New Sea Level Rise Policies Will Have A Major Impact on California Coastal Development

The California Coastal Commission adopted this week a new, major statewide policy document to help guide its decision-making when analyzing the impact of sea level rise on new permit applications and coastal land use plans.

The nearly 300-page policy document analyzes current science, technical information and best practices in a single resource to help coastal regulators at the state and local level.  While the document is intended by the Commission to guide planning and development decisions, it is advisory and does not alter or supersede existing legal requirements, such as the dictates of the California Coastal Act and certified local coastal programs.  (“Local coastal programs” are the land use regulatory documents prepared in accordance with the Coastal Act that govern land use and development in the coastal zone.)  In practice, the document will likely establish the beginning design or negotiating position with staff, unless project applicants or local governments have a persuasive case that varying from the policy document is warranted.

When should sea level rise issues be evaluated?

Sea level rise should be considered in the project analysis when the project or planning site is:

  • Currently in or adjacent to an identified floodplain.
  • Currently or has been exposed to flooding or erosion from waves or tides.
  • Currently in a location protected by constructed dikes, levees, bulkheads, or other flood control or protective structures.
  • On or close to a beach, estuary, lagoon, or wetland.
  • On a coastal bluff with historic evidence of erosion.
  • Reliant upon shallow wells for water supply.

New 5.5 Foot by Year 2100 Sea Level Rise Standard

The Commission has concluded that the “best available science” on sea level rise projections today can be obtained from the National Research Councils 2012 Report, Sea-Level Rise for the Coasts of California, Oregon and Washington: Past, Present and Future.  For most of California, regulators will be starting with a 5.5 foot sea level rise by year 2100 assumption, as shown in the following table.

Sea Level Rise Projections for California.  Year 2000 as baseline.

Time Period North of Cape Mendocino South of Cape Mendocino
By 2030 -2 to 9 inches

(-4 to 23 cm)

2 – 12 inches

(4 – 30 cm)

By 2050 -1 to 19 inches

(-3 to 48 cm)

5 to 24 inches

(12 to 61 cm)

By 2100 4 to 56 inches

(10 to 143 cm)

17 to 66 inches

(42 to 167 cm)

The policy document recommends that coastal regulators use a precautionary approach by planning and providing adaptive capacity for the highest amount of possible sea level rise.  The Coastal Commission has used for many years a sea level rise assumption of 3 feet when evaluating shoreline projects.  Now, new development and redevelopment will likely have to design and plan for 5.5 foot sea level rise at the property, unless other contrary evidence can be provided to the NRC study or unique coastal processes exist for the property in question.

Selected Sea Level Rise Policy Recommendations

An exhaustive analysis or restatement of the policy guidance document is beyond the scope of this article.  However, real estate owners and developers in the coastal zone should keep the following new Commission policies in mind:

  • Permitting authorities should avoid siting development within areas vulnerable to flooding, inundation, and erosion, so that long-term shoreline protective devices are unnecessary.
  • Continuing a controversial policy, new development and redevelopment generally may not use bluff retaining or shoreline protective devices.
  • Local Coastal Programs should encourage and require redevelopment to be brought into conformance with current sea level rise standards, including removal of seawalls or other armoring.
  • New development should be approved with conditions that require future modification, relocation, or removal of buildings when they become threatened with natural hazards, including sea level rise.
  • Improvements to existing at-risk structures should be limited to basic repair and maintenance. Permitting agencies should not allow property owners to extend the life of such structures or expand-at risk elements of the development, consistent with the Coastal Act.
  • Continuing and formalizing another policy, local coastal programs and coastal development permits should require recorded assumptions of the risk, “no future seawall” conditions, and/or other appropriate mitigation measures that require the private property owner to internalize the risk of developing in the coastal zone.
  • When sea level rise causes the public trust boundary to move inland so that a protective device that was located on uplands becomes subject to the public trust, the property owner should either obtain permission from the applicable governmental agency or apply for a permit to remove the encroachment.
  • For impacts to sand supply or public recreation due to sea walls or revetments and the loss of sandy beach from erosion in front of shoreline protection devices, require commensurate in-kind mitigation, a sand mitigation fee, and other necessary mitigation fees.

