City Of El Cajon v. County Of San Diego Local Agency Formation Comm'n

• Decision Date: 11 August 2010
• Docket Number: G041793,No. 06CC13348,06CC13348
• Court: California Court of Appeals Court of Appeals
• Parties: CITY OF EL CAJON, Plaintiff and Appellant, v. COUNTY OF SAN DIEGO LOCAL AGENCY FORMATION COMMISSION et al. Defendants and Respondents; HOME DEPOT, USA, INC. et al., Real Parties in Interest and Appellants.

CITY OF EL CAJON, Plaintiff and Appellant,

v.COUNTY OF SAN DIEGO LOCAL AGENCY FORMATION COMMISSION et al.

Defendants and Respondents; HOME DEPOT, USA, INC. et al., Real Parties in Interest and Appellants.

G041793

No. 06CC13348

Court Of Appeal Of The State Of California

Fourth Appellate District

Division Three

Filed 08/11/10

Procopio, Cory, Hargreaves & Savitch, Evelyn F. Heidelberg and Kendra J. Hall for Plaintiff and Appellant City of El Cajon.

Latham & Watkins, Allen D. Haynie, Daniel P. Brunton, and Adrianna B. Kripke for Real Party in Interest and Appellant Home Depot, USA, Inc.

Colantuono & Levin and Holly O. Whatley for Defendants and Respondents San Diego Local Agency Formation Commission and Commissioners of the County of San Diego Local Agency Formation Commission.

John J. Sansone, County Counsel, C. Ellen Pilsecker and Marian Brewster, Deputy County Counsel, for Real Party in Interest County of San Diego.

Lounsbery Ferguson Altona & Peak and Alena Shamos for Real Party in Interest Lakeside Fire Protection District.

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

O P I N I O N

RYLAARSDAM, J.

Appeals from a judgment of the Superior Court of Orange County, Gail Andrea Andler, Judge. Affirmed in part and reversed in part with directions.

Best Best & Krieger, Clark H. Alsop and Kira L. Klatchko for California Association of Local Agency Formation Commissions, as Amicus Curiae on behalf of Defendants and Respondents San Diego Local Agency Formation Commission.

* * *

This case involves an action under the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (the Act). (Gov. Code, § 56000 et seq., all further statutory references are to the Government Code unless otherwise indicated.)

The City of El Cajon (City) and Home Depot, USA, Inc. (Home Depot; collectively plaintiffs) appeal from a judgment in favor of the San Diego Local Agency Formation Commission (LAFCO), its commissioners, the County of San Diego (County), and Lakeside Fire Protection District (Lakeside). The judgment was entered in a consolidated action involving City's petition for a writ of mandate to overturn the denial of its request to annex and reorganize the services of an unincorporated parcel of land owned by Home Depot and the latter party's cross-complaint for damages allegedly arising from the denial. Only the ruling on City's petition is challenged on appeal.

The primary issues presented are whether LAFCO (1) abused its discretion by finding the property sought to be annexed was not "substantially surrounded" by City under the Act, and (2) violated the California Environmental Quality Act (CEQA; Pub. Resources Code, § 21000 et seq.) by making findings on the annexation/reorganization request that contradicted the findings contained in an environmental impact report (EIR) prepared for Home Depot's proposed development of the property. We conclude the answer to both of these questions is yes and reverse the judgment on City's petition.

FACTS AND PROCEDURAL BACKGROUND

The property in question consists of 14.31 acres of unincorporated territory owned by Home Depot. City borders the property on its north, west, and south sides, constituting 68 percent of the parcel's perimeter. The property's fourth side abuts a freeway, Interstate 8. County's general plan and zoning ordinances designate the property for residential use. But the property is located within City's sphere of influence and City's general plan has designated it for commercial use since 1979. Currently, fire protection services are provided by Lakeside, which is separated from the property by the freeway. However, City's fire department has the closest station and it is designated as the first responder for emergency services. City's police station is also closer to the property than the County's sheriffs department. In addition, City has a sewer main adjacent to the property, and the proposed annexation would not result in any change for the provision of water to the parcel.

A variety of commercial enterprises have used the property since the 1940's. Currently, a 5, 000 square-foot office building and adjacent parking lot, occupied by a private business, are located on the property's western edge. The property also includes two abandoned residences that are accessible by a road, plus a billboard next to Interstate 8.

