In an opinion filed September 13, and modified and certified for publication on October 6, 2023, the Fourth District Court of Appeal (Div. 3) affirmed the trial court’s judgment denying a CEQA writ petition challenging the City of Laguna Beach’s determination that the Guidelines’ Class 31 categorical exemption applied to its approval of a project to remodel a historic single family home. Historic Architecture Alliance, et al v. City of Laguna Beach, et al (Ian and Cherlin Kirby, Real Parties in Interest) (2023) 96 Cal.App.5th 186. The decision refines the established CEQA principle that a project that may cause a change in the significance of a historical resource is also one that may have a significant environmental effect (and thus require an EIR or MND) in the unique context of CEQA’s categorical exemption for projects found to be consistent with the “Secretary of the Interior’s Standards for the Treatment of Historic Properties” (the “Secretary’s Standards”). (CEQA Guidelines, § 15331.) It also clarifies that the “fair argument” test does not apply to a project opponent’s attempt to establish the historical resource exception (Guidelines § 15300.2(f)) to this categorical exemption; because both the exemption and the exception require the lead agency to make the same factual determination – i.e., the project’s consistency with the Secretary’s Standards – applying the fair argument test to the exception would render the exemption meaningless.
The Project And Factual And Procedural Background
In 2017, the Kirbys bought and applied to the City to remodel a two-story, 1,940-squre foot Colonial Revival-style single-family residence built in 1925. The house had been listed in 2014 by the City’s Heritage Committee on the City’s historical register as an individual resource with a rating used for buildings that “strongly maintain their original integrity and demonstrate a particular architectural style or time period.”
The City’s consultant, Historic Resources Group (“HRG”) issued a 2018 report concluding that the 2017 remodel project met some of the Secretary’s standards (Nos. 1, 4, 6, 7, and 8), but not others (Nos. 2, 3, 5, 9, and 10).
The Kirbys and their architect revised their plans and resubmitted a 2019 project that the City’s Heritage Committee, an advisory body, recommended the City’s Design Review Board approve with two alterations. During the ensuing months, the Kirbys and their architect worked with City’s staff (which included a qualified historical preservation professional) to address the recommendations and further revise the plans to achieve conformance with the Secretary’s Standards, reducing the addition by almost 300 square feet in the process.
Upon learning of next-door neighbor Sundman’s privacy and view concerns, the Kirbys made further size reductions and design changes and resubmitted the further revised project in late 2020. City’s staff found the project in compliance with the Secretary’s Standards and recommended approval and adoption of the Class 31 exemption for “projects limited to maintenance, repair, stabilization, rehabilitation, restoration, preservation, conservation or reconstruction of historical resources in a manner consistent with the [Secretary’s Standards].” (Guidelines, § 15331.) Staff also indicated no exception to the exemption applied.
City’s Design Review Board agreed and, over Sundman’s and his historical resource consultant’s objections, approved the project by 4-1 vote. Sundman appealed to the City Council, which rejected his and his consultant’s claimed “fair argument” that the project would cause a substantial adverse change in the significance of a historic resource so as to defeat the categorical exemption; instead, the council voted unanimously to reject the appeal and uphold the exemption after considering evidence that the 2020 project was consistent with the Secretary’s Standards.
After-formed group Historic Architecture Alliance (of which Sundman was a member) and the Laguna Beach Historic Preservation Coalition then jointly filed a writ petition under CEQA challenging the City’s decision, based on the same arguments they had advanced before the City, and the trial court denied that petition in 2022.
The Alliance appealed the adverse judgment and the Court of Appeal unanimously affirmed it.
The Court of Appeal’s Opinion
There being no dispute that the Kirbys’ single-family dwelling was a “presumptive historical resource” under CEQA due to its listing in the local register, and that their remodel proposal required permits and was thus a CEQA “project,” the issue before the Court was whether the City correctly found the project categorically exempt at the second stage of the CEQA review process and not subject to an exception to the exemption. It is well settled that if a lead agency establishes that a project falls within an exempt class, the burden shifts to the project opponent to prove an exception. Here, appellant Alliance argued it had carried its burden of establishing that CEQA’s historical resource exception (Pub. Resources Code, § 21084(e); Guidelines, § 15300.2(f)) applied, thus removing the project from the historical resources exemption.
