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The Trump administration has been busy chipping away at Obama-era regulations. As of July 2017, Donald Trump has issued over forty Executive Orders and dozens of Presidential Memoranda and Proclamations. The intent of many of these is to remove regulatory burdens on developers, the agriculture industry, and business more generally. One of Trump’s primary targets has been environmental regulations, and wetland regulations in particular have been in the crosshairs. Trump has followed through on a campaign promise to revisit – with an eye toward rescinding – the Obama administration’s Clean Water Rule. That federal pullback from wetland regulations may have unintended consequences in California, which is on the cusp of promulgating new wetland regulations of its own.

Federal Pullback

From their very inception, federal wetland regulations promulgated pursuant to the Clean Water Act have been a target of controversy and consternation. No one on either side of the spectrum has been happy, and standing in the middle of this regulatory angst are the U.S. Environmental Protection Agency and the U.S. Army Corps of Engineers, the two agencies tasked with regulating the fill of wetlands for development pursuant to the Clean Water Act. As with most controversial regulations, the wetland regulations evolved over the years, swinging like a pendulum from protective to not-as-protective, as a result of litigation brought by environmentalists and industry interests.

But the real twists and turns of this saga have been punctuated by sporadic pronouncements by the U.S. Supreme Courtwetlands-300x168

The Court’s most recent decision on wetland regulations came in the form of a fractured opinion in which no majority view emerged. That case, Rapanos v. United States, involved a challenge to the Corps’ determination that a permit was required to fill wetlands slated for development of a mall. The landowner argued that the Corps was overreaching and had no jurisdiction over his wetlands because they were not “waters of the United States,” a term of art that once applied to a wetland gives EPA and the Corps the ability to exercise their permitting authority. The U.S. Supreme Court gave us little to no unifying guidance on what constitutes “waters of the United States.” Of crucial importance now, however, is the plurality opinion authored by the late Justice Antonin Scalia. Citing Webster’s New International Dictionary: Second Edition, Justice Scalia adopted a literal approach to the definition of “waters of the United States,” and declared that the agencies’ jurisdiction under the Clean Water Act includes only relatively permanent waters and wetlands with a continuous surface connection to relatively permanent waters.

In the wake of Rapanos, EPA and the Corps provided some informal guidance to landowners and developers on how the agencies would apply the Rapanos decision. The Clean Water Rule adopted by EPA and the Corps in 2015 emerged from this guidance and from efforts by the agencies to evaluate proposed definitions of “waters of the United States.” The Rule was controversial from the beginning, and it quickly became enmeshed in litigation because of its (both real and perceived) expansion of the agencies’ jurisdiction. The Rule soon became a political target as the 2016 election year got into full swing. Trump fully embraced the issue, and said on the campaign trail in May 2016 that “we’re going to rescind all the job-destroying Obama executive actions including . . . the Waters of the U.S. rule.”

That promise was fulfilled on June 27, 2017. In response to an Executive Order issued by Trump earlier this year, EPA and the Corps formally announced the proposed rescission of the Clean Water Rule and re-codification of the regulations that existed prior to the Rule. According to the Federal Register Notice announcing the rescission, the agencies intend to follow this action with formal rulemaking to “conduct a substantive re-evaluation of the definition of ‘waters of the United States.’” Thus far, no hard-and-fast timeline has been offered for when that proposed “re-evaluation” will be available.

We may not know when it will be available, but we have a good idea of what it will look like. Trump’s Executive Order previewed the substance of the new definition. The Order makes it clear: the agencies must take into consideration Justice Scalia’s opinion in the Rapanos case. This means it is likely the new definition will focus on more literal interpretations of “waters,” which in turn means a much more narrow view of EPA’s and the Corps’ scope of jurisdiction under the Clean Water Act.

In short, the new rule likely will reflect a significant federal pullback on regulating wetlands.

California Pushback?

What does this mean for wetland regulations in California? This question is particularly relevant now because a federal pullback on wetlands regulations is sure to contribute to a perfect storm of events currently unfolding in Sacramento.

