Ocean Street Extension CEQA
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Ocean Street Extension Lawsuit Spotlights CEQA Controversy

Is the California Environmental Quality Act an unfair tool for anti-development activists, or a developer scapegoat?

A rendering of a development long planned at 1930 Ocean Street Extension.

When developers Craig Rowell and Rick Moe bought 2.7 acres of land in Santa Cruz in April 2007, they weren’t expecting it to look the same more than 11 years later.

Today, the site at 1930 Ocean Street Extension is much the same mix of open grassy area and a few trees—not a development of 32 housing units, let alone the original proposal of 40. That doesn’t look likely to change anytime soon, either, as the site is now the subject of a lawsuit brought under the California Environmental Quality Act, known as CEQA (pronounced SEE-quah).

The Ocean Street Extension Neighborhood Association filed the suit in late October against Rowell and Moe, as well as the city of Santa Cruz and the City Council. The suit alleges —among other issues—that the environmental impact report (EIR), a document required under CEQA for some projects, doesn’t adequately analyze the cumulative impacts of the proposed development and fails to respond to many of the comments put forth by neighbors in the report drafting process.

Rowell and Moe say they weren’t surprised by the lawsuit. They feel neighbors have been opposed to the project, which would include at least a few affordable units, from the beginning. In their eyes, the CEQA suit is just another tool to try to stop it entirely.

“CEQA was certainly written and enacted with all the best of intentions,” Moe says. “And it has done a lot of good, there is no question. But it has some holes in it, and it is getting used to try to stop projects.”

Legal analyses of CEQA, which was signed into law in 1970 by then-Gov. Ronald Reagan, show divisions over its ripple effects on development and the state’s housing supply. Over the past three years, California’s nonpartisan Legislative Analyst’s Office, which blames lousy housing affordability on a lack of housing construction, has argued that CEQA inhibits housing construction statewide. This past winter, a study by San Francisco law firm Holland & Knight, published in the Hastings Environmental Law Journal, concluded CEQA has mostly been used in recent years “to block infill housing and transit-oriented land-use plans, as well as public service and infrastructure projects.”

Another recent report, however, published by the UC Berkeley School of Law, “Getting It Right,” contends that claims of CEQA’s slowing effects are overstated, and that the real drivers of struggles to add more housing are local agencies such as zoning boards and planning commissions that must sign off on any proposed development.

In extreme instances, outside groups have used CEQA as a way to extract last-minute payments out of developers and local governments, as one Irvine resident named Michael Goolsby did this past spring when he issued a couple challenges to a 125-unit Redwood City development shortly before the project set a date to break ground. The developer contributed $50,000 toward a settlement agreement with Goolsby, who is barred from practicing law.

No developers have stories of incidents quite so extreme happening on this side of the hill.

Here in Santa Cruz, Bill Parkin, a partner at the Wittwer Parkin LLP law firm, is representing Ocean Street Extension neighbors in their case against Rowell and Moe, and he’s well aware that CEQA sometimes gets painted as a law that slows down development or is used by “not in my backyard” (NIMBY) groups. CEQA, he says “is just not the problem.”

“At the end of the day, this notion that the environment is mutually exclusive from people having homes and from economic growth is simply silly,” he says.

He adds that the environmental law is used as a “scapegoat,” and says developers really don’t want the potential impacts of their projects disclosed.  

COMPLEX LEGACY

The Ocean Street Extension Neighborhood Association has spent much of the past decade entrenched in the proceedings around the proposed development at 1930 Ocean Street Extension. Community members filed more than 100 comments during the drafting of the project’s EIR, and “many of them were not addressed at all” in the final report as required by CEQA, says Ellen Aldridge, a member of the group’s steering committee.

“Our neighborhood association has been concerned about this development since it’s been proposed,” Aldridge says. Their concerns include the potential for increased traffic on the narrow road and how that might affect bicycle and pedestrian safety as well as residents’ ability to evacuate in an emergency, especially if Highway 9, the other route in and out of the neighborhood, is closed.

