Many of California's most distinctive buildings have come of age. Our historic resources include not only graceful cathedrals, imposing courthouses, and ornate museums, but also beach bungalows, folk-art gardens, department stores, cafes, and movie theaters. Many familiar resources which mirror our culture now face demolition and disuse, including many buildings in San Jose.
California law encourages historic preservation. Cultural and historic resources have been protected along with natural resources like rivers, forests, and mountains, ever since the California Environmental Quality Act was adopted in 1970. The Legislature increased legal safeguards for the "built environment" in the 90's. The undisguised point of CEQA's protection of historic resources is to require objective consideration, review, and approval of feasible alternatives to demolition projects. Just as unnecessary pollution of a waterway is disallowed, approval of a project which results in the loss of an historic resource is unlawful when a feasible project alternative exists.
The City of San Jose boasts a number of restored historic buildings, but has lost much of its historic downtown through neglect and lack of foresight in an increasing pattern of demolition to make way for new construction.
The public interest petitioner, Preservation Action Committee of San Jose (PAC-SJ), now seeks to require the City to comply with CEQA's protections, so that additional historic resources will not be needlessly lost. This case concerns the Redevelopment Agency's New Century Block Project, through which the City has approved full
or partial demolition of four buildings in its National Register Downtown Commercial Historic District, including a City Landmark, the Jose Theater. The City’s predisposition for approval of the project prior to environmental review of the feasibility of alternatives circumvented a fair look at preservation.
Through the efforts of PAC-SJ and the EIR consultants, feasible alternatives to demolition of the Jose Theater and Hong Kong Market, both slated for demolition as part of the project, were brought to light. These preservation alternatives gained the support of City staff, the Planning Commission, the Historic Landmarks Commission, the State Office of Historic Preservation, the National Trust for Historic Preservation, and three members of the City Council. Yet the City and Redevelopment Agency, already committed to the project long before CEQA review began, approved the demolition project despite the existence of a feasible alternative. The decision was not supported by substantial evidence in the record and was unlawful. The Court’s peremptory writ is therefore needed to protect San Jose residents from the needless destruction of historic spaces and the loss of integrity of the Downtown Commercial Historic District.
STATEMENT OF FACTS
A. PROJECT DESCRIPTION
The New Century Block Project is a demolition and redevelopment project proposed on 1.8 acres in downtown San Jose, on an historic block bounded by South Second Street, East Santa Clara Street, South Third Street, and East San Fernando Street. The project proposes mixed-use development of 117 residential units over 21,100 square feet of ground-floor retail uses, with below-ground parking. Planned buildings vary in height between three to five stories above grade. Final SEIR 1, Fig. 1-10, 3-10.
The project area lies in the Downtown Commercial Historic District, which is listed on the National Register of Historic Places. Photo 1-6; Id. at 29, 31, 33, 34 and 36. The project proposes full or partial demolition of four buildings of historic character, including the Jose Theater which was declared a City Landmark in 1991. Id. at Appendix A. The Theater, a Spanish Renaissance brick theater building opened for vaudeville in 1904, is a Contributing Structure in the Downtown Commercial Historic District and is individually eligible for the National Register of Historic Places and the California Register of Historic Places. Among the famous names appearing at the Jose were Al Jolson and Harry Houdini. AR 1784, 1793. Another building slated for demolition, the Hong Kong Market, also is a Contributing Structure. Id. at 2.
The project proposes demolition of two other buildings that may qualify as Contributing Structures, the Allens Furniture Receiving Department building and the Second Street Plaza building. The project proposes to retain the facade and lobby of the Jose Theater, but will otherwise demolish all four buildings. Ibid.
B. PREDEVELOPMENT PROCESS.
In 1992, the City issued a programmatic Final Environmental Impact Report (EIR) for its Downtown Strategy Plan, which presented a long-range program for the redevelopment and preservation of the central core of San Jose, requiring preservation of historic resources. Historic preservation policies of the Plan are summarized in the project EIR. AR 820 (EIR) at 18-21.
In 1994, a proposed renovation of the Jose Theater was considered by the Redevelopment Agency for El Teatro Campesino, a Latino theater company. AR 1401, 1410; AR 820 (EIR) Appendix F. This project did not go forward, and inception of the New Century Block Project began.
On June 11, 1996, Frank Taylor, the executive Director for the Redevelopment Agency, wrote a memo to the Agency Board explaining "Business Terms negotiated by and between Saratoga Capital and the Redevelopment Agency for the subject New Century Block Project." AR 1356. On June 26, 1996, Board Member David Pandori wrote a memo to the Board regarding the project and its treatment of the Jose Theater, conceding that new construction would replace the interior of the theater and encouraging "displaying [the theater's] history as part of a well-planned retail development in the ground floor of the site." AR 1377. Pandori also recommended "early review" of the required Historic Preservation [demolition] permit, "preferably before a significant approval such as Business Terms [which] is consistent with the historic review process already required under city law." AR 1378.
