Valley of the Moon Alliance v. County of Sonoma

Filed 10/18/06 Valley of the Moon Alliance v. County of Sonoma CA1/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION ONE

Defendants County of Sonoma and the Sonoma County Board of Supervisors approved the Sonoma Country Inn project and certified the project’s environmental impact report (EIR). Plaintiff Valley of the Moon Alliance appeals from a judgment denying its petition for writ of mandamus, which challenged the project approval decision.

Plaintiff contends that there was a feasible alternative to the project, Alternative 5, and that the EIR is deficient regarding traffic, water supply, and off-site alternatives. We disagree and affirm. Defendants’ decision to approve the project is supported by substantial evidence. In particular, there is substantial evidence to support defendants’ determinations that Alternative 5 is not feasible, and the EIR is adequate and complies with the California Environmental Quality Act (CEQA) (Public Resources Code, § 21000 et seq.).[1]

I. FACTS

This case comes to us with a 31-volume administrative record. We summarize the lengthy and substantial environmental review process that led to the approval decision.

In February 2001, real party in interest Graywood Ranch LP (Graywood) filed an application for the approval of the Sonoma Country Inn project, seeking the plan amendments, permits, zoning changes, etc., for a 50-room inn, spa, restaurant, winery, and 11 residences on the Graywood Ranch on Highway 12 in Kenwood.

The inn would provide accommodations by reservation only, employ up to 119 people, and have an estimated year-round occupancy of 80 percent. The inn would include small retail shops, a central gathering space, administrative offices, and meeting rooms. The spa and restaurant would be part of the inn but open to the public by reservation. The restaurant includes a lounge and would seat 75 patrons inside and 50 outside. The winery would have an annual production capacity of 40,000 cases, and would have a tasting room, a wine retail sales area, and a “Country Store“ selling Sonoma County foods, produce, and gift items. The winery would host 60 special events a year, including weddings, meetings, winemaker dinners, and charitable auctions.

The inn, spa and restaurant would be located on a plateau above the valley floor. The winery would be located on the valley floor itself. Graywood submitted a number of technical reports in support of its application.

In April 2002, the Sonoma County Permit and Resource Management Department (PRMD) issued a 46-page initial study. The County concluded that the project may have a significant effect on the environment, requiring preparation of an EIR.

The draft EIR (DEIR), which consumes almost an entire volume of administrative record, was issued in May 2003. The DEIR describes the project objectives. Graywood’s first objective was to “[c]onstruct a high quality 50-room inn, spa, winery, and residential complex that is substantially in compliance with intended uses identified” in the County General Plan and Zoning Ordinance. Other objectives included providing “a ‘country inn’ experience in keeping with the character of Sonoma Valley, while providing amenities that are available to both local residents and visitors,” and “consistent with [Sonoma Valley’s] history of agricultural uses and tourism.”

The DEIR analyzed the four main, on-site project alternatives, Alternatives 1 through 4. The DEIR also identified and analyzed 10 off-site alternatives, concluding they were infeasible.

The DEIR included a detailed analysis of potential impacts on water supply, and concluded that the project would not cause a significant impact to water supply, groundwater recharge, or nearby wells. The DEIR also included a detailed analysis of traffic impacts, and concluded that the additional mitigation measure of two proposed turn lanes would allow high-speed traffic on Highway 12 to move out of the main traffic stream and slow down for turns into the project access road, thus mitigating potential safety concerns for rear-end collisions.

The DEIR also indicates that the annual production of the winery was reduced from 40,000 to 10,000 cases. The winery would host 30 special events per year.

A public hearing on the DEIR was held on June 5, 2003. All interested persons were given the opportunity to be heard.

As a result of public comment on the DEIR, a fifth onsite alternative, Alternative 5, was developed and added to the environmental review analysis of the project. Alternative 5 eliminated the winery on the valley floor and the winery special events, and moved the inn/restaurant/spa complex to the valley floor from the plateau. The inn was to be reduced from 50 rooms to 24 rooms.