For over a decade, the State Water Resources Control Board has been working on a wetland protection and regulation policy to address some of the uncertainty created at the federal level by the U.S. Supreme Court. Rapanos and other Court decisions, most notably Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers, or “SWANCC,” created “gaps” in the overall regulation of wetlands by establishing the bright line rule that intrastate, non-navigable, and isolated waters are not “waters of the United States” subject to EPA’s and the Corps’ jurisdiction. Instead, these waters are considered “waters of the State of California,” or simply “waters of the State,” and they are subject to a separate permitting regime established by the State’s Porter-Cologne Water Quality Control Act. wetlands1-300x225

The State Board’s draft wetland policy – recently renamed the State Wetland Definition and Procedures for Discharges of Dredged or Fill Materials to Waters of the State – is a quantum leap in the Board’s wetlands permitting and regulation regime. As its title suggests, the policy proposes a formal definition of “wetlands,” which is not currently defined or applied with any consistency across the natural resource statutes in California. In addition, the policy proposes a permitting process that mimics the onerous, costly, and time consuming process used by the Corps for authorizing wetland fill under the Clean Water Act.

A 2016 draft of the policy received numerous comments objecting to the State Board’s proposed definition of wetlands and permitting process. Notably, the U.S. Army Corps of Engineers raised serious objections to the State Board’s putative authority to issue the policy, citing federal preemption and issues related to the policy’s consistency with its own wetland permitting program under the Clean Water Act. Other commenters raised issues related to the definition of wetlands being too vague, arbitrary, and irrationally expansive, and the process for permitting wetland fills as being too cumbersome and costly.

The State Board responded to these comments and issued a revised draft of the policy on July 21, 2017. Unfortunately, many of the issues raised by the commenters remain unresolved. The Board’s timeline for final approval of the policy is aggressive, particularly given what will likely be a controversial and highly charged approval process. According to its website, the policy is expected to be adopted by the Board sometime “Winter 2017.”

What may motivate the State Board to meet this aggressive timeline, and to charge ahead with a policy many view as vague, onerous, and duplicative, is the federal wetland regulations pullback. In effect, the federal pullback may be responsible for a California pushback.

Nature abhors a vacuum. As the Trump administration narrows the federal government’s ability to regulate wetlands, the State Board may use its new wetland policy to fill the regulatory void that will be created. It can be dangerous to prognosticate too much, but in light of California’s generally pro-environmental politics, one thing is virtually certain – the State will be emboldened to fill the “Trump Gap,” as some of us in the industry have been referring to it, as the federal government begins to pull back from wetland regulations. Somewhat ironically, in California we can expect yet another layer of regulatory oversight as a result of this federal pullback. Stay tuned.

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Over the past four months, Sacramento lawmakers have introduced a number of bills to tinker with the state’s premier environmental statute, the California Environmental Quality Act (CEQA). While it is too early to know whether any of the proposed changes to CEQA will be enacted, each could impact the building industry.  Below are a few to watch as they wind their way through the legislature:

  • SB 224 (Jackson) would fundamentally change how CEQA analysis is performed. Today, to determine whether a project would have a significant adverse effect on the environment, a lead agency looks at the change to existing environmental conditions (usually referred to as the “environmental baseline”) resulting from the project. That change is then measured against the agency’s “threshold of significance.” If the change exceeds the agency’s significance threshold, then it must be mitigated, avoided, or overridden as prescribed by CEQA. In establishing the environmental baseline conditions, the lead agency is not now required to examine whether conditions at the project site, such as existing development, occurred legally and pursuant to a required permit. Unpermitted and illegal conditions at the project site are included within the baseline based on CEQA’s current language and well-established case precedent. SB 224 would change the baseline equation by excluding from the environmental baseline existing conditions resulting from illegal or unpermitted actions, emergency repairs to public service facilities, or other actions necessary to prevent or mitigate an emergency, if such actions were made without CEQA review. This change will require lead agencies, in describing the environmental baseline, to figure out if past illegal, unpermitted, or emergency actions occurred without CEQA review at any time in the past, and then look beyond what actually exists at the project site and speculate on what the condition of the environment would be without those actions. (This approach to establishing the environmental baseline is similar to that historically used by the California Coastal Commission for projects within the Coastal Zone.) SB 224 is set for hearing by the Senate Standing Committee on Environmental Quality on April 19. capitol650
  • AB 890 (Medina) would require an initiative proponent to file a copy of a proposed measure with the local agency and ask for environmental review of the measure. The local agency then has 30 days to determine if the action proposed by the initiative is subject to CEQA, and if so, whether it has the potential to significantly impact the environment. If it has such a potential, the proposed measure cannot be adopted by initiative, but instead could receive a public hearing if a sufficient number of signatures are collected and after CEQA review is complete. Even if the action proposed by the initiative has no potential to significantly impact the environment, AB 890 gives the local agency 180 days to prepare a negative declaration and requires that the negative declaration be circulated for public review and comment for at least 20 days before the meeting at which the legislative body would consider certifying the initiative. Assembly member Medina has described AB 890 as closing “an initiative process loophole that wealthy developers use to avoid environmental review,” but that description fails to capture the bill’s transformative nature. As drafted, the bill constrains the right of any person, not just the wealthy, to have a direct voice in local land use decisions. AB 890’s next hearing will be before the Committee on Elections and Reapportionment.
  • AB 1404 (Berman) would expand the scope of CEQA Guidelines Section 15332, more commonly known as the “infill exemption.” This categorical exemption promotes California’s goal to locate new development in already developed areas as a way to preserve pristine land and reinvigorate existing communities. As currently drafted, the infill exemption applies in cities, but not counties. AB 1404 would expand this exemption to include proposed development within the unincorporated areas of a county on for projects of no more than five acres which are “substantially surrounded by urban uses.” If this bill passes, smaller infill projects in counties could be approved more quickly, avoiding lengthy CEQA review. The bill awaits its first hearing before the Assembly’s Committee on Natural Resources.
  • SB 80 (Wieckowski) would make a number of changes to CEQA’s noticing requirements. The most significant of these changes involves projects determined by the lead agency to be exempt from CEQA. Currently, an agency does not need to file a notice of determination with the Office of Planning and Research when it approves a project that it finds to be exempt. SB 80 requires the filing of such notices for exempt projects. This bill adds to CEQA’s required procedures and could trip up an unwary lead agency. Many project applicants already ask the lead agency to file a notice of determination for exempt projects because doing so shortens the statute of limitations for challenging the exemption from 180 days to 35 days. This bill would make that filing a necessity which project applicants should closely monitor to make certain that the agency makes the filing. SB 80’s next committee hearing will be before the Senate Committee on Appropriations.
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The development of a real estate project of almost any size is going to require compliance with the California Environmental Quality Act – CEQA – generally through the preparation of an environmental impact report – an EIR.  Those who have gone through the process know that the preparation of an EIR can cost hundreds of thousands of dollars and take a year or more, all this before the first public hearing.  Further, opposition to an approved project frequently results in a lawsuit, one which generally claims that there has been a failure to comply with CEQA, either because an EIR should have been prepared (if one hadn’t been) or else that the EIR that was prepared was inadequate.  That litigation can, by itself, add hundreds of thousands of dollars in costs and two or three years before the first spoonful of dirt can be moved even assuming that the opponents’ lawsuit fails.  Costs and delays increase if the lawsuit is successful.  Small wonder that developers look for ways around CEQA.

The California initiative process allows for project approval either because a city council decides to adopt the initiative as written or because it is submitted to the voters who vote in favor of the initiative.  It has been the law for over a decade that a project that is proposed through the initiative process and approved by the voters is not subject to CEQA.  This has led several developers, including Wal-Mart, to use the initiative process to get their project approved.  Wal-Mart scored a significant victory in 2014 when the California Supreme Court held that CEQA wasn’t implicated when the proposed initiative was adopted by a city council.  In that case, Wal-Mart proposed, and the city council adopted, a specific plan that authorized the expansion of an existing Wal-Mart store.