In a Sept. 25 City Council meeting, councilmembers voted 5-2 to advance the project at 32 units instead of the proposed 40, in what appeared to be a form of concession to neighborhood concerns. At least five of the units would be affordable.  

The affordable housing component seemed to be a selling point for some councilmembers on the project at a time when the pace of affordable housing construction locally—as throughout much of the state—has failed to meet mandated goals.

Even with the change to the number of units, the neighborhood group says no one has responded its concerns in any substantive way. The goal of its lawsuit is to have the city reissue the EIR, Aldridge says, “and substantively address the questions we raised and consider mitigations and alternatives,” which she says “were given short shrift.”   

“Everyone acknowledges there needs to be additional housing, that there’s a housing crisis,” Aldridge says. “That doesn’t mean you put projects that aren’t suitable for the site or the surrounding infrastructure in to just say you built more housing. You have to do a critical analysis of both the legal requirements and the environmental concerns, and make sure you’ve got the right project in the right place.”

That’s the key part of this lawsuit, Parkin says. The Ocean Street Extension project, he says, didn’t consider all feasible mitigations and alternatives that might reduce environmental impacts.

“What is very interesting about the Ocean Street case is the whole affordable housing crisis we have is driving this almost like a collective insanity,” Parkin says. “We just throw the baby out with the bathwater when it comes to good planning.”

BUILDING STAMINA

Santa Cruz Principal Planner Eric Marlatt can’t comment on the Ocean Street Extension case, but says that the city does occasionally receive letters from attorneys about CEQA documents before a project gets a hearing. Often, those letters are from attorneys representing neighbors who are opposed to a project. They don’t always progress to litigation like this one did.

Marlatt routinely goes to conferences to learn about the latest in environmental requirements. Generally, he says that most CEQA litigation has less to do with content of the actual environmental analysis than it does the procedural steps that a given agency follows. And, procedurally speaking, CEQA is doing what it was supposed to do, Marlatt says—local governments are looking at potential impacts to a project, disclosing them and mitigating or offsetting them.

Over Marlatt’s nearly 30-year career, CEQA has become more complex, he says, due in part to litigation that’s shaped the body of law around it.

When he first started interacting with CEQA in the early 1990s, an initial study for a project was a two-page checklist. Now, an initial study “many times can be 80 to 100 pages of analysis,” he says.

Rowell and Moe, the Ocean Street Extension developers, say they’ve spent some $713,000 to date in the effort to see their vision of housing on the property turn into a reality (not counting the $1.65 million they paid to purchase the site). The consultant fees and city review of the EIR alone cost nearly $100,000 combined, and took around two years. That was due, in part, to the “extensive” comments from neighbors, they say.

Other developers have shared similar concerns about CEQA gumming up housing construction that they see as essential, and which many advocates are clamoring for. Jesse Nickell, senior vice president of construction and development at Swenson, says the bottom line is that “people are really afraid of change.” While CEQA is generally a really good thing, he says, “it becomes a tool sometimes for anti-development.” From there, the effects are a simple matter of supply and demand on Santa Cruz’s housing market, he says.

“If nobody can get the product out, then everything goes up in value,” says Nickell.

Ocean Street Extension residents insist, though, that the project proposed in their neighborhood simply isn’t the right product for Santa Cruz. Aldridge says she and her neighbors aren’t against development, and she knows the lot won’t be vacant forever. “But the laws are there for a reason,” she says.

Rowell and Moe believe that the case against them doesn’t have anything to do with considering alternatives for environmental purposes. They say it appears more focused on stopping their whole project.

“I think what they really want,” Rowell says, “is they want us not to be there.”

Additional reporting by Jennifer Wadsworth.

Alisha is a freelance reporter covering tech, policy and business news. Prior to moving to Santa Cruz, she covered policy and politics for CQ Roll Call in Washington, D.C., and for The Associated Press in Michigan, her home state.

