Concerned Citizens of Beverly Hills/Beverly Grove v. City of L. A.

• Docket Number: B307226
• Decision Date: 12 August 2022
• Parties: CONCERNED CITIZENS OF BEVERLY HILLS/BEVERLY GROVE, Plaintiff and Appellant, v. CITY OF LOS ANGELES, Defendant and Respondent.
• Court: California Court of Appeals

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CONCERNED CITIZENS OF BEVERLY HILLS/BEVERLY GROVE, Plaintiff and Appellant, v. CITY OF LOS ANGELES, Defendant and Respondent.

B307226

California Court of Appeals, Second District, Seventh Division

August 12, 2022

NOT TO BE PUBLISHED

APPEAL from an order of the Superior Court of Los Angeles County No. 19STCP00035 Richard L. Fruin, Jr. Judge. Affirmed.

Jamie T. Hall, Julian K. Quattlebaum III, and Channel Law Group LLP, for Plaintiff and Appellant.

Michael N. Feuer, City Attorney, Terry Kaufmann Macias Assistant City Attorney, Amy Brothers and John Fox, Deputy City Attorneys, for Plaintiff and Respondent.

WISE J. ^[*]

In this CEQA^[1] action Concerned Citizens of Beverly Hills/Beverly Grove (Concerned Citizens or appellant) appeals the trial court's denial of its petition for writ of mandate challenging the City of Los Angeles's approval of an ordinance allowing limited, short-term rental activity to take place within the City of Los Angeles. Although the City issued a negative declaration indicating the ordinance would not have a significant effect on the environment, appellant contends the City utilized an improper baseline and disregarded fair arguments that the ordinance would have a significant negative environmental impact. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

A. The Proposed Project

In 2015, the Los Angeles City Council acknowledged that "[i]n the past few years, technology and innovation have expanded and fundamentally changed the way people travel and vacation. Visitors to Los Angeles and cities around the world routinely use 'short-term rentals' in lieu of hotels to stay in and experience community. The impact of the short-term rental industry has been dramatic-in both positive and negative ways." Airbnb, an internet hosting platform for short-term rentals, estimated that in 2015 "there were about 12,270 active hosts in Los Angeles who accommodated 560,000 guests." However, "[a]ssuming that Airbnb represents about 65% of the total listings in the City," the City estimated that "there are likely about 20,000 total active listings for short-term rental in the City of Los Angeles."

Short-term rentals were not permitted in the vast majority of the City. The City explained its "current zoning regulations do not anticipate or effectively govern short-term rentals,^[2] and need to be revised so that the City can effectively preserve rental housing, protect the character of residential neighborhoods, and collect transient occupancy tax that pays for crucial City services." The City Council passed a motion directing the Department of City Planning to draft an ordinance that "authorizes a host to rent all or part of their primary residence to short-term visitors" but "prohibit[s] hosts from renting units or buildings that are not their primary residence or are units covered by the Rent Stabilization Ordinance."

B. The Proposed Ordinance

After investigating other cities with short-term rental ordinances, including San Francisco, Sacramento, New York, Portland and Santa Monica, conducting three studies between 2016 and 2018, and preparing a CEQA narrative supporting a negative declaration, the Department of City Planning proposed a draft ordinance. The draft ordinance opted "for a hybrid approach" that included "new regulations to enable the legalization of a portion of the short-term rentals already in existence." Under the proposed regulations only primary residences would be allowed to be used as short-term rentals, and all short-term rentals would be required to register with the City. All residences subject to the Rent Stabilization Ordinance would be prohibited from being used as short-term rentals, and shortterm rentals would generally be limited to no more than 120 days a year. The short-term rental "host"^[3] and property owner would also be held responsible for any nuisance violations, including fines resulting from the failure to comply with the ordinance.

The proposed regulations prohibited internet hosting platforms from advertising short-term listings that did not have a valid registration. The internet hosting platforms would also be required to "provide to the Department of City Planning on at least a monthly basis . . . the Home-Sharing registration number of each listing, the name of the person responsible for each listing, the street address of each listing and . . . the number of days booked." Additionally, the proposed ordinance required the City to set aside 10 percent of the anticipated revenue from the transient occupancy tax to enforce the new ordinance.

