In Mani Brothers Real Estate Group v. City of Los Angeles, the Second District Court of Appeal of California addressed the issue of whether the City of Los Angeles (the “City”) and the Los Angeles Community Redevelopment Agency (the “CRA”) properly relied on a 2005 Addendum to a 1989 environmental impact report (“EIR”) in approving a modified project. In doing so, the Court specifically rejected the analysis of a 2006 case which held that the initial inquiry should focus on whether the changes amount to a “new project” requiring an EIR. Rather, under the substantial evidence standard of review, and based on CEQA and the CEQA Guidelines, the Court held that the proper question is whether the changes result in new significant impacts compared to the original project.

The project in question is located on 6.3 acres in downtown Los Angeles, within the City’s central business district redevelopment area. In 1989, the CRA certified an EIR for the original project. That project (the “Original Project”) consisted of five buildings with approximately 2.7 million square feet of total development, including offices uses, retail uses, and a hotel. The implementation of the Original Project was delayed by litigation, which left the developer in a weak commercial real estate leasing market.

In May 2004, in response to a changed market that favored residential and mixed-use development, the developer requested that the CRA revise the Original Project to permit residential uses. The revised project (the “Modified Project”) reduced much of the space devoted to office and retail use, retained the hotel component, while adding a residential component that provided more than 800 residential units. The Modified Project increased the total project size to approximately 3.2 million square feet.

The CRA undertook an assessment of whether additional CEQA review was required for the Modified Project, pursuant to Public Resources Code § 21166 and CEQA Guidelines § 15162. Based on the applicable standards, the CRA determined that a new or supplemental EIR was not necessary because there were no new or more severe significant environmental impacts from the Modified Project than what had been previously evaluated in the EIR for the original project. Thus, the CRA prepared an Addendum, which concluded that although the Modified Project was approximately 18% larger, the environmental impacts would be reduced, primarily because of the introduction of the large residential component. Residential uses generate considerably less traffic when compared to office and retail uses.

Following the City and the CRA’s approval of the Modified Project, the Petitioner Mani Brothers (a rival developer and neighboring landowner) challenged the approval. Mani Brothers relied extensively on a recent case decided by the Third District Court of Appeal, Save Our Neighborhood v. Lishman (2006) 140 Cal.App.4th 1288 (“Save our Neighborhood”). There, the City of Placerville had approved a substantially revised project in reliance on an Addendum to a mitigated negative declaration prepared for a previous project. The Third District found that the project in question was not a modified version of the prior project, but was so different as to constitute a completely new and different project. The Third District concluded that the CEQA requirements allowing the preparation of an Addendum did not apply to a “new project”, and that the city had violated CEQA. Based on this same reasoning, the Mani Brothers argued that the Modified Project was so different that it should be considered a “new project” requiring a new EIR.

The Court rejected this argument, and the fundamental analysis of the Third District in Save Our Neighborhood. The Court stated that the “new project” test did not provide a useful or objective framework, because drastic changes to a project “might be perceived by some as transforming the project to a new project, while others may characterize the same drastic changes in a project as resulting in a drastically modified project.”

As noted by the Court, the focus of CEQA is the potential environmental impacts of a project. The Court stated that by focusing on whether a project was “new” or “modified”, and finding such a label determinative, as the Third District did in Save Our Neighborhood, imposed a new analytical factor beyond the framework of CEQA. Changes in the size, ownership, nature and character of a project are of no consequence in and of themselves, and are only meaningful to the extent they affect the environmental impacts of a project.

Therefore, the Court found that it must look to Public Resource Code Section 21166 and CEQA Guidelines § 15162, which mandate that a supplemental EIR need not be prepared unless substantial changes to a project are proposed that will require revisions to the previous EIR due to a new significant environmental impact, or a substantial increase in the severity of a previously identified significant environmental effect.

Applying this standard, the Court found that there was substantial evidence in the record to support the CRA’s determination that the Modified Project would not cause new or more severe impacts that were not previously analyzed in the EIR for the Original Project, except as to the analysis of impacts on police services.

The original 1989 EIR found that the Original Project would have significant and unavoidable impacts on police services. The 2005 Addendum stated that the Modified Project would increase the demand on the police services, but then concluded that mitigation measures would reduce these impacts to a level of insignificance. The Court found that this conclusion was inexplicable and not supported by substantial evidence because the mitigation measures were the same measures that the 1989 EIR found would not reduce impacts on police services to less than significant. Thus, the Court found that the CRA and the City erred in failing to prepare a Supplemental EIR evaluating the revised project impacts on police services.