The City nonetheless entered into a predevelopment agreement with the developer on June 27, 1996, approving Business Terms and authorizing negotiation of a Disposition and Development Agreement and Ground Lease "providing for Agency funding of up to 9.8 million dollars" for the project. AR 1379-1380. A Memorandum of Business Terms defined details of the project including financial arrangements and a development schedule. AR 1047-1057. News of the planned demolitions became public only when the project was included as an item in a Redevelopment Agency budget proposal. AR 1379-1380.
On July 16, 1996, PAC-SJ objected to the proposal to demolish the Jose Theater which had essentially been approved by the Redevelopment Agency without participation of the Historic Landmarks Commission or compliance with CEQA. AR 1790; see also AR 775. On August 12, 1996, the Redevelopment Agency prepared an internal memo which outlined project steps:
AR 1990. Further explication of the process occurred in November 1996, when Agency staff noted that to meet a project March 1998 deadline for approval of the DDA and Planned Development rezoning,
the zoning application needed to be filed with the Planning Department. AR 1991. However, staff noted: " Filing the PD zoning has only one negative aspect . . . The plans are public information documents." Ibid; emphasis added. The Agency apparently knew that public reaction to the demolition project would be very negative.
A Case Statement for the preservation of Jose Theater was presented to the City by PAC-SJ in October 1996, and stated:
The agency’s privately negotiated deal excluded community input, ideas and alternative plans and concepts that would save the Jose Theater or integrate it into potential development projects . . .
AR 1786, 1787.
C. EIR PROCESS
The City in December 1996 prepared a Notice of Preparation (NOP) of a Supplemental EIR proposing to evaluate the impacts of demolishing the four historic buildings in the New Century Block Project. AR 820-821 (EIR); 1008-14. The EIR Initial Study was prepared in February 1997. AR 820, Appendix H.
Comments on the NOP were received from PAC-SJ, the State Office of Historic Preservation (SHPO), and the Historic Landmarks Commission, all voicing serious concerns about the continuing viability of the Downtown Historic District if the project were allowed. One concern was that loss of Contributing Structures in the District could lead to a de-listing of the District from the National Register, which in turn would jeopardize availability of federal tax credits necessary for future rehabilitation projects. This was explained to the City by the SHPO in no uncertain terms:
A loss of Commercial District National Register eligibility would result in the loss of such incentive funds (federal tax credits for seismic upgrade on contributing masonry buildings in the Commercial historic District) for private property owners. The loss of such funds also would undermine the city’s goal to assist private owners to meet URM [unreinforced masonry] requirements and could presumably lead to further destruction.
AR 703. The SHPO also stressed the conflict with the Downtown Strategy’s plan to retrofit rather than demolish historic buildings:
AR 704.
The Draft EIR was published in March 1997, and listed the project objectives in general terms: "to redevelop an existing blighted and underutilized site in Downtown San Jose, in furtherance of [adopted City Plans]." AR 820 at 13. The objectives also included enhancement of the "historic streetscape," rehabilitation of the Jose Theater facade, construction of "viable new housing in the Downtown Core," and promotion of downtown vitality. Ibid.
Among the comments on the EIR, prominent historic preservation architect Bruce Judd explained the consensus:
AR 1725. Other comments were received from the SHPO, PAC-SJ, and the Historic Landmarks Commission. AR 820, Appendix L, Sec. III.
James A. Salata, Chair of the Historic Landmarks Commission, told the City that more emphasis should be placed on the Jose Theater than on the other buildings in the Downtown Commercial District because it is the only designated City Landmark ever proposed for demolition. He stated that the Jose Theater's status as the only cultural resource in the Downtown Commercial District should be heavily emphasized, along with the fact that the scale of the proposed project has a significant unavoidable impact on the visual integrity of the Downtown Commercial District. He indicated that the SHPO's opinion should be sought to "address the threshold which determines the loss of National Register status for the Downtown Commercial District." AR 820 at Appendix L, p.27.
The City responded to comments in the First Amendment to the Draft SEIR. AR 820-821; Appendix L, pgs 1-27. Among other issues, commentors noted that the SEIR failed to analyze alternatives which would permit preservation of some of the historic buildings in enough detail to permit meaningful comparison with the proposed New Century Block Project or other alternatives (AR 541A), incorrectly characterized the demolition of the Jose Theater and retention of the facade as historic preservation, and made sweeping, unsubstantiated statements about cost, structural integrity, and seismic retrofit. SHPO Cherilyn Widell reiterated her concerns regarding the loss of the Historic District stemming from the proposed demolitions, and presented basic preservation guidelines that the DEIR had failed to incorporate. AR 541-544.
The assertion that the retention of the facade of the Jose Theater will "maintain and enhance" the historic streetscape is inaccurate. Although the DEIR acknowledges that the demolition of the Jose Theater is a significant impact, the DEIR consistently cites retention of the facade of the Jose Theater and its incorporation into the new construction on Second Street as an act which compensates for the demolition of the historic theater and preserves the historic appearance of the street.
The DEIR should clearly explain that "facadism", the incorporation of selected architectural elements of a building into new construction, is not a recognized form of historic preservation. The incorporation of the historic facade is merely a design reference to the past. It does not fall within the meaning or intent of historic preservation and cannot be said to maintain either the integrity or the appearance of the historic street.