The final EIR (FEIR) was completed and released to the public in February 2004. It consists of the DEIR and a volume of response to public comment. In response to public comment, the FEIR substantially reduced the square footage of the winery and the number of annual special events.

In response to other public comment, the FEIR states that an alternative limiting development to the valley floor may not be feasible. The FEIR also concludes that Alternative 5 “would only partially meet [Graywood’s] first objective [constructing a high quality 50-room inn], as it would have fewer rooms, and no winery or special events.”

The FEIR found that the additional turning lanes would mitigate traffic problems caused by vehicles slowing to turn onto the project access road. The FEIR also concluded “that there is a significant and reliable supply of groundwater in the project area.”

A PRMD staff report of March 18, 2004 identified Alternative 5 as the environmentally superior alternative. The staff recommended that defendants approve “a significantly modified project most like Alternative 5. . . .”

The County Planning Commission (Commission) held noticed public hearings on March 18, April 1, and May 20, 2004. The Commission allowed for additional written testimony to be submitted by June 7, 2004, and continued the matter for decision to June 17, 2004. On that date, following a public meeting, the Commission voted 4-1 to recommend that defendant Sonoma County Board of Supervisors (Board) certify the FEIR and approve the project. On July 15, 2004, the Commission adopted a resolution recommending FEIR certification and project approval.

On August 10, 2004, after a public meeting, the Board voted by a straw vote of 4-0-1 to certify the FEIR and approve the project. On November 2, 2004, the Board voted 5-0 to approve the project, and issued a detailed resolution.

In its resolution and supporting documentation, the Board found all five on-site alternatives to be infeasible. The Board specifically found that Alternative 5 was economically infeasible due to the reduced size of the hotel, relying on studies we shall discuss below. The Board also found that Alternative 5 was infeasible because it would frustrate the County’s goals related to agricultural tourism and a substantial increase in transient occupancy tax (TOT) revenue. The Board also found that the proposed additional turning lanes would mitigate traffic impacts and did not require recirculation of the FEIR.

On November 30, 2004, plaintiff challenged the Board’s project-approval decision by filing a petition for writ of mandate. After substantial briefing and oral argument, the trial court denied the petition in a lengthy ruling rendered from the bench.

The trial court ruled that there was substantial evidence in the record that Alternative 5 was infeasible, based on economic infeasibility shown by the studies referred to above and other factors, including frustration of the County’s goals of tourism and increasing TOT revenue. The court further ruled that the Board’s finding against recirculation of the FEIR was supported by substantial evidence, because the additional mitigation measure of the two turning lanes did not amount to significant new information.

Finally, the court ruled that petitioner had not met its burden of showing that the FEIR was inadequate with regard to traffic, water supply, and off-site alternatives. The court noted that “Most of the evidence cited by [plaintiff] is simply comments made by its members or attorney, constituting conclusions, lay opinion, and so on, or statements that are taken within only partial context, or which ignore the discussion thereafter. This has little evidentiary value.”

II. DISCUSSION

Our standard of review is clear. We review an agency decision to approve an EIR only for a prejudicial abuse of discretion. We will find such an abuse of discretion where the agency has failed to proceed in the manner required by law, or if the agency’s decision is not supported by substantial evidence. (Laurel Heights Improvement Assn. v. Regents of University of California (1988) 47 Cal.3d 376, 392-393 (Laurel Heights I); §§ 21168, 21168.5.)

Under the administrative guidelines governing CEQA, the decision to approve an EIR must be supported by substantial evidence in the record. (Guidelines, § 15091, subd. (b).) “ ‘Substantial evidence’ “ is defined as “enough relevant information and reasonable inferences from this information that a fair argument can be made to support a conclusion, even though other conclusions might also be reached.” (Guidelines, § 15384, subd. (a).) Substantial evidence includes “facts, reasonable assumptions predicated upon facts, and expert opinion supported by facts.” (Guidelines, § 15384, subd. (b).) It does not include “[a]rgument, speculation, unsubstantiated opinion or narrative, [and] evidence which is clearly erroneous or inaccurate. . . .” (Guidelines, § 15384, subd. (a).)

