CITY COUNCIL: Findings for Council's Decision to Grant Appeal of Planning Commission Approval of EIR & Permits for Plaza del Mar

Meeting Date: 2 December 2008
Prepared by: Brian Roseth,
Planning Consultant

City Council
Agenda Item Summary

Name: Consideration of findings and the record of decision on the appeal of Planning Commission approval of an environmental impact report and project permits for the Plaza del Mar project located on the SE corner of Dolores Street and Seventh Avenue.

Description: On 4 November 2008, the City Council granted an appeal of the Planning Commission’s decision to certify the Environmental Impact Report and approve project permits for the Plaza del Mar project. The proposed action is to approve findings and record of decision to document the Council’s action.

Overall Cost:
City Funds: N/A
Grant Funds: N/A

Staff Recommendation: Adopt the findings and record of decision.

Important Considerations: On 4 November 2008, the City Council heard an appeal of the Planning Commission’s decision to certify the Environmental Impact Report and approve all project permits for the Plaza del Mar project. The Council granted part of the appeal and denied part. Staff was directed to prepare findings to document the action.

Attached are the findings and the specifics of the Council’s action. The Council should review these to verify that they are an accurate representation of the action.

Decision Record:
Planning Commission action on 10 September 2008; City Council reviews 4 November 2008.

Reviewed by:

__________________________ _____________________
Rich Guillen, City Administrator Date


CITY OF CARMEL-BY-THE-SEA
DEPARTMENT OF COMMUNITY PLANNING AND BUILDING
STAFF REPORT
TO: MAYOR MCCLOUD AND CITY COUNCIL MEMBERS
THROUGH: RICH GUILLEN, CITY ADMINISTRATOR
FROM: BRIAN ROSETH, PLANNING CONSULTANT
DATE: 2 DECEMBER 2008
SUBJECT: CONSIDERATION OF FINDINGS AND THE RECORD OF DECISION ON THE APPEAL OF PLANNING COMMISSION APPROVAL OF AN ENVIRONMENTAL IMPACT REPORT AND PROJECT PERMITS FOR THE PLAZA DEL MAR PROJECT LOCATED ON THE SOUTHEAST CORNER OF DOLORES STREET AND SEVENTH AVENUE.

On 4 November 2008, the City Council granted part of an appeal of the Planning Commission’s decision to certify the Environmental Impact Report (EIR) and approve all project permits for the Plaza del Mar project. There were several grounds for the appeal and it is the understanding of staff that all were accepted by the Council, except for the challenge regarding historic preservation.

The attached findings and record of the Council’s action are submitted for review and approval. As drafted, the Council action grants the appeal, overturns the Commission decisions to certify the EIR and approves all permits. The decision also provides guidance for the Commission on the interpretation of California Statutes regarding CEQA and affordable housing. The effect of the action is to remand the EIR and project permits to the Planning Commission for further review.

CITY COUNCIL FINDINGS FOR DECISION
Appeal of the Planning Commission’s Approval of the Plaza del Mar Project

BACKGROUND FINDINGS
1. The PDM project includes the following elements:
• 4,958 square feet of commercial space
• 5 market-rate condominiums
• 2 apartments affordable to low-income households, and
• 2 levels of underground parking, including a level of valet parking that will be a commercial business.

2. The project was reviewed through a lengthy public process that included two Environmental Impact Reports (EIRs) and three appeals. This action constitutes a fourth appeal.

3. The Revised Final EIR identified eight impacts. Seven of these were less-than significant or could be mitigated to less-than–significant. The remaining impact was on the City’s visual quality resources that would result from demolition of the Burde Building. The EIR classified this impact as significant. The public, professional architects and the local chapter of the American Institute of Architects identified this building as an important architectural resource1.

4. Pursuant to CEQA, when a project will have a significant adverse impact on the environment the choices available to the City are to:
• Deny the project
• Approve an alternative project that avoids the impact, or
• Determine that no alternative to the project is feasible and approve the project with findings that document the infeasibility and explain to the public why project benefits warrant approval in spite of the significant adverse environmental impact (Statement of Overriding Considerations).

5. On 10 September 2008 the Planning Commission certified the project EIR, approved all project permits and adopted findings supporting a Statement of Overriding Consideration to explain why the impact on visual quality was acceptable. The basis for the Commission’s action rested on two California affordable housing Statutes.