Home Depot first proposed constructing a home improvement store on the property in the late 1990's and prepared an EIR for the project. City certified the EIR, but denied Home Depot's application for a prezoning change and conditional use permit at that time. In 2004, Home Depot resubmitted its proposed development to City along with an addendum to the EIR. Both the original EIR and the addendum concluded some aspects of the project would not result in any significant environmental impacts and, with identified mitigation measure, aspects of the project that would cause significant impacts could be reduced to a level below significance. In mid-2005, City approved the project. It adopted the EIR's addendum, a prezoning change to allow retail and commercial use of the property and a conditional use permit, and issued a resolution requesting LAFCO initiate proceedings for annexation of the property and its reorganization, i.e., detachment from Lakeside and other service providers covering the property.

County filed a lawsuit challenging the EIR and the addendum. That case was dismissed because County failed to name Home Depot as the real party in interest and did not discover its error until after the statute of limitations had expired.

LAFCO conducted hearings on City's annexation/reorganization resolution in May and June 2006. In preparation for the hearings, LAFCO's executive officer drafted a staff report on the proposal. The report acknowledged "[s]tate [l]aw places express limitations on the power and discretion of LAFCO to disapprove city annexations, when a commission finds that certain conditions exist," such as a "territory that is surrounded or substantially surrounded," "and meets certain other requirements." But, finding the property was not substantially surrounded by City, it rejected the claim that approval of the proposal was mandatory.

According to the staff report, "The local conditions and circumstances related to the Home Depot reorganization are very unique [sic] and could not have been adequately addressed or anticipated through a state statute or local procedure. The depth of the concerns related to the Home Depot Reorganization is compelling.... [O]ver 150 letters,... petitions, and numerous letters from local agencies have been sent... expressing serious concerns about the proposal. This level of local agency and citizen concern must[,] therefore, be considered in making a relevant boundary determination. [¶]... [¶] LAFCO staff believes that while [s]tate [l]aw encourages the elimination of islands and substantially surrounded territory, it also would be irresponsible to ignore the concerns expressed... to [LAFCO].... Based on the compelling nature of the concerns raised by citizens and local agencies and a review of important factors, LAFCO staff has concluded that evidence related to the Home Depot Reorganization points towards a determination that the reorganization site cannot be automatically defined as substantially surrounded by... City...."

Further, claiming "[t]he final determination of what constitutes a surrounded or substantially surrounded annexation boundary rests with LAFCO," and that "[t]he Legislature has intentionally deferred to each LAFCO the task of defining the technical and policy aspects associated with defining the term 'substantially surrounded[,]'" the report recommended "use [of] the factors embodied in... [s]ection 56668... to make the necessary findings...."

In support of its finding the property was not substantially surrounded, the report cited the commission's receipt of "letters from affected residents," a petition "signed by over 1, 000 people" opposing the proposal, County's opposition "based on the City's environmental determinations as well as the proposed project's incompatibility with the County's General Plan," and Lakeside's opposition to "the proposed reorganization because the associated detachment of the subject territory from [Lakeside] will cause a reduction in the annual property tax revenues allocated to the FPD." The report concluded "[t]he depth and validity of concerns expressed by citizens and local agencies" constitute "compelling evidence that the proposed reorganization may have adverse effects on adjacent areas and the region (e.g., boundary, financial, service, community character, regional housing needs, and environmental issues, etc.)." Thus, the staff report recommended LAFCO deny the proposed annexation/reorganization.

In June 2006, LAFCO denied City's application. Relying on "the Executive Officer's report," and "evidence presented both verbally and in writing," LAFCO cited "the following reasons" for its decision: "1) Concurrence with the Executive Officer that the subject property is not an unincorporated island and is not substantially surrounded by... City...; 2) Severe adverse impacts would result from the proposed reorganization on the land use compatibility and community character in the predominantly residential neighborhood bordering the reorganization; 3) Serious cumulative environmental impacts on traffic, noise, and air quality would result from the Home Depot project; 4) A significant loss of property tax revenue to... Lakeside...; 5) The proposed 'Home Depot Reorganization' is inconsistent with adopted LAFCO Policy; and 6) Issues raised by subject agencies and concerned residents have not been satisfactorily addressed by the applicant."

City filed a petition for a writ of mandate challenging LAFCO's decision. Shortly thereafter, Home Depot filed a cross-complaint for declaratory and injunctive relief and damages alleging LAFCO's denial of the application violated...