Here are several potential developments related to affordable housing and CEQA that you should watch for in the coming months:

. . . CEQA REFORM: As we move into 2015, there again will be calls for comprehensive CEQA reform. But will they be heeded? The need for reform is widely acknowledged, as it was by Governor Brown in his 2013 State of the State address: “We . . . need to rethink and streamline our regulatory procedures, particularly [CEQA].” An article in the Environmental Monitor said “In recent years there have been several attempts in the legislature to reform … CEQA. …[Y]et very few substantive changes have been made….” But that was in 1996, seventeen years before the Governor made his comments. Nothing substantive happened in between – or since.

Can there be legislation which both retains the comprehensive environmental review originally at the core of CEQA and eliminates the delay, uncertainty, and litigation abuse that has evolved in the decades since the law was first adopted. Occasional “tweaks” are not reform.   Will 2015 be any different?

. . . WHAT THE CALIFORNIA SUPREME COURT HAS TO SAY ABOUT AFFORDABLE HOUSING IN SAN JOSE: California’s Supreme Court has agreed to review an appellate court’s decision upholding San Jose’s current affordable housing ordinance. California Building Industry Association v. City of San Jose will be the Court’s first venture into a challenge to the validity of an in lieu development fee since the US Supreme Court’s decision in Koontz v. St. Johns River Water Management District.

. . . NEW CEQA GUIDELINES AND LOCAL REACTIONS: Pay close attention to this one. The Legislature wants to force Californians out of their cars and into or onto bicycles, buses, and rail. New CEQA Guidelines will soon be in effect to implement SB 743, the 2013 legislation that removes congestion and delay as environmental impacts under CEQA. (See the related post below.) How will cities respond when EIRs and other environmental analysis can no longer consider adding trips to already congested roads to be a significant impact? What will happen when a city’s general plan says that City roads must operate at an acceptable level of service, but improving intersections to maintain that level of service will be considered a significant impact under CEQA? Will development outside of large metropolitan areas with readily available transit facilities be stopped in its tracks? Whatever the very uncertain consequences of these new Guidelines may be, they will undoubtedly be a game changer for the entitlement of new projects.

 . . . AFFORDABLE HOUSING NEXUS STUDIES: To justify a mandate for affordable housing by establishing a “nexus” between new housing development and the need for affordable housing, many California cities are preparing studies which often have a rationale that goes something like this: Newly constructed residences create new households in the city. New households represent new income and, therefore, new consumers in the city. These new consumers require goods, services, and government. This new consumption creates new jobs, many of which are lower paying. Low paying jobs go to members of lower income households who cannot afford market rate homes in the city.

The City of San Jose “Residential Nexus Analysis” finalized in October 2014 focuses only on the rental market. It finds that the per unit “total nexus cost” for each market rate apartment is $28,000 ($25,000 for high-rise apartments). The per square foot “nexus cost” was stated to be $28.28 ($27.78 for high rise apartments). A resolution establishing the “Housing Impact Fee” was adopted by the San Jose City Council on November 18, 2014. The City Council’s Resolution established two residential “development types” which would be subject to the Housing Impact Fee.  Those were “Rental Development” and “Downtown High Rise Rental Development.”  The adopted Schedule of Fees set the initial Housing Impact Fee for both development types at $17 per square foot of floor area for each market rate rental unit within a project.

A different approach is being taken by the City of Hayward, which is considering a per square foot fee only for for-sale product, with a rate of $4.00/sf for market rate single-family detached and $3.24 for single-family attached.

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