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In a case published on September 18, 2018 the Fourth District Court of Appeal held that CEQA does not apply to the lawful demolition of a potential historic resource prior to application for a development permit.  In Bottini v. City of San Diego, No. D071670 (4th Dist., Sep. 18, 2018), — Cal.Rptr.3d —- ,  the court affirmed that the proper baseline for CEQA analysis is the environmental condition at the time an application for development is submitted.  However, while the court rejected the City’s CEQA determination that the project was not categorically exempt from environmental review, the court denied all three of the property owners constitutional claims and held that the City’s erroneous CEQA determination was not the basis for a regulatory taking, equal protection, or due process claim.

Windemere – Historic Resource or Public Nuisance?

Windemere was “a late Victorian-era beach bungalow in La Jolla designed by architects Joseph Falkenhan and Irving Gill.”  After the Bottinis purchased Windemere, the City of San Diego’s local historic review board voted not to designate it a historic resource.  However, soon after the City’s decision, the State Office of Historic Preservation weighed in and stated that it believed Windemere “appear[ed] eligible” for the California Register of Historical Resources.  Despite this letter, the City determined the cottage was a public nuisance and ordered Windemere be demolished.  After demolition, the Bottinis applied for a permit to construct a new single-family home.

The City declined to adopt staff’s determination that construction of the single-family home was exempt from review under the California Environmental Quality Act (CEQA) under the Class 3 exemption.  The City found instead that the project was not just construction of a single-family home, but also included the now complete demolition of Windemere.  As a result, the City found that both the unusual circumstances and the historic resources exceptions applied to project and required further CEQA review before it would approve the development permit.

The owners of the property sued the City for violation of CEQA, and under the Takings, Equal Protection, and Due Process clauses of the California Constitution.  The Court of Appeal upheld the trial court in full – agreeing that the City had in fact violated CEQA but that the CEQA violation did not result in a regulatory taking or violation of equal protection or due process.

CEQA Baseline Set Based on Development Permit Application

The court denied the City’s claims that the demolition of Windemere and construction of a new home should be treated as a single project under CEQA.  The court was not persuaded by the fact that the Bottinis submitted a preliminary review application to determine the developability of the site, even in light of prior case law that prohibits piecemealing the demolition of an existing building from the redevelopment of the site.  (See e.g., Orinda Ass’n v. Board of Supervisors (1986) 182 Cal.App.3d 1145.) The court upheld the City’s determination that the building was not historic and further upheld the issuance of demolition permit because it “furthered a goal unrelated to the construction of the Bottinis’ residence—the protection and safety of the City’s citizens.” Moreover, all parties agreed that the demolition permit was ministerial, and therefore the court found the demolition permit “fell outside of CEQA’s scope altogether,” which is consistent with other case law wherein agencies can permit the demolition of historic resources with either ministerial or discretionary decisions. (See e.g., Friends of Juana Briones House v. City of Palo Alto (2010) 190 Cal.App.4th 286.)

Important to the court was the lack of procedural or substantive challenges to the public nuisance determination that resulted in the issuance of the demolition permit.  “In fact, the City [did] not even attempt to articulate why it believes the public nuisance determination was incorrect.”  The court also noted that the “public nuisance determination did not reference or authorize, let alone depend on, the subsequent issuance of a building permit to the Bottinis.”

Seemingly because of the timeline of events and the independent validity of the City’s issuance of a ministerial demolition permit based on determinations that the building was not historic and was a public nuisance, the court found that the baseline for the single family home project was the vacant lot and aptly stated that “[w]hile the City may wish to turn back the clock and undo these decisions, that goal cannot be accomplished in this case by simply redefining the Bottinis’ project and setting a CEQA baseline in the past, to a time when the Windemere still existed.”

It is also interesting to note that in determining that the project was exempt, the court assumed that Windemere was in fact historic, but found under the plain language of the historic resources exception, because the cottage no longer existed, the project “will not cause a substantial adverse change in the Windemere’s significance.”

The case does not change the law with regard to CEQA and the demolition of historic resources but it confirms that the lawful determination that a resource is not historic and is a public nuisance, and then issuance ministerial demolition permit, can be made independent of the review for the development of the site.

No Constitutional Violations for Erroneous CEQA Determination

The court denied all of the property owners constitutional claims based on the City’s erroneous CEQA determination.

This is the first case to explicitly endorse applying the Penn Central factors to ad hoc regulatory takings claims under the California Constitution and expressly reject the “substantially advances” formula in Landgate.  The Bottinis claimed that the City’s CEQA determination delayed construction of their new home and was a regulatory taking because they had to pay a mortgage on two properties (existing home and the empty lot).  Although the court found in favor of the Bottinis on the first Penn Central factor (economic impact of the regulation on the claimant), it disposed of the takings claim on the second factor because when the Bottinis purchased the property, they knew they the City could designate it as a historic resource, and they did not have a reasonable investment backed expectation.

The court was similarly unsympathetic to the Bottinis’ due process and equal protection claims.  It held that “[t]he Bottinis have no right or statutorily conferred interest that entitles them to bypass CEQA review,” and that “[t]here can be no dispute that the state has a legitimate interest in protecting California’s environmental resources and ensuring that statutorily mandated environmental reviews are conducted.”  Notably, the court concluded that the City Council articulated a rational basis for its decision, even though they concluded that the expressed basis was erroneous.

Takeaways

Bottini applies existing CEQA caselaw to a different set of facts that leads to the City being able to ministerially determine a resource is not historic and order its demolition, and then consider the vacant site as the appropriate baseline for project review.

Bottini likewise extends a body of caselaw rejecting the “substantially advances” test in Landgate, Inc. v. California Coastal Com. (1998) 17 Cal.4th 1006.  While a number of prior appellate courts have expressed doubt about the continued validity of Landgate in light of the U.S. Supreme Court’s decision in Lingle v. Chevron U.S.A, this case is the first to definitively conclude that Lingle abrogated the Landgate test as applied to ad hoc regulatory takings under the California Constitution.

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