The Court observed that the application of CEQA’s historical resource exemption and its historical resource exception both depend on whether a project complies with the Secretary’s Standards. If an agency finds a project complies, it is exempt; conversely, if an agency finds a project noncompliant, the exception applies. And as a matter of law “[a]n agency’s finding a project comes within the historical resource exemption necessarily includes the finding the project complies with the Secretary’s Standards” and also includes “an implied finding the project does not have a significant impact on the environment.” (Citing Guidelines, § 15064.5(b)(3); World Business Academy v. State Lands Com. (2018) 24 Cal.App.5th 476, 496.)
Applying the deferential substantial evidence standard of review to the City’s factual determination that the project fell within the historical resource exemption (i.e., was consistent with the Secretary’s Standards) (citing Protect Tustin Ranch v. City of Tustin (2021) 70 Cal.App.5th 951, 960), the Court observed that it does not reweigh the evidence and must affirm the agency’s finding if there is any substantial evidence – i.e., “evidence of ponderable legal significance that is reasonable in nature, credible, and of solid value” – to support it, whether contradicted or uncontradicted, and that it resolves all evidentiary conflicts and indulges all legitimate and reasonable inferences in favor of the finding. (Citing ibid.; World Business Academy, at 498-499.)
Here, the Court found “substantial evidence in the administrative record supporting the City’s factual determination the Kirby’s project is consistent with the Secretary’s Standards and falls within the historical resource exemption[,]” essentially citing the factual and procedural background set forth above. Per the Court: “Under the substantial evidence standard, it is the agency’s role to weigh conflicting evidence and not ours. [citation] Thus, we accept the City’s finding the evidence of compliance with the Secretary’s Standards was weightier than the opposing views.”
In rejecting appellant Alliance’s attempted reliance on the “fair argument” standard to establish an exception to defeat the exemption, the Court “conclude[d] in the particular context of this case, where the decisive factor for the historical resource exception is the same as that for the historical resource exemption – whether the project complies with the Secretary’s Standards – the Alliance’s reliance on the fair argument standard is misplaced.” In distinguishing earlier cases making arguably contrary statements, the Court held “neither Berkeley Hillside [Preservation v. City of Berkeley (2015) 60 Cal.4th 1086] nor Valley Advocates [v. City of Fresno (2008) 160 Cal.App.4th 1039] was addressing the issue before us – does the fair argument standard apply to the agency’s determination of whether a project complies with the Secretary’s Standards for purposes of the historical resource exception when the agency has found the project does comply with the Secretary’s Standards for purposes of the historical resource exemption. We conclude the fair argument standard does not apply in this situation.”
The Court reasoned that because the determination of compliance with the Secretary’s Standards, like the issue of unusual circumstances addressed in Berkeley Hillside, is “an essentially factual inquiry,” the agency is the finder of fact and courts should apply the traditional substantial evidence standard. Per the Court: “To establish the historical resource exception, it is not enough to merely make a fair argument the project did not comply with the Secretary’s Standards. If this was all the challenger had to establish, the historical resource categorical exemption would be meaningless.” (Citing Berkeley Hillside, at 1104-1105.)
In a portion of the opinion added in its order granting the publication requests of respondents, and numerous other nonparty entities (including the California Building Industry Association, the BIA of the Bay Area, the California Business Properties Association, the League of California Cities, and the City of Glendale), and denying rehearing, the Court also rejected appellant Alliance’s argument that the City improperly mitigated into a categorical exemption on “the facts of this case.” Per the Court: “Prior to the City’s approval, revisions were made to the project’s plans so the project was consistent with the Secretary’s Standards; these revisions were not mitigation measures as used in the context of CEQA’s mitigated negative declarations, negative declarations, or EIRs.”
Conclusion and Implications
The Court’s conclusions make common sense and its holding helpfully preserves a meaningful CEQA categorical exemption for projects remodeling structures that are historical resources.
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