This is only a small sample of the issues raised by the sea level rise policy document. Before seeking a coastal development permit on or near the shoreline, property owners should carefully review the policy guidance document with counsel.  Going forward, project costs will likely be increased – both at the planning and design stage and at the construction stage.

In addition, this policy document is the most recent policy pronouncement that coastal regulators may use to pursue so-called “managed retreat” of private development so that a public shoreline can come into being over time as sea levels rise.  As the policy document points out, federal and state takings law may be triggered in the particular case.

These new changes will have a significant impact on future permitting in the coastal areas of California. We will see how these new policies are implemented by state and local government and, if necessary, challenged by real estate owners and developers.

State Agencies Can’t Say CEQA Mitigation is Infeasible If Earmarked Funds Are Unavailable, High Court Says

When environmental review of a proposed development project by a state agency shows that it will have traffic impacts, a state agency is not allowed to nevertheless approve the project on the grounds that the funds needed to mitigate congestion have not been earmarked by the Legislature, the California Supreme Court has held.

The court’s recent unanimous decision in City of San Diego v. Board of Trustees of the California State University is significant for two important reasons.  First, it is now clear that state agencies cannot shift the costs of off-site environmental mitigation of their projects to local and regional governments, except in very limited circumstances.  Second, the use of a “statement of overriding considerations” by the legislative body of a lead agency will not be given deference by the courts if potential mitigation measures are not “truly infeasible.”

The Board of Trustees of the California State University sought to expand the campus of San Diego State University (“SDSU”) to accommodate more than 10,000 additional students over the next several years.  The environmental impact report for the project showed that it would contribute significantly to traffic congestion off-campus.  Although the Board of Trustees budgeted more than $9.9 billion for campus expansion efforts, the Board of Trustees declined to use those funds, or any of the California State University’s other financial resources, to reimburse other local governments for SDSU’s fair share of the cost of mitigating its project’s off-campus environmental impacts.  The Board of Trustees maintained that it was not required by law to pay for mitigating a project’s environmental effects unless the Legislature made an appropriation for the specific mitigation measures required.

In other words, if the Legislature did not make an earmarked appropriation for specific environmental mitigation, the Board of Trustees argued that it could take the position that mitigation was infeasible and the Board of Trustees could adopt a statement of overriding considerations and approve the project.  A “statement of overriding considerations” is a legal tool under the California Environmental Quality Act (“CEQA”) that allows a reviewing public agency to approve a project because it offers non-environmental benefits that outweigh its unmitigated significant environmental effects.

The California Supreme Court rejected the Board of Trustees’ argument.  The Board of Trustees is not limited to earmarked appropriations to mitigate the environmental effects of its projects.  Indeed, the Board of Trustees must use other available sources of funding to comply with CEQA’s mandate.

The court acknowledged that CEQA permits a lead agency to determine that mitigation measures necessary to avoid a project’s environmental effects are within the responsibility and jurisdiction of another public agency. However, the ability to shift the burden to another agency is strictly limited:  a lead agency may disclaim responsibility “only when the other agency said to have responsibility has exclusive responsibility.”  When the other agency doesn’t have exclusive responsibility, then the lead agency must share the economic costs of mitigating environmental impacts on regional infrastructure.

The high court gave several reasons for requiring cost sharing, but two bear repeating here.  First, nothing in CEQA says or even suggests that funds appropriated by the  Legislature for a project’s overall budget cannot be used for environmental mitigation.  Second, CEQA does not condition or limit the duty of a state agency to mitigate its project’s environmental impacts on the Legislature’s grant of a specific, earmarked appropriation.

The court also pointed out that the Board of Trustee’s position was unreasonable and impracticable. If a lead agency proceeds with a project without paying for the needed mitigation, the cost of addressing the project’s impacts on local infrastructure would be shifted to local and regional governmental agencies.  Under state and federal law, local and regional governments have limited tools to raise funds for local infrastructure projects.  Developer impact fees must be roughly sized to the impact of each developer’s project. Any “gap” in funding not covered by developer impact fees for needed infrastructure would require local government to draw on its general fund or increase taxes.  Thus, in this case, the City of San Diego would be put in the uncomfortable position of solving issues caused by the SDSU project.   Neither CEQA, nor any other state statute identified by the Board of Trustees, gives the California State University the authority to shift its share of the costs of infrastructure improvements to local governments.

