Restored historic and old buildings, particularly in cities like San Francisco, contribute to the distinctive character that lure tourists and thereby creates jobs. Two relatively recent changes affect those buildings and the potential for their continued revitalization. First, changes to the Historic Tax Credit may alter the capital stack used to finance the rehabilitation of historic projects, as well as the overall return on investment for such projects. Second, changes to the Standards for the Treatment of Historic Properties with Guidelines for Preserving, Rehabilitating, Restoring and Reconstructing Historic Buildings may alter how historic resources are treated and the mitigation measures required under the California Environmental Quality Act.
On Friday, September 29th, Governor Brown signed a long-anticipated package of 15 housing-related bills, as summarized in our prior post, “California Legislature Passes Historic Housing Legislation in Effort to Tackle State’s Housing Crisis” (9/22/17). Collectively, these bills constitute the legislature’s farthest reaching action in years to address California’s ongoing housing crisis. Though the bills are expected to make only a small dent in California’s annual shortage of new housing stock, they are, at the very least, a resounding acknowledgment that the state’s housing crisis requires action at the highest level. This post highlights the core bills: SB 35 (which provides a streamlined entitlement process for qualifying projects), and SB 2 and SB 3 (both of which are intended to provide much-needed funding for affordable housing).
Environmental justice goals and policies are coming to the general plans of California cities and counties. So what does that mean for new development projects?
Timing. The new environmental justice requirements are the product of SB 1000, which was signed into law by Governor Jerry Brown on September 24, 2016. Under SB 1000’s amendments to Government Code Section 65302, a local agency will now be required to address environmental justice issues when, on or after January 1, 2018, it concurrently adopts or revises two or more general plan elements. In those circumstances, the local agency must either adopt an environmental justice general plan element or include environmental justice goals, policies, and objectives in its existing general plan elements.
The Meaning of Environmental Justice. To better understand the environmental justice movement and the types of “EJ” provisions local agencies will be pressed to place in their general plans, it is helpful to look at the goals of the California Environmental Justice Alliance, which, along with the Sierra Club and other prominent environmental organizations, is one of the state’s strongest advocates for EJ legislation. The Alliance’s goals include assuring that all families live in healthy neighborhoods, that polluting industries are replaced by green industries, that planning priorities place people above profit, and that lower cost housing is not exposed disproportionately to sources of noise, air, and other pollution.
“Disadvantaged Communities.” Under the new law, all general plans must identify “disadvantaged communities” within their boundaries. These may be areas already identified under existing law in Cal EPA’s list of disadvantaged communities. Areas on that list are specifically targeted for the investment of funds generated by the California Air Resources Board’s cap-and-trade program for reducing greenhouse gases.
Alternatively, a “disadvantaged community” may be identified as a “low-income area” that the local agency has determined to be “disproportionately affected by environmental pollution and other hazards that can lead to negative health effects, exposure, or environmental degradation.” A “low-income area,” in turn, is an area with household incomes at or below 80% of the statewide median income or with household incomes at or below the low income threshold designated by the Department of Housing and Community Development.
SB 1000 appears to provide local agencies with considerable discretion in interpreting the boundaries of “disadvantaged communities,” which is likely to lead to different approaches to defining those boundaries throughout the state.
General Plan Requirements. So, what are the required policy considerations that these environmental justice general plan amendments must address? Pursuant to SB 1000, they must spell out objectives and policies that:
- Reduce the unique or compounded health risks in disadvantaged communities by means that include . . . the reduction of pollution exposure, including the improvement of air quality, and the promotion of public facilities, food access, safe and sanitary homes, and physical activity.
- Promote civil engagement in the public decisionmaking process.
- Prioritize improvements and programs that address the needs of disadvantaged communities.
As with the definition of “disadvantaged communities,” the interpretation of these broad policy statements is likely to lead to the implementation of the new law in vastly different ways.
Prudent Practices. Keeping in mind that all new development must be consistent with the provisions of the local general plan, landowners and developers should keep close tabs on general plan amendments implementing the new law so that their concerns are considered before the new general plan provisions are firmly in place.
In addition, developers should know exactly where their local agency stands in the process of making the required amendments. If a local agency has not timely made the required amendments, legal challenges are likely to confront projects approved when the local agency is not yet in compliance. Buyer beware: this should be a due diligence consideration when acquiring land, not merely something to address at the tail end of the entitlement process.
What the Future Holds. In the end, environmental justice issues are likely to play an increasingly significant role in all new development in California. Each local agency will approach its own EJ considerations in the context of its own political environment, its existing state of development, and its anticipated future development patterns. You should expect that some EJ general plan amendments will contain mundane and less impactful requirements, while others will contain more aggressive provisions that easily could jeopardize the viability of a project.
Given the broad, generalized requirements of the new law, and the likelihood that its provisions will be interpreted and applied in varying ways by local jurisdictions throughout the state, rest assured that the courts will play a key role in shaping the scope of environmental justice requirements throughout California. This definitely falls within the category of “Stay Tuned.”
Yesterday, California voters approved Proposition 51, a $9 billion bond to replenish the State’s school construction fund. Proposition 51 was passed just in the nick of time because, according to the California State Allocation Board (SAB), the State has run out of money for new school construction.