In applying the substantial evidence standard, we must resolve any reasonable doubts in favor of the agency decision, and we may not substitute our judgment for the agency’s. (Laurel Heights I, supra, 47 Cal.3d at p. 393.) We must uphold a decision to approve an EIR “if there is any substantial evidence in the record to support the agency’s decision that the EIR is adequate and complies with CEQA. [Citation.]” (Dry Creek Citizens Coalition v. County of Tulare (1999) 70 Cal.App.4th 20, 26 (Dry Creek).)

We do not pass on the correctness of the environmental conclusions of an EIR, but only determine whether the EIR “is sufficient as an informational document. [Citations.]” (Dry Creek, supra, 70 Cal.App.4th at p. 26; see Laurel Heights I, supra, 47 Cal.3d at p. 392.) And we “may not set aside an agency’s approval of an EIR on the ground that an opposite conclusion would have been equally or more reasonable. [Citation.]” (Laurel Heights I, supra at p. 393, citing Greenbaum v. City of Los Angeles (1984) 153 Cal.App.3d 391, 401-402.)”[2]

The law requires that we extend substantial deference to agency decisions. Those decisions are presumed correct, and plaintiff “bear[s] the burden of proving otherwise. . . .” (San Franciscans Upholding the Downtown Plan v. City and County of San Francisco (2002) 102 Cal.App.4th 656, 674 (San Franciscans).)

Plaintiff contends that Alternative 5 is feasible, and that the EIR is deficient in three areas. We note that plaintiff largely ignores the detailed ruling of the trial court that is supported by substantial evidence.

Feasibility

CEQA requires that an EIR identify feasible alternatives to a project, and that a project not be approved if there are feasible alternatives available that will substantially reduce the environmental impact of the project. (§§ 21001, subd. (g), 21002, 21002.1, subd. (a); Citizens of Goleta Valley v. Board of Supervisors (1990) 52 Cal.3d 553, 564-565 (Goleta Valley II).) A project may be approved if alternatives are made infeasible by “specific economic, social, or other conditions. . . .” (§ 21002.)

Feasibility is defined as “capable of being accomplished in a successful manner within a reasonable period of time, taking into account economic, environmental, social, and technological factors.” (§ 21061.1.) The feasibility of project alternatives is judged by a rule of reason. (Goleta Valley II, supra, 52 Cal.3d at p. 565; Foundation for San Francisco’s Architectural Heritage v. City and County of San Francisco (1980) 106 Cal.App.3d 893, 910 (Foundation for San Francisco).)

A lack of economic viability may render an alternative infeasible. But mere increased costs or decreased profits do not ipso facto lead to a conclusion of infeasibility. The test is stated in Citizens of Goleta Valley v. Board of Supervisors (1988) 197 Cal.App.3d. 3d 1167 (Goleta Valley I). “The fact that an alternative may be more expensive or less profitable is not sufficient to show that the alternative is financially infeasible. What is required is evidence that the additional costs or lost profitability are sufficiently severe as to render it impractical to proceed with the project.” (Goleta Valley I, supra, at p. 1181.)

Several cases find substantial evidence of economic infeasibility without explicitly stating the Goleta I test or speaking in terms of impracticality. We must assume that impracticality was implicit in those courts’ conclusions.

