CITY COUNCIL: Staff Report & Recommendation of Recirculated Final Environmental Impact Report for the Sale of the Flanders Mansion Property

CITY OF CARMEL-BY-THE-SEA
STAFF REPORT
TO: MAYOR McCLOUD AND COUNCIL MEMBERS
FROM: RICH GUILLEN, CITY ADMINISTRATOR
DATE: 28 APRIL 2009
SUBJECT: CONSIDERATION OF STAFF RECOMMENDATION ON THE RECIRCULATED FINAL ENVIRONMENTAL IMPACT REPORT AND THE SALE OF THE FLANDERS MANSION PROPERTY

The City Council will be reviewing the Sale of Flanders Mansion Proposed Project at a
public hearing on 28 April 2009. This review is the culmination of a long process that
began when the Council first identified this project as a goal for the City Administrator.
The Council established this goal for several reasons. The property is a historical
resource listed on the National Register and will require substantial funding to restore and
rehabilitate. A report prepared by ARG indicates that approximately $1.157 million will
be needed for this purpose. This expenditure would divert funds from capital reserves
and/or shift funding from other projects that reflect a higher priority to the Council, as
reflected in the capital improvements/capital outlays plan.
The City should maintain a strong balance of reserve funds and not spend these
unnecessarily on projects of less importance to the City Council. Reserve funds help the
City absorb revenue shortfalls from economic downturns like the current recession. The
City Council annually reviews and accepts public input on a “Work Plan”. A 5-year
Capital Improvement and Outlay Budget is included in the Work Plan document. The
City Council uses this document to set priorities on a triennial basis and only reviews
projects that are financially achievable in a 5-year time period. The adoption of a Work
Plan project only occurs after the normal operating expenses of the City are deducted
from the projected revenue sources and after careful consideration of the available
reserve funds in the City coffers. The project list for the upcoming fiscal years
2008/2009 and 2009/2010 are listed in the attached Exhibit 3.2.10 Master Response 10:
City Finances.
The City Council has broad discretion to determine the appropriate public
purposes for which to allocate City funds, whether annual funds or reserve funds,
including deciding funding and expenditure priorities. The determination of what
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constitutes an appropriate public purpose on which to expend public funds is primarily a
matter for the City Council, as the City's legislative body. Discretionary fiscal and
budgetary decision-making includes questions of budgetary and fiscal policy, allocation
of available resources according to priorities, and choices between competing plans for
accomplishing objectives. Ultimately, it is up to the City Council to set priorities for how
public funds should be allocated to serve public purposes. This includes whether the
public purpose is served by retaining the Flanders Mansion property and rehabilitating
and maintaining it in the long-term at City expense, or whether it is a sound fiscal
decision not to retain the property and undertake such expenditures.
CEQA requires the City Council to balance economic, legal, social, and
technological benefits of a proposed project against its unavoidable environmental risks
(CEQA Guidelines § 15093(a)). If specific economic, social, or other conditions make
infeasible certain project alternatives or mitigation measures which substantially lessen
the significant environmental effects of the project, the City may approve the project in
spite of one or more significant environmental effects. However, CEQA does not
authorize an agency to proceed with a project that will have significant unmitigated
effects on the environment, based simply on a weighing of those effects against the
project's benefits, unless the measures necessary to mitigate those effects are truly
infeasible. Economic viability is one of the factors that may be taken into account in
addressing the feasibility of an alternative. The fact that an alternative may be more
expensive or less profitable is not sufficient to show that the alternative is financially
infeasible. What is required is evidence that the additional costs or lost profitability are
sufficiently severe as to render it impractical to proceed with the project. “Feasible”
means capable of being accomplished in a successful manner within a reasonable period
of time, taking into account economic, environmental, legal, social, and technological
factors. In order to approve a project or alternative that would have a significant,
unmitigatible environmental impact, the City will be required to make findings
identifying the specific considerations that make infeasible the environmentally superior
alternatives and the specific benefits of the project which outweigh the environmental
harm.
