CITY COUNCIL: Appeal of Planning Commission's Decision to Certify EIR and Deny Plaza del Mar Project

Meeting Date: 3 November 2009
Prepared by: Sean Conroy, Plng & Bldg Services Manager
Brian Roseth, Planning Consultant

City Council
Agenda Item Summary

Name: Consideration of an appeal of the Planning Commission’s decision to certify an Environmental Impact Report and deny a project for the demolition of an existing building and the construction of a mixed-use development including a two-level underground parking garage, five market-rate condominiums, two low-income housing units, and commercial floor area. The project location is the SE corner of Dolores and 7th (Homescapes Building). The appellant is John Mandurrago.

Description: On September 17, 2009, the Planning Commission certified an Environmental Impact Report, adopted CEQA findings and denied all permits for the Plaza del Mar project. The appellant requests that the City Council overturn the Planning Commission’s decision to deny the project.

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

Staff Recommendation: Deny the appeal and uphold the Planning Commission’s decision.

Important Considerations: In December 2008 the City Council granted an appeal and overturned the Planning Commission’s decision to approve this project. The Council remanded all project decisions back to the Planning Commission, adopted findings and provided specific direction on several issues to assist the Commission. Part of this direction was to develop better evidence regarding the feasibility of the adaptive reuse.

The Council also affirmed that demolition of the Burde Building would constitute a significant environmental impact and provided the Commission with guidance on the interaction between CEQA and California housing statutes.

Recent Decision Record:
• 9/10/2008 - Planning Commission certifies and EIR and approves the project.

• 12/2/2008 - City Council adopts findings to overturn the Planning Commission decision.

• 9/17/2009 - Planning Commission adopts findings to certify EIR and deny the project.

• 9/21/2009 - Applicant files an appeal of the Planning Commission’s decision.

Reviewed by:

__________________________ _____________________
Rich Guillen, City Administrator Date

CITY OF CARMEL-BY-THE-SEA
STAFF REPORT
TO: MAYOR MCCLOUD AND CITY COUNCIL MEMBERS
THROUGH: RICH GUILLEN, CITY ADMINISTRATOR
FROM: SEAN CONROY, PLANNING SERVICES MANAGER,
BRIAN ROSETH, PLANNING CONSULTANT
DATE: 6 OCTOBER 2009 (AMENDED 3 NOVEMBER 2009)
SUBJECT: CONSIDERATION OF AN APPEAL OF THE PLANNING COMMISSION’S DECISION TO CERTIFY AN ENVIRONMENTAL IMPACT REPORT AND DENY A PROJECT FOR THE DEMOLITION OF AN EXISTING BUILDING AND THE CONSTRUCTION OF A MIXED-USE DEVELOPMENT INCLUDING A TWO-LEVEL UNDERGROUND PARKING GARAGE, FIVE MARKET-RATE CONDOMINIUMS, TWO LOWINCOME HOUSING UNITS, AND COMMERCIAL FLOOR
AREA. THE PROJECT LOCATION IS THE SE CORNER OF DOLORES AND 7TH (HOMESCAPES BUILDING). THE APPELLANT IS JOHN MANDURRAGO.

I. INTRODUCTION
On 17 September 2009, the Planning Commission certified the Environmental Impact Report, adopted CEQA findings and denied all permits for the Plaza del Mar project.

1The applicant has appealed the CEQA findings and denial of permits to the City Council.

2 This appeal raises several issues, some of which the Council reviewed during Barbara Livingston’s appeal of the project approval in 2008.
In December 2008, the City Council granted the Livingston appeal and remanded all project decisions back to the Planning Commission. The Council adopted findings and provided specific direction on several issues to assist the Commission.

3 Part of this direction was to develop better evidence regarding the feasibility of the adaptive reuse alternative. The Council also affirmed that demolition of the Burde Building would 1 See attachment #4: Planning Commission Resolution 2009-01 which includes Environmental Findings and
Findings for Denial, dated 9/17/09
2 See attachment #1: Letter of appeal, dated 9/16/09
3 See attachment #6: City Council Findings for Decision, dated 12/2/08

constitute a significant environmental impact and provided the Commission with guidance on the interaction between CEQA and California housing statutes.

In the discussion below, staff has summarized the claims in the appeal and provided a response. This report does not review in detail those issues already covered in prior Planning Commission and City Council findings. Instead, only a brief response is given and references are provided to the relevant documents, which are attached.