Other developers have followed Wal-Mart’s lead. For instance, Moreno Valley’s City Council adopted an initiative that approved a 40,000,000 square foot logistics facility in November, 2015.  However, the opposition’s responses demonstrate that the use of the initiative process isn’t a silver bullet.  First, opponents attempted to get enough signatures on a referendum petition to overturn the Council’s adoption of the initiative.  That worked in 2015 in Carlsbad when a referendum overturned the council’s approval of a proposed shopping center.  When the opponents couldn’t get enough signatures to put a referendum on the ballot in Moreno Valley, four lawsuits were filed in February 2016 attacking the Council’s action.  A Riverside Superior Court judge ruled in favor of the City in September 2016.  That judgment is now on appeal.

Nor should it be assumed that a city council will automatically adopt an initiative.  Land use is political and a council may, or may not, be willing to take responsibility for approving a project by adopting the initiative.  The alternative is to put the initiative on the ballot to let the voters decide.  Such initiatives were on the ballot in Beverly Hills, Cupertino, Cypress, and San Diego County in November 2016.  All were rejected by the voters.

The bottom line?  There is a way around CEQA, but it’s neither guaranteed nor cost free.  Nevertheless, the use of the initiative should be considered for a substantial project.

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As we have done for the past eight years, the Retail Group of Cox, Castle & Nicholson LLP has, once again, taken on the daunting task of forecasting what to expect in the forthcoming year in four critical segments that affect the retail industry. In doing so, the Retail Group analyzed the social, political and economic events of 2016, reviewed various economic data and projections and have come to certain opinions relating to the retail industry and where it is heading in 2017. Below is a product of their thinking, in the form of four articles of interest addressing such topics as capital markets, retailing, retail development and the impact of residential development on retail. If you would like to read the content of the report, click the links below.

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California’s Native American Heritage Commission has issued its initial approval of draft regulations that, if finally approved, will guide the treatment and disposition of Native American human remains and associated burial items in connection with development projects and other ground-breaking activities in California. Ground-Breaking-Shovel4-300x200

The Draft Regulations. The overarching goal of the regulations is to protect Native American burial sites and remains that may be disturbed as a result of development. The main thrust of the regulations is to address certain problems associated with the “Most Likely Descendants” (MLDs) process and the treatment and disposition of Native American human remains. These problems include, for example, identifying the appropriate MLD for the treatment and disposition of human remains and confidentiality during the process of conferring with landowners regarding that treatment and disposition.

From the perspective of developers and landowners, the regulations appear broad in scope. They apply to any “project,” which encompasses not only “projects” as defined under the California Environmental Quality Act, but also “any ground-disturbing activity that results in the inadvertent discovery of Native American human remains.”

Key elements of the regulations include (1) implementation of specific timing and procedural requirements for identifying tribes or consortia of tribes as MLDs upon discovery of Native American human remains in any “project”; (2) the creation of rules and guidelines for required conferrals (including an optional mediation process) between landowners and MLDs; and (3) the establishment of a Code of Ethics for MLDs and their authorized representatives to follow in the context of the treatment and disposition process. The regulations also clarify the confidential nature of decisions and agreements surrounding treatment and disposition of Native American human remains and limit the types of related information available to the public.

Next Steps in the Process. The Commission’s recent approval is not the final step for the regulations. Instead, this approval serves to initiate the formal rulemaking process for potential future adoption and publication.

Pursuant to the Commission’s approved timeline, the first public comment period is expected to commence on April 13, 2017, and end on June 26, 2017. A public hearing is tentatively set for July 21, 2017. If timely approved and adopted, the regulations will take effect in early 2018.