In Goleta Valley II, the Supreme Court stated that infeasibility could be based on a study showing that a reduced-size alternative to a proposed 574-room hotel was not economically viable. (Goleta Valley II, supra, 52 Cal.3d at pp. 566, 575, fn. 7.) Following Goleta Valley II, one court held that an economic study provided substantial evidence to support a conclusion that a reduced-herd-size alternative to a proposed dairy was not economically viable and therefore infeasible. (Irritated Residents, supra, 107 Cal.App.4th at p. 1401.) Other cases have based an infeasibility determination on economic inviability. (See San Franciscans, supra, 102 Cal.App.4th at p. 695 [additional costs and reduced profitability made alternative impractical and therefore infeasible]; Foundation for San Francisco, supra, 106 Cal.App.3d at p. 913 [additional construction costs and greatly reduced sales tax revenues made alternative infeasible].)

The Board received two expert studies which showed that by reducing the inn from 50 to 24 rooms, Alternative 5 was not economically feasible. One study was prepared by Barry Ben-Zion, Ph.D., a consulting economist and former professor of economics at Sonoma State University, with the assistance of Celeste Plaister, CPA. The Ben-Zion report concluded that the revenue decrease from a reduction from 50 to 36 rooms could only be offset by a 36 percent increase in room rates, leading to “nothing but economic losses for any foreseeable future,” thus economic infeasibility. Alternative 5, which proposed only 24 rooms, was likewise economically infeasible.

The second study was prepared by Resorts & Hotels Hospitality Group (RHHG), a resort and hotel consulting and marketing firm. The RHHG study concluded that revenues generated by a 36-room inn would not support development costs and not sustain the staffing and services necessary “to make the Sonoma Country Inn an upscale destination resort.” RHHG concluded that 50 rooms “would be the minimum [number of] rooms required to support the project.”

Defendants also refer us to the testimony of two witnesses before the Commission. Bill Carson, general manager of the Fountaingrove Inn in Santa Rosa and chair of both the Sonoma County Lodging Association and the Sonoma County Visitors and Conventions Bureau, testified that 36 rooms would not be feasible or economically viable: “It’s a tough business as it is and with that size a project and that quality of project they are looking at doing out there [it] just doesn’t make any sense to do it on a smaller scale.” He also testified that Sonoma needed upscale facilities like the project because of competition with Napa and Monterey for “the world class traveler that we deserve to have.”

Mark Harmon, the project applicant and developer, operated a similar 50-room inn in the Napa Valley. He testified before the Commission that “[f]ifty rooms are vital to the economic feasibility of [the Sonoma Country Inn] project.” He also testified that “a 50 room country inn allows the County substantial room tax revenues.”

Plaintiff essentially admits it offered no contrary expert evidence. As such, there is essentially uncontradicted evidence of economic infeasibility. (See Sierra Club v. County of Napa (2004) 121 Cal.App.4th 1490, 1508.)

Notwithstanding this evidence, plaintiff contends that Alternative 5 is economically feasible. Plaintiff’s argument is essentially an attack on the Ben-Zion and the RHHG reports.[3] We are not sure of the extent to which these attacks were made below, but in any case they are without merit when viewed in the context of this record. Plaintiff attacks the Ben-Zion report because it considered only a reduced-room inn scenario, and did not consider other revenue sources such as the winery and special events.[4] But the winery and its special events are not included in Alternative 5. We question why the report should have analyzed a phantom income stream. In any case, the Ben-Zion report properly focused on the essential difference in economic viability between the 50-room project and 36- and 24-room alternatives. The lost profitability from a 36-room or 24-room inn would make it impractical to proceed with the project. This is the core of the economic feasibility issue.

Plaintiff briefly attacks the RHHG report, primarily because it involved only a 36-room alternative and was rather conclusory. But if a 36-room alternative is not economically viable, by clear implication of reasoning a 24-room alternative would not be. And we consider the report not conclusory but a concise review based on the expertise of its authors.

The reports, along with the testimony discussed above, constitute substantial evidence that Alternative 5 is economically infeasible.