6. The first Statute (codified as California Government Code Section 65915) requires the City to grant “incentives or concessions” for projects that include specified amounts of affordable housing. Incentives or concessions can include waivers of City design standards, General Plan policies or Municipal Code provisions that, if applied, would make the affordable housing infeasible. The Statute does not specify how a city should determine the feasibility or infeasibility of affordable housing in this context. Cities are obligated to approve requested incentives or concessions unless very specific circumstances apply. The Planning Commission determined that for the proposed project, none of the special circumstances applied.

7. The Plaza del Mar project needed two waivers: approval to remove two significant trees2 and approval to alter the City’s required ratio between condominiums and apartments3. Given the Statute’s clear mandate to encourage affordable housing, the Planning Commission accepted at face value the applicant’s statements that affordable housing was feasible only if the requested incentives/concessions were approved. The Commission granted the two requested incentives/concessions.

8. The second Statute influencing the Commission’s decision (California Government Code Section 65589.5) mandates approval of projects that include affordable housing except under very limited circumstances. The Commission determined that none of the circumstances applied. The Commission, acting on the recommendation of the City’s planning staff and legal counsel, believed it was obligated to approve the project.

9. The Commission was faced with the challenge of harmonizing the requirements of the Public Resources Code (CEQA) and the Government Code (Affordable Housing Statutes). Acting on the recommendation of the City’s planning staff and legal counsel, the Commission approved the project and adopted findings to support a Statement of Overriding Considerations. The sole basis for these findings was the Commission’s perceived mandate to approve affordable housing projects.

10. On 24 September 2008 the Planning Commission decisions on approval of the demolition, certification of the EIR and project approval were appealed to the City Council and on 4 November 2008 the City Council heard the appeal.

11. The grounds for appeal4 were:
a. The Planning Commission was not obligated to approve concessions or incentives just because the project provided affordable housing. The lead sentence in the applicable Government Code section says “When an applicant seeks a density bonus for a housing development …[the] local government shall provide the applicant incentives or concessions for the production of [affordable] housing…” This language obligates approval of incentives or concessions only for projects that supply so much affordable housing that they require a density bonus. This project doesn’t.

2 The City’s Local Coastal Program and its Municipal Code prohibit removal of significant trees except under unusual circumstances that do not apply to the Plaza del Mar project.

3 The City requires at least a 1:1 ratio of apartments to condominiums. This helps implement the General Plan Housing Element which identifies that the City has abundant opportunities for owner‐housing and more limited opportunities for rental housing.

4 The original letter of appeal was supplemented by additional letters received on 27 October 2008 and 4 November 2008.

b. The project is proposing just seven units, just two of which are affordable to low-income households. The allowable density for the project site is 16 units. Since the Plaza del Mar project does not need a density bonus Section 65915 does not apply and granting the incentives or concessions would violate the City’s General Plan. Approving the developer’s request to reduce the number of required apartments and to build less than half the density allowed on the site runs counter to the intent of the statute which is to maximize housing production.

c. The section 65915 requires a finding that a requested incentive or concession is necessary to make the production of affordable housing feasible in the project. There is no evidence in the record to support such a finding other than the applicant’s own statement.

d. Even if the affordable housing statute does obligate approval of incentives or concessions it does not trump the requirements of CEQA. Section 65915 limits its own mandate by providing a caveat acknowledging CEQA: “nothing in this subdivision shall be interpreted to require a local government to waive or reduce development standards if …[it] would have a specific, adverse impact…[upon] the physical environment, and for which there is no feasible method to satisfactorily mitigate the …impact.

e. The aesthetic effects of a project are a valid topic for analysis in CEQA and can be the basis of a significant impact on the environment. The Plaza del Mar project will have a significant adverse impact on the City’s visual quality and there is no feasible way to mitigate the impact. These points are conceded in the EIR. Because of the statutory caveat in section 65915, the City is not obligated to grant the concessions/waivers to facilitate the proposed affordable housing.

f. The City retains its authority to deny the project because of its environmental impact on visual quality. This is consistent with the CEQA Guidelines. The Commission erred in adopting a Statement of Overriding Considerations premised solely on a conclusion that Section 65915 compelled project approval.

g. The existing building on the project should be adaptively reused and could accommodate condominiums and affordable apartments without demolition.

h. The applicant and the Planning Commission cite Section 65589.5 as mandating approval of the project because it qualifies as a “housing development project” that includes affordable housing.

The Commission erred because the project does not meet the definition of a “housing development project” specified in the statute. A “housing development project” is either entirely residential or it is a mixed-use project where non-residential uses are limited to “neighborhood commercial” and all commercial uses are limited to the first floor. “Neighborhood Commercial” is defined as “small scale general or specialty stores that furnish goods and services primarily to residents in the neighborhood”. As approved by the Commission, there are no limits on what can occupy the first floor commercial space and commercial uses are not limited to the first floor.

