Opinion
B307226
08-12-2022
CONCERNED CITIZENS OF BEVERLY HILLS/BEVERLY GROVE, Plaintiff and Appellant, v. CITY OF LOS ANGELES, Defendant and Respondent.
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.
NOT TO BE PUBLISHED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 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.
CEQA refers to the California Environmental Quality Act (Pub. Resources Code, § 21000 et seq.) and the implementing regulations (Cal. Code Regs., tit. 14, § 15000 et seq.) (CEQA Guidelines). Citations are to the Public Resources Code unless otherwise stated.
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, 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."
According to the administrative record, the existing zoning regulations were ineffective because the enforcement system was complaint-based rather than proactive, and the City lacked dedicated funds to enforce the regulations. In addition, internet listings did not typically list addresses for short-term rentals, which made it difficult for the City to locate those properties.
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" and property owner would also be held responsible for any nuisance violations, including fines resulting from the failure to comply with the ordinance.
The administrative record refers to "host" as someone "who live[s] on their property and offer[s] a bedroom for rent. Rentals can also take place in the entire home, a couch or suite of rooms."
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) 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).)"
The City later determined the ordinance was a project under CEQA.
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. (Code Civ. Proc., § 904.1, subd. (a)(1).)
We deny the City's motion to dismiss the appeal. In its motion, the City contends Concerned Citizens failed to file its appeal within 60 days of the March 10, 2020 order. The City relies on Meinhardt v. City of Sunnyvale (2022) 76 Cal.App.5th 43, review granted June 15, 2022, S274147. In Meihardt, the court held when "a court has entered a ruling on a writ petition that constitutes a final judgment, any party seeking appellate review of that ruling must timely appeal from that final judgment-and the time to file a notice of appeal is not restarted by the trial court's subsequent entry of a document styled as a 'judgment' that merely reiterates the prior final judgment." (Id. at p. 50.) Meihardt is distinguishable because in this case the trial court's order of March 10, 2020, was not a final judgment. Instead, the court ordered the City to prepare and serve a judgment, and also allowed appellant 10 days in which to object and prepare an alternative form of judgment for the court's consideration. The time for Concerned Citizens to appeal began running when the court entered final judgment on June 22, 2020.
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 of the many exemptions that excuse otherwise covered activities from CEQA's environmental review. Finally, assuming no applicable exemption, the agency must undertake environmental review of the activity." (Union of Medical Marijuana Patients, Inc. v. City of San Diego (2019) 7 Cal.5th 1171, 1185, fn. omitted.)
"[T]he agency must first undertake an initial study to determine whether the project 'may have a significant effect on the environment.' [Citations.] If the initial study finds no substantial evidence that the project may have a significant environmental effect, the lead agency must prepare a negative declaration, and environmental review ends. [Citations.] If the initial study identifies potentially significant environmental effects but (1) those effects can be fully mitigated by changes in the project and (2) the project applicant agrees to incorporate those changes, the agency must prepare a mitigated negative declaration. This too ends CEQA review. [Citations.] Finally, if the initial study finds substantial evidence that the project may have a significant environmental impact and a mitigated negative declaration is inappropriate, the lead agency must prepare and certify an EIR before approving or proceeding with the project." (Union of Medical Marijuana Patients, Inc. v. City of San Diego, supra, 7 Cal.5th at pp. 1186-1187, italics omitted; see We Advocate Through Environmental Review v. County of Sikiyou (2022) 78 Cal.App.5th 683, 690 ["Depending on the initial study's findings, the lead agency must then prepare either an EIR, a mitigated negative declaration, or a negative declaration"]; see also § 21080, subds. (c), (d).)
"Given the statute's text, and its purpose of informing the public about potential environmental consequences, it is quite clear that an EIR is required even if the project's ultimate effect on the environment is far from certain." (California Building Industry Assn. v. Bay Area Air Quality Management Dist., supra, 62 Cal.4th at pp. 382-383, italics omitted.) Accordingly, "'if a lead agency is presented with a fair argument that a project may have a significant effect on the environment, the lead agency shall prepare an EIR even though it may also be presented with other substantial evidence that the project will not have a significant effect.'" (Berkeley Hillside Preservation v. City of Berkeley (2015) 60 Cal.4th 1086, 1111-1112, quoting CEQA Guidelines, § 15064, subd. (f)(1); see Save the Plastic Bag Coalition v. City of Manhattan Beach (2011) 52 Cal.4th 155, 171 ["If the agency's initial study of a project produces substantial evidence supporting a fair argument the project may have significant adverse effects, the agency must . . . prepare an EIR"]; Citizens for Responsible &Open Government v. City of Grand Terrace (2008) 160 Cal.App.4th 1323, 1331 [""The fair argument standard is a 'low threshold' test for requiring the preparation of an EIR. [Citations.] It is a question of law, not fact, whether a fair argument exists, and the [trial court owes] no deference to the lead agency's determination."].)