Id. at 541.
PAC-SJ's comments on the amended EIR (820-821, Appendix L, pgs 17-25), pointed out that demolition of the Jose Theater is inconsistent with the City's 2020 General Plan, the Downtown Strategy Plan, and the 1992 Strategy Plan. PAC-SJ reemphasized the importance of the Jose Theater as an historical resource, and noted irregularities in the project approval process, failure to consider City Landmark standards for rehabilitation as stated in the Secretary of Interior’s Standards for Rehabilitation, and lack of consistent standards in comparing alternative projects. Ibid.
The Redevelopment Agency negotiated and prepared a summary of the proposed Disposition and Development Agreement and ground lease between the Agency and the developer Saratoga Capital in May 1997. AR 509-521. The detailed terms of the agreement included costs of $9,800,000 to be borne by the Agency. AR 516. The agreement stated that "the Agency has determined that the high quality residential development as provided in the DDA offers the best complementary use [for the site]" and that:
AR 521.
D. PLANNING COMMISSION REVIEW.
The Planning Commission met on June 11, 1997, to consider the certification of the Final SEIR and to vote on the Planned Development Rezoning. AR 2226-2254; 2282-2353. At the hearing, many citizens came forward to express their concerns regarding the threat to the Downtown Historic District and its standing in the National Register, the importance of the Jose Theater as a city landmark, and support for an alternate plan not considered in the DEIR. Speakers also queried whether the predevelopment agreement between the Redevelopment Agency and the developer rendered any meaningful review process moot. Ibid.
At the Planning Commission, the petitioner representatives of PAC-SJ presented a detailed project alternative, The Jose Theater Historic District Adaptive Reuse and Development Plan Alternative (AR 886-941), which allowed preservation and reuse of the Jose Theater and the Hong Kong Market buildings with the fewest significant impacts of all the alternatives while meeting the New Century Block Project objectives. Tom Simon of the San Jose Preservation Action Council commented during the hearing:
AR 2233.
Ibid. The SEIR concluded that the project would create significant unavoidable impacts to a City Landmark, the Jose Theater, and to the Downtown Commercial Historic District. AR 820-821.
City Staff recommended that the Planning Commission certify the Final SEIR, but then recommended that the Planning Commission deny the proposed rezoning (AR 1684-1693):
Id. at 1687.
1. The proposed rezoning is not consistent with the historic, archeological and cultural resources goals of the General Plan in that it includes the demolition of a Historic Landmark Building, and contributing structures to the Downtown Commercial District.
2. The proposed rezoning is not consistent with the intent of the Residential Design Guidelines regarding Neighborhood compatibility.
3. The proposed project would result in significant impacts to the Downtown Commercial Historic District which could jeopardize the District’s listing on the National Register of Historic Resources.
4. The proposed project would result in the loss of a significant historical resource, the Jose Theater, a City Historic Landmark.
5. The proposed Third Street elevation would constitute a "monolith" totally insensitive and architecturally unrelated in design to the existing downtown context, and more importantly to the Downtown commercial Historic District
Id. at 1689.
The Planning Commission moved to add the project alternative presented by petitioner PAC-SJ in the SEIR. AR 2244-2245. The SEIR was then certified. Id. at 2253. After extensive public testimony and Commissioner discussion, the Planning Commission voted to recommend adoption of a project alternative which would retain and rehabilitate both the Jose Theater and the Hong Kong Market in their entirety and to redesign the project to integrate into the historic district in accord with comments made by staff. AR 2345-2352. As later summarized by staff, the Commission recommendation included "major revisions":
2. The facades on S. Third and E. San Fernando Streets should be redesigned to ensure that the proposed project's scale, massing, and architecture complement, and are sympathetic to, the character, rhythm and historic and architectural context of the Downtown Commercial District.
AR 1574.
While the Planning Commission's recommendation regarding alteration of the project to save the Jose Theater and Hong Kong Market automatically proceeded to consideration by the City Council, the Commission's certification of the EIR was final unless appealed. On June 16, 1997, petitioner PAC-SJ therefore filed an appeal of the Planning Commission certification of the SEIR, citing the lack of inclusion of petitioners’ complete comments in the Final SEIR, lack of analysis of an alternative with the least impacts which accomplishes project objectives, lack of analysis of alternative funding mechanisms available for historic preservation, and irregularities in the project approval process, including approval of the budget and predevelopment agreement before the CEQA EIR process occurred. AR 454.
E. HISTORIC LANDMARKS COMMISSION REVIEW.
On June 30, 1998, City Planning Director James Derryberry submitted a staff report to the Historic Landmarks Commission regarding the New Century Block Project, which recited the Planning Commission recommendation and noted that it "is a hybrid of Alternatives B and D which were identified in the SEIR." AR 1574. Mr. Derryberry noted that the
AR 1573. Mr. Derryberry made detailed recommendations for the Commission's actions, supporting the revisions of the Planning Commission and adding additional design recommendations. AR 1574-1575. Retention and reuse of the Jose Theater was repeatedly stressed as a feasible way to "preserve the integrity of the Jose Theater City Landmark and protect the listing of the Downtown Commercial Historic District on the National Register of Historic Places" as well as further redevelopment objectives of removing blight and "enhancing the vitality of the Downtown." Ibid.
