This week, Gov. Gavin Newsom touched on one of the third rails of California politics. He hopes the results will send shocks through the state’s home construction industry.
Since the law was signed in 1970, Newsom has tolerated the state legislature to pass on what experts believe is the most important reform of the California Environmental Quality Act (CEQA).
This change abandons CEQA as proposed low or mid-rise developments in urban neighbourhoods are zoned. There are no more 1000 pages of soil research. The shadows that the buildings could cast and the traffic they could bring. There is no more risk of a CEQA lawsuit from an angry neighbor.
Sweeping out these rules, no matter how challenging politics, would eliminate barriers the nation has built over decades, curb home building there, and suffocate Californians’ ability to live affordable, the governor said when he signed Monday evening.
“The world we invented has competed with us,” Newsom said. “We have to play.”
Californians don’t have to wait long for the impact of reform. They were enabled with the Governor’s pen stroke.
In the short term, at least, the outcome could be a revolutionary increase in how development takes place in California cities, rather than an immediate impact on construction. Many hurdles (interest rates, labor availability, zoning, material prices, tariffs) within and outside the control of local and state governments will determine whether the home is being constructed. What has changed is that an important point of external group leverage is that they are good and equiped for illness after building a California community home.
In one critic’s words, it may be difficult to understand how CEQA turned out in the sentence “Law that swallowed California.”
At the base, CEQA all said that project supporters must disclose environmental impacts and mitigate if possible before they are approved. However, the process by which CEQA kicks off involves developers and local governments completing their research, complaining that the opponents are insufficient, and judges suing them to send everyone back from the start again.
Time is money, and the enemy of the project quickly realized that this uncertainty could be used to its advantage. Sometimes, if their complaints are deaf at city hall, threatening the challenge of CEQA is the only way to hear yourself and avoid harmful consequences. However, in other circumstances, the law has become a powerful udgel made to influence concerns that have a tangential relationship with the environment at best.
An example is Legion. The owner of a gas station in San Jose sued a nearby rival gas station that wanted to add several more pumps. Pro-Life Advocates sued the proposed planned custody clinic in San Francisco. Berkeley homeowners sued the University of California over plans to increase registrations with the state’s flagship university and the possible consequences of traffic and noise.
Over time, CEQA negotiations were incorporated into the development structure in California, and all major players were known and used. Los Angeles Mayor Karen Bass recalled trying to stop the opening of a liquor store in the 1990s as a community organizer in Southern Los Angeles using CEQA. The company owned by billionaire developer Rick Caruso, Bus’ opponent in the latest mayoral election and usually a CEQA critic this year, filed the CEQA lawsuit challenging the massive redevelopment of a television studio near Caruso Shopping Mall.
In the case of housing, the main interest group invested in CEQA at the state level was the labor organization representing construction workers. Their leaders argued that if lawmakers give CEQA relief to developers who will boost their revenue, workers should share loot through better wages and benefits.
The union’s opposition was sufficient to prevent the proposal from the then GOV in 2016. Jerry Brown limits CEQA’s challenges to urban housing developments even from voting for legislative committees. A year later, a version of Brown’s bill was passed, but developers who wanted to take advantage of it had to pay workers union-level wages.
Since then, almost every year, lawmakers have been engaged in this dance with labor groups. In 2022, the California Carpenter’s Council escaped from the state’s Building and Construction Trade Council, supporting a more stringent version of labor standards that lawmakers led to multiple bills.
However, housing construction has not continued. The number of projects with permits issued is millions less than what Newsom promised to build on the campaign trail in 2018. Newsom and the lawmakers decided they needed to do more.
“We’re sitting here, thrust our heads into the political walls and there’s nothing to show that,” said Congress member Buffy Wicks (D-Oakland) at Monday’s signing ceremony.
This year, Wicks abandoned the CEQA rules for urban housing development without labor requirements and wrote the law that worked through the usual process. In May, Newsom grabbed Wicks bill and additional CEQA reform laws and said he wanted to pass them as part of the budget. By doing so, you will be able to quickly track the bill into law without the usual whittles that occur at committee hearings disappear.
Newsom doubled as budget negotiations heated up. In a rare move, he insisted on linking approval of the state’s full spending plan this year to the passing of CEQA reforms. That meant that otherwise opposing legislators could not vote only if they were willing to train their budgets with torpedoes.
What emerged was a clean CEQA exemption for home builders in urban multifamily areas. Union-level wages for construction workers are only required for high-rise or low-income buildings. Both are currently paid for the professional labor required by other state and local regulations for taller buildings and affordable construction.
CEQA usually does not affect single-family home construction in established communities.
It is not clear whether this will soon become important for home construction. The research is mixed with the effects of CEQA. A Berkeley Law professor, California, found that over three years, less than 3% of housing projects in many metropolitan cities across the state face CEQA lawsuits. Another discovered tens of thousands of residential units being challenged under the CEQA in just a year. Still, more advocates of reform argue that it is impossible to quantify the horrifying effect of the threat of the CEQA litigation on California’s development, and that it is impossible to quantify how much the law controls the debate.
“This shows the earthquake shift from ninvisibility to the richness of California’s democratic politics,” said Mott Smith, chairman of the Infill Builders Council, a real estate industry association that advocates urban housing. “You can touch this mythical third rail and live to see another day.”
Those who live across the street from the proposed five-storey apartment building and those who oppose the home should stop doing anything other than the 55-year-old environmental law.
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