B. Appellate Standard of Review
"In reviewing an agency's . . . decision for compliance with CEQA, we ask whether the agency has prejudicially abused its discretion; such an abuse is established 'if the agency has not proceeded in a manner required by law or if the determination or decision is not supported by substantial evidence.' [Citation.] In determining whether there has been an abuse of discretion, we review the agency's action, not the trial court's decision. '[I]n that sense appellate judicial review under CEQA is de novo.'" (Center for Biological Diversity v. Department of Fish &Wildlife (2015) 62 Cal.4th 204, 214-215 (Center for Biological Diversity); Vineyard Area Citizens for Responsible Growth, Inc. v. City of Rancho Cordova (2007) 40 Cal.4th 412, 427 ["An appellate court's review of the administrative record for legal error and substantial evidence in a CEQA case, as in other mandamus cases, is the same as the trial court's: the appellate court reviews the agency's action, not the trial court's decision; in that sense appellate judicial review under CEQA is de novo"].) We determine de novo whether the agency has employed the proper procedures, and we review the agency's substantive factual conclusions for substantial evidence. (Sierra Club v. County of Fresno (2018) 6 Cal.5th 502, 512; Covina Residents for Responsible Development v. City of Covina (2018) 21 Cal.App.5th 712, 724.)
An agency's decision to rely on a negative declaration or a mitigated negative declaration under CEQA "'is reviewed for abuse of discretion under the 'fair argument' standard.'" (Jensen v. City of Santa Rosa (2018) 23 Cal.App.5th 877, 886; see Wollmer v. City of Berkeley (2009) 179 Cal.App.4th 933, 939.) "[A] reviewing court may not uphold an agency's decision [not to prepare an initial EIR under the fair argument test] 'merely because substantial evidence was presented that the project would not have [a significant environmental] impact. The [reviewing] court's function is to determine whether substantial evidence support[s] the agency's conclusion as to whether the prescribed 'fair argument' could be made. If there [is] substantial evidence that the proposed project might have a significant environmental impact, evidence to the contrary is not sufficient to support a decision to dispense with preparation of an EIR and adopt a negative declaration, because it [can] be 'fairly argued' that the project might have a significant environmental impact. Stated another way, if the [reviewing] court perceives substantial evidence that the project might have such an impact, but the agency failed to secure preparation of the required EIR, the agency's action is to be set aside because the agency abused its discretion by failing to proceed 'in a manner required by law.'"" (Berkeley Hillside Preservation v. City of Berkeley, supra, 60 Cal.4th at p. 1112.) "The fair argument standard thus creates a low threshold for requiring an EIR, reflecting the legislative preference for resolving doubts in favor of environmental review." (Covina Residents for Responsible Development v. City of Covina, supra, 21 Cal.App.5th at p. 723, fn. omitted.)
C. The City Did Not Abuse Its Discretion in Establishing the Baseline
"The fundamental goal of an EIR is to inform decision makers and the public of any significant adverse effects a project is likely to have on the physical environment.... To make such an assessment, an EIR must delineate environmental conditions prevailing absent the project, defining a 'baseline' against which predicted effects can be described and quantified." (Neighbors for Smart Rail v. Exposition Metro Line Construction Authority (2013) 57 Cal.4th 439, 447.) "According to an administrative guideline for CEQA's application, the baseline 'normally' consists of 'the physical environmental conditions in the vicinity of the project, as they exist at the time . . . [the] environmental analysis is commenced." (Communities for a Better Environment v. South Coast Air Quality Management District (2010) 48 Cal.4th 310, 315.) However, "as one appellate court observed, 'the date for establishing baseline cannot be a rigid one. Environmental conditions may vary from year to year and in some cases it is necessary to consider conditions over a range of time periods.'" (Communities for a Better Environment at p. 327.) But "[a]n existing conditions baseline shall not include hypothetical conditions, such as those that might be allowed, but have never actually occurred, under existing permits or plans, as the baseline." (Cal. Code Regs., tit. 14, § 15125, subd. (a)(3).) "[A]n agency enjoys the discretion to decide, in the first instance, exactly how the existing physical conditions without the project can most realistically be measured." (Neighbors for Smart Rail v. Exposition Metro Line Construction, supra, 47 Cal.4th at p. 449; accord, Fat v. County of Sacramento (2002) 97 Cal.App.4th 1270, 1278.)