The City Council reviewed this appeal on 6 October 2009. The Council referred the application back to the Planning Commission primarily based on the applicant’s suggestion that he would be willing to make some project modifications. However, the applicant has now indicated that his is not willing to make any project changes at this time

4. Since there are no proposed project modifications, no additional review is required by the Planning Commission.

Note: The following discussion was amended since the City Council meeting on 6 October 2009 to respond to the appellant’s letter of that date. Each of these amendments is noted as an “Addendum” and is shown highlighted.

II. RESPONSE TO ISSUES ON APPEAL
Mixed-Use Policies (appeal letter pages 1-2): The appeal claims that the
Commission’s decision violates the applicant’s due process rights by raising a new issue, not noted in the Draft EIR or in any previous Staff Report, alleging a violation of the City’s General Plan/Coastal Plan. The appeal also claims that the Findings do not explain why the project is inconsistent with the General Plan/Coastal Plan. The appeal explains that the project was specifically designed to not increase commercial floor area
and thereby avoid the need for a conditional use permit. The appeal notes that the project has nearly as much commercial square footage as currently exists on site.

Response: The Commission and staff repeatedly raised the issues related to the General Plan/Coastal Plan mixed-use policies and inadequate commercial floor area (12/13/06, 1/10/07, 5/14/08, 6/11/08 and 7/16/08). The RDEIR discussed these at pages 2-12 and 2-13 where it stated, “the project does not fully conform with the General Plan policies related to mixed-use developments”. The project requires a Use Permit regardless of the amount of commercial space because it includes construction of a parking facility.
The terms “violate” and “inconsistent with the intent of” are distinct. The Commission understood that the project does not “violate” the General Plan regarding mixed-use

4 See attachment #3: Letter from appellant dated 10/13/09

developments because the three applicable policies are an expression of intent. The policies are not structured to mandate a specific yes/no decision that could be violated.

However, the City still has discretion to use the intent of the policies in the General Plan/Coastal Plan as a basis for its decisions. That is why they were adopted.

References:
Planning Commission Findings #3, #4 and #10 dated 9/17/09.
Planning Commission Minutes, dated 12/13/06, 1/10/07, 6/11/08
Staff Reports, dated 12/13/06, 1/10/07, 6/11/08 and 7/16/08
Revised Draft EIR pages 2-12 and 2-13
Architecture (appeal letter pages 3-4): The appeal claims that during the 2006 historic resources appeal the City Council determined that the building is not architecturally important and can be demolished.

Therefore, the Planning Commission cannot subsequently determine that demolition of the Burde Building would cause a significant environmental impact on the City’s visual quality resources.

Response: In the 2006 historic resources appeal, the City Council considered the architecture of the Burde Building for its historical significance only. Specifically, the Council had to determine whether the architecture was so significant that it would qualify as historical although the building was only 34 years old.5 The Council adopted
the following finding:

Finding 34: Based on Findings #30 through #33, above, and pursuant to eligibility criteria for the California Register of Historic Resources and the Carmel Municipal Code, the bank building does not embody distinctive characteristics of a type, period, region or method of construction, or present the work of an important creative individual or possess high artistic value, nor does it make an unusually strong contribution to history, architecture, engineering or culture.

The preponderance of the evidence does not support the Bank building’s designation as an historic resource. Using the five tests established in National Register Bulletins #15 and #22, and using the additional test for exceptional importance in the Carmel Municipal Code, the evidence in the record does not support a finding that the bank building qualifies as historically significant within the City of Carmel-by-the-Sea.

Since adopting this finding, the Council has twice confirmed that its historical resource conclusions should not be applied to the broader context of whether the building is

5 Attachment #5 is an excerpt from the City Council’s 2006 Findings.

environmentally significant as a visual quality resource.6 The Council has never stated that the building can be demolished.

Addendum: The letter of 6 October 2009 cites five findings to prove that the City Council already has granted approval to demolish the Burde Building. These findings now appear in Attachment #4. They do not support the appellant’s position.

References
City Council Findings and Basis for Decision #1, #2, #3 and#4, dated 12/2/08
City Council Actions on the Appeal #1, dated 12/2/08
Planning Commission Findings for Denial #6 and #7, dated 9/17/09
Planning Commission Environmental Findings, dated 9/17/09
Attachment #4: Excerpts from City Council Findings on Appeal, dated 11/7/06
Concessions (appeal letter pages 4-5): The appeal claims that the project is not seeking a density bonus and does not need to qualify for one in order to get concessions. The appellant acknowledges that the project violates the Zoning Code and General Plan/LCP, but cites authority to waive these violations in the Density Bonus and Other Incentives Statute.

