What the ruling means

Yesterday evening, Judge Miller released her ruling for the Student Athlete High Performance Center project. While the news reports were plentiful, most of them reported on the reactions of the two sides, the reporters having not themselves read and analyzed the 129 page ruling before their press deadlines. What follows is a detailed analysis of the ruling itself and what it means going forward.

The plaintiffs in the case, the City of Berkeley (COB), the Panoramic Hills Association (PHA) and the Save the Oaks (STO) had used two different laws to challenge the planned development by the University. The first is the Alquist-Priolo Act (AP), a long-standing law that governs the construction, or lack thereof, on and around earthquake faults. The second is the California Environmental Quality Act (CEQA), a more recent but still long-standing law designed to bring to light all of the impacts of each construction project before it is approved by the appropriate governmental entity through the creation of an Environmental Impact Report (EIR).

Alquist-Priolo:

The court ruled that the University is subject to the AP as just about everyone expected. This is no big deal in the end because the University's case did not rely on ruling that the University was not subject to this law. However, the PR aspects of this should not be overlooked. This sounds like a big victory for the COB, the PHA and the tree-sitters, particularly since this is the first thing discussed in the ruling and takes a bunch of pages. For the weak of heart that aren't willing to read the whole thing, all they'll ever see is the court focusing on the plaintiffs winning what seems like a significant point. While in the end it'll all come out in the wash, it was probably a poor decision to advance this argument in court by the University because it allows the COB, PHA and the tree-sitters an avenue to claim a major victory where they in fact they do not.

The upside for Bear fans is that all the stuff that was actually meaningfully debated in court went the way of the University including that the stadium and the SAHPC are separate structures. The one fly in the ointment was that, and this was even admitted by the University in court, there were a few very minor alterations to the stadium as part of the SAHPC:

1. A Grade Beam to be installed along base of the Stadium's west wall.

2. Alterations to existing staircases.

3. Holes in the foundation for wiring.

What this means is that the AP is triggered for these minor alterations and therefore the University must do the legal work to show that the improvements are less than 50% of the value of the stadium. This means getting the court to approve a value for the stadium and getting cost estimates for the alterations. The alterations will be pretty cheap, so there's no issue there. The key issue is what Memorial Stadium is worth.

What the COB will attempt to show is that the value of the stadium is very low, so low that nearly any alternation is larger than the 50% allowed. The way they would accomplish this is to use a "depreciation method" where you take the cost of construction and then depreciate the value of the structure for each year it was used.

This technique is used in a number of areas, particularly for tax purposes. Businesses that own cars routinely use this valuation technique to offset their profits. If the depreciation method was used, since Memorial has been around and used for 85 years, it would be very easy to come up with a valuation of $0.

Of course the University contends that the Memorial Stadium is worth far more. They would prefer to use a "replacement value method". This would result in a very high value because construction costs are so high these days.

The judge seems to have preemptively tipped her hat as to what method she would like to see used for the valuation in the ruling. While she refused to specify which method must be used, the ruling states what she thinks is the right way to value the stadium:

"(the cost of replacing the existing improvements [commentary: which means the structure and not the land] less whatever depreciation or obsolescence the improvements have suffered) may be more likely to serve the purposes of the Alquist-Priolo."

Her basic thinking is that if you built a new stadium from scratch, the resulting building is worth more than the old one even if they were identical. The lack of chips and cracks and the longer period of time it will be before aspects of it, like splintery wood seats, have to be repaired or replaced make it worth more. So while replacement value is a good starting point, and that's the key, you have to reduce the value by a bit to take into account the fact that the building isn't brand new.

The key to understanding how this will all play out as stated above is that you get to start with replacement cost. The depreciation because the stadium is not new is not going to devalue the stadium to the degree that the 3 items listed above couldn't be done.

So to summarize the AP issues left to be resolved, all that the University needs to do is get a reasonable valuation of the stadium, by the judge's own proposed method, and everything will be in compliance for the AP and this law will no longer block the SAHPC project.

California Environmental Quality Act:

While the AP rulings were a mixed bag for the University, particularly if you include the meaningless ruling regarding the University being subject to the AP, the CEQA aspects of the case were far more one-sided. It is important to note just how many things went the University's way:

· The Regents did not error by having the EIR reviewed by a sub-committee.

· The Regents did not prematurely approve the EIR.