There is an entire level of parking that will be operated as a commercial use.
i. The EIR’s conclusion that there are no impacts to historical resources is not based on substantial evidence.

12. In response to the original letter of appeal the applicant’s representative submitted a response letter addressing the following points:
a. The original draft EIR stated that the Burde Building was “...not consistent with the surrounding architectural style or setting in the project area. …the loss of these buildings is considered to be a less-than-significant impact. The Planning Commission overrode this conclusion and made new findings, using its own subjective criteria, that the building was great or exceptional architecture.

b. These findings were not based on any written criteria or objective standards in the General Plan and were based merely on subjective statements which are not substantial evidence. Section 65589.5(d)(2) of the California Government Code states: …a local agency shall not disapprove an affordable housing project …unless it makes written findings based on substantial evidence in the record [that] the development project… would have a specific adverse impact upon the public health or safety and there is no feasible method to satisfactorily avoid the significant impact without rendering the project unaffordable to low and moderate income households.

c. Section 65915 of the Government Code defines “specific adverse impact” as: “A significant, quantifiable, direct and unavoidable impact, based on objective, identified, written public health or safety standards, policies or conditions…” Visual quality is not a public health or safety standard. It is subjective, not supported by evidence in the record, not appropriate for evaluating this project and not a legitimate basis for an appeal.

d. The Council already settled issues related to historicity and architecture/visual quality when it acted in 2006 to deny an earlier appeal. Raising architecture/visual quality issues again is barred by the principles of res judicata and estopple.

13. At the appeal hearing the City Council received additional testimony was received from the following:
Susan Brandt-Hawley, representing the appellant.
Dennis Boegher, representing the project applicant
Jim Wright
Olaf Dahlstrand
Lucia Dahlstrand, representing Jean Grace
Mike Dawson, representing Monterey Bay Area Preservation
Brian Congleton, representing the American Institute of Architects, Monterey Bay Chapter
Roberta Miller, representing the Carmel Residents Association
Clayton Anderson, representing the Friends of the Forest
Claudine Van Vleet, representing the Carmel Preservation Foundation
Barbara Brooks
Linda Anderson
Richard Rhodes
Ken White
Richard Barrett
Monte Miller
Anne Bell
Elinor Laiolo
John Mandurrago, project applicant

14. The City Council also received written testimony from the following:
American Institute of Architects, Monterey Bay Chapter
Friends of Carmel Forest
Carmel Residents Association
Alliance of Monterey Bay Area Preservationists
Erling Lagerholm
Jean Grace

CITY COUNCIL FINDINGS AND BASIS FOR DECISION
Finding: The Council concurs with the Planning Commission’s decision to revise the draft EIR regarding the importance of the Burde Building’s architectural and visual quality.

Basis: The Commission’s action was taken in December 2006 following the City Council’s adoption of findings in November 2006. Although these findings included a consideration of architectural merit, they did so in the context of determining whether the Burde building is an historical resource. This is far different from a determination that the Burde building contributes significantly to Carmel’s visual quality. These findings, in fact, recognized the value of the building’s architecture even though it is not historical. The Council’s action, its adopted findings and all supporting documentation constituted new evidence in the record that the Commission rightfully considered. The basis of the Commission’s action was well-documented in the revised EIR and in associated Staff Reports.

Finding: Visual quality issues are a valid topic for evaluation in environmental review under CEQA and can be the basis for finding a significant impact.

Basis: This is consistent with the forms and other supporting documents for the State CEQA Guidelines.5 This also is consistent with California Appellate decisions affirming that aesthetics and visual character are important environmental issues worthy of analysis in an EIR and can be the basis of finding significant environmental impacts.6

5 See: The Environmental Checklist published by the Office of Planning and Research the State agency charged with administering CEQA. The Checklist includes a section covering aesthetics.

6 See: The Environmental Checklist published by the Office of Planning and Research the State agency charged with administering CEQA. The Checklist includes a section covering aesthetics.
See also: Ocean View Estates Homeowners Association, Inc, v. Montecito Water District, and

Finding: The Council concurs with the Commission that demolition of the Burde Building would constitute a significant impact on the City’s visual quality resources and therefore constitute a significant environmental impact as defined in CEQA.

Basis: The analysis contained in the final EIR.

Finding: The Council reaffirms its 6 February 2007 decision that the 2006 appeal regarding the historicity of the Burde Building was exclusive to historicity and did not address whether the Burde building is an important architectural/visual resource.

