Planning the Future of CEQA and Dense Development

by Jeremy Loudenback

15824652712_afdb25545d_oAs California ponders the shape of its future, nothing underscores the current challenges of urban development more than the California Environmental Quality Act (CEQA).

Since its passage in 1970, CEQA has remained at the heart of many battles over development, with local governments, environmentalists, developers, and community groups all staked to a review process that can delay or even derail projects.

But as the state moves to realign its development goals toward promoting denser, more compact living spaces, the debate around CEQA is changing. At a Price Research Collaborative event last week (“CEQA and Infill Development: Should There Be a Safe Haven?”), a wide-ranging panel of experts, academics, and practitioners reflected on CEQA’s fractious history and the prospects for change under the new a new law (SB 743).

Ethan Elkind, associate director of the Climate Change and Business Program jointly sponsored by the U.C. Berkley and U.C.L.A. law programs, highlighted the history of a law that was originally put in place to stem the tide of huge-scale government infrastructure projects.

“CEQA came about in part to put a check on such an unfettered agency and government actions,” Elkind said. “But the environmental part is extremely misleading because it’s essentially just a public process. If you’re a government entity, you now have to start to study the potential effects, the impacts that this project is going to have, and the key here is you have to mitigate if feasible.”

For infill developer Mott Smith, delays from CEQA have a direct impact on his business and can shape the type of projects he takes on.

“A one-year delay in a project as a result of CEQA causes me to lose half of my salary,” he said. “A two-year delay in my project causes my compensation to drop by two-thirds. And so you can see why the treat of this would make me panic. It would mean that I have to go for bigger projects that accommodate that risk.

“I have to go for luxury projects whose margins are bigger and can compensate me for that risk. And it means that if I am purely economically driven, I am probably going to go out to the suburbs where cows aren’t going to sue me and try to do projects out there.”

15824653102_e395edf3d2_oAnn Sewell, vice president for housing and economic development at the California Community Foundation, has had mixed experiences with CEQA in her efforts to build affordable housing, but she points to the Cornfields Arroyo Seco Specific Plan as a way that CEQA can sometimes be used to spur creative results.

“CEQA brought everybody to the table to negotiate what turned out to be a really a brand new set of tools that were really creative for both market rate developers and affordable developers in that neighborhood,” she said. “I think in some cases it can be used to protect the public good. What’s bad about it is the fact that it can so easily be hijacked for private gain.”

Now SB 743 is forcing developers, local government leaders, and others to reimagine the CEQA dynamic. The law endeavors to shift CEQA’s environmental impact focus away from solely mitigating congestion to creating incentives to decrease driving, a decision that gives Smith, a principal with Civic Enterprise Associates, reason to be excited.

“Now, increasing the number of cars driving on the road and the miles they are driving is considered an environmental impact under California’s natural resources law—that is huge,” Smith said. “We’ve actually aligned the law with common sense about the environment. Driving fewer miles is better for the environment and that’s big.”

But amid the new mandate to encourage denser, transit-friendly development, Sewell urged the audience to remember that income matters when it comes to new development.

“Keeping spaces for low-income people near transit is really what’s going to drive that reduction in greenhouse gas emissions,” she said. “The impact that you’re seeing already from the Expo line is that the neighborhood is changing rapidly. Car ownership is going up. People are being forced away. The core transit riders can’t live next to transit anymore. So how do we address that?”

Rick Cole, deputy mayor for budget and innovation for the City of Los Angeles in the Garcetti administration, suggested that greater legislative leadership is required to encourage more affordable housing and better align state development guidelines in local communities.

“We should set a policy at the state level that would apportion out to each community a fair share of affordable housing,” Cole said. “That should have teeth. Set the goal at the state level, and then let local communities figure out how to achieve it. They have to develop their affordable housing goals.

And we got to change the paradigm. We’ve got to return to some timeless ways of building. And we’ve got to make it really easy.”