The Historic Landmarks Commission held a public hearing on the project on July 9, 1997. Members of PAC-SJ spoke in opposition to the proposed project and asked the Commission to consider the economic feasibility studies prepared by Landmark Partners to reuse the Jose Theater. AR 1500. When questioned by the Commission, project developer James Fox said that because the proposed project would lose 26 units to reduced parking if the Jose Theater was preserved, he was unwilling to make the changes recommended by the Planning Commission. Ibid.
Commissioners Casalino and Schmidt indicated that demolition of the Jose Theater and other Contributing Structures would result in a severe impact on the Downtown Commercial Historic District because many buildings have already been lost in the district. AR 1501. Commissioner Lazzarini questioned the purpose of having the District if the City does not protect the buildings within it. He said the City should consider other options which preserve the Jose Theater and also meet the housing goals of the proposed project. Ibid.
Chair Zetterquist said the City of San Francisco, at 49 square miles, has almost twice as many City Landmarks as the City of San Jose, and noted that the City of San Francisco has never demolished a City landmark. Ibid. The Commission unanimously moved to forward a six-point recommendation to the City Council, supplementing the recommendations of the Planning Commission, and included a recommendation that the City Council purchase the Jose Theater with Redevelopment Agency funds, retrofit it and protect it from the weather, and provide compensation to the applicants for costs of redesign. Id. at 1501-1502.
In a subsequent letter to Mayor Susan Hammer on August 29, 1998, the Landmarks Commission Chair James Zetterquist explained the Commission's action:
It is very discouraging to the commissioners, as it should be to you, that even when all the legal steps necessary to preserve a structure were taken, the theater is still threatened. Six short years ago, the City Council designated the Jose Theater a "Landmark of Special Historical, Architectural, Cultural, Aesthetic or Engineering Interest or Value of a Historic Nature," and in so doing not only granted the theater special status, but protection.
AR 210.
F. REDEVELOPMENT AGENCY ACTION.
Prior to the City Council hearing on the appeal of the SEIR certification or consideration of the Planning Commission's project recommendations, the Redevelopment Agency on August 21, 1997, took action "committing to the appropriation and encumbrance of funds" in the amount of a million dollars for the development of the project over the next three years. AR 1284.
G. CITY COUNCIL HEARING ON ORIGINAL PROJECT.
Prior to the City Council hearing on the project, PAC-SJ included a summary of its Alternate Plan proposed for rehabilitation of the Jose Theater, complete with an index of resources, supporting organizations, potential funding sources, consultants reports, response to the SEIR, and case statement. AR 1718-1741. Soon after, PAC-SJ announced availability of financing for the Alternate Plan in the sum of up to $11 million. AR 1712.
On September 16, 1997, the City Council held a public hearing to hear the appeal of the SEIR and to consider the proposed Planned Development rezoning for the New Century Block Project. AR 2132-2254. Community members came forward to express support for and confirm the viability of the alternative put forth by PAC-SJ. Ibid. Architectural consultant David Wessel presented displays of two projects illustrating successful rehabilitation and reuse of historic buildings. AR 2162-2164. Charles Loveman from Landmark Partners explained the feasibility of alternative financing for the housing component of the project. Id. at 2164-2167. Aaron Paley of Community Arts Resources came forward to propose a model for creating a non-profit organization that could use and operate the Jose Theater for the City's arts community. Id. at 2168-2170.
1. Planning Director Recommendation.
Director of Planning Derryberry explained to all present that the purpose of the public hearing was for the Council to decide whether the project should be modified as recommended by City Staff, the Planning Commission, and the Historic Landmarks Commission, or approved intact as recommended by the Redevelopment Agency. AR 2134. He pointedly stated that "I have to report to you that this project was designed before the EIR was done and does not incorporate the feasible mitigation that the EIR identified." AR 2135.
As a preface to explaining that staff could not support the project as proposed, Mr. Derryberry stated that, while "preliminary review is a standard procedure for every development in this City," thereby allowing staff to discuss project design with the Redevelopment Agency and developers before formal application begins, this never happened with the current project:
As the City’s Director of Planning, it’s very disturbing to me that the planning Staff and two city Commissions are strongly opposing a project that is being recommended by the Redevelopment agency. How can this be? We’re both bound by the same General Plan Policies, the same supplemental EIR we both refer to, and the same City Council gives direction to both staffs.
The bottom line, Madam Mayor, members of the Council, for this project, is that this residential retail mixed use project, a very excellent development concept, does not have to come at the expense of the Jose Theater or the Hong Kong Market, or the Downtown Commercial historic district. On behalf of the Planning Commission and the Historic Landmarks Commission, I respectfully recommend that the City Council direct the Redevelopment Agency to take this project, redesign to incorporate the mitigation the EIR identifies, to involve City Staff and your two commissions in this review process, then we can bring back to the City Council a project which has brought community support because it provides the downtown housing we need and preserves our historic landmark district.
AR 2135-2136; emphasis added.
