Billionaire Developer Igor Olenicoff Loses CEQA Appeal

Olen Properties, the Orange County-based company run by colorful billionaire Igor Olenicoff, has lost its court appeal in a high-profile development spat in Newport Beach that also carried potential implications for California’s controversial CEQA environmental law.

Olen’s firm had sued another developer’s adjacent apartment project, including on a CEQA technicality, but last year lost its petition to stop the apartment construction.

Last month, an Orange County appellate judge upheld the earlier court ruling, clearing the way for the 312-unit apartment project to proceed.

The Picerne Group, the development firm behind the new apartment project, did not respond to a request for comment on the latest ruling, but a lawyer for the firm — along with a chorus of others, including significant pro-housing groups — has previously characterized Olen’s legal challenge against the City of Newport Beach as a classic case of attempted CEQA abuse.

“We don’t think he has any legitimate basis for suing,” Jennifer Hernandez, an attorney for TPG, told the Orange County Register last year. “This is not a guy who has any environmental track record.”

But Olen does have financial interests at stake, Hernandez and other opponents have argued, and apparently calculated that the apartment development would damage business at the Olen Center Newport. That 10-story, 62,000-square-foot Class A office building is located on Birch Street, in the Koll Center Newport, a mixed-use complex with multiple commercial buildings, parking lots and landscaped open space.

Rendering of the disputed apartment project (City of Newport Beach)

TPG’s five-story, 312-unit apartment project is slated to rise on a surface parking lot used by Koll Center tenants.

Representatives for Olen Properties have pushed back on claims that the firm’s environmental challenge was insincere.

“The city is attempting to place thousands of new high-density apartments throughout Newport Beach,” the firm’s general counsel wrote in an email last year to the Orange County Register. “Olen’s national headquarters is in Newport Beach, and many of its employees and investments are also there. Given that context, the traffic, clean air, noise and other negative impacts of the Picerne project are deeply important to Olen.”

Olen Properties did not respond to a request for comment on the appeals ruling.

The firm, which owns some 8 million square feet of office space and 17,000 apartment units in the Southwest and Southeast, first began its legal challenge against TPG’s plans in 2015, initially based on an argument that an apartment project would violate the Koll Center’s deed restrictions. That challenge failed, and several years later, in 2021, after the City of Newport Beach approved the project, Olen brought its new suit against the city, alleging Newport Beach had violated procedure by approving the project without a new environmental review.

The suit claimed that the construction could pose a hazardous materials risk because of a nearby semiconductor plant, that it violated city rules because it would disturb soil without an onsite paleontologist and that it would violate various city land use policies.

Potential traffic issues were also central to the case, including an argument that the city’s traffic study for the project used an inappropriate traffic impact measurement method. The city used a method that no longer falls under CEQA guidance because it needed a direct comparison to a decades-old figure that also used the method. The appeals judge ruled the city did not have to use the new method.

CEQA, the sweeping California environmental law that was signed into law by then-governor Ronald Reagan in 1970, has for years ranked among the state’s most controversial laws because of its wide reach and susceptibility to abuse.

The focus on the law has lately increased as the state’s housing crisis has become more acute. One scathing analysis published last year by the law firm Holland & Knight found that in 2020 “anti-housing” CEQA lawsuits had targeted nearly half the 100,000 apartment units that were produced in California that year.

“The result: CEQA has indeed become a population control [statute]. … California is losing people, and the people being expelled are our families, our kids and grandkids,” it concluded.

This year Gov. Gavin Newsom has blasted the law and pushed a reform plan around infrastructure projects, although the plan does not address CEQA abuse related to housing projects.

“It’s a nothingburger,” one Bay Area housing advocate posted about the governor’s plan.