SACRAMENTO, Calif. (CN) - Expansion of a Tahoe ski resort should not move forward until planners address the feasibility of a smaller project, a federal judge ruled.
Lake Tahoe lies in the Sierra Nevada mountain range, west of Caron City, Nev., over the California-Nevada border. At 191.6 square miles, Lake Tahoe is the largest alpine lake in North America. Visitors flock there year-round to hike, swim and ski, surrounded by the lake's famously clear waters and stunning mountain vistas.
The nearby town of Homewood had a population of just 904 as of 2004. Its largest tourism feature is the Homewood Mountain Resort, a 25,000 square-foot ski resort that opened in 1962 and is owned by JMA Ventures and Homewood Village Resorts.
In 2006, they proposed expanding the resort to over 1 million square feet with 325 new residential and tourist accommodation units.
In addition to boosting revenues for the resort, which has been operating at a loss, the companies say expansion will improve water quality, retire sensitive lands and reduce land coverage overall.
The Tahoe Regional Planning Agency accepted the project into its incentive program for developers, named the Community Enhancement Program, or CEP. Since Homewood does not have a community plan, however, the resort expansion would not qualify for the tourist-accommodation unit bonuses available to CEP participants.
To get around this, the planning agency amended the regional plan and code to allow allocation of bonuses under ski area master plans, as well as community plans.
Sierra Club and Friends of the West Shore challenged the approval of the Homewood Ski Area Master Plan in a January 2012 complaint against the planning agency; the resort's owners; Placer County, Calif.; and its board of supervisors.
They said that the changes remove community needs from consideration during land-use planning, in a departure from prior practice.
But the planning agency countered that projects zoned in ski master plan areas must still meet environmental thresholds. It said that the amendment "merely expanded incentives that it previously found to be environmentally beneficial," the court summarized.
U.S. District Judge William B. Shubb credited these explanations, but took issue with the project alternatives included in the project's environmental impact report.
Opponents to the expansion claimed that report needed an alternative that did not amend the regional plan or the code of ordinances, preserving existing land-use rules and the environmental protections inherent in those rules.
Under the California Environmental Quality Act, or CEQA, however, courts are limited to endorsing alternatives that "avoid or substantially limit a significant and unavoidable effect of the project," according to the ruling.
Here, "the project has no significant and unavoidable effects related to land-use regulations," after mitigation, Shubb wrote.
The environmentalists found more success as to report's treatment of alternative 6.
"Alternative 6 is the reduced-size alternative, which proposed to reduce the number of total tourist accommodation units and residential units" from 336 to 284, the ruling states.
The county and planning agency argued that alternative 6, and any other alternative that would reduce the project size, would be economically infeasible. To support their conclusion, they used reports submitted by project developer JMS and studies conducted by BAE Urban Economics.
BAE found that having fewer residential and tourist units would cause the project to lose $127,609 per year by limiting the number of skiers staying overnight.
A reduced number of skiers would also hurt profits for services such as dining, ski rental, and ski lessons, the consultant found.
It also argued that a reduced project would shrink lift ticket sales, which would "represent 52 percent of the total operating revenue."
Other resort services and real estate development could still generate revenue, but they also generate additional offsetting costs, BAE found.
Shubb was not convinced.
"The BAE memoranda fail to provide substantial evidence that alternative 6 is economically infeasible," he wrote. "At best, BAE's analyses show that a reduced-size alternative would be less profitable. Fatal to BAE's flawed conclusion of infeasibility is its failure to consider the resort's other revenue streams besides lift tickets, to what extent the real estate component of the project could support the reduced project's economic feasibility, and whether the capital investment a reduced project could attract is insufficient."
BAE also failed to support its conclusions with enough financial data, the judge said.
"This court does not question BAE's expertise or dispute the accuracy of the information it did rely on, but notes ... that significant gaps in BAE's memoranda information render meaningful comparison between the proposed project and the reduced alternative impossible," Shubb wrote.
"Without such comparative data, the economic feasibility of the reduced alternative is unknown beyond the obvious conclusion that it would be less profitable," he added.
The report "misleads the public" by suggesting that ticket sales are the resort's only source of income even though the BAE reports "show that other revenue streams are critical to the resort's financial viability," according to the ruling.
Since the environmental impact report did not mention these other revenue streams, its analysis and rejection of alternative 6 violates CEQA, Shubb ruled.
Shubb rejected challenges as to the report's study of soil, water and air quality.
He granted summary judgment to the environmentalists solely as to the issue of alternative 6. In all other respects, he granted summary judgment to the defendants.
"This does not necessarily mean that the project or some version of it may not go forward at some point in time," Shubb wrote.
But that cannot happen until the planning agency and county ensure that they have certified a legally adequate environmental impact report and statement, making the necessary findings under CEQA and the Tahoe Regional Planning Compact.
The planning agency and county cannot begin project construction until they prepare and circulate a CEQA-compliant report.
Shubb ordered the clerk to close the case, but noted that it could be reopened if either party showed good cause.
Read the Top 8
Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.