2. Public Testimony.
Among those testifying before the City Council in support of the recommendations of City Staff and its Commissions was the SHPO, Cherilyn Widell, who traveled "from Sacramento to indicate [her] grave concern for the continued preservation and care of the San Jose Downtown Commercial Historic District." AR 2171. The SHPO described the National Register of Historic Places, eloquently noting that
AR 2172. Ms. Widell warned that due to the numerous losses of buildings in the San Jose Downtown Commercial Historic District in recent years, the "District is perilously close to losing its National Register status because of its loss of character." AR 2173; emphasis added. Loss of historic status would result in loss of the 20% federal tax credit critical to rehabilitation opportunities for other historic resources in San Jose. AR 2174-2175. Ms. Widell concluded that
Complementing the remarks of the SHPO, Courtney Damkroger of the Western Office of the Washington D.C.-based National Trust for Historic Preservation urged the Council to remove the demolition of the Jose Theater and the Hong Kong Market building from the proposed development project and to "coordinate with the preservation and arts community and the Redevelopment Agency to provide the funds necessary to acquire the historic Jose Theater and the Hong Kong Market as community resources." AR 2177. She reiterated that facade retention is not a favored preservation element but a last resort at best. AR 2176. Regarding the predevelopment agreement:
PAC-SJ representative Tom Simon also addressed irregularities of the predevelopment agreement:
Id. at 2155. Following other public speakers (AR 2177-2204), the public hearing was continued to October 21, 1997, with direction to City staff "to try to work this out. . ." AR 2208.
In an article printed in the San Jose Mercury News on September 16, 1997, the City's recently retired and highly respected Planning Director Gary Schoennauer commented upon the predevelopment agreement and it’s effects on the approval process:
AR 1713-1715.
G. CITY COUNCIL HEARING ON REVISED PROJECT.
Following the City Council's direction, a revised project was designed over a four week time period, which included an underground parking garage, 116 apartments, and 17,600 leasable square feet of commercial uses, with the Jose Theater facade, lobby, and second floor space rehabilitated. The remainder of the building, the actual theater auditorium, would be razed to create a publicly owned gallery/museum/retail space. AR 1438.
In a memorandum to the City Council dated October 21, 1998, James Derryberry presented the views of the Historic Landmarks Commission regarding the modified project design. Ibid. The Commission had requested deferral of action until November, so that the Commission could have adequate time to review the proposal and also could have the benefit of input from the SHPO regarding the revised design and the status of the National Register District. The Commission had also requested redesign in certain particulars and information regarding specific costs of construction. Ibid.
The Commission recommendations followed a public hearing held on October 16, 1997, at which Commissioner Henderson noted that the revised plan is "lose-lose" because the developer was not happy with it and it did not save enough of the Jose to retain its historical significance. AR 1440. She said the City is sacrificing the Jose Theater to gain 25 underground parking spaces. Her comment was supported by other Commissioners. Commissioner Cheng said the project should be revised to build the housing and preserve the entire theater. AR 1440.
The City again received critical input from the SHPO, Cherilyn Widell, in correspondence dated October 23, 1997:
It appears that the Jose Theater will be sacrificed to construct twenty-five (25) parking spaces. The insistence on placing one story of underground parking directly under the building footprint is driving demolition. It is the complex and expensive requirements of stabilizing the historic walls during excavation of the parking lot that render infeasible what is otherwise a relatively straight forward stabilization and seismic reinforcement project. Serious consideration should be given to the alternative of placing parking under the new construction on the corner of San Fernando St. or at an adjacent location.
The State Office of Historic Preservation continues to maintain that the rehabilitation and reuse of the Jose Theater is a viable and feasible alternative to demolition . . .
The continued pattern of practice of selecting a demolition alternative over adaptive reuse or rehabilitation of historic properties is seriously jeopardizing the viability of the historic district. . .
If this trend of demolition continues it will be incumbent upon the SHPO to submit the San Jose Downtown Commercial Historic District to the Keeper of the National Register for removal from the National Register. . .
AR 158, 1435-1436; emphasis (bold) added; underline in original.
In a supplemental report to the Mayor and Council dated October 24, 1997, Derryberry expressed city staff support for the redesign of the Jose Theater, but continued to object to the lack of redesign of the housing facades on Third and San Fernando Streets. AR 1436-1437. In a Supplemental Report dated October 27, 1997, Derryberry responded to the SHPO letter to the effect that in staff's opinion, more partial design changes are unworkable and in order to rehabilitate the entire Jose Theater the developer and architect would need to start over. AR 1436.
On October 28, 1997 the City Council reconvened and heard lengthy testimony regarding the new proposal. AR 2068-2131. Jim Zetterquist, Chair of the Historic Landmarks Commission, stated:
Furthermore, we find the new proposal replete with inaccurate assumptions, misinformation and a lack of critical cost analysis of viable alternative construction methods. . .
I again respectfully request that you appoint a special task force comprised of representatives from the Redevelopment Agency, the Historic Landmarks Commission, PAC-SJ, the Planning Department and the developer to evaluate recently proposed alternatives which keep both the housing project and the Jose Theater intact. Constructing parking in the southeast corner rather than under the Theater is just one alternative worth careful consideration.
