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City Approval Of Preliminary Terms for New Football Stadium Was Not A Project Approval And Did Not Violate CEQA

In Cedar Fair, L.P. v. City of Santa Clara, the latest case interpreting Save Tara, the Sixth District Court of Appeal found that the City of Santa Clara did not violate CEQA when it approved preliminary terms for a new football stadium. The City had adopted a 39-page Stadium Term Sheet which detailed proposed construction, financing and other provisions for development of a stadium for the 49ers National Football League team. Despite the detailed description of the proposed stadium project and supportive statements by City officials, the court determined that the term sheet did not commit the City to approve the stadium project and did not rule out consideration of mitigation measures or alternatives in later CEQA reviews.

The project proposed to construct a new football stadium for the 49ers NFL football team on a 17-acre site adjacent to the Great America amusement park. Cedar Fair owned and operated Great America and used the proposed stadium site as a parking lot. In June 2009, the City and its Redevelopment Agency (collectively, City) approved a Stadium Term Sheet. The term sheet identified the proposed site, number of seats, ownership, leasing arrangements and other similar details. In July 2009, the City extended an existing Negotiating Agreement for the project while staff prepared an EIR and worked on a Disposition and Development Agreement. In March 2010, the City certified an EIR for the project and approved general plan amendments to accommodate the proposed stadium use. Cedar Fair challenged the Stadium Term Sheet approval as invalid under CEQA claiming it amounted to a project approval before an EIR had been prepared. The trial court sustained the City’s demurrer without leave to amend, finding that approval of the term sheet was not a project approval for CEQA purposes under the principles set forth by the California Supreme Court in the Save Tara case.

The appellate court affirmed the trial court action. The court reviewed the primary elements of Save Tara, including the CEQA definition of “approval” which commits the decisionmaker to a definite course of action, the timing of CEQA compliance at the earliest feasible time, and the potential for bureaucratic and financial momentum to render an EIR a “post hoc rationalization”. In Save Tara, the California Supreme Court had instructed that courts should look to the terms of a development agreement and its surrounding circumstances to determine whether, as a practical matter, the agency has committed to the project so as to preclude consideration of alternatives or mitigation measures, including the alternative of not proceeding with the project. Applying these principles to the term sheet, the Cedar Fair court looked primarily to the language of the document itself. The term sheet stated its purpose to set forth “preliminary” terms negotiated by the parties to date, explicitly stating that it was not binding and was intended to provide a general framework for subsequent binding negotiations on the stadium project. The term sheet required CEQA compliance and provided the City with sole discretion to modify the project as necessary, to select other feasible CEQA alternatives or to decide not to proceed with the project. The court also cited to the City staff report for the Negotiating Agreement extension, which explained that the stadium project would not proceed until mutually acceptable agreements were negotiated “based upon information produced from the CEQA environmental review process and from other public review and hearing processes.” The staff report further noted that the Negotiating Agreement provided the City with an “off-ramp to exit the stadium project” if the negotiations proved unsuccessful. The court noted that while the term sheet was “extremely detailed, it expressly binds the parties to only continue negotiating in good faith” and not to the stated preliminary terms. The court also stated that neither City expenditures on consultant support nor advocacy for a proposed project necessarily equated to commitment to the project. Based on the term sheet and viewed in light of the surrounding circumstances, the court concluded that approval of the term sheet was not a project approval under CEQA.

This case confirms the Save Tara principles that determining whether a development-related agreement constitutes a project approval under CEQA is highly factual. In addition to extensive discussion of Save Tara, the analysis sets forth the relevant facts from the stadium term sheet and “surrounding circumstances” and shows how they balance in favor of the City’s action in this instance. The recent Parchester Village Neighborhood Council case cited in the decision also balanced the relevant facts in favor of a city action, finding that approval of a municipal services agreement was not a project approval. By contrast, the Riverwatch case cited in the decision determined that a water district agreement to provide recycled water to a landfill operator was invalid because it committed the agency to action without benefit of CEQA compliance. Through Cedar Fair and other recent cases, the courts are providing useful guidance on how the facts of a particular situation may weigh one way or the other in the Save Tara balance.