In establishing the baseline, the City retained Host Compliance LLC, a firm that contracts with cities to assist with gathering relevant home-sharing data and supports the enforcement of cities' home-sharing ordinances. The data showed that there were 1.45 million housing units in the City and "as of October 2017 there are approximately 28,918 active short-term rental listings within the City of Los Angeles." Approximately 55 percent of all short-term listings were located in multi-family buildings, even though 80 percent of multi-family units in Los Angeles were subject to the Rent Stabilization Act. Thus, "it is possible that as many as forty-four percent of current short-term rental units are . . . [Rent Stabilization Act] units. These units would be ineligible for home sharing under the proposed ordinance." The baseline also noted that 32 percent of short-term rental listings were for more than 120 days a year, and the City expected short-term rental tax receipts to drop by 37 percent by eliminating the ability of hosts to use non-primary residences as short-term rentals.
Appellant does not dispute these data but contends the baseline does not take into consideration the City's failure to enforce its own zoning laws. Appellant argues, "Over several years, despite documented complaints to the City Attorney and [Los Angeles Department of Building and Safety], the City took no action while thousands of illegal short-term rentals operated throughout the City. Allowing the City to benefit from its lack of action to enforce its laws is a gross misapplication of CEQA. No agency should be provided impunity to, intentionally or negligently, allow an illegal, environmentally impactful activity to get out of hand, and then claim that the situation the agency created, despite numerous complaints that were ignored, should be the baseline to which the impacts of discretionary action by the agency should be compared."
Appellant has misdirected its dissatisfaction with the City's historic response to short-term rentals. The law does not require the City to make an evaluation based on a hypothetical, and potentially misleading analysis of how many short-term rentals might exist had the City been able to curb those rentals through existing zoning regulations. Rather, the law requires the baseline to be determined by existing environmental conditions so as to accurately measure the environmental impact of the proposed project. (See § 15125, subdivision (a)(1) ["Generally, the lead agency should describe physical environmental conditions as they exist at the time the notice of preparation is published, or if no notice of preparation is published, at the time environmental analysis is commenced"]; see also Communities for a Better Environment v. South Coast Air Quality Management District, supra, 48 Cal.4th at p. 322 ["An approach using hypothetical allowable conditions as the baseline results in 'illusory' comparisons that 'can only mislead the public as to the reality of the impacts and subvert full consideration of the actual environmental impacts,' a result at direct odds with CEQA's intent"]; Neighbors for Smart Rail v. Exposition Metro Line Construction, supra, 47 Cal.4th at p. 453 [an agency may only forgo analysis of a project's impacts on existing environmental conditions if the analysis would be uninformative or misleading]; Hollywoodians Encouraging Rental Opportunities v. City of Los Angeles (2019) 37 Cal.App.5th 768, 773; Center v. County of Merced (2007) 149 Cal.App.4th 645, 657-658 ["Before the impacts of a project can be assessed and mitigation measures considered, an EIR must describe the existing environment. It is only against this baseline that any significant environmental effects can be determined"]; accord, San Joaquin Raptor Rescue Center v. County of Merced (2007) 149 Cal.App.4th 645; County of Amador v. El Dorado County Water Agency (1999) 76 Cal.App.4th 931, 952.)
For instance, in Eureka Citizens Responsible Government v. City of Eureka (2007) 147 Cal.App.4th 357, the appellant contended "the Project description, as reflected in the EIR, was improperly 'skew[ed]' by failure to consider the nature and consequences of what appellants deemed prior 'illegal' activities of the applicant, including historic zoning violations and alleged code violations in the construction of the playground." (Id. at p. 370.) But the court rejected that argument because "preparation of an EIR is not generally the appropriate forum for determining the nature and consequences of prior conduct of a project applicant, and environmental impacts should be examined in light of the environment as it exists when a project is approved." (Ibid.) Moreover, "the 'more prudent method of dealing with alleged prior illegality '-reliance in the first instance on direct enforcement by the agencies charged with the responsibility of doing so, and second, to rely on the enforcing agencies to comment in the EIR process" was the proper method such that "[w]hile any alleged code violations in the construction of the playground may have been relevant to the City's consideration of the variance requested, it was not a CEQA consideration." (Id. at pp. 370-371.)