5 Comments

5 Comments

  1. michael nussbaum

    December 12, 2018 at 3:05 pm

    In order for this project to proceed, the next-door crematorium has been penciled in to move across Ocean Street Extension and to be placed right near the San Lorenzo River, as apparently it’s not helpful to market brand new condos when there’s bodies being cremated literally next door. It’s likely that most of the folks who live at the Tannery Lofts just down river are not clued into this little tidbit (the few residents I’ve talked to there, sure weren’t), and how is moving a crematorium to be *closer* to the river environmentally prudent?

    The kicker for this? The crematorium owner has agreed to do the rather morbid task of removing any dental work prior to cremation to reduce the toxic emissions from the smokestack – not to install any sort of scrubbers to technologically address/solve the issue. As time goes on, it’s not solely dental implants which are of concern, however, for it’s more and more common to have all sorts of implants in our bodies, and non of those concerns have been addressed. But at least the developers can pay the cemetery to move the crematorium to keep it out of sight (for those new condos, anyway..)

  2. Sarah Heusten

    December 7, 2018 at 4:42 pm

    Classic case of NIMBYs ruining a perfectly fine development project.

  3. DISGUSTED

    December 7, 2018 at 10:46 am

    The utter selfishness, ignorance, and pettiness of the Ocean Street Extension residents can’t be overstated. Their statements throughout the project at meetings showed an abject aversion to even reading the current EIR and all the associated information about, for example, traffic. It doesn’t matter what the reports say, it doesn’t matter what the truth is, these residents would trot out the same arguments. They are impervious to information, and will throw whatever temper tantrums they can.

    There’s zero honesty to this lawsuit, just a bunch of “got mine, screw you” attitude from aging bougie jerks. The tactic is merely to delay the project as long as possible, drive up costs as far as possible, in a hope to bankrupt the housing builders. Shame on those residents, they’re behaving awfully and hurting the community.

  4. Michael Cox

    December 3, 2018 at 8:17 am

    I was trained in CEQA at Cal-State Hayward. The Geography Department established a class to learn and practice the law back in the early 80s. We each had to work up an actual project. I was able to write over 80 pages of comments for a TV transmission tower in the Bay Area. It was obvious to us twenty-somethings that the implementation of the law was going to become riddled with abuse. It needs to be reformed, but how? You can’t take away people’s right to use the law and litigation as a means toward the end of stopping a project they do not like or want.

    I worked as an environmental protection specialist for a good portion of my career. I observed the gradual expansion of the implementation process and the increasing abuse that came as part of the deal. Government was looking for more work and revenue. Neighbors were looking to kill projects by a thousand paper cuts and financial extractions. Opportunistic lawyers were looking for an easy mark. I believe CEQA lawsuits are now the number one tool used by project opposition to stop work across the State.

    A lot of the abuse happens behind the scenes. Confidentiality and non-disclosure are certainly part of the litigation. It would be interesting to know not only how many projects have been shaken down in public litigation, but also in confidential settlements, and what the ultimate cost is. I had written a comment back in October about “litigation ahead” for the Ocean Street project. I was excoriated for that comment.

    Frankly, the majority opinion I see expressed over and over by residents in the County is a desire to chase away any change. We want our exclusive paradise all to ourselves. The City of Santa Cruz is the poster child for this attitude, where the main battle is now a battle to crush rental property owners. The students think they are going to get cheap rent. The jokes on them. Property values and rents will continue their upward climb, interrupted by the inevitable economic downturns, and a dribble of public money will continue to go toward homelessness, rent subsidies, road expansion, and the other social ills created by the abuse of law to stop any meaningful building of housing.

  5. Wm. C Casey

    December 1, 2018 at 10:37 pm

    As a local design and land-use professional, congratulations on a very well-written article. A dispute like this, CEQA lawsuit and all, is not easy to understand or understand. Your article is one of the best I’ve read at explaining this process for regular folks.

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