Key dates in the Commission’s current schedule for the rulemaking process are as follows:

  • February 3, 2017: Commission Staff submits proposed rulemaking package and draft proposed regulations to the California Department of Finance for review of fiscal impact.
  • April 3, 2017: Commission Staff submits required rulemaking documents to the California Office of Administrative Law (“OAL”) for publication.
  • April 13, 2017: OAL publishes Notice of Proposed Action, which begins the formal process of adopting the regulations and the period for public comment and tribal consultation.
  • June 26, 2017: Public comment period ends.
  • July 21, 2017: Public hearing.
  • August 11, 2017: Publication of substantial changes to the proposed regulations, which commences another public comment period of 28 days.
  • September 8, 2017: Public comment and tribal consultation periods end.
  • October 20, 2017: Potential date of Commission adoption (if adopted, the regulations will be submitted to the OAL for final review and submitted to the California Secretary of State, with an effective date likely to take place in early 2018).

The proposed draft regulations presented at the Commission’s January 20 meeting are available here: Most Likely Descendants Regulations 


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In its AdobeStock_88090393-300x200recent draft assessment of “California’s Housing Future,” the State’s Department of Housing and Community Development (HCD) made these observations, among many others:

  • California needs 180,000 new homes each year.
  • Over the last ten years, annual production has averaged less than 80,000 homes.
  • Californians overpay for housing, commute too far, and are overcrowded.
  • The existing system of land use regulation creates barriers to development.
  • The housing crisis makes it difficult for California businesses to attract and retain employees.
  • A smaller percentage of Californians own their homes than at any time since the 1940s.
  • The housing shortage disproportionately impacts California’s younger residents and the economically and physically disadvantaged.
  • California is home to 12% of the nation’s population and 22% of the nation’s homeless.
  • Funding for affordable housing is unstable.
  • High housing costs increase health care costs and decrease educational outcomes.
  • California’s population will grow from today’s 39 million to 50 million by 2050.

While this report is candid and open, its findings mean little if California’s elected officials at every level do nothing meaningful to counter these growing and disturbing – but hardly surprising – realities. The Legislature cannot continue to avoid reconciling legitimate environmental concerns, the challenges of climate change, the need for greater housing affordability, and the increasing demand for housing of all types by avoiding true CEQA reform and adopting ever increasing restrictions on new housing development. Nor can it simply decree that more affordable housing be built, ignoring the reality that those who build homes will not do so unless it makes sound business sense. At the local level, residents understandably want to avoid traffic jams and overcrowding and would like to define their own visions of their communities. Those who own their homes are thrilled by the increases in home prices resulting from the housing shortage. But when every community says “We don’t oppose more housing, just do it somewhere else,” there ultimately is nowhere else in California to go. Combine these factors with environmental solutions that, intended or not, produce elitist housing outcomes, and we have a housing crisis which no one denies, but the most powerful forces in the state are seemingly helpless to address. The challenges are complex and there’s no easy answer, but looking the other way only increases the cost of housing, makes doing business in California less attractive, and sends our young adults elsewhere. That, for sure, is not an acceptable outcome.

Public comment on the HCD draft report is open through March 4. Click here for the full draft report or go directly to the HCD website.

This post was previously published by Tim Paone in LinkedIn.

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Do Parking Formulas Deprive Cities of Revenue Opportunities?

When a city planning department proposes a change in the city’s development standards to address a specific planning concern, it often is asked by its city council “What are other cities doing?” This question is particularly likely when the proposed change, on its face, suggests that local residents might be inconvenienced. But in the face of increasing economic challenges, some California city councils are willing to pioneer creative planning approaches to stimulate economic activity in their cities, rather than let that activity land elsewhere.

