In an opinion certified for partial publication on July 22, 2019, the Second District Court of Appeal affirmed the trial court’s decision and held that the City of Los Angeles was not required to prepare an EIR to assess housing-related impacts for a boutique hotel project on the site of a now-vacant former apartment building. Hollywoodians Encouraging Rental Opportunities (HERO) v. City of Los Angeles (B285552; filed 6/28/19, ordered published 7/22/19) ___ Cal.App.5th___ (“HERO”).

The project at issue in HERO is a proposed 24-room boutique hotel in the Hollywood area of Los Angeles. Prior to 2013, the project site was occupied by an 18-unit apartment building that was subject to the city’s Rent Stabilization Ordinance. In 2013, the owner filed a notice of intent to withdraw all 18 units from the rental housing market pursuant to the Ellis Act in order to pursue construction of a condominium project on the site. While the condo project was later abandoned due to a lack of financing, the building never returned to the rental market and remained uninhabited for nearly two years.

In July 2015, the owner of the property submitted a new application to the city, this time seeking to convert the site into a 24-room hotel. The city prepared an initial study for the hotel project. The initial study concluded that, with mitigation, the project would have no significant environmental impacts. With respect to population and housing impacts specifically, the initial study concluded that the project would not displace housing units or residents because the apartments had been withdrawn from the rental market and the building was uninhabited. Accordingly, the zoning administrator adopted a mitigated negative declaration (MND) and approved the project. The zoning administrator’s decision was subsequently affirmed following appeals to the area planning commission and city council.
Following the city council’s approval of the project, three petitioners, including a resident of a nearby building, a former tenant of the apartments, and HERO, filed a petition for writ of mandate challenging the approval. The thrust of the petitioners’ CEQA claims was that the city was required to prepare an EIR to analyze the project’s direct, indirect, and cumulative impacts on the supply of rent-stabilized housing and the displacement of tenants. The trial court denied the petition in full, holding that the city properly concluded the project would have no impact on housing or population because the rental units had been removed from the market and vacated long before the hotel project was proposed. The trial court further ruled that, aside from the baseline issue, the petitioners failed to demonstrate that the project would have a significant effect on the physical environment, and not just socioeconomic impacts.

On appeal, the petitioners’ primary argument was that the city was required to prepare EIR because substantial evidence supported a fair argument that the cumulative effect of the project and other similar projects would be to eliminate rent-stabilized housing units in Hollywood and displace residents that depend on such housing. The Court of Appeal rejected the petitioners’ argument, holding that the proper baseline against which the project’s impact must be assessed is a vacant building, not a tenant-occupied rental property. As the court explained, at the time the environmental analysis for the project commenced in 2015, the property did not include rent-stabilized apartments. Rather, as noted above, the all units had been withdrawn from the rental market in 2013 and the building sat uninhabited since that time. Because these events occurred prior to the project proposal and initial study, the court explained, they were not attributable to the project. Thus, the city properly determined an EIR was not required to analyze such impacts on housing and population. Moreover, the court added, there was nothing in the record to suggest that the 2015 hotel project was a reasonably foreseeable consequence of the initial condominium project for which the apartments were originally removed from the rental market, and there was no evidence that the city was attempting to chop up or evade CEQA review.

Turning to the issue of cumulative impacts, the court held that the city was not required to prepare an EIR to inquire into the cumulative impact of the project on housing and population. Because there was no substantial evidence of a project-specific potentially significant impact, the court explained, the city properly determined that the effects of the project would not be cumulatively considerable and no further analysis was required.

Remy Moose Manley partner Sabrina Teller and associate Christina Berglund represented the Real Parties in Interest in this matter.