CEQA’s Burdensome Regulation Abuses Power and Decreases Housing Availability

Commentary

CEQA’s Burdensome Regulation Abuses Power and Decreases Housing Availability

To builders working in and low-income residents living in the “People’s Republic of California,” the California Environmental Quality Act’s (CEQA) overreach has prohibited many types of urban development and decreased the affordability of California living. Of more concern than CEQA’s implementation, is the abuse of CEQA policy by special interests and neighborhood groups who couldn’t be less concerned for the environment. Not in my backyard (NIMBY) activists and competing developments in close proximity or of the same product type are often responsible for wasteful and abusive uses of CEQA policy. CEQA creates a review process which only undercuts market forces and furthers the drastic housing shortage and affordability issues in California.

Our state legislators like to tote that CEQA curbs sprawl and fixes the evils of the automobile by embracing central planning solutions for our development “woes.” However, like so many other government initiatives, the reality does not match the initial intentions. In 2015 national law firm Holland and Knight conducted a study on CEQA abuse and found that 80% of CEQA lawsuits targeted infill development and only 20% of lawsuits filed targeted “greenfield” or exurban development. A plausible, albeit largely non-libertarian, case may be made for restricting from-scratch development on virgin rural land. But the attack on infill development in the urban cores at the center of established and robust regional economies is altogether regressive.

In case our state legislature hasn’t heard, California is in a housing crisis. We hear constant calls for additional homeless services funding and new public housing projects. Most recently the city of Los Angeles passed proposition HHH, a $1.2 billion homeless housing initiative that at best will scratch the surface of the issue. If we want to move beyond Band-Aid solutions, we must add more supply. The largest hurdle, as shown in the Holland and Knight study, is the 29% of CEQA lawsuits targeted towards residential development, the largest categorical target of any development type amongst CEQA lawsuits, which includes a mixed bag of retail, schools, infrastructure, industrial and entertainment projects among others.

Perhaps the most troubling consequence of CEQA abuse is the social favoritism and insider cronyism that has resulted from the poorly executed legislation. Powerful wealthy home owners in exclusive California enclaves have viewed any development as reducing their standard of living and real estate values. They bring up baseless concerns of “neighborhood identity” and “regional character.” Concerns which, far from environmental, have put CEQA front and center in their legal arguments. While endless interpreting of environmental laws has been profitable for legal representatives, it has not helped protect the environment.

Finally, we must not forget the financial and market implications of CEQA policies. With threats of CEQA lawsuits, institutional lenders are less likely to loan development capital and in turn developers will be less likely to take on the risks of new development. Many development firms have resorted to “value add” or upgrades to existing structures in efforts to fly under the erroneous requirements and risky legal backwaters initiated by CEQA. Other developers have gotten out of the development process altogether resorting to pre-existing asset and property management.

Redwood city, a wealthy community in the Bay Area, is one of the epicenters of CEQA abuse. Residents are blocking the city from new development using CEQA statues, despite the fact that there are no legitimate environmental issues with any of the proposed developments. Resident and criminal defense attorney Geoff Carr claims that residents are, ” up in arms in just the sheer scope of building.” While Carr might have a legitimate objection to some of the development, the fact that CEQA can be hijacked for NIMBYist reasons shows one major flaw in the current legislation. It is time to stop using burdensome CEQA policy to hold the laws of supply and demand and our development community hostage.

What California needs is a logical CEQA process that protects the environment against true, proven, market failures. Providing an incentive structure for such issues as native plant and species preservation and air pollution mitigation should serve as the driving force for CEQA policy. In addition, it is time for CEQA to drop its domain in the worlds of heritage conservation, archeological resource review, and Native American cultural resource review, among other auxiliary review concerns. Overreach into non-environmental arenas spreads CEQA’s tentacles much farther than appropriate, further slowing the development process by creating more EIR (Environmental Impact Review) lawsuits outside of the realm of environmental concern. CEQA lawsuits must also follow a sense of transparency. Environmental organizations, which file CEQA lawsuits, are largely exempt from disclosing finances during legal proceedings. An October 2016 report by the Milken Institute outlines the need for “litigation transparency” to lift the veil on “nonprofit organization[s] with an environmentally friendly name that is, in fact, simply a front used to file lawsuits against developers.” Environmental law often runs against market forces and sound logic, but if executed correctly the rule of law can serve as a beneficial check and balance as opposed to a burdensome development anchor.

Baruch Feigenbaum is assistant director of transportation policy at Reason Foundation a non-profit think tank advancing free minds and free markets.