One example is the adoption in late 2016 by the Lancaster City Council of an ordinance which eliminates specific off-street parking requirements (e.g., the number of spaces which must be provided based upon the square footage of the proposed development) for development in commercial zones. Instead of the arbitrary “one size fits all” approach for particular uses, Lancaster’s ordinance requires developers with projects in commercial zones to demonstrate that they are providing adequate parking for their proposed use without being tied to a formula which may or may not be a good measure of the demands of that use. One of the stated purposes of the ordinance is to maximize the City’s economic return from commercial development. In its report on the ordinance to the City Council, Lancaster’s planning staff expressed its belief that “the City’s minimum parking requirements were rooted primarily in a perception of convenience, and not in economic return.” The staff report recommending approval of the ordinance recognized that removing the “regulatory barrier” of formulaic minimum parking requirements in favor of requirements based on actual demand would give developers “the ability to maximize land use potential and value generation, with resulting long-term benefits to the City.” In other words, common sense planning can be a win-win.

From the perspective of the commercial developer, the adoption of Lancaster’s flexible approach to parking requirements is both enlightened and welcome. Most significantly, it reflects an acknowledgement of the many unintended consequences of the typical cookie-cutter approach to parking requirements. Perhaps most impressive is the recognition that rigid parking requirements dictate the design of buildings in ways that, ultimately, may contribute to vacancy and lost economic productivity for the city. Rather than an abstract, formulaic, or “this is how we’ve always done it” approach to planning, Lancaster’s approach reflects the uncommon understanding that what makes a project work for the developer also is likely to be what makes the project work for the city.

The City of Lancaster is located in northern Los Angeles County, relatively far from the hustle and bustle of the Los Angeles metropolitan area. While the remote location of Lancaster undoubtedly influenced its desire to take steps to enhance economic activity within its community, the logic of its new parking ordinance makes sense for any city competing for new economic activity. Beyond parking, this approach could open the door to merging planning and economic development considerations in other types of development. For example, the affordability of nearby housing for employees is a factor which impacts the decisions of businesses to locate within a particular community. For retail development in particular, more houses also means more customers which, in turn, generates greater economic activity for the city. Perhaps one day, California communities will see the wisdom of easing development standards and other regulations for housing to facilitate the production of desirable and affordable residential communities that will benefit home purchasers, tenants, the broader community, and even the city’s coffers.  Stay tuned.

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Anyone who is considering developing, remodeling, or demolishing hotels, motels, or other visitor-serving lodging in the California coastal zone needs to be aware that these projects are likely to be receiving much greater scrutiny at the Coastal Commission.

California’s Coastal Act requires the Commission to protect, encourage, and, where feasible, provide “lower cost visitor and recreational facilities,” which includes lodging. However, under the Coastal Act the Commission cannot fix private overnight room rental rates or set income eligibility standards for overnight room rentals.

The Commission has been discussing ways to provide low-cost overnight accommodations in light of these limitations. The Commission is now approaching the issue with renewed emphasis due to the recent enactment of AB 2616. AB 2616 allows the Commission to consider environmental justice and “the equitable distribution of environmental benefits throughout the state when acting on a coastal development permit.” The new law defines “environmental justice” as “the fair treatment of people of all races, cultures, and incomes with respect to the development, adoption, implementation, and enforcement of environmental laws, regulations, and policies.”

Although AB 2616 takes effect on January 1, 2017, the Commission already is applying environmental justice principles with respect to lodging. At a recent workshop, the Commission’s staff presented preliminary recommendations to address low-cost overnight accommodations. While the Commission has not yet adopted any formal guidance, we expect the Commission will be using the principles discussed at the workshop in evaluating applications in the meantime.

There are some immediate implications that applicants need to plan for now:

First, the Commission is likely to scrutinize renovations and demolitions of existing lower-cost lodging much more closely. The Commission has seen examples of locally approved renovations of affordable accommodations that removed the units from the affordable category. The Commission is now aware of companies investing in that business model. We can expect the Commission to maintain that such upgrades require coastal development permits conditioned to address the anticipated loss of affordability. We also anticipate that the Commission will deny permits to demolish or repurpose affordable accommodations, unless replacement accommodations are first provided.