Evidence received: The City also obtained an historic rehabilitation report, prepared by
ARG. A thorough economic analysis has now been provided by the firm of CBRE. All
of these documents should be used by the Council in making decisions.
This project was the subject of an Environmental Impact Report (EIR) prepared in 2005.
Following certification of that EIR, the City Council’s decisions were successfully
challenged in Superior Court. One result of the Court’s decision has been the preparation
of a Recirculated Draft and Recirculated Final Environmental Impact Report (RDEIR and
RFEIR) in 2009. If the RFEIR is certified, the project is ready for Council action.
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The primary purpose of the project has been defined as:
To divest the City of the Flanders Mansion property which is in need of significant shortterm
and long-term repair and rehabilitation.
In addition to this purpose there are several secondary objectives:
1) To ensure that the Flanders Mansion is preserved as a historic resource;
2) To ensure that the Flanders Mansion building and property are put to productive use;
3) To ensure that future use of the Flanders Mansion and property will not cause
significant traffic, parking or noise impacts on the surrounding neighborhood;
4) To ensure that future use will not significantly disrupt the public’s enjoyment of the
Mission Trail Nature Preserve or the Lester Rowntree Native Plant Garden;
5) To ensure that environmental resources of the park are protected; and
6) To ensure that the Flanders Mansion parcel continues to provide the public with as
many park benefits as are practical.
I. ADDRESSING SIGNIFICANT IMPACTS
Addressing environmental impacts is central to the decision-making process in CEQA.
Impacts are classified into three categories: Less-than-significant, potentially significant
and significant-and-unavoidable. The California Quality Act Guidelines Section
15091(a) requires that for each significant effect identified in a Final EIR, the lead
agency must make one of the following three written findings supported by substantial
evidence in the record and must provide a rationale for each finding:
(1) Changes or alterations have been required in, or incorporated into, the
project to avoid or substantially lessen the identified significant
environmental effect.
(2) Such changes are within the jurisdiction of another agency and the changes
have been or should be adopted by that other agency.
(3) Specific economic, legal, social, technological or other considerations make
infeasible the mitigation measures or project alternatives identified in the
final EIR.
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The Flanders Mansion RFEIR identifies 14 impacts. Of these, 12 can be reduced to lessthan-
significant levels by adopting mitigations. Of the two remaining impacts, one is
significant and unavoidable (selling parkland) and the other is potentially significant and
unavoidable (conflicts with General Plan policies). As discussed above, staff
recommends that the Council determine that there is no conflict with the General Plan
and, therefore, there is no significant-and-unavoidable impact related to this issue.
The one remaining significant impact is classified as unavoidable. The Flanders Mansion
property is parkland. It is well-integrated into the Mission Trails Nature Preserve and
used by the public as parkland. Selling the property will result in the exclusion of the
public from this part of the park and constitutes a significant impact. There is no way to
mitigate this except by not selling it. The RFEIR identifies three project alternatives that
would avoid this significant-and-unavoidable impact:
• Lease as a single-family residence
• Lease as a public or quasi-public use
• No Project (do not sell or lease)
If the City Council chooses to sell the Flanders Mansion property it must adopt the last of
the three findings identified above in Section 15091: Specific economic, legal, social,
technological or other considerations make infeasible the mitigation measures or project
alternatives identified in the final EIR. There must be substantial evidence in the record
to support such a finding and there must be a rationale to connect the evidence to the
conclusion.
The Council also would need to determine that the remaining significant impact is
acceptable due to overriding considerations. This is achieved by adopting a Statement of
Overriding Considerations that explains to the public the basis for the Council’s decision.
The following decisions are required to complete this process:
RFEIR Certification. To do this the Council must adopt findings stating that the RFEIR
is “adequate” as required by the CEQA Guidelines. The Forest and Beach Commission,
Historic Resources Board and the Planning Commission all have determined that the
RFEIR is adequate.
The following Council decisions interact and typically are made as a single action. They
are listed below as separate items for clarity.