Just last week, despite the outstanding legal efforts of the California Building Industry Association (CBIA) to forestall it, SAB published a notice to initiate significant “Level 3” school fee increases throughout California. The passage of Proposition 51 (for which we can thank CBIA leadership, among others) will replenish the State’s coffers and should provide a defense against the imposition of Level 3 fees. Politics being what they are, however, it remains to be seen whether Proposition 51 will actually induce cash-strapped school districts to drop their guard.
Given the uncertainty surrounding school construction in California, builders are looking for creative alternatives. Just this year, Cox Castle lawyers negotiated two widely-touted developer-built-school deals with districts in the Bay Area (Fremont and Foster City-San Mateo). These highly-specialized transactions can provide great benefits to builders, including assurance of timely delivery of new schools to serve their neighborhoods and the potential for reduced costs in light of the significant upward pressure on statutory school fees. These deals also provide benefits to school districts in the form of state reimbursement of funds from Proposition 51.
These transactions are complex and take time to negotiate. If you or your building or development company are looking for ways to navigate this uncertain regulatory environment, it may be worth your while to consider building a school.
Looking only at its name, the Fixing America’s Surface Transportation Act (FAST), a long-term funding bill adopted by Congress in late 2015, would seem to benefit only ground transportation projects. For the most part, FAST has been billed as a program that will deliver long-term funding certainty for surface transportation infrastructure investment.
FAST, however, does much more, providing “fast track” environmental review and federal permitting for major infrastructure projects, including renewable and conventional energy, surface transportation, aviation, ports and waterways, water resource projects, broadband, pipelines and other similar projects (those that involve a likely investment of more than $200 million). FAST is designed to increase transparency, require communication between federal agencies and project sponsors, force agencies to provide a timeline for review (and limit their ability to deviate from that timeline), and provide some limits for judicial review (shorter statute of limitations, exhaustion of administrative remedies, and additional findings for preliminary injunctions). The principal benefits of FAST include:
- Increased Transparency and Agency Cooperation with a Central Online Tracking Database. FAST requires the establishment of a “permitting dashboard” for all covered projects. The permitting dashboard is a searchable online database that will provide the status and schedule of environmental review and permitting tasks for each agency for all the covered projects.
- Coordinated Environmental Review and Permitting Plan and Schedule. A project must be placed on the permitting dashboard within two weeks of being identified on the inventory of covered projects. Within sixty days after a project is placed on the permitting dashboard, the lead agency must develop a plan for coordinating and completing the environmental review and permitting process. The plan must include a permanent timetable from which the agencies may deviate only under limited circumstances (written justification must be provided and there are limits on how long an extension can be granted). In addition, if a project sponsor requests a meeting to discuss the project, the review and permitting process, or the schedule, the federal agencies are required to meet with the sponsor within sixty days of that request. The lead agency has specific requirements to make relevant information available to other agencies and the project sponsor as early as possible.
- Development of Project Alternatives. FAST requires the lead agency to engage the cooperating agencies and the public to determine the reasonable range of project alternatives. If an Environmental Impact Statement (EIS) is to be prepared, this process shall be completed no later than completion of scoping for the project. Ultimately, it is up to the lead agency to determine the reasonable range of alternatives.
Less than one week remains to comment on important proposed changes to the CEQA Guidelines that flow from the 2013 adoption of “SB 743.” Once phased in, these Guidelines will change the evaluation of a project’s potential transportation impacts and, if the Guidelines function as the Governor’s Office of Planning and Research (OPR) desires, alter the pattern of California land development. Under the Guidelines, vehicle miles traveled (VMT) will replace level of service (LOS) as the standard a lead agency must measure a project’s traffic impacts. Under the new metric, what was mitigation for traffic impacts, such as the widening of roads, will soon be considered a significant impact. Accordingly, the implications of these Guidelines go beyond the need for traffic engineers to retool their traffic models (itself a complex task).
Of course changing CEQA is bound to be controversial. OPR’s first Guideline proposal generated numerous and diverse comments, reflecting differences among California’s lead agencies’ size and access to transit, and stakeholders’ individual (often ideological) views on transportation. As a result, OPR issued a second set of proposed Guidelines on January 20, 2016, which can be viewed on OPR’s website. Comments on this latest draft must be submitted to CEQA.Guidelines@resources.ca.gov by 5:00pm on February 29, 2016.
Practical Implications of the New Guidelines
OPR proposes to revise Appendix G, which is the heart of the proposed Guidelines. Although Appendix G is provided for guidance only, agencies typically follow it almost to the letter. As proposed, the transportation significance thresholds in Appendix G would eliminate questions related to LOS and instead focus on VMTs, including whether a project would induce additional automobile travel by increasing physical roadway capacity. In addition, OPR proposes technical guidance, to be published as a separate document, to help lead agencies implement the new Guidelines. This technical guidance includes recommended quantitative thresholds and analysis methods for determining the transportation impacts from various types of projects, including residential, retail, office, and roadway development. Following are some of the practical consequences that we foresee resulting from the proposed changes: Continue reading →
Cities are increasingly requiring development agreements to sidestep legal limits on exactions imposed during the entitlement process. Because the courts have determined that DAs are “contracts”, cities are using DAs to exact “public benefits” that the United States Constitution prevents them from requiring through the permit process. Taking this tact further, some municipal codes now mandate that developers enter into DAs as a condition to receiving their entitlements. Having forced the developer to enter into a DA, the agency then exacts “community benefits” that it can’t otherwise legally obtain.
