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California Supreme Court Grants Review in Save Tara v. City of West Hollywood

On Wednesday, May 16th, the California Supreme Court granted a petition for review of an appellate decision that could have important implications for California public entities that rely on contingent agreements with developers as a vehicle to pave the way for future development and redevelopment activities.

In Save Tara v. City of West Hollywood(2007) 147 Cal.App.4th 1091, the Court of Appeal found that the City violated the California Environmental Quality Act (“CEQA”) by failing to complete an environmental impact report for a low-income senior housing project before entering into a contingent agreement for the transfer of property to a nonprofit housing developer. The requirement imposed by the appellate court is an onerous one for cities, redevelopment agencies and developers, and conflicts with previous rulings that held that the public agency only needed to undertake CEQA review before committing to a definite course of action with respect to a proposed project. If it stands, the Tara decision could jeopardize the ability of cities, redevelopment agencies and other California public agencies to enter into Disposition and Development Agreements and other agreements that make the conveyance of property expressly contingent upon the satisfaction of enumerated conditions including the developer’s acquisition of all required land use entitlements and the completion of required review under CEQA. This result could seriously impede the development and financing of affordable housing and other redevelopment projects, because without preliminary assurances from cities and redevelopment agencies, developers have little financial incentive to prepare site development plans and undertake other costly predevelopment activities, including the financing of required CEQA analysis. The Supreme Court’s grant of review will also help resolve uncertainties in this area of the law, since the Tara decision is at odds with earlier decisions in Stand Tall on Principles v. Shasta Union High School District, 235 Cal.App.3d 772 (1991) and Concerned McCloud Citizens v. McCloud Community Services District (2007) 147 Cal.App.4th 181.

We will continue to monitor this case closely as it moves through briefing and oral argument, and Meyers Nave, on behalf of its public agency clients, intends to file an amicus brief in support of the City of West Hollywood. Cities and redevelopment agencies who are interested in filing their own briefs in support may obtain additional information regarding the briefing schedule by contacting West Hollywood city attorney Michael Jenkins at mjenkins@localgovlaw.com or John Cotti at jcotti@localgovlaw.com.

Meyers Nave is recognized for its work with all types of public agencies in California and provides the full scope of legal services to cities, counties, redevelopment agencies and special districts statewide.