Similarly, in Riverwatch v. County of San Diego (1999) 76 Cal.App.4th 1428, the court determined the superior court erred in finding "that the EIR should have developed an environmental baseline which accounted for the prior illegal activity both on the quarry project and off site." (Id. at 1452.) Rather, the court stated, "We believe that in general preparation of an EIR is not the appropriate forum for determining the nature and consequences of prior conduct of a project applicant." (Ibid.) As the court explained, "The real difficulty we see in requiring the development of early baselines is the burden it would impose on drafters in determining the nature of any prior illegality.... [¶] Thus, a particular problem we foresee in requiring an earlier baseline is that definitive evidence of prior illegality will most likely come in the form of the acts of enforcing agencies and that use of an early baseline by a separate agency preparing an EIR may either interfere, conflict or unfairly amplify such enforcement action. [¶] In the absence of more detailed guidance either from the Legislature or the Resources Secretary, we believe a more prudent method of dealing with alleged prior illegality is to rely in the first instance on direct enforcement by the agencies charged with the responsibility of doing so, and second, to rely on such enforcing agencies to comment in the EIR process on the impact any new project may have on their enforcement activities. Because the prior illegality was subject to enforcement actions and the enforcing agency participated in the CEQA process, CEQA did not require any further accounting for prior activity at or within the vicinity of the project." (Id. at p. 1453; see also Fat v. County of Sacramento, supra, 97 Cal.App.4th at pp. 1278-1280 [court approved baseline that did not include consideration of "the history of illegal expansion at the Airport" despite "evidence of environmental damage during that period, and the Airport had been the subject of at least two zoning enforcement actions"]; cf. Communities for a Better Environment v. South Coast Air Quality Management District, supra, 48 Cal.4th at 321 ["In each of these decisions, the appellate court concluded the baseline for CEQA analysis must be the 'existing physical conditions in the affected area' . . . that is, the '"real conditions on the ground"' . . . rather than the level of development or activity that could or should have been present according to a plan or regulation"].)
Appellant's reliance on League to Save Lake Tahoe v. Tahoe Regional Planning Agency (E.D.Cal. 2010) 739 F.Supp.2d 1260, affd. in part, vacated in part and revd. in part (9th Cir. 2012) 469 Fed.Appx. 621, is also misplaced. In that case, the Tahoe Regional Planning Agency sought to increase the number of authorized mooring buoys on Lake Tahoe. However, the agency included all existing buoys, including unauthorized buoys, in its environmental assessment baseline. The federal district court ruled this was an abuse of discretion because "the fact that sub silentio approval of existing unauthorized activity is in an important sense an agency action." (Id. at p. 1275.) But there is no evidence that the City of Los Angeles approved or intentionally allowed short-term rentals; rather, as the administrative record makes clear, the City lacked the tools to enforce applicable zoning laws because the "City's current zoning regulations do not anticipate or effectively govern short-term rentals." We conclude the City did not abuse its discretion when it used current conditions to set the baseline.
Additionally, League to Save Lake Tahoe is distinguishable because "as the federal district court, itself, explained in denying a motion for reconsideration . . . it was concerned with the environmental provisions of the Tahoe Regional Planning Compact, an agreement between California and Nevada, and not with CEQA.... The compact's environmental provisions 'go further than those of CEQA.'" (Citizens for East Shore Parks v. State Lands Commission (2011) 202 Cal.App.4th 549, 562.)
D. Appellant Failed To Raise a Fair Argument Showing the Project Would Have a Significant Environmental Impact
Appellant contends the City's negative declaration improperly invoked the common-sense exemption because appellant "raised numerous legitimate questions whether the ordinance might have a significant impact on the environment." Appellant argues the "administrative record is replete with evidence-based examples of the kinds of significant impacts that will flow from the adoption of the Ordinance, including depletion of housing stock, noise pollution, air pollution, traffic congestion, additional and unmanageable stress on City services, in particular first responders-fire and law enforcement, water, trash, and parks and recreation personnel and facilities." Based on our review of the administrative record, we conclude appellant did not raise a fair argument establishing the project might have a significant impact on the environment.
1. Home-sharing Impacts
Appellant contends "that an increase in home-sharing activity could result from the adoption of the Ordinance, at the very least in those areas of the City not subject to the Rent Stabilization Ordinance." Although appellant cites to estimates from Host Compliance, LLC "that short-term rental activity had increased by 45 percent over [a] 16-month period, which translates to a 34 percent annual growth rate when adjusted to a 12-month period," it was these studies that prompted the need for the ordinance in the first place. As the City noted, "The proposed ordinance is in response to issues raised from the dramatic increase in the number of residences being rented informally on a short-term basis . . . in recent years." Nothing in the historic statistics speaks to the short-term rental activity that may occur after the new ordinance is implemented.
