☆ Expert breakdown: How CEQA started, what reforms are making waves, and where we're headed
Ernst Ludwig Kircher: Dance Hall Bellevue, 1909. Image by Rawpixel
Dave Rand, local land use attorney specializing in CEQA regulations, exclusively chats with Opp Now about all things California Environmental Quality Act. He analyzes why it first came into being, what loophole encourages cities/interest groups to logjam projects—as well as new reforms to mitigate this—and his suggested solution (warning, it's pretty “surgical”). Plus: how do carpenters' unions fit into the puzzle of ridiculous CEQA overrregulations, even for exemption options?
Opportunity Now: What challenges do developers face with CEQA, and how does this impact housing projects?
Dave Rand: CEQA is without question the bane of virtually every developer's existence. Now, it originally came into being for very understandable and well-intended purposes: providing disclosure to the public about implications of certain development projects, and setting up a way in which development projects that have negative effects can be addressed and ameliorated for the public's benefit. These are laudable goals. But over the years, CEQA's been contorted, mainly by the courts, into an absolute beast. It regularly requires thousands of pages of analysis and expert evaluation for a single project. What's more, there are all kinds of opportunities and loopholes for people who want to fight development (oftentimes to advance their own professional and/or financial interests).
CEQA gets particularly vexing when it comes to housing projects, an issue I work on a lot. There's no law or regulation that slows down approval of construction of housing more than CEQA. Despite where our state stands today regarding affordability, the dire need for housing stock, and residents moving elsewhere, CEQA assumes two things: the status quo is a good thing, and development (i.e., change) has negative implications and should be checked. That mindset needs to be flipped on its head. Yes, for warehouse logistics facilities that bring thousands of truck trips to neighborhoods, there should be full-fledged review processes that have teeth. On the other hand, housing and alternative energy uses (things our state needs and which tend to be virtually harmless) shouldn't be looked at skeptically from the eyes of environmental law, and shouldn't be approached in the same way we treat other noxious uses with negative implications.
It's absurd: a developer can be held up years in the courts fighting to try to argue the environmental benefits of in-fill, transit-proximate, mixed-use, mixed-income housing projects. If there's anything more benign as far as the environment goes, I can't think of it. It checks every environmental box, but CEQA assumes it should be thoroughly studied and vetted, which costs time and money while creating opportunities for special interests to slow things down and fight the project.
I observe this all the time with our housing developers, and it drives me nuts. I can't remember the last time we had an opponent from a truly pure environmental group (though admittedly, we do a lot of housing; and there definitely are righteous groups out there employing CEQA to fight projects with noxious uses/health concerns). The opposition we see is mostly from traditional NIMBYs and labor unions.
ON: What about the State's recent CEQA reforms, designed to make approval processes quicker and easier for certain projects?
DR: There's definitely been some helpful reform in the past few years that's begun to move the needle.
There are new by-right (also called ministerial) processes, meaning that certain housing/mixed-use projects are now exempt from discretionary review and can be processed and approved without CEQA. The legislature has provided SB 35 (as modified by SB 423), AB 2162 (permanent supportive housing projects), and AB 2011 for this purpose.
There's also AB 1633, from the Bay Area's Assemblymember Tang, signed into law by our governor. For the first time for housing projects, this bill puts the burden on cities to communicate evidence-based reasoning if they deny CEQA exemptions or streamlining options.
Furthermore, certain other exemptions have been adopted and strengthened over the years. Folks like me employ them extensively. Naturally, they're not perfect tools, as they come with their own exceptions, limitations, and opportunities to be challenged. (For instance, sometimes cities refuse to process these exemptions. Thankfully, AB 1633 should change the dynamic so that applicants now have legal ammunition to ensure cities play fair. They're not completely subject to cities' whims anymore.)
ON: This all sounds significant. Or are we jumping the gun?
DR: Well, let's dig into the by-right bills a little. They passed for a specific political reason: they were supported by organized labor, particularly in the construction trades (e.g., carpenter's unions were a significant proponent of AB 2011 and SB 423). Why? All of these bills require, as a minimum, that construction be built with union protections.
I have nothing against unions by any means, but that is a costly requirement for just about every city except San Francisco, where I understand everything's done with prevailing wage construction. It's particularly costly for low- and mid-rise (predominantly wood frame construction) projects as compared to high-rise buildings (all concrete or steel), which are more likely to be built with union trades regardless. As a result, these new statutes don't work for many projects. That means that for the most part, developers still must go through onerous review processes and contend with CEQA.
It's important to acknowledge that the recent AB 2011—a landmark piece of legislation—broke with precedent by “only” mandating union healthcare benefits and prevailing wage for housing projects. Before then, the monolithic force of construction unions only sided with CEQA reform bills if they also required mandatory union hiring requirements (denoted “skilled and trained workforce” requirements), meaning that workers graduated from a union-sponsored apprenticeship program. With AB 2011, carpenters supported and got credit for a more moderate position (which was replicated in SB 423 this session and has become the de facto standard). This law is very helpful, but in Southern California, I don’t see it parting the sea. There remain many projects that can't feasibly sustain a mandatory prevailing wage requirement, particularly in LA County. For instance, most of my clients who build market-rate housing don't use these exemption laws—and we don't even discuss them—because they're just not going to work. They mostly only work for high rise projects or developments that are already required to pay prevailing wage (i.e., are reliant on public subsidies).
ON: This is something that doesn't get talked about enough: how union interests are needlessly and messily tied up with CEQA's environmental concerns. Costly prevailing wage obligations sound to us like something that would hurt developers more than help them, except in the spare cases you mentioned.
DR: Definitely. Getting the CEQA thumbs-up is an incredibly costly, time-intensive process and one of the reasons there are developers who just won't build in California (or build far more sparingly than they'd otherwise prefer). It's hard enough for developers considering the macroeconomic environment (capital markets freezing up, and construction costs and interest rates going through the roof). But on top of that, they take on the risk of getting stuck in a city process for 2–3 years and then getting tied up in court another 2–3 years. That's not appealing to a lot of builders.
Accordingly, we always hope CEQA will get tackled by the legislature in a big way. Incremental improvements have been made, but we haven't seen it blown up in the wholesale way we need, particularly for housing (to compensate for California's years of underproduction).
ON: Many residents and developers are with you there; they're all for “blowing up” onerous regulations. So imagine you've captured the CEQA genie and get one special wish. What would you reform, or add, or axe entirely?
DR: The cleanest, most straightforward approach would be a surgical strike: to make all housing projects—at least within the in-fill environment—by-right. Cities could still adopt objective standards (as to density, height, square foot limitations, etc.) and zoning limitations, but projects without discretionary review would be exempt from CEQA.
This kind of a flat, across-the-board exemption would apply to a far greater number of projects—a significant shot in the arm for housing production.
This is not a new idea; there's nothing novel about me suggesting it. Then-governor Brown floated the idea a while back, but pulled it back pretty quickly when faced with a torrent of opposition from interest groups (most particularly organized labor). And let's be honest: it seems unlikely such a sweeping reform could pass the legislature. So I'm not optimistic we'll see a major reform like this.
I'm not trying to be overly negative, as the legislature has provided numerous options to improve the processing of local housing projects. But they haven't yet completely cracked the CEQA nut. We need a new mindset. We need to get out of the way of developers, and focus on expediting projects that are not just environmentally benign but desperately needed.
Related:
Analysis: Why Bay Area cities should call it quits with CEQA, PLAs, rent controls
SF law expert: Washington/Oregon don't have CEQA. Why should CA?
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