Although plaintiff does not directly address the issue, there is substantial evidence to support the Board’s finding that Alternative 5 is also infeasible from the standpoint of frustrating County goals, particularly increasing TOT revenue. The Board concluded that the annual TOT revenue from the project would be $14,620 per room. A 50-room inn would generate an annual revenue of $731,000. That would provide a significant economic benefit to the County. TOT revenues go directly into the general fund and are used for a variety of services, including park and recreation projects, and were expected to be used to provide affordable housing. But a 36-room inn would amount to a loss of more than $200,000 per year and well over $1 million over a five-year period.

The trial court correctly determined that there is substantial evidence in the record to support the Board’s finding that Alternative 5 is not feasible.[5]

Alleged Deficiencies in the EIR

As noted, plaintiff bears the burden of showing the EIR is inadequate. As the trial court held, plaintiff has not met that burden.

Traffic. Plaintiff claims the EIR is inadequate for failing to assess the environmental impact of the additional turning lanes recommended as a mitigation measure after the EIR was circulated. But the turning lanes were explained to the public and discussed at some length in the Board’s November 2, 2004, resolution.[6] Plaintiff essentially argues the EIR should have been recirculated. The trial court held that recirculation was not necessary because the turning lanes are not significant new information. (See Laurel Heights Improvement Assn. v. Regents of University of California (1993) 6 Cal.4th 1112, 1132.) Substantial evidence supports this determination. (Id. at p. 1135.)

Water Supply. Plaintiff argues the EIR inadequately analyzes the impact of the project on the groundwater supply. This contention is puzzling. The EIR contains a comprehensive analysis of the water supply impacts. This analysis is sufficient to provide the public with adequate environmental information and thus comply with CEQA. There is simply no basis for plaintiff’s claim that the EIR is inadequate with regard to water supply.

Off-Site Alternatives. Here again plaintiff attempts to manufacture an issue which does not exist. Plaintiff contends the EIR failed to sufficiently discuss off-site alternatives to the project, particularly sites that are commercially zoned. The EIR, however, contains an exhaustive review of numerous potential off-site alternatives, and finds them inadequate. There is no legal basis for plaintiff’s argument that the EIR had to consider any additional alternatives off-site. Defendants considered a reasonable range of alternatives. (See Goleta II, supra, 52 Cal.3d at p. 566.)

III. DISPOSITION

The judgment denying the petition for writ of mandate is affirmed.

______________________

Marchiano, P. J.

We concur:

______________________

Stein, J.

______________________

Margulies, J.

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[1] Subsequent statutory references are to the Public Resources Code. References to “Guidelines” are to the State CEQA Guidelines, the administrative regulations promulgated to implement CEQA. (Cal. Code Regs., tit. 14, § 15000 et seq.)

[2] Plaintiff points out that we need not reach the substantial evidence standard if we determine that the agency did not proceed in the matter required by law. This is clearly an appellate tactic to avoid the substantial evidence rule. We would only stop short of a substantial evidence analysis in an extreme case, where the agency failed to proceed as required by CEQA. (See, e.g., No Oil, Inc. v. City of Los Angeles (1974) 13 Cal.3d 68, 73-75 [failure to prepare an EIR]; Association of Irritated Residents v. County of Madera (2003) 107 Cal.App.4th 1383, 1390-1392 (Irritated Residents) [failure to comply with CEQA’s information disclosure requirements].)

[3] Plaintiff makes an additional, brief argument that defendant confused project benefits with feasibility, which we reject as an unmeritorious interpretation of the record.

[4] Plaintiff also complains that the report did not consider revenue from the sales--apparently one-time sales--of the 11 residential lots. We do not consider this a significant component of the long-term economics of the project.

[5] In light of this conclusion, we need not discuss other grounds of infeasibility, such as the question whether the Alternative 5 project would physically fit on the site on the valley floor.

[6] See Save Our Peninsula Committee v. Monterey County Bd. of Supervisors (2001) 87 Cal.App.4th 99, 137-139, for a discussion of constructing improvements for traffic generated by a new project. The turning lanes in this case satisfy the needed mitigation plan.