This highly questionable approach relies on the fiction that the DA is an arms-length agreement voluntarily entered into by the developer. Forcing a developer to enter into a DA to obtain otherwise unlawful exactions, however, most likely makes the DA itself an unlawful exaction. It is not surprising, though, that many developers often agree to these exactions in order to garner the votes they need for their entitlements. Doing so is an unpleasant reality that is sometimes simply viewed as the “cost of doing business,” with acquiescence being preferable to losing a project.
Nonetheless, in our view, what’s “good for the goose is good for the gander.” If an agency wants to rely upon the “contract theory” of DAs to impose otherwise unlawful exactions, then the developer should insist on provisions to assure that the DA is treated as a contract in all respects. For example, usual rights and remedies (including, e.g., damages for breach of contract) should be incorporated into that DA.
With these considerations in mind, here are some important tips, in no particular order, to consider in the negotiation and drafting of your DA: Continue reading →
You’ve got a great project and you’re ready to start the approval process. However, some community members are opposed to your project, and one or two of them have just been elected to the city council, after having run on a platform of unequivocal opposition to your project. What, if anything, can you do?
The first question to ask is, what kind of land use approvals are you seeking? If they are legislative approvals, such as a general plan amendment or a rezoning, then the answer is that there probably is nothing you can do about the apparent bias of the new city council members. Decisions by the Supreme Courts of both the United States and California have stressed the free speech rights of politicians who espouse the concerns of the electorate. Suppose the approvals sought aren’t legislative, but are, instead, administrative. Typically, administrative approvals are not issued by an elected body and include approvals such as subdivision maps, conditional use permits and variances. Here there is a possibility of relief, so long as you can allege “concrete facts” which demonstrate bias or an unacceptable probability of actual bias. A decision maker’s previously-voiced opposition to a project generally isn’t enough to justify his or her disqualification. Real examples of actions which demonstrate an appropriate probability of actual bias on the part of a decision maker include (i) writing an article objecting to a project while it is undergoing the approval process, (ii) having ex parte contacts with project opponents and failing to disclose those contacts, (iii) improperly appealing an action taken by a planning commission, and (iv) urinating on the property subject to the entitlement approvals at issue. (Yes, these are all real-life examples taken from the case law.)
Suppose that, like these examples above, you do have concrete facts sufficient to demonstrate a probability of actual bias. What should you do? Continue reading →
Your land use approval contains a condition – say, the sacrifice of your first born child prior to the issuance of the 50th certificate of occupancy – mandated by a local ordinance which is successfully challenged by someone else a year or two after you start building but before you seek the 50th certificate. Can you get the condition set aside?
Unfortunately, the answer is no. You’re bound by it because you failed to challenge it yourself in a timely manner.
Every developer is aware that the time in which to challenge an undesirable condition imposed on a land use approval is short – typically 90 days. What most developers are not aware of is that a failure to challenge a condition within the time allowed prohibits a later challenge even if it later becomes clear that the condition violated the law at the moment it was imposed.
This was recently highlighted in a case which involved an inclusionary housing condition imposed on a use permit for an apartment building with retail space on the ground floor in the City of Berkeley. Five years later, a different developer involved in a different project in a county far, far away, successfully challenged a similar condition as being illegal on the grounds that it had been preempted by a state law which prohibited precisely that kind of condition. The second developer was successful because it had filed its lawsuit within 90 days of the issuance of the permit which allowed it to build its apartment project. Continue reading →
The California Supreme Court’s latest California Environmental Quality Act (CEQA) decision contains important rulings affecting three areas of land use and environmental law practice. The decision, Center for Biological Diversity v. California Department of Fish and Wildlife (November 30, 2015, Case No. 217763), was a 5-1-1 decision, and it arose out of one of many environmental impact reports (EIRs) that have been prepared for the large Newhall Ranch development that is proposed in northern Los Angeles County. This particular EIR followed earlier EIRs certified by Los Angeles County in 1999 and 2003 in connection with the County’s primary project approvals. The new EIR was a joint EIR/EIS prepared by the California Department of Fish and Wildlife and the U.S. Army Corps of Engineers to evaluate the impacts of several additional project approvals, including a resource management plan, a conservation plan for the endangered spineflower plant, a streambed alteration agreement, and two permits for the incidental take of protected species.
Several of the rulings in the case are likely to make the CEQA process, and the analysis of greenhouse gas emissions in CEQA documents, more complicated. The primary rulings in the case are discussed below.
EIR Analysis of greenhouse gas emissions upheld in part, rejected in part. The Court upheld some aspects of the EIR’s lengthy analysis of greenhouse gas emissions, but found that the analysis was not thorough enough. There are three components to this ruling. Continue reading →