· The University did not need to re-circulate the EIR with the late breaking seismic reports.

· The EIR did properly analyze the impact of removing the trees (a major blow to the tree-sitters case).

· The EIR did properly analyze the impact of potential native burial plots (a blow to Zachary RunningWolf's assertions).

· The EIR's project description was sufficiently detailed.

· The EIR did properly analyze the impact of the geological and seismic factors.

· The project will not worsen emergency access to the Panoramic Hills neighborhood (rebutting the PHA's main legal argument).

· The project doesn't violate the 2020 LRDP's requirement, an EIR that the University is subject to, for mitigations impacts to "cultural resources".

· The EIR was reasonable to join all of the projects together instead of having a separate EIR calling out the SAHPC's purpose and impact.

· The EIR addressed the necessary project alternative sites and scopes.

· The proposed lighting does not harm the historical character of Memorial stadium.

Item after item went the way of the University. Every tenuous claim of the plaintiffs was rebutted. While there is reason to criticize the University for advancing a singular aggressive claim that AP is not applicable to the University, the COB, PHA and STO advanced one tenuous claim after another and the court shot all of them down with surprisingly strong language for a legal ruling.

The one surprising little note towards the end of the CEQA portion of the ruling was the court rejecting one of the EIR's more minor statements. The statement was that the additional impacts from doubling the number of events at the stadium were unavoidable. Judge Miller disagreed because there was nothing in the EIR that showed why doubling the number of events was a requirement of the project.

What makes this aspect of the ruling particularly interesting is that the ruling did not say what the implications of that conclusion were, which leaves a lot of confusion as to how this deficiency will be resolved. Unlike the AP issues, it's unclear exactly what the University will have to do to rectify the situation.

Writ of Mandate:

The ruling concludes by saying that based on all of the above, a 'Writ of Mandate' will be issued. The 'Writ' is the statement of what explicitly will have to be done to rectify the problems in the proposal. The judge gave the COB, the PHA and the STO until June 24th to propose the 'Writ' and until the 27th for the University to respond.

What this means is that the plaintiffs are going to write a proposed writ that is very aggressive. It will likely suggest that based on the 'unavoidable' misstatement in the EIR, the project should be halted. Failing that, at a very minimum, they will argue that the EIR is foundationally inaccurate and therefore the University has to redo it. This request follows the classic delay tactic because a redone EIR will require that it be resubmitted for public comment and be re-approved by the Regents. The plaintiffs will also argue for a stadium valuation of $0 or very close to it so that the cost of the three minor alterations that are required for the SAHPC will be larger than the 50% rule.

The University will respond with a number of objections to the above proposal. They'll argue that the 'unavoidable' misstatement could be merely re-written to something like 'desirable in the context of the proposed project'. Or perhaps they can remove the doubling of the number of the events as part of the EIR. In any case, and why the second scenario is less likely, they will argue that no recirculation and no re-approval is necessary. They will also of course propose a value of the stadium in the hundreds of millions.

The fly in the ointment for Bear fans is that this whole process will have to happen. If the judge were to rule that the EIR needs to be either recirculated or re-approved after the minor changes, it could delay the project for easily another year, if not more. Additionally just the time the judge will take to rule on the proposed writ could end up taking a very long time again (she's shown a tendency to do that after all). While all of that is happening, the injunction is still in place and the tree-sitters will still have trees to try and occupy.

In that sense, that's why the ruling was a victory for the tree-sitters. All of the activities the University took to prepare to remove the tree-sitters, were likely for not. It's going to take weeks if not months to get this all cleared up. The University is not going to want to have to have round-the-clock security while that is happening to prevent the tree-sitters from re-entering the trees and so they're not going to remove them from the trees until this is all resolved. Of course, in the intervening time, the tree-sitters will rebuild all of their platforms and rope bridges and everything that was just taken down.

They'll force the University to go through the same shenanigans when the final approval is pounded out.

However, that large grain of salt notwithstanding, this was a victory for the Bears. There's nothing in this ruling that is not resolvable. It's just going to take a bit more time. It is hard to believe that the judge is going to require a recirculation, particularly considering how she ruled regarding the plaintiffs objections regarding late changes to the EIR that did not get recirculated. As such the delay will likely be on the order of weeks and that before the season starts, the injunction will be lifted.