AR 2083.
Historic Landmarks Commissioner Mark Lazzarini also addressed the City Council:
AR 2084.
Judy Henderson, Vice Chair of the Commission, stated:
But what we’re proposing . . . are that the parking underneath the Jose be moved to the corner of Third and San Fernando, which would allow, then, the Theater to stand as is. That the funds that are identified to demolish the auditorium and rebuild a new structure on that part of the footprint of the Jose be used instead to seismically retrofit the walls of the existing theater.
AR 2085-2086.
Karita Hummer addressed the Council and refuted all justifications to demolish the Jose Theater auditorium, including the availability of building users, the structural feasibility of the Theater, the viability of affordable housing, and the availability of financing. AR 2088-2090. PAC-SJ member Andre Luthard spoke regarding the predevelopment agreement:
AR 2087.
[t]he Jose Theater should be saved in its entirety. . . We’ve brought before you consultants recognized in the field of preservation. They’ve submitted alternative plans which would preserve the Theater and still accomplish a much needed housing development. You have heard representatives from the National Trust for Historic Preservation on the cultural and economic benefits of Historic districts and listing on the National Register of Historic Places.
You have been presented with petitions signed by hundreds of citizens from all walks of life and from all ethnic groups expressing their desire to preserve the Jose Theater. You have heard from small performing groups interested in using the Jose and their need for performance space. Our own State of California Historic Preservation officer appeared before you and corresponded with you, citing the previous loss of the buildings within the Commercial Historic District and the danger of losing Historic District status and listing on the National register of Historic Places. . .
You have heard preservationists over and over talk about tax credits and other economic benefits. You’ve allowed all this input, but your own statements show that the decision has already been made.
AR 2090-2091; emphasis added.
City Councilmember Pat Dando stated that
AR 2120. Councilmember Alice Woody said
AR 2122.
Councilmember Trixie Johnson summed up the project history:
. . . And they came around and they sold that vision to us one on one in private meetings with Frank Taylor. That’s how it’s done, dirty little secret. . .
The majority of the council at that time was willing to go along. There was never a discussion about whether this was or wasn’t historical preservation because it was never done in public before a lot of the thinking was solidified. I think the assumption of the Agency going into this process was that Council, and it was slightly different Council, was willing to destroy the Theater for that project, they don’t really care about the Theater, and it’s okay, we can talk to another developer about destroying this Theater for something else that the Council really cares about, like housing . . .
I do believe that’s mentally what was happening at the Agency, and that’s why we got to where we are in this recent history. . .
If we approve the destruction. . . We lose the theater forever, there's no chance to bring it back. With the [now fully restored hotel and conference center] Hayes [Mansion], we waited. We threw tarps over the roof, and we dreamed, and it happened . . .
. . . We can have the housing. We just have to have the will to step back from the brink and rethink what we are doing . . . Our community has asked us to have vision. The majority of this Council does not have a vision which includes a viable historic district downtown. There was a song, "Once you tear something down and you put in a parking lot." We’re tearing down a community treasure and putting in 25 parking spaces. That’s the bottom line for tonight’s decision.
AR at 2123-2126; emphasis added.
At the close of the October 28 hearing, the City Council approved the revised project, upheld the certification of the SEIR by the Planning Commission, and adopted a statement of overriding considerations on a vote of 8-3. AB 1470-1485.
On November 18, 1997, Tom Simon wrote a letter to the Mayor and Council members asking that the formal approval of the New Century Block project be removed from the consent calendar.
no factual information has been put forth showing why four historic buildings in a National Register Historic district must be sacrificed . . . One of the gravest concerns we have is how the RDA pushes its projects through. . . also alarming is how even with dramatic and compelling testimony from local, state and national officials and informed citizens, the council is unmoved. What has rendered the council so immune to logic and reason? Alternatives to this project were never seriously analyzed or considered. The city council rushed to a decision. The only attempt at modifying the project since it’s announcement was a last minute, half hearted attempt undertaken only to assure the needed votes on the council, not a legitimate attempt at preservation.
AR 193-196. On November 20, 1997, the City Council approved the rezoning of the New Century Block Project parcels, making way for development of the project in spite of environmental impacts. Ironically, the approval revised the project to require the City to buy the Jose Theater, as suggested by the Historic Landmarks Commission, but for the purpose of its demolition to build a "box" development without a user in mind.
This action was timely filed on December 18, 1998. On or about February 3, 1998, the Redevelopment Agency approved a DDA and ground lease for the New Century Block Project, with provisions requiring the Agency to contribute $14,337,000 to the project, including $5,147,000 for purchase of the real property. The developer was given an option to purchase the property for $1 following repayment of only the $2,900,000 agency loan for affordable housing construction. AR 818-819; 1257-1259.
On April 20, 1998, petitioner filed an amended petition, incorporating allegations relevant to the approval of the DDA and ground lease and including allegations relevant to the approval of another demolition/redevelopment project, the Fairmont Hotel Expansion. A demurrer is pending because the City wishes to separate the legal challenges to the two projects. In June 1998, the historic preservation (HP) permit and planned development permit (PD) for the New Century Block Project were approved. The parties have agreed that these two approvals will automatically be set aside if petitioner is successful in this mandamus action. The parties have also agreed that regardless of the outcome of the demurrer, the CEQA (Section V) cause of action on the New Century Block Project shall now proceed on the basis of the stipulated briefing schedule.