Basis: The final conclusion of the Council’s 7 November 2006 findings stated in its entirety: The Historic Resources Board decision is reversed. The Palo Alto Savings and Loan Building (Bank Building) does not qualify as an historic resource. It shall not be listed on the Carmel Inventory of Historic Resources and shall not be considered an historic resource for purposes of any environmental review. This action reached no conclusions about the visual quality or architectural value of the Burde Building.

Finding: The affordable housing statutes in the Government Code and the environmental review provisions in the Public Resources Code must coexist with equal force. One obligation does not invalidate or “trump” the other. The decision-making process established by CEQA is to be followed independently from the decision-making process under the two affordable housing statutes.

Basis: This is consistent with subsection 65589.5 (e) which states “This section also does not relieve the local agency from making one or more of the findings required pursuant to Public Resources Code Section 21081 or otherwise complying with the California Environmental Quality Act.7 This also is consistent with Government Code Section 65915(d)(1)(B) which states: The City…shall grant the concession or incentive…unless the City…makes a written finding, based upon substantial evidence [that] the concession or incentive would have a specific adverse impact, as defined in Section 65598.5 (d)(2), upon public health and safety or the physical environment or on any real property that is listed on the California Register of Historical Resources…(emphasis added). This section is clear that impacts need not be limited to health and safety issues.

COUNCIL ACTIONS ON THE APPEAL
1. The Council denies the appellant’s argument that the Burde Building should be treated as a historical resource. The appellant presented no evidence in the record that would warrant revisiting the appeal of 2006 in which the Council determined the building is not historical. Pocket Protectors, v. City of Sacramento et.al.

7 The referenced findings related to the decision‐making process discussed above in Background Finding #4.

2. The Council grants the appeal regarding certification of the EIR and approval of all project permits. The Council remands the project to the Planning Commission with the following determinations and instructions:
• The Commission should consider the project’s significant impact on visual quality and take one of the following approaches:
o Deny the project, or
o Evaluate the feasibility of alternatives and adopt one if found to be feasible, or
o Approve the project with findings that support a Statement of Overriding Considerations. Such findings may include reference to affordable housing, but shall not conclude that Section 65915 mandates approval of incentives or concessions, or that Section 65589.5 mandates approval of the project in spite of significant adverse environmental impacts.

• In considering the feasibility of a project alternative (per CEQA) the Commission’s decision should be supported by evidence in the record. To be credible, the analysis of the evidence must be adequately reasoned and, if possible, should be provided by an independent third party. This is consistent with CEQA Guidelines Sections 15091 and 15093.8

• At a minimum, an adaptive reuse project alternative that avoids demolition of the Burde Building (or at least retains the important visual character of the building) should be considered as an alternative in the EIR even if it does not meet all project objectives. This is consistent with Section 15126.6 of the CEQA Guidelines.9

• In reaching a decision regarding the feasibility of providing affordable housing without the requested incentives/concessions the Commission should rely on evidence in the record.

This too should be the product of a reasoned analysis.

8 If the Commission determines that the project should be approved in spite of unmitigated, significant impacts, there must be findings explaining why alternatives or mitigations are not feasible. Section 15091 states that findings supporting a Statement of Overriding Considerations must be based on “Specific economic, legal, social, technological, or other considerations, including provision of employment opportunities for highly trained workers, make infeasible the mitigation measures or project alternatives identified in the Final EIR. And further that: “The findings required …shall be supported by substantial evidence in the record.” Section 15093 provides additional clarification: When a lead agency approves a project which will result in the occurrence of significant effects which are identified in the final EIR but are not avoided or substantially lessened, the agency shall state in writing the specific reasons to support its action based on the final EIR and/or other information in the record. The Statement of Overriding Considerations shall be supported by substantial evidence in the record.

9 Subsection (a): “…An EIR shall describe a range of reasonable alternatives to the project…which would feasibly attain most of the basic objectives of the project but would avoid or substantially lessen any of the significant effects of the project.” and (b) “…the discussion…shall focus on alternatives to the project…which are capable of avoiding or substantially lessening any significant impacts of the project, even if these alternatives would impede to some degree the attainment of the project objectives, or would be more costly.”

• For purposes of applying Section 65589.5 of the Government Code, the Planning Commission should assume that the project does qualify as a “Housing Development Project”. If the project is approved, the Commission should either limit allowed commercial land uses to “neighborhood commercial” or should adopt findings explaining why this is unnecessary or inappropriate.

1 See Council Findings dated 11 November 2006, Planning Commission Findings dated 10 September 2008 and the Visual Quality Section in the Final Environmental Impact Report.