Why some say this environment law hurts the housing market
CEQA – the California Environmental Quality Act – is being used to slow down developments for reasons other than the environment, say developers. And that's throttling the supply of homes.
CEQA is the California Environmental Quality Act.
Whatever you want to build in the state – be it an oil refinery, mall or high-rise apartment building – the law requires a detailed review on how it could affect the nearby environment.
It was created in 1970, and environmentalist David Pettit says it came out after a failed ski resort project in the 1960s by Disney.
"A lot of people believe it was created in response to the Mineral King situation in the Sierras," says Pettit, an attorney with the National Resources Defense Council.
Locals stopped it on the federal level because they said it would damage the landscape, and California enacted it own protections – CEQA – shortly afterwards.
To comply, a builder must make a report detailing the environmental impact of their proposed project.
"This could take nine months to a year, and that’s not including any litigation that might happen," says Pettit.
Stakeholders can also have their say in the process. "Typically it’s locals or community groups," Pettit adds.
But this is where developers say the process is prone to shenanigans.
When CEQA isn't used for its intended purpose
Builders say they have nothing against CEQA.
"I think CEQA’s a great law, personally," says attorney Jennifer Hernandez, who represents developers in court. But she does have an issue with how the law leads to lawsuits.
"Oh my gosh, so many projects just don’t even get passed because no one wants to get sued," she says. "So why bother?"
Litigation can turn that year-long process into several years, and developers say it’s expensive to buy land and sit on it for such a long time without anything to show for it.
In a study she conducted, Hernandez says most of those lawsuits in Los Angeles target apartment and condo projects.
"Over a three-year period, 97 percent of the challenged housing projects were in existing neighborhoods," she says, and the cases were predominantly filed by wealthy homeowners nearby.
She argues that their stake in slowing a housing development isn't for environmental reasons, but because they are NIMBYs – meaning Not In My Back Yard.
"It’s not for nothing that my generation, the baby boomers, is called the 'me' generation," she says. "We don’t want those people, we don’t want that change. And they’re suing mostly aspiring homeowners in entry-level condos or renters."
The law was also written so that anyone can weigh in on a project, she says, no matter where they are. That means people in L.A. could comment on a project miles away in the Bay Area, for example.
Hernandez says these are some of the many reasons CEQA lawsuits are out of control.
The argument against CEQA being to blame
David Pettit says these concerns are overblown.
"I hear a lot about how CEQA’s to blame for the housing crisis," he says, "but if you look at what’s happening on the ground, only 1 percent of CEQA matters get litigated."
(He's actually being generous. The report he cites says the rate of suits is actually less than that – 0.7 percent)
Hernandez, however, says that small percentage mostly contains the projects that could create the biggest numbers of homes – large high-rises and expansive developments.
Pettit counters that there are ways developers can avoid a costly CEQA review and litigation process. For example, a builder can skip some of the steps if they make a certain percentage of homes in a project for lower-income people.
"Any time, the legislature does something for the development community, it’s never enough," he says.
For now, revamping CEQA is not on the horizon.
But watch SB 35 in the legislature right now. Hernandez sees it as a way to streamline the process and let developers skip more steps as they work to build more supplies of homes in California.