STANDARD OF REVIEW
In deciding whether to issue a peremptory writ for violations of the California Environmental Quality Act (CEQA; Public Resources Code (PRC) § 21000 et seq.), this Court shall determine whether the City and Redevelopment Agency committed a prejudicial abuse of discretion or failed to proceed in the manner required by law. The court "can and must . . . scrupulously enforce all legislatively mandated CEQA requirements." Citizens of Goleta Valley v. Bd of Supervisors (Goleta II) (1990) 52 Cal.3d 553, 564. The case turns upon whether or not the project approvals are supported by substantial evidence in the record: "facts, reasonable assumptions predicated upon facts, and expert opinion supported by facts." CCP § 1094.5; PRC §§ 21168.5, 21080(e), 21082.2(c).
ARGUMENT
I. VIOLATIONS OF CEQA.
CEQA achieves its purpose of long-term protection of the environment by functioning as "an environmental full disclosure statute, and the EIR is the method . . . [of] disclosure . . ." Rural Landowners Assn. v. City (1983) 143 Cal.App.3d 1013, 1020. An EIR's purpose is "to provide public agencies and the public in general with detailed information about the effect which a proposed project is likely to have on the environment . . ." (PRC § 21061; Karlson v. City of Camarillo (1980) 100 Cal.App.3d 789, 804) and acts as "an environmental 'alarm bell' whose purpose is to alert the public and its responsible officials to environmental changes before they have reached the ecological points of no return." County of Inyo v. Yorty (1973) 32 Cal.App.3d 795, 810.
1. Failure to Adopt Feasible Alternatives.
CEQA requires mitigation measures to be formulated in an Environmental Impact Report, to reduce significant adverse project effects to a level of insignificance. Guideline § 15126(c). The mitigation measures are not just informational; if a project has significant environmental impacts identified in an EIR, feasible mitigations must be implemented or the project must be denied. PRC § 21081. As noted CEQA commentators, Remy, Thomas, Moose and Manley observed, "[i]n contrast to [the National Environmental Protection Act], CEQA requires agencies to implement . . . feasible alternatives identified in EIRs for projects that will otherwise cause significant adverse impacts." Guide to the California Environmental Quality Act (CEQA) (9th ed. 1996), p. 9, citing PRC § 21002, 21081, Guidelines §§ 15002(a)(3), 15021(a)(2), 15091(a); Sierra Club v. Gilroy (1990) 222 Cal.App.3d 30, 41; Kings County Farm Bureau v. City of Hanford (1990) 221 Cal.App.3d 692, 730-731. Thus, "an agency cannot satisfy the statute simply by 'considering' the environmental impacts of a proposed project." Guide to CEQA, supra, pp. 9-10, citing Burger v. County of Mendocino (1975) 45 Cal.App.3d 322.
Agencies must deny approval of a project with significant adverse effects when feasible alternatives can substantially lessen the effects. Sierra Club v. Gilroy (1990) 222 Cal.App.3d 30, 44, 41 citing Citizens for Quality Growth v. City of Mt. Shasta (1988) 198 Cal.App.3d 433, 440-441; Guidelines §§ 15002(a)(3), 15021(a)(2),(c), 15041(c), 15364, 15370.
The City must adopt findings, supported by substantial evidence in the record, in order to approve a project with significant impacts when it fails to adopt mitigation measures identified in the EIR and review process. Guideline § 15091.
The space limitations of this brief preclude citation to all relevant evidence regarding the City's failure to approve a preservation alternative for the New Century Block Project; petitioners refer the court to the comprehensive Statement of Facts, ante at 2-26, and will fully discuss the evidence vis-à-vis this issue at the hearing on the merits. Briefly stated, however, a peremptory writ should issue to set aside the approval of the project for violations of CEQA, because the record contains no substantial evidence that preservation of the entire Jose Theater is infeasible.
In the appeal of the EIR adequacy, one issue raised by PAC-SJ was that "since the final project approval may hinge on the issue of feasibility, more evidence is needed to support or refute the argument that preservation is not feasible." AR 452. James Derryberry's official response was a concession that "the Draft EIR does not find that restoration of the Jose Theater or the Hong Kong Market is infeasible." Ibid. In fact, the EIR found restoration alternatives to be feasible ways to achieve project objectives: "[t]his Preservation and Reuse Alternative would meet the housing and retail objectives of the project . . . although the housing would be provided at a reduced level." AR 820 58-63. This was the basis of staff's recommendation for denial of the project.
The record shows that preservation of the Jose Theater would result, at worst, in the loss of 25 parking places, since underground parking could not be accommodated beneath the theater auditorium. There is also some evidence that a preservation alternative could be more expensive than the proposed project (AR 1687), and might require the developer to "go back to the drawing board." AR 1436.