Select the Project to Implement. The choices open to the City Council are:
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• Proposed project: Sell the Flanders Mansion Property with mitigation measures
imposed
• No Project (do not sell or lease)
• Lease the property for occupancy as a single-family residence
• Lease the property for occupancy by a low-impact public or quasi-public use
• Sell the property with conservation easements and mitigations
Determine General Plan Consistency. Adopt a finding that the Council’s selected project
option is consistent with the General Plan. The Planning Commission reviewed this issue
on April 23, 2009 and has forwarded a recommendation that all sale options and all lease
options are consistent with the General Plan.
Adopt Mitigations and/or an Alternative. The RFEIR identified 14 significant impacts
and four project alternatives. CEQA statutes require the City to avoid or reduce all
significant impacts by adopting feasible mitigation(s), or by selecting a feasible project
alternative. If feasible, all significant impacts must be mitigated to a level of “less-thansignificant”.
In addition to adoption of mitigations, the Council should require
incorporation of those mitigations into Conditions of Sale and covenants to be recorded
to run with the land and apply to all future owners and, as a contingency if the voters do
not approve a sale of the property, if that project or alternative is selected, the City
Council should also require incorporation of the mitigations into Conditions of Lease. If
all significant impacts cannot be reduced or avoided, or if the Council chooses to reject
alternatives that would do so, a Statement of Overriding Considerations must be adopted.
Adopt a Statement of Overriding Considerations. If all significant impacts cannot be
avoided or reduced to a less-than-significant level, and the Council still wants to proceed
with the project or an alternative, a Statement of Overriding Considerations must be
adopted. This Statement must explain why the Council chooses to approve a project that
has unmitigated significant impacts. This Statement must be supported by evidence and a
rationale.
In 2005, the Council rejected as economically infeasible, a lease alternative that would
have avoided a significant impact. The Council approved selling the property and
adopted a Statement of Overriding Considerations based a brief economic analysis.
When the City’s actions were challenged in a lawsuit, the Superior Court found that the
City did not have sufficient economic evidence to reject the lease alternative and
therefore violated CEQA. The Court also found that the Flanders Mansion property
constituted parkland. This meant that the CEQA analysis in the EIR must be revised and
that selling the property would require a public vote.
The 2009 RFEIR analyzes lease and sale alternatives. Lease alternatives do not achieve
the project purpose but would avoid or reduce all significant impacts. Sale alternatives
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meet the project objectives but would have one significant impact that cannot be
mitigated. If the Council chooses to sell the property, it must (1) find the lease
alternatives to be infeasible and (2) adopt a Statement of Overriding Considerations
explaining why project benefits outweigh the significant impact.
Staff recommends adoption of the Sale with Conservation Easements and Mitigations
alternative. This alternative meets the project purpose while doing the best job of
avoiding or reducing environmental impacts. This alternative still has one significant
impact that cannot be mitigated. Therefore, in order to select this alternative the Council
must still adopt a Statement of Overriding Considerations and find the lease alternatives
to be infeasible.
In response to the Superior Court decision, the City worked with Denise Duffy &
Associates to revise the EIR and recirculate it (RFEIR). The City also obtained an
historic rehabilitation report prepared by ARG. A thorough economic analysis has now
been provided by the firm of CBRE. All of these documents should be used by the
Council in making decisions.
If the Council accepts the staff recommendation, the following actions should be taken:
1. A Resolution Certifying the Recirculated Final Environmental Impact
Report for the Sale of the Flanders Mansion Property;
2. A Resolution Adopting a Mitigation Monitoring and Reporting Program,
Conditions of Sale, a Declaration of Conditions, Covenants and Restrictions to Be
Recorded Against the Property, and Conditions of Lease;
3. A Resolution Adopting a Statement of Overriding Considerations;
4. A Resolution Adopting a Project for Implementation: Sale of Flanders
Mansion Parcel with Conservation Easements and Mitigation; and
5. A Resolution of Notice of Proposed Discontinuance of Public Park Land
and Setting Date for Hearing of Protests Against Sale of Public Park Land.