Second, we can expect that the Commission will require projects that are not affordable to provide onsite low and moderate-cost accommodations (such as camp sites, RV overnight facilities, and similar lower-cost classes of accommodations). We also expect the Commission to  impose higher in-lieu fees on all classes of lodging projects and appreciably higher in-lieu fees on high-cost lodging projects, even where existing affordable accommodations have not been eliminated. The Commission’s data shows that fees collected to date have not been enough to create the affordable accommodations for which they were imposed.

Third, Commission staff’s preliminary recommendations emphasize consideration of a project’s affordability relative to the availability of affordable overnight accommodations in the vicinity of the project. The Commission and the State Coastal Conservancy are developing a database for this analysis. Applicants need to be prepared to address marketplace affordability and project economics before the Commission.

Fortune favors the prepared. That certainly will be the case when it comes to dealing with lodging in the coastal zone in the coming years.

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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?

TimingThe 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.”



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No matter your politics or perspective on development in the state, one thing is beyond debate – California is facing a serious housing shortage crisis. A recent article in the Los Angeles Times warns that this shortage will have significant adverse effects on the state’s economy. Making matters worse is a dearth of affordable housing. Efforts by policymakers to deal with these shortfalls have resulted in mixed success. Most recently, Governor Brown’s proposal to streamline the approval of “as of right” housing projects that include some affordable units stalled last August.

The California Legislature, however, has come up with new tools to either incentivize or require a developer to intensify development and create affordable housing opportunities. An issue that sometimes comes up is how these tools of local government square with existing state statutes or regulations governing conservation or protection of sensitive lands, such as those regulated by the California Coastal Commission.


No Density Bonus for this Coastal Project

In Kalnel Gardens, LLC v. City of Los Angeles, the court of appeal tackled this issue in the context of a relatively small project in the Venice area of Los Angeles. The developer applied to the City to tear down a two-story, three-unit apartment building and replace it with five duplexes and five single-family homes for a total of 15 residential units. The project was granted additional density and height limits beyond what was allowed on the site because two of the units would have been designated as affordable units.

The City’s Zoning Administrator granted these development incentives based on the following statutes:

  • Housing Accountability Act. This act is sometimes referred to as the state’s “anti-NIMBY law.” The Housing Accountability Act limits the ability of local governments to reject or make infeasible housing development projects based on their density without a thorough analysis of the “economic, social, and environmental effects of the action,” including the adoption of express findings required by the statute.
  • Density Bonus Act. This act addresses the shortage of affordable housing in California by requiring local governments to award a developer certain development concessions and a density bonus that allows an increase in density above what the zoning ordinance allows if the developer agrees to set aside a certain percentage of the units in a housing development for low or very low income residents.
  • Mello Act. This act establishes minimum requirements for affordable housing within the coastal zone by requiring, first, the construction of replacement low income housing when existing affordable housing is demolished and, second, new affordable housing units as part of new developments, either at the site of the new development or somewhere else.

A group of neighbors administratively appealed the project, alleging that it violated the Coastal Act because the project’s height, density, setbacks, and other visual and physical characteristics were inconsistent with the existing neighborhood. The West Los Angeles Area Planning Commission found that the project did not conform to the Coastal Act on that basis, and on appeal to the City Council by the developer, the City Council agreed with the Commission.

The developer sued the City, arguing that the City had violated the housing density statutes identified above by reducing the size of the Project and denying the incentives sought under the Density Bonus Act. The question for the court, then, was whether the Coastal Act takes precedence over the “density bonus” allowances sought by the developer.

The court’s answer? The Coastal Act does supersede a local government’s obligations under these housing density laws. The court reached this conclusion by assuming that it must apply the law in a manner that is “most protective of coastal resources,” essentially putting the housing density statutes in the backseat. In sum, in a clash between the Coastal Act and the state’s housing density statutes, the Coastal Act will win.

Although the court here looked to specific language in the Coastal Act and the housing density laws to reach this conclusion, this decision suggests that other statutes similarly protective of sensitive lands may be viewed as superseding other state law mandates that local government incentivize affordable housing projects in order to meet the state’s housing crunch. Bottom line: if you face that balancing act as a developer, beware.