by Lauren E. Partch
One of California’s current strategies to ease the state’s housing shortage crisis is to excuse certain types of new housing developments from complying with one of the state’s leading environmental regulations, the California Environmental Quality Act (CEQA).
Enacted in 1970, CEQA is a state law that requires proponents of new development projects to conduct a rigorous environmental review of the project’s impacts to local environmental resources before the government can grant approval for the project. CEQA was modeled after the National Environmental Protection Act (NEPA), a federal law that similarly requires environmental review of certain projects. However, whereas NEPA only applies to federal projects, CEQA applies to nearly all projects that are touched by a government agency (e.g., for approval) in the State of California.
Since it was enacted, critics have blamed CEQA for stifling the state’s economic growth and more recently for impeding the development of the additional housing desperately needed to relieve the state’s housing shortage. Critics also complain that CEQA is frequently weaponized by NIMBY-minded (the acronym for “Not In My Back Yard”) community members who wield the Act to significantly delay or altogether block new multi-family housing projects from being constructed in their neighborhoods. Thus, the thought behind the state’s recent statutory changes to CEQA for certain types of housing projects is that, by removing the time and cost impositions of CEQA, the construction of specific types of housing development projects will begin sooner and result in a faster reduction to the housing shortage.
However, whether CEQA is at all responsible for California’s housing shortage is highly disputed. Researchers and CEQA experts disagree with the premise that CEQA is to blame for California’s lack of affordable housing. See, e.g., Aaron Peskin, Why CEQA Matters, 48hills, Aug. 14, 2022, https://48hills.org/2022/08/why-ceqa-matters/. It may be more likely that, because CEQA’s information disclosure process can be quite costly and time-intensive for development projects that have significant environmental impacts, the Act is globally unpopular with developers and their lobbyists who are eager to tell legislators that CEQA is the root of California’s housing crisis.
In response, the 2022 California state legislature passed several laws that carve out CEQA exemptions for specific types of new housing development. AB 2011 and SB 6 remove the barriers of CEQA from certain housing projects in an effort to streamline new housing development, while SB 886 targets a narrower set of housing concerns arising from growing university student populations.
AB 2011 and SB 6: Multifamily Housing Development on Commercially Zoned Sites Assembly Bill (AB) 2011 (Assembly Member Buffy Wicks) enacted the Affordable Housing and High Road Jobs Act of 2022, which provides a ministerial CEQA-exempt approval pathway for qualifying multifamily projects (five or more units for sale or rent) on commercially zoned land that pay prevailing wages to construction workers and meet specified affordable housing targets.
To qualify for this exemption, a housing project must meet certain requirements, including that the project must pay prevailing wages to construction workers, be built in a zone where office, retail, or parking is a principally permitted use, and must be either a 100% affordable (lower income) housing project, or a mixed-income housing project that has a 50-feet-minimum frontage along an abutting commercial corridor. Any qualifying project must meet certain site requirements, such as that it be located in an urbanized area and not within 500 feet of a freeway or within 3,200 feet of an oil or gas refinery. For mixed-income rental projects, either 15% of units must be priced for lower income, or 8% of units must be priced for very low income and 5% must be priced for extremely low income. For mixed-income owner-occupied projects, 30% of units must be priced for moderate income, or 15% must be for lower income. Additionally, the affordable units in mixed-income projects must have the same bedroom/bathroom ratios as the market-rate units, have the same quality appliances and fixtures, and be finished as market-rate units. AB 2011 has a sunset date of January 1, 2033, unless it is extended.
AB 2011 is accompanied by SB 6 (Sen. Anna Caballero), which enacted the Middle Class Housing Act of 2022. Unlike AB 2011, SB 6 does not create a new approval process, but provides that an affordable multifamily housing project on a commercially zoned site which meets specific criteria may invoke SB 35 and the Housing Accountability Act (a 2017 law intended to streamline certain affordable multifamily infill housing development projects by circumventing CEQA requirements). Projects proposed under SB 6 itself are not exempt from CEQA, but also do not require affordable housing. Like AB 2011, SB 6 projects must pay prevailing wages to construction workers and utilize a “skilled and trained workforce.”