The key document for the court's consideration, in conjunction with the facts chronologized in the Statement of Facts, is City Resolution No. 67721 for the New Century Block Project, regarding the claimed infeasibility of mitigation measures and alternatives to demolition of the Jose Theater and Hong Kong Market. AR 1470-1485. At Section III, "Cumulative Impacts," the resolution states that the cumulative loss of historic resources in the Downtown Commercial District will be significant and unavoidable, and that no mitigation measures have been identified to avoid or mitigate this problem. AR 1476; see EIR discussion of cumulative impacts attached hereto. Sections IV and V find preservation and reuse of the entire Jose Theater and/or Jose Theater/Hong Kong Market infeasible because they would not allow as much new housing or revitalize Downtown San Jose as much as the proposed project. AR 1480. There is no quantification or justification for a finding of infeasibility on the basis of such conclusory findings, and they do not rise to the level of substantial evidence justifying loss of a City Landmark. Further, there is no mention at all of the repeated recommendations for feasible alterations of the Third Street streetscape as recommended by the Historic Landmarks Commission and staff.
As Mr. Derryberry told the Historic Landmarks Commission:
AR 1573; see also 1574-1575. A few less housing units do not make a project infeasible; clearly, no developer has rights to a certain number of units. All of the objectives of the project (ante at 7) are met by a preservation alternative, either the EIR alternatives or the amended alternative proposed by PAC-SJ. The loss of 25 parking spaces to preserve a City Landmark is a feasible mitigation measure, and the administrative record is replete with practical solutions for preservation supported by staff, the State Historic Preservation Officer, the Historic Landmarks Commission, and PAC-SJ.
The writ should issue to set aside the project approval, because substantial evidence does not support a finding that preservation alternatives are infeasible.
2. Precommitment to the Project.
CEQA requires EIRs to "be prepared as early as feasible in the planning process to enable environmental considerations to influence project program and design . . ." Guideline § 15004(b).
Laurel Heights Improvement Association v. UC Regents (1988) 47 Cal.3d 376, 394. This is echoed in required policies of the City's historic preservation goals and plans. AR 820 at 14-20.
In the recent case Citizens for Responsible Government v. City of Albany (1997) 97 Daily Journal DAR 10014, the Court held that the City's approval of a development agreement unlawfully "contracted away its power to consider the full range of alternatives and mitigation measures required by CEQA." Id. at 10020. Even though the development agreement anticipated environmental review, its very existence precluded effective analysis. While the facts of the Albany case involved submission of a development agreement to public vote, the reasoning of the Court is relevant:
Id. at 10020. The City and Agency were mandated to complete environmental review prior to committing a million dollars to the project (AR 1284) and approving Business Terms. AR 1356, 1379-1380. Unlike the recent case City of Vernon v. Board of Harbor Commissioners (1998) 98 Daily Journal DAR 4419, the Redevelopment Agency in San Jose actually "approved" steps in implementation of the project, which committed it to a definite course of action. The behind-the-scenes assurances were reflected in the comments of developer Jim Fox at the City Council:
AR 2137.
All project approvals and precommitments must be set aside in order to allow meaningful CEQA review of project alternatives. A peremptory writ should issue ordering that all City and Agency resolutions relating to approval of the New Century Block Project be set aside, including funding allocations and business terms among other approvals, and that the project be reconsidered in full compliance with CEQA mandates.
B. VIOLATION OF HEALTH AND SAFETY CODE
If the writ issues as requested, the DDA and ground lease will be set aside, and this cause of action will be moot. In the alternative, violations of the Health and Safety Code also warrant issuance of a peremptory writ. According to the terms of the DDA and Ground Lease, the Agency will contribute $14,337,000 to the project, including $5,147,000 for purchase of the real property. The developer has an option to purchase the property for $1 following repayment of only the $2,900,000 agency loan for affordable housing construction.
Under Health & Safety Code § 33434, this property cannot lawfully be leased or sold under such preferential terms. The law requires that a sale price which is less than the fair market value of the interest to be conveyed be justified by the agency, which has not and cannot be done. Further, the agency cannot make required findings that
(2) The consideration is not less than the fair reuse value at the use and with the covenants and conditions and development costs authorized by the sale or reuse.
The writ should issue to set aside the approval of the DDA and the Ground Lease.
CONCLUSION
Redevelopment and revitalization of Downtown San Jose are goals embraced by all of the parties to this action. But actions to accomplish these goals must proceed in tandem with local and state laws which protect historic resources. Just as redevelopment cannot lawfully proceed in riparian corridors, new construction projects cannot sacrifice historic resources in the fact of feasible project alternatives. Such alternatives are recognized by all historic resource professionals who participated in the City's review of the New Century Block Project, from the petitioner PAC-SJ to the City's own appointed Historic Landmarks Commission, to the State Office of Historic Preservation.
The record demonstrates the City's unwillingness to consider alternatives based on its precommitment to a demolition project, apparently based on an initial misimpression that saving the Jose Theater facade would accomplish historic preservation. This significant error cannot defeat the protections of CEQA. The peremptory writ should issue in the first instance.
Dated: Respectfully submitted,
BRANDT-HAWLEY & ZOIA
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Susan Brandt-Hawley