This case also reinforces the California Supreme Court’s limits on a lead agency’s use of a statement of overriding considerations to approve a project notwithstanding its significant environmental effects. The court repeated from its decision in City of Marina v. Board of Trustees of California State University: “CEQA does not authorize an agency to proceed with a project that will have significant, unmitigated effects on the environment, based simply on a weighing of those effects against the project’s benefits, unless the measures necessary to mitigate those effects are truly infeasible.”  This “truly infeasible” standard, reaffirmed by the high court, underscores that a mere balancing of “overriding economic, legal, social, technological, or other benefits of the project” against the significant effects on the environment is not enough.  To adopt a statement of overriding considerations, a specific finding in the record that identified mitigation measures or alternatives are infeasible because of “specific economic, legal, social, technological, or other considerations, including considerations for the provision of employment opportunities for highly trained workers” is required.

CEQA is not only a procedural statute.  Many provisions of CEQA have as their focus the preparation of environmental documents to inform the public and decision makers of the significant environmental impacts of proposed projects.  However, as this case makes clear, CEQA’s “substantive” limitations on the powers of state agencies and local legislative bodies to make decisions should not be overlooked.

California Supreme Court lets stand challenge to tiered pricing model for water service

California water utilities cannot impose tiered pricing to discourage excessive water use without showing the price increases are related to the increased cost of providing water service to the customer.

On July 23, the California Supreme Court let stand a lower court ruling that invalidated San Juan Capistrano’s price tier structure for water rates.  In Capistrano Taxpayers Association, Inc. v. City of San Juan Capistrano, the California Court of Appeal held that Proposition 218 requires public water agencies to calculate the actual costs of providing water at various levels of usage.  Water rates must reflect the “cost of service attributable” to a particular parcel.  If a water agency does not calculate the cost of actually providing water at its various tier levels, the tier allocation is suspect and may violate the California Constitution.

Capistrano Taxpayers Association was decided and published in April.  The immediate outcry in response to the decision was powerful — with even California Governor Jerry Brown deriding the decision.  In response, various public interest groups and California’s Attorney General Kamala Harris requested that the California Supreme Court “depublish” the opinion.  “Depublication” would have eliminated the precedential effect of the lower court ruling, so that other water districts could ignore the decision.  However, without further comment, the California Supreme Court refused to depublish the opinion today.  As a result, Capistrano Taxpayers Association is binding on water districts throughout the state.

The state’s Water Resources Board has told the Sacramento Bee that it can live with the ruling.  “The decision does not foreclose conservation pricing,” board spokesman Tim Moran said in a written statement.  It appears that the Water Resources Board may need to re-read Capistrano Taxpayers Association and Proposition 218.

Proposition 218, enacted by voters in 1996, says that it “shall be liberally construed to effectuate its purposes of limiting local government revenue and enhancing taxpayer consent.”  The voters adopted Proposition 218 in order to prevent local governments from using their considerable powers to raise revenue without an economic nexus or a vote of the people.  Proposition 218 provides in relevant part:  “A fee or charge shall not be extended, imposed, or increased by any agency unless it meets all of the following requirements: Revenues derived from the fee or charge shall not exceed the funds required to provide the property related service [and] the amount of the fee or charge imposed upon any parcel or person as an incident of property ownership shall not exceed the proportional cost of the service attributable to the parcel.”  If the fee or charge does not meet the economic nexus requirements of the California Constitution, then a water district should call the policy what it is – a tax – and seek voter approval.

Put another way, if a water district seeks to adopt, as a matter of policy alone, a pricing structure to discourage “wasteful water use” such an action by a water district would not survive a challenge under Proposition 218 without a vote of the people.  Taxpayer consent is required for a water district to adopt a “conservation pricing” policy.

