lowe’s belief that a smaller store would place it at a ‘competitive disadvantage’ in a ‘large market such as San Jose,’ due to its inability ‘to meet the demands and requirements of a large market store in terms of throughput and merchandise availability,’” Justice Nathan Mihara wrote for the court.

“The mere fact that an alternative might be less profitable does not itself render the alternative infeasible unless there is also evidence that the reduced profitability is ‘sufficiently severe as to render it impractical to proceed with the project,’” Mihara continued, citing Citizen of Goleta Valley, v. Board of Supervisors, (1988) 197 Cal.App.3d 1167, 1181. “The administrative record does not contain any evidence that the reduced-size alternative would be so much less profitable and produce so many fewer tax dollars that the project would be impractical.”

The court also found that the EIR’s discussion of the reduced-size alternative was unclear because the size of the alternative was ambiguous.

The court rejected PAC’s contention that its alternative was substantially different from those in the EIR, but the court agreed that the city’s responses to comments regarding alternatives “appear inadequate.”

After the appellate panel issued its ruling, city officials said they would release a revised EIR this fall.

The Case:
Preservation Action Council v. City of San Jose, No. H028201, 06 C.D.O.S. 7205, 2006 DJDAR 10233. Filed August 8, 2006.
The Lawyers:
For PAC: Susan Brandt-Hawley, (707) 938-3908.
For the city: Nora Frimann, city attorney’s office, (408) 277-4454.
For Lowe’s: Arthur Friedman, Steefel, Levitt & Weiss, (415) 788-0900.
For IBM: Ronald Van Buskirk, Pillsbury, Winthrop, Shaw, Pittman, (415) 983-1000.