Response: The Planning Commission interprets the statute differently than theapplicant. The first two subsections of the statute discuss the mandate for concessions:

65915 (a): When an applicant seeks a density bonus for a housing development within, or for the donation of land for housing within, the jurisdiction of a city…that local jurisdiction shall provide the applicant incentives or concessions for the production of housing units and child care facilities as prescribed in this section. All cities…shall adopt an ordinance that specifies how compliance with this section will be implemented.

65915 (b)(1): A city…shall grant one density bonus, the amount of which shall be as specified in subdivision (g), and incentives or concessions as described in subdivision (d) when an applicant for a housing development seeks and agrees to construct a housing development, excluding any units permitted by the density bonus awarded pursuant to this section, that will contain at least any one of the following: [The statute then lists
affordable housing categories that must be met by the project].

These subsections are not independent. Subsection (a) establishes the principle that concessions are mandated when an applicant seeks a density bonus. It functions like a preamble for the entire statute. Subsection (b) establishes the mechanism and makes reference to density bonuses and the concessions. If the subsections are independent,

6 On 2/6/07 and again on 12/2/08.

the first subsection is redundant. This result would be contrary to accepted rules for statutory interpretation. All subsections must add meaning and value.

Addendum: The appellant further supports his argument by noting that other parts of the statute specifically make reference to subsection (b) and not to subsection (a). A synopsis of these references follows:

65915 (d): An applicant for a density bonus under subsection (b) may submit a proposal for specific incentives/concessions. The City must grant the concession unless it adopts findings regarding economics or adverse impacts on public health and safety or the physical environment or historic resources.

65915 (g)(1, 2, 4) and (h)(2): The amount of the density bonus allowed by subdivision (b) depends on the percentage amount of affordable housing provided.

65915 (p)(3): Cities are limited in the amount of parking they can require for projects that meet the criteria of subsection (b).

Response:
Subsection (a) is not referenced in any subsequent clause of the statute. If the applicant’s claim that it operates independent of subsection (b) is correct, this would mean that the protections for the environment and historic resources called for in subsection (d) would not apply to projects qualifying for concessions under subsection (a). The provisions regarding parking and density bonus percentages also would not
apply. The fact that subsection (a) is never mentioned throughout the statute lends weight to staff’s position that it is linked to (b).

References
Planning Commission Findings for Denial #15 and #16, dated 9/17/09
Housing Development Project (appeal letter pages 5-6): The appeal claims that the Planning Commission erred in finding that the project does not qualify as a “housing development project” as defined in the Housing Accountability Act.

Response: The Commission reviewed the statutory definition of this term and
concluded that the commercial aspects of the project disqualify it. Specifically, the second level of commercial/valet parking and the absence of any control over what could occupy the retail spaces (e.g. visitor-serving uses such as art galleries, jewelry stores) both fail to meet the criteria in the definition.

References
City Council Actions on the Appeal #2 (bullet 5)
Planning Commission Finding for Denial #17, dated 9/17/09
Significant Adverse Impacts (appeal letter pages 6-9): The appeal claims that the Planning Commission erred in its CEQA decision because it relied on impacts to visual quality resources instead of the more limited “significant adverse impacts” defined in the Housing Accountability Act.

Response: The Commission and the applicant have different interpretations of the statute. Section 65589.5 (d)(2) of the statute defines “significant adverse impact” as a:

“Specific, quantifiable, direct and unavoidable impact based on objective, identified written public health or safety standards, policies or conditions as they existed on the date the application was deemed complete”.

As defined, “significant adverse impact” is specific to “public health and safety”. It does not address “impacts to the physical environment”.

Section 65915(d)(3) states:
Nothing in this subdivision shall be interpreted to require a local jurisdiction to grant an incentive or concession that has a specific adverse impact, as defined in paragraph (2) of subdivision (d) of section 65589.5 upon health, safety, or the physical environment and for which there is no feasible method to satisfactorily mitigate the significant adverse impact. [Emphasis added]

This second term comes from CEQA. The very first step in the CEQA process is to determine whether a proposed activity may result in a physical change in the environment.

7 The hallmark of CEQA analysis is its demand for comprehensive
review and consideration of all identified significant environmental impacts. If the legislature intended to limit the application of CEQA when applied to Housing Development Projects it could have amended CEQA or the CEQA Guidelines.