Although the City admitted it "has seen research and heard testimony about lives and communities that have been negatively impacted by short term rentals . . . loss of neighborhood character, the loss of valuable housing stock and various nuisance activities," the City concluded "the impact of enforcement of the proposed ordinance would reasonably result in approximately a 20% to 40% reduction in short-term rental activity ...." The City projected "that this would lead to a reduction to between approximately 11,000 and 15,000 active listing from the baseline range of 18,285 active listings.... This estimate is in line with the impacts observed in the City of Santa Monica and the City and County of San Francisco, both of which recently adopted similar regulations. The City's estimate assumes that most short-term rental activity, which is currently illegal, would discontinue after adoption of the ordinance."
Indeed, the City's predicted reduction in short-term rental activity was based on the fact that the ordinance "prohibits homesharing in units subject to the Rent Stabilization Ordinance, which disqualifies nearly half of the City's housing stock from participating in home-sharing." Additionally, because nonprimary residencies were further excluded under the ordinance, the City estimated that it "could result in up to a 46% decline in short-term rental booking receipts." The ordinance also limited short-term rentals to less than 120 days a year and imposed additional enforcement measures (with a source of funding to support those enforcement measures), which it anticipated would further decrease short-term rental activity. Finally, the City noted that both the Santa Monica and San Francisco ordinances that imposed similar requirements resulted in a reduction of short-term rentals. Because the City determined the ordinance would reduce short-term rental activity, it also concluded that there would not be a significant impact on the environment, including noise and displacement.
Although appellant argues that "market forces are likely to return a large amount of the activity despite the reductions . . . thereby creating greater incentives for new hosts to participate in the sharing activity," there is nothing in the administrative record to support this prediction. (Dunnings v. Clews (2021) 64 Cal.App.5th 156, 170 ["'[m]ere argument, speculation, and unsubstantiated opinion, even expert opinion, is not substantial evidence for a fair argument. [Citations.] . . . Neither is the mere possibility of adverse impact on a few people, as opposed to the environment in general"'], accord, § 21080, subd. (e)(2) ["Substantial evidence is not argument, speculation, unsubstantiated opinion or narrative, evidence that is clearly inaccurate or erroneous, or evidence of social or economic impacts that do not contribute to, or are not caused by, physical impacts on the environment"]; Taxpayers for Accountable School Bond Spending v. San Diego Unified School Dist. (2013) 215 Cal.App.4th 1013, 1036.)
2. Noise Level Impacts
"CEQA defines the '"[e]nvironment"' to mean 'the physical conditions which exist within the area which will be affected by a proposed project, including . . . noise.' (§ 21060.5.) . . . Thus, for purposes of CEQA, the noise caused by a project can result in a significant effect on the environment." (King & Gardiner Farms, LLC v. County of Kern (2020) 45 Cal.App.5th 814, 883.)
Generally, "[a] lead agency enjoys substantial discretion in its choice of methodology." (Center for Biological Diversity, supra, 62 Cal.4th at p. 228.) Indeed, "[t]he absence of a mandatory standard in CEQA, the Guidelines or judicial decisions for determining the significance of a noise increase means it is the responsibility of lead agencies to choose the thresholds of significance to be applied to a project's noise impacts." (King &Gardiner Farms, LLC v. County of Kern, supra, 45 Cal.App.5th at p. 884; accord, § 15064.7, subd. (a) ["A threshold of significance is an identifiable quantitative, qualitative or performance level of a particular environmental effect, noncompliance with which means the effect will normally be determined to be significant by the agency and compliance with which means the effect normally will be determined to be less than significant"]; Mission Bay Alliance v. Office of Community Investment & Infrastructure (2016) 6 Cal.App.5th 160, 192 ["The lead agency has substantial discretion in determining the appropriate threshold of significance to evaluate the severity of a particular impact"].)
In evaluating the level of noise the ordinance would potentially generate, the City concluded there would be a "less than significant impact" because "the Home-Sharing ordinance only affects the use of existing residential structures in established neighborhoods and no new development is reasonably foreseeable. There is the possibility of an increase in operational noise levels in homes that are rented under this ordinance; however, there are no studies or other data that show home-sharing results in a substantial increase in noise levels in neighborhoods with short-term home-share rentals so as to violate local noise ordinances. Furthermore, it is anticipated that enforcement of existing Municipal Code noise regulations, for which funding is provided by the proposed Ordinance, will generally ensure excess noise does not result from home-sharing. In fact, because the ordinance prohibits all full-time vacation home rentals, there is the potential for a decrease in the number of vacation rentals, which could lead to the possible decrease in noise levels related to the operation of home-sharing."
