San Diego Loses Home Depot Appeal

Home Depot, which has tried for years to win approval to build a new big-box store on land that it owns in an unincorporated area of San Diego County, scored a legal victory last week, but isn't much closer to breaking ground.

The 4th District Court of Appeal in Santa Ana - a venue chosen to avoid possible local bias - ruled in favor of the city of El Cajon's petition to annex the property from the county so the project can forward. City of El Cajon v. County of San Diego Local Agency Formation Commission, G041793 (Super. Ct. 06CC13348, filed Aug. 11, 2010).

Although it does not guarantee Home Depot will be breaking ground, the decision could set a precedent in the battles between communities over land annexation by better defining who has controlling interests in unincorporated parcels.

The court ruling focused on two questions.

First, did the Local Agency Formation Commission, or LAFCO, abuse its discretion by finding that the property wasn't "substantially surrounded" by the city, as mandated by the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000?

Second, did the commission violate the California Environmental Quality Act by ignoring the findings of an environmental impact report prepared for the proposed Home Depot development?

The court answered yes to both questions, handing a win to supporters of the project, and sent the case back to the lower court with directions to enter a judgment directing the LAFCO to grant the city's application for annexation.

Neither LAFCO nor the county of San Diego has decided whether to appeal the decision.

The 14.3-acre parcel at the center of the dispute is bordered by the city on three sides - constituting 68 percent of the parcel's perimeter - with a fourth side abutting Interstate 8.


The Cortese-Knox-Hertzberg Act doesn't provide a threshold for what "substantially surrounding" a site means when a municipality is considering annexation. Depending on the jurisdiction, the threshold can vary widely, according to Michael Ott, executive officer of San Diego LAFCO.

"We used the approach of looking at a number of factors, such as the impact on public services, fire protection, emergency medical services, geography and community character," Ott said. "Based upon that balancing act, our commission determined that, while this property may be 68 percent surrounded, it's not necessarily 'substantially surrounded.'"

The court, however, found that the land is located in El Cajon's "sphere of influence" and therefore could be developed for commercial uses as designated in the city's general plan rather than limited to residential uses under the county's land-use plans.

In 1963, the state legislature authorized the creation of LAFCOs to preserve agricultural land and discouraging urban sprawl. The commissions vary from county to county, and generally include county and city officials, along with members of the general public.

"Different LAFCOs throughout the state come up with their own standards," said Holly O. Whatley, senior counsel at Colantuono & Levin in Los Angeles, who represents the San Diego LAFCO. "Every piece of property is unique, so they should be considered on their own merits. It's better not to have a stated threshold."

Evelyn F. Heidelberg, a partner at Procopio, Cory, Hargreaves & Savitch in San Diego, who represents the city, said that the commission relied on the opposition of a small group of residents and the Lakeside Fire Protection District, which was concerned with losing part of its tax base, to fight the land annexation.

"It's particularly gratifying to the city of El Cajon that the Court of Appeal directed the trial court to enter a judgment issuing a writ directing LAFCO to grant application for annexation," she said.

As for CEQA, the court found that the commission's reasoning that it could disregard the environmental impact report because it disapproved the city's application "lacks merit."

"If LAFCO could avoid CEQA compliance by simply denying the annexation/reorganization application, it would render the foregoing statutes and guidelines governing lead agency and responsible agency duties superfluous," the court ruled.

Senior deputy county counsel Ellen Pilsecker found this reasoning "baffling."

"Generally, the responsible agency relies on the CEQA review done by the lead agency," she said, "but the statute recognizes that there are times when something different can be done."

Legal fights between LAFCOs and municipalities are uncommon.

"It is fair to say, that most such applications do not result in litigation between the applying city and the LAFCO," Heidelberg said.

Meanwhile, Home Depot is biding its time, said Kathryn Gallagher, a company spokesperson.

"Right now, we're waiting to see what LAFCO does," she said. "We'll be evaluating our steps and moving forward."