8 The discretion to adopt CEQA findings and deny the project is supported by another section of the statute, which states:
7 PRC Section 21065 and CEQA Guidelines Section 15060.

8 In fact, the CEQA Guidelines were amended in 2008 to address affordable housing projects that met certain thresholds. The Plaza del Mar project does not meet these thresholds. (CEQA Guidelines Article 12.5 Sections
15191 through 15196.)

65589.5 (e) 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

The Commission concluded that the housing statute’s “specific adverse impacts” does not replace the broader scope of environmental impacts used in CEQA. By law, the Commission was obligated to consider all significant impacts, including visual quality.

References
City Council Findings and Basis for Decision #2 through #5, dated 12/2/09
City Council Action on Appeal #2 (bullet #1), dated 12/2/08
Planning Commission Findings for Denial #18 and #20
Planning Commission Environmental Findings, dated 9/17/09
Coastal Act (appeal letter page 9): The appeal claims that the City must grant concessions from the LCP and cites authority in the Density Bonus and Other Incentives statute as well as Government Code Section 65590 related to affordable housing in the Coastal Zone.

Response: The Planning Commission’s finding addressed the Housing Accountability Act (HAA). The appellant’s argument is based on the Density Bonus and Other Incentives statute and is not applicable. The appellant’s reference to Section 65590 overstates the statutory requirement; the City is not obligated to approve all requests.

The “or” in the statute allows discretion to offer density bonuses, modified zoning standards, accelerated processing or fee waivers. The City already waives building permit fees in proportion to the number of affordable units in a project and offers density bonuses, reduced parking requirements and increased floor area. These are more than sufficient to implement Section 65590.

References:
Planning Commission Findings for Denial #19, dated 9/17/09
Housing Accountability Act Findings (appeal letter pages 9 and 10): The appeal claims that the Commission erred in finding that project denial was required in order to comply with CEQA and the Coastal Act.

Response: The HAA specifies that a city can deny a Housing Development Project only when one of five circumstances applies. The Planning Commission found that one did apply: compliance with State statutes (CEQA and the Coastal Act) compels denial.

The HAA requires that CEQA be implemented. The Commission’s CEQA findings
(1) identified a significant impact, (2) found alternatives infeasible, and (3) determined that project benefits did not warrant adoption of overriding considerations. This chain of decisions mandates project denial. The HAA also requires that the Coastal Act be implemented. The project violates LCP requirements to protect significant trees and
provide rental units equal in number to the proposed condominiums. The project also fails to implement the intent of the LCP policies for mixed-use developments. Unlike the Density Bonus Statute, the HAA does not override the LCP.

References:
Planning Commission Findings for Denial #18, #19 and #20, dated 9/17/09

III. NEW ISSUES
The appeal letter includes two comments not previously raised during Commission review of the project:

“The applicant will comply with the requirement to retain two significant trees if this incentive is not granted and if the applicant seeks judicial review of the City’s denial of applicant’s request for these incentives”
…the applicant is willing to provide [an] equal number of rental units as market rate [units], provided a court should rule, and/or the City finds that the two incentives requested by the applicant are not appropriate. Under this condition the applicant will comply with the City ordinance/General Plan to have [an] equal number of rental units and condominium [units] in the Plaza del Mar project.

While not entirely clear, these appear to withdraw the request for concessions or offer to accept conditions of approval. If implemented, these would eliminate some of the issues that led to project denial.9 Design revisions, however, would be necessary, especially if the trees are to remain. At present, there are no drawings that would allow
review of a revised project. Further, the offer to withdraw the request for concessions to facilitate project approval indicates that the concessions are not needed to make the project economically feasible. According to provisions in the Density Bonus Statute10, waivers of development standards must be “required” or “necessary” to make the
affordable housing feasible.

Addendum: This section regarding “New Issues” has been rendered moot because the applicant has withdrawn his proposal to eliminate the need for concessions.

9 The CEQA issues regarding loss of visual quality resources would still remain. The appellant’s new comments relate to the applicant’s project as submitted—not to an adaptive reuse alternative. The applicant has stated in the record, and the Planning Commission has agreed, that the project is infeasible if the Burde Building is retained.

The concessions, whether approved or denied, will not change this.
10 Sections 65915(d)(1)(A) and 65915(f)

IV. RECOMMENDATION
Deny the appeal and uphold the Planning Commission’s decision.