Despite the City's conclusion, appellant contends there is no link between the overall volume of home sharing and noise levels, and that the City "decided not to conduct any further studies to determine if that increase would be substantial." (See City of Redlands v. County of San Bernardino (2002) 96 Cal.App.4th 39, 41 [The County "set the stage by failing to gather facts and evidence in conducting its initial study of the amendments' potential environmental effects. The County's conclusory evaluation of the amendments fail to support its decision to adopt a negative declaration"].)
Appellant's argument is misplaced. As evidenced by the administrative record, the City did not come to its conclusion without a factual basis or lack of investigation. (See Aptos Council v. County of Santa Cruz (2017) 10 Cal.App.5th 266, 294 (Aptos) ["The County did not come to this conclusion without investigating or conducting studies"].) Rather, the record supports the City's determination that the ordinance would result in less short-term rental activity and therefore a reduction in noise caused by short-term rentals. (Id. at p. 296 [rejecting argument County failed to gather relevant data].) Nor was there any requirement, as appellant admits, for the City to undertake a noise evaluation study before coming to its conclusion. (Rominger v. County of Colusa (2014) 229 Cal.App.4th 690, 725 ["There is 'no authority . . . that an initial study is inadequate unless it amounts to a full-blown EIR based on expert studies of all potential environmental impacts. If this were true, the Legislature would not have provided in CEQA for negative declarations'"].)
There were comments from multiple members of the public indicating they had experienced excessive noise coming from existing short-term rentals. As appellant argues, "the City blindly assumed that enforcement of existing noise regulations would suffice despite the fact that many commenters testified that the existing regulations had proven to be inadequate." But these complaints involved noise emanating from illegal short-term rentals as they existed before the ordinance, and merely expressed doubt that the ordinance would be sufficient to quell future noise. These concerns do not constitute substantial evidence that the ordinance would increase noise, or that the City would be unable to enforce the ordinance regarding noise. (See Newtown Preservation Society v. County of Eldorado (2021) 65 Cal.App.5th 771, 790 [concluding petitioner's concerns regarding existing wildfire hazards do not support a fair argument that the project may have a potentially significant effect on the environment or may exacerbate existing environmental hazards.].)
3. Non-hosted Impacts
Appellant argues that without hosted short-term stays, "short-term renters, often not being stakeholders in the community in the same way that homeowners and longterm residents are, will not have the acute concern and adapted behaviors of residents to, for instance, act appropriately relative to the tremendous fire hazards in the hillsides where fires can be caused by simple activities such as smoking, barbequing, outdoor fire pits and even a hot muffler.... Vehicles left parked because renters may have forgotten or did not fully take in any instructions they might be given will increase the need for vehicle towing on red flag days which will result in increased safety hazards on the roads, since maneuvering towed vehicles on many of the steep and narrow hillside roads is risky and will create temporary blockages.... [¶] For renters on vacation, or in any case, paying top dollar, there may be less attention on water conservation."
Again, the administrative record does not support appellant's argument. Because the City concluded, with supporting evidence, that the ordinance will significantly reduce short-term rentals, all the related concerns appellant associates with those short-term rentals should also be reduced.
Although the City acknowledged that "hosted activity helps to protect the housing stock, ensures the primary residential use is maintained and limits nuisance behavior by guests," the City looked at the experiences of hosted stay requirements in Santa Monica and San Francisco and noted that it has "proven very difficult for cities to be able to verify whether each guest stay is hosted on a nightly basis. A random inspection, for example, could determine whether a host is present at a given time; however, this would not prove whether the stay is considered hosted or not since a host is still permitted to go their place of employment and attend to regular social and other engagements.... Enforcement would continue to be an issue of concern." Because hosted stays have been difficult to enforce, both Santa Monica and San Francisco have not enforced the hosting requirement. Yet, Santa Monica saw a 30 percent drop in the number of short-term rentals, while San Francisco noted that its "55 percent reduction was observed after the City began enforcing registration requirements due in part to the requirement that renters need landlord approval to register for home-sharing." As the proposed ordinance in this case also requires registration and landlord approval, the City concluded that "it is anticipated that a similar decline would be observed in Los Angeles."
As nothing in the administrative record shows that nonhosted short-term rentals result in a significant environmental impact, appellant's arguments do not constitute substantial evidence of a fair argument. (See § 15384, subd. (a); see also Pala Band Mission of Indians v. County of San Diego (1998) 68 Cal.App.4th 556, 580 ["We conclude Pala's comment letter does not constitute substantial evidence under the applicable 'fair argument' standard because it consists almost exclusively of mere argument and unsubstantiated opinion, which are excluded from the definition of substantial evidence under CEQA"].)