Together, these two laws are intended to permit residential development on sites currently zoned and planned for commercial and retail use. They both go into effect on July 1, 2023.
SB 886: Public University Housing Development Projects To make building student and faculty housing easier and faster, Senate Bill 886 (Senator Scott Wiener) exempts housing development projects carried out by a public university on university-owned property from CEQA requirements until January 1, 2030. SB 886 was signed into law last September.
To qualify for this exemption, public university housing projects must meet specific requirements, including that construction workers must be paid prevailing wages and, in many cases, participate in “skilled and trained workforce” apprentice programs (similar to the provisions of AB 2011). No more than one-third of the project’s square footage shall be used for dining, academic, or student support service spaces and the project may not produce more than 2,000 units or 4,000 beds. The project must also have a transportation demand management program, cannot result in any net additional greenhouse gas emissions, and every building must be Leadership in Energy and Environmental Design (LEED) platinum certified.
SB 886 also mandates that the development site be located within a half-mile of a major transit stop or of the campus boundary or create 15% lower per capita Vehicle Miles Traveled (VMT). The development site must also be university-owned land that is not located in a very high wildfire risk area, flood zone, hazardous waste site, earthquake zone, farmland, wetlands, or protected species habitat area. In addition, the project cannot involve the demolition of or be built on a site with rent-controlled, deed-restricted affordable or rental housing.
The Pros and Cons of These CEQA Exemption Laws The most recent CEQA carve-outs have pros and cons when it comes to the state’s commitment to safeguarding public health, protecting environmental resources, and maintaining public transparency.
A benefit of AB 2011 is that, like SB 35, the law will remove the barriers of CEQA for additional infill multifamily housing projects. One of CEQA’s flaws as an environmental conservation tool is its failure to balance a project’s costs with its environmental and public health benefits. For example, the environmental benefits of building new infill housing (increasing density within already-urban areas) rather than the alternative “urban sprawl” style of development that expands a city’s footprint are immense, considering that building new housing within cities is an ideal way to reduce traffic, improve air quality, and minimize destruction of green space and wildlife habitat. And because CEQA has been used by community residents as a “weapon” to delay or entirely block development within existing neighborhoods, removing CEQA from the equation may make more infill development possible.
Another potential benefit (and the primary motive behind these laws) is that the exemptions may quicken the approval process of certain housing projects. Without the need for developers to comply with CEQA requirements, project approval and construction would theoretically occur sooner and result in earlier housing availability. Reducing the homeless populations in the state’s urban areas would clearly yield significant public health benefits for unhoused people and the community in general. However, given non-CEQA-related obstacles to housing production, such as supply chain issues, increased costs of construction, union labor laws, and the likelihood of new housing developments to produce market-rate units rather than the affordable or low-income housing needed to avert the current crisis, it is unclear whether these exemptions will have their intended effect.
The drawbacks of removing CEQA’s safeguards from additional housing development projects are apparent from the ways in which they juxtapose CEQA’s mission. CEQA requires developers to assess and publicly disclose the environmental and public health impacts of the project and requires developers to mitigate those impacts. The new exemptions remove CEQA’s procedural requirements that otherwise force a developer to analyze how and to what extent the project will negatively impact environmental resources, the significance of those impacts, consider less-impactful project alternatives, and implement mitigation measures to minimize the environmental damage. Indeed, many environmental advocates view CEQA as one of the state’s most powerful legal tools to prevent destruction of natural habitat and protect public health. The exemptions eliminate that tool for certain projects.
Conclusion The recent legislative session produced several notable housing laws which remove CEQA’s information disclosure and accountability measures from specific types of housing development projects. On one hand, these laws are intended to streamline the housing approval process for certain projects, encouraging increased density and speeding up the timeframe for construction to get underway. On the other hand, they deprive the public of the ability to learn how a new development will impact local environmental resources and remove incentives for developers to choose less impactful project alternatives and implement measures to minimize the impacts. Time will reveal whether these exemptions ultimately help resolve California’s housing shortage crisis, and, if so, at what costs to public health and the environment.
Lauren E. Partch is an associate practicing environmental law at Bick Law LLP. She can be reached at lpartch@bicklawllp.com.