Of course, most water districts politically want to avoid a public vote.  It is much easier politically to claim that a tiered pricing structure fits within the economic nexus requirements of Proposition 218. To do that, some heavy lifting by the water district and its consultants will be required.  A water district needs to do more than merely balance its total costs of service with its total revenues.  The water district must correlate its tiered prices with the actual cost of providing water at those tier levels.  Of course, Capistrano Taxpayers Association says that it is not necessary for the water district to calculate a rate for each particular parcel or street address.  However, pricing tiers must be based on water usage, not water budgets.  Water agencies must determine how to pass on the true, marginal cost of water to those customers whose extra use of water forces water agencies to incur higher costs to supply extra water.  In order to make that determination, water agencies will need to compile a robust evidentiary record and supporting professional analysis in support of their decision.

Much of California is still in the midst of a severe drought.  Policy makers are using whatever tools they can to encourage residents and businesses to conserve water — and rightly so.  However, those tools should be used within Constitutional limits. The California Supreme Court’s decision not to depublish Capistrano Taxpayers Association ensures that water districts will have to follow Proposition 218’s mandate.

US Supreme Court holds sign regulations can’t impose different restrictions based on informational content

If a city or county’s laws impose different restrictions on signs based on their informational content, the laws are presumptively unconstitutional and may be justified only if the government proves they are narrowly tailored to serve compelling state interests, the US Supreme Court has held.

In Reed v. Town of Gilbert, decided in the last blockbuster month at the US Supreme Court, the justices established a powerful tool for real estate owners, developers and brokers to challenge local sign ordinances. Cities and counties throughout the US should carefully review their signage laws and regulations in light of the court’s decision, as many local governments likely have non-compliant laws on the books.

The Town of Gilbert is a municipality in Arizona that had, like many U.S. cities, a sign code that limits the use and display of outdoor signs without a permit.  The Town’s sign code applied different time, size, and other restrictions on the signs, depending on whether they were ideological, political or for religious assembly, among other categories.  The petitioners, a church and its pastor, held temporary worship services in and near the Town.  The church posted signs early each Saturday bearing the church’s name and the time and location of the next service.  The church did not remove the signs until around midday Sunday.  The Church was cited by the Town for exceeding the time limits for displaying temporary directional signs and for failing to include an event date.

The U.S. Supreme Court held that the sign code’s provisions were content-based regulations of speech, violating the First Amendment to the U.S. Constitution.    The Town’s sign code defines categories of temporary, political and ideological signs on the basis of their messages and then subjects each category to different restrictions.  Because the nature of the restrictions depend entirely on the signs communicative content, the signs are subject to the strictest level of Constitutional review. The Town’s claims that the disparate treatment was justified on the basis of keeping the Town beautiful and safe were inadequate and rejected by the high court.

Justice Thomas, writing for the court, rejected the Ninth Circuit’s prior decision upholding the Town’s sign code.  A court must first ask whether a law is content based on its face. If so, the inquiry ends and strict scrutiny applies. It doesn’t matter if a local government has a benign motive, content-neutral justification, or lack of animus toward the ideas contained in the regulated speech. However, if a sign law is content neutral on its face, the inquiry is not over.  A court must still inquire into the purpose and justification for the law and determine whether it is content based.

The Court rejected the Ninth Circuit’s conclusion that the Sign Code did not single out any idea or viewpoint for discrimination.  While the Town may not have been guilty of blatant content discrimination, the sign code did single out specific subject matter for differential treatment.

In light of the Court’s decision, local governments enacting sign ordinances must resolve their public policy concerns with regulations that focus on size, building materials, lighting, moving parts, portability, and location.  Those requirements cannot differ based on the content or message of the sign.  For example, it is no longer acceptable to have different sign requirements for political signs and commercial real estate listing signs.

Only in extraordinary circumstances would a content-based sign survive strict scrutiny — such as, for example, where absolutely necessary to protect the safety of pedestrians, drivers and passengers. Local governments are well advised to closely review Justice Alito’s concurring opinion, which describes additional helpful examples of sign restrictions that would likely survive First Amendment testing.

Real estate owners, developers and brokers often confront cities and counties that seek to impose strict limits on the types of signage that can be placed on public and private property.  In light of the holding of Reed v. Town of Gilbert, commercial signage will be harder for local governments to prohibit and limit.  All signage in the community must be treated equally, regardless of its content, with very limited exceptions.