4. New Construction Impacts
Appellant challenges the City's conclusion that "because only primary residences may be used for short-term rentals, there is no economic incentive to construct new residences for short- term rentals." Appellant contends "there would be an economic incentive for people to build new accessory dwelling units (ADUs) and then rent them out as short-term rentals under the Ordinance.... The City knew this sharing ADUs would be used for home sharing.... The City also knew that the development of new ADUs was reasonably foreseeable-especially in light of the passage of new state regulations that provided for streamlined development."
Appellant's argument is yet again belied by the administrative record. An ADU, also called a "granny flat," is "an attached or a detached residential dwelling unit that provides complete independent living facilities for one or more persons and is located on a lot with a proposed or existing primary residence." (See Gov. Code, § 65852.2, subd. (j)(1).) In this case, the ordinance indicated that an "accessory dwelling unit . . . may not be used for Home-Sharing unless an applicant demonstrates the Accessory Dwelling Unit is the applicant's primary unit" and "a renter or lessees shall not engage in Home-Sharing without prior written approval of the landlord."
On December 10, 2018 an exception was made for approximately 555 ADUs properly permitted before December 2017. No comments were received on this exception.
There is nothing in the record to support the conclusion that the ordinance will "incentivize new development." As the administrative record notes, "New State regulations providing for streamlined development of ADUs became effective on January 1, 2017.... While comprehensive data is not available on the total number of ADUs that existed prior to 2017, information on the number of permits issued from 2013 to the end of 2016 shows that only 421 ADUs received a Certificate of Occupancy. [¶] Given the small fraction of ADUS expected to be used for homesharing, and further given the overall anticipated reduction in short-term rental activity, it is reasonable to conclude that a very small number of additional ADUs would become eligible for home-sharing, and any effect on this amendment would be de minimus." (Dunnings v. Clews, supra, 64 Cal.App.5th at p. 170 [holding argument, speculation and unsubstantiated opinion does not constitute "substantial evidence for a fair argument"].)
5. Displacement Impacts
Appellant asserts the City should have done a report to determine how the ordinance was likely to drive development to other areas in the City. Appellant did not raise this issue during the administrative process, and it is now forfeited. (§ 21177, subd. (a) ["An action or proceeding shall not be brought pursuant to Section 21167 unless the alleged grounds for noncompliance with this division were presented to the public agency orally or in writing by any person during the public comment period provided by this division or before the close of the public hearing on the project before the issuance of the notice of determination"]; accord, Stop Syar Expansion v. County of Napa (2021) 63 Cal.App.5th 444, 453 ["In the context of CEQA, specifically, '"'The essence of the exhaustion doctrine is the public agency's opportunity to receive and respond to articulated factual issues and legal theories before its actions are subjected to judicial review.'" [Citations.] Comments must express concerns so the lead agency has "'"'its opportunity to act and to render litigation unnecessary.'"'" [Citation.].' [Citation.] [¶] Thus, 'the requirement of exhaustion is a jurisdictional prerequisite, and not a matter of judicial discretion'"]; Tahoe Vista Concerned Citizens v. County of Placer (2000) 81 Cal.App.4th 577, 589 ["'The exhaustion doctrine . . . operates as a defense to litigation commenced by persons who have been aggrieved by action taken in an administrative proceeding which has in fact occurred but who have failed to "exhaust" the remedy available to them in the course of the proceeding itself'"].)
Appellant contends it raised the issue of displacement by way of a 2016 letter wherein it noted "that there may be a decrease in certain rentals due to the regulatory requirements embodied in the ordinance. . . this demand will almost certainly be filled by other homeowners willing to rent their homes subject to the new requirements outlined in the ordinance." Appellant also claims that one commentator noted that the "ordinance would permit significant intensification of use and significant densification in residentially zoned areas across the City where all short-term rental activity is now illegal." Neither comment was sufficiently specific to fairly apprise the City of the displacement issue.
Even if the issue of displacement had been raised during the administrative process, the City concluded that "the Home-Sharing ordinance only affects the use of existing residential structures in established neighborhoods and no new development is reasonably foreseeable. Furthermore, the ordinance requires the dwellings used for home-sharing to be a person's primary residence. Therefore, it would not displace any existing housing, necessitating the construction of replacement housing elsewhere." There is nothing in the administrative record showing that the ordinance would cause displacement or that any such displacement would significantly impact the environment through the construction of replacement housing. (Aptos, supra, 10 Cal.App.5th at p. 296 ["[E]nvironmental review of potential future developments would be an impossible task, because it is unclear what form future developments will take. The suggested environmental impacts are simply not reasonably foreseeable at this time, and evaluation of the impacts would be wholly speculative"].)