The Department of City Planning estimated the proposed ordinance "would reasonably result in approximately a 20% to 40% reduction in short term rental activity. Based on the data available . . . the City would expect that this would lead to a reduction to between approximately 11,000 and 15,000 activity listings from the baseline estimate." The Department also concluded the proposed ordinance "will not have a significant effect on the environment" above baseline conditions such that "an environmental impact report is not required."

C. The City Adopts the Ordinance and Issues a Negative Declaration

During the years the ordinance was being considered, the City held 10 public hearings and received over 2,000 written and oral comments. The ordinance was also reviewed by various commissions and committees, including the City Planning Commission, Planning and Land Use Management Committee and Housing Committee.

On December 11, 2018, the Los Angeles City Council passed the Home Sharing Ordinance to allow and regulate certain short-term rentals within the City of Los Angeles. The mayor approved the ordinance on December 17, 2018. To comply with CEQA requirements, on December 14, 2018, the City adopted a negative declaration that stated "[t]he ordinance is not a 'project' as defined by CEQA Guidelines Sec. 15378 and 15060(c)(3)^[4] and there is no possibility that the Ordinance may have a significant effect on the environment, as it will not spur new development or direct physical effects. Implementation of the Ordinance will result in fewer primary residences being offered for short-term rentals compared to current levels. (CEQA Guidelines Sec. 15061(b)(3).)"

D. The Trial Court Denies the Petition for Writ of Mandate

Concerned Citizens filed a petition for writ of mandate on January 14, 2019, seeking both declaratory and injunctive relief. According to the petition, the City "violated CEQA by failing to conduct an [Environment Impact Report, or EIR] for the Project. Respondent erroneously concluded that a Negative Declaration was the appropriate environmental clearance document. Substantial evidence in the record supports a fair argument that a project may have a significant effect on the environment."

On December 6, 2019, the trial court heard argument on the petition. The court framed the issue by stating "petitioner makes a single substantive argument that the home-sharing ordinance will increase home sharing activity. Petitioner contends, therefore . . . that an EIR should be prepared. So petitioner argues that because of the increased home-sharing activity, there will be additional noise impacts, air pollution, traffic congestion, depletion of housing stock and stress on city resources.... [¶] The City claims there's a 20 to 40 percent reduction [in short-term rentals]. If that were the case, it would seem to me it supports the negative declaration."

On March 10, 2020, the court denied the petition. In its written ruling, the trial court concluded there was substantial evidence the ordinance would reduce the number of short-term rentals. The court expressly found there was not a fair argument supported by substantial evidence that the ordinance would increase short-term rentals. The trial court ordered the City to prepare and serve a judgment consistent with the trial court's ruling but allowed Concerned Citizens 10 days to object and prepare an alternative form of judgment. On June 22, 2020, the court entered judgment denying the petition. This appeal followed.^[5] (Code Civ. Proc., § 904.1, subd. (a)(1).)

DISCUSSION

A. CEQA Overview

CEQA and the regulations implementing it "embody California's strong public policy of protecting the environment." (Tomlinson v. County of Alameda (2012) 54 Cal.4th 281, 285; see § 21001; Mountain Line Foundation v. Fish &Game Com. (1997) 16 Cal.4th 105, 112 ["CEQA is a comprehensive scheme designed to provide long-term protection to the environment"].) As the Supreme Court explained, "CEQA was enacted to advance four related purposes: to (1) inform the government and public about a proposed activity's potential environmental impacts; (2) identify ways to reduce, or avoid, environmental damage; (3) prevent environmental damage by requiring project changes via alternatives or mitigation measures when feasible; and (4) disclose to the public the rationale for governmental approval of a project that may significantly impact the environment." (California Building Industry Assn. v. Bay Area Air Quality Management Dist. (2015) 62 Cal.4th 369, 382.)

"CEQA review is undertaken by a lead agency, defined as 'the public agency which has the principal responsibility for carrying out or approving a project which may have a significant effect upon the environment.'" (Friends of the Eel River v. North Coast Railroad Authority (2017) 3 Cal.5th 677, 712, italics omitted.) The lead agency "proceeds by way of a multistep decision tree, which has been characterized as having three tiers. [Citation.] First, the agency must determine whether the proposed activity is subject to CEQA at all. Second, assuming CEQA is found to apply, the agency must decide whether the activity qualifies for one...