In its ruling, the trial court noted that before the ordinance was adopted, short-term rentals "were concentrated in four council districts.... The fact is that short term rentals are concentrated in four council districts that are close to vacation attractions shows that is where most vacationers want to stay. There is no indication that a short-term renter would be wiling to accept a unit that requires a commute to a preferred area. Nor is there any indication that a short-term rental demand will be so strong in less favored areas."
6. Feasible Mitigation Measures
A mitigated negative declaration "means a negative declaration prepared for a project when the initial study has identified potentially significant effects on the environment, but (1) revisions in the project plans or proposals made by, or agreed to by, the applicant before the proposed negative declaration and initial study are released for public review would avoid the effects or mitigate the effects to a point where clearly no significant effect on the environment would occur, and (2) there is no substantial evidence in light of the whole record before the public agency that the project, as revised, may have a significant effect on the environment." (§ 21064.5; § 15070, subd. (b); see Architectural Heritage Assn. v. County of Monterey (2004) 122 Cal.App.4th 1095, 1118-1119 ["adoption of a mitigated negative declaration is proper only where the conditions imposed on the project reduce its adverse environmental impacts to a level of insignificance"].) An agency may not rely on mitigation measures to reach an exemption determination. (See Salmon Prot. & Watershed Network v. County of Marin (2004) 125 Cal.App.4th 1098, 1107 ["[T]he County erred in relying upon mitigation measures to grant a categorical exemption from CEQA. Only those projects having no significant effect on the environment are categorically exempt from CEQA review"].)
Appellant argues that the City adopted mitigation measures but failed to acknowledge them in the Negative Declaration in order to avoid preparing a Mitigated Negative Declaration. Appellant asserts, "Some of these include, but are not limited to, the following: (1) providing information related to emergency exit routes, (2) posting written notices prohibiting smoking on decks or patios in Very High Fire Hazard Severity Zones and (3) distributing codes of conduct to guests to address 'behavioral, security, and other matters.'"
There is no indication that the items outlined by appellant were related to environmental concerns; rather, these measures appear to regulate guest behavior, which is a valid function of police power and outside the scope of CEQA. (See San Franciscans for Reasonable Growth v. City and County of San Francisco (1989) 209 Cal.App.3d 1502, 1516 ["We conclude that project-specific or cumulative impacts on the availability of child care programs are not environmental impacts and, therefore, the Commission had no duty under CEQA to condition project reapproval on exactions from the project sponsor in this area. To state it differently, the board of supervisors enacted the child care provisions outside the scope of CEQA"]; see also Clary v. City of Crescent City (2017) 11 Cal.App.5th 274, 289 ["local governments' police powers, provides local governments with authority to impose and enforce land use regulations, through a nuisance ordinance or otherwise"].)
E. Common Sense Exemption
The City adopted a negative declaration based on the common sense exemption. "A project that qualifies for neither a statutory nor a categorical exemption may nonetheless be found exempt under what is sometimes called the 'common sense' exemption, which applies '[w]here it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment.... If there exists 'no substantial evidence that the project or any of its aspects may cause a significant effect on the environment' . . . the agency must prepare a 'negative declaration' that briefly describes the reasons supporting its determination." (Muzzy Ranch Co. v. Solano County Airport Land Use Com. (2007) 41 Cal.4th 372, 380; see § 15601, subd. (b)(3).) A negative declaration is "a written statement briefly describing the reasons that a proposed project will not have a significant effect on the environment and does not require the preparation of an environmental impact report." (§ 21064.) "Like an EIR, an initial study or negative declaration 'must focus on impacts to the existing environment, not hypothetical situations.'" (Communities for a Better Environment v. South Coast Air Quality Management Dist., supra, 48 Cal.4th at p. 322.) "[W]hether a particular activity qualifies for the common sense exemption presents an issue of fact, that the agency invoking the exemption has the burden of demonstrating it applies." (Muzzy Ranch Co. v. Solano County Airport Land Use Com., supra, 41 Cal.4th at p. 386; see Davidon Homes v. San Jose, supra, 54 Cal.App.4th at p. 117.)
Based on the totality of the administrative record and the fact that appellant has failed to raise a fair argument, we conclude there was substantial evidence for the City of Los Angeles to determine that the ordinance would not have a significant impact on the environment. Accordingly, we find no error in the City's adoption of a negative declaration based on the "common sense" exemption.
DISPOSITION
The judgment denying the petition for writ of administrative mandate is affirmed. The City of Los Angeles is to recover its costs on appeal.
We concur: PERLUSS, P. J., SEGAL, J.
[*] Judge of the Alameda County Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.