SB 9 Part Three: Housing v. Environment

This is the third and final post on SB 9. See the first two here and here. This post discusses the interplay of SB 9 and CEQA and the California Coastal Act, and wraps up with my personal take on the bill.

In a nutshell, SB 9 projects would not be subject to CEQA, but they would still need to comply with the California Coastal Act.

California is navigating (at least) two crises at once: a climate crisis and a housing affordability crisis. The goals of environmental and coastal protection seem at odds with the goal of developing more housing. Time will tell whether the State can address one crisis without making the other worse.

SB 9 and CEQA

The California Environmental Quality Act (“CEQA”) generally requires preparation of an environmental impact report on a project that may have a significant effect on the environment. CEQA does not apply to the approval of ministerial projects.

By establishing the ministerial review processes for approving certain housing developments and urban lot splits, SB 9 exempts the approval of such projects from CEQA. This is a win for developers, whose projects are often delayed or foiled entirely by CEQA litigation (or threat of litigation).

According to the Senate Environmental Quality Committee, however, “CEQA operates, not by dictating pro-environmental outcomes, but rather by mandating that ‘decision makers and the public’ study the likely environmental effects of contemplated government actions and thus make fully informed decisions regarding those actions. … In other words, CEQA does not care what decision is made as long as it is an informed one.” (Citizens Coalition Los Angeles v. City of Los Angeles (2018) 26 Cal. App. 5th 561, 577.)  (See Senate Housing Analysis, 4-12-21)

The Senate Environmental Quality Committee is concerned about ministerial approvals and CEQA exemptions because they do not promote informed decision making by local governments. “CEQA’s environmental review process lends to comprehensive overview of a project and informs governmental officials of associated significant direct and indirect environmental impacts. Without this review, how will officials be fully informed of the potential consequences of their decision, including approving an ordinance or the cumulative impacts of seemingly small individual projects?” (Senate Housing Analysis, 4-12-21)

SB 9 and California Coastal Act

The Coastal Act of 1976 regulates development in the coastal zone to protect coastal resources and ensure coastal access. (Public Resources Code Section 30000, et seq.). Generally, any development activity in the Coastal Zone requires a Coastal Development Permit from the Coastal Commission or local government with a certified Local Coastal Program (“LCP”).

SB 9 provides that nothing in the bill can be construed to supersede or in any way alter or lessen the effect or application of the Coastal Act, except that local governments are not required to hold public hearings for coastal development permit applications for specified housing developments and urban lot splits. (Proposed Gov. Code sections 65852.21(j) and 66411.7(n).)  Similar language is contained in Government Code section 65852.2(l) pertaining to ADUs. Note that SB 9 does not prohibit a local government from holding a public hearing for coastal development permit applications.

Accordingly, local governments can continue to require compliance with their certified LCPs, even for SB 9 projects.

 An implementation memorandum and Coastal Commission appeal documents provide insight into the Coastal Commission’s approach to conflicts between the Coastal Act and new housing development laws. Coastal Commission analysis shows that ADU projects must be consistent with certified LCPs. For example, if a certified LCP requires replacement parking, replacement parking must be provided even though it conflicts with new ADU laws.

 According to the implementation memorandum, “existing ADU provisions contained in certified LCPs are not superseded by Government Code section 65852.2 and continue to apply to CDP applications for ADUs until an LCP amendment is adopted.” Presumably, the Coastal Commission will take the same position with respect to lot splits and SB 9 “duplex” development. If SB 9 passes, I expect to see another implementation memorandum from the Coastal Commission.

Coastal Commission Appeals

All actions on local coastal development permits seaward of the appealable area boundary may be appealed by any aggrieved person to the Coastal Commission.

Accordingly, the public can still get involved in ADU, duplex and urban lot split projects within an appealable jurisdiction by filing an appeal with the California Coastal Commission. Any locally-approved development project between the first public road and the sea; within 300 feet of a beach, mean high tide or bluff edge; within 100 feet of a wetland or stream; or on tidelands, submerged lands, or public trust lands; is appealable to the Commission. The approval or denial of a major public works project or energy facility, regardless of its location, is also appealable. In counties only, the approval of any project that is not the principal-permitted use under the certified LCP zoning code is appealable to the Commission.

Coastal Commission Suggests, but does not Mandate, LCP Updates

The Coastal Commission implementation memorandum provides: “[w]here LCP policies directly conflict with the new provisions or require refinement to be consistent with the new laws, those LCPs should be updated to be consistent with the new ADU provisions to the greatest extent feasible, while still complying with Coastal Act requirements.”

It does not say that the LCPs must be updated. The language regarding conflicts between the Coastal Act and new development laws in the Coastal Commission implementation memorandum and in SB 9 and state ADU laws is squishy. I assume this is by design to avoid stepping on the constitutional rights of Californians.

The California Constitution guarantees public access to California’s coast (Art. X, § 4). The Coastal Act requires “maximum access, which shall be conspicuously posted” to carry out the constitutional requirements (Pub. Res. Code § 30210). It also directs the Coastal Commission to “[m]aximize public access to and along the coast and maximize public recreational opportunities in the coastal zone consistent with sound resources conservation principles and constitutionally protected rights of private property owners” (Pub. Resources Code § 30001.5(c)).

State-Mandated Local Program

By increasing the duties of local agencies with respect to land use regulations, SB 9 would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

SB 9 provides that no reimbursement is required because local agencies can levy service charges, fees, and assessments sufficient to pay for the program or level of service mandated by this act. In reality, while cities can charge fees for staff time to process development applications, the attorney and consultant fees required to decipher the new (and constantly changing) state laws and regulations pertaining to housing, update ordinances and LCPs, and train staff on processing, are not all recoverable from charges, fees and assessments. I also suspect that this is not the end of the barrage of housing laws. We will continue to see changes for the foreseeable future, and local agencies will continue expending time and money reacting to the new legislation.

Closing Thoughts

As we enter fire season, which is projected to be the worst in recent history, it’s important to ask ourselves if we’re actually solving a problem or if this is performative politics. Are we creating affordable home ownership opportunities for Californians, or are we enabling developers and venture capitalists to profit from worsening the quality of life for those who already live here?

Anecdotally, a significant number of homes in the Coastal Commission appealable jurisdiction are not used as primary residences and are often vacant. Publicly available applications suggest that development projects in those areas use new housing development laws to construct larger properties, to avoid parking, setback, and lot size requirements, and to minimize public processes that slow down and increase the cost of development. I have yet to see construction of affordable housing in the appealable jurisdiction.

SB 9 does not provide homeownership or home retention opportunities. It is designed for investors to buy urban land and develop more multifamily rental properties without regard for the environment or infrastructure. Increasing rental stock may be helpful for some people – but the State should be honest about what is going on. If we are going to further stress our environment and infrastructure in the name of creating affordable housing, we should at least mandate affordability on those new units.  (See, e.g., Cambridge Massachusetts 100% affordable housing overlay.) If we fail to do that now, it will be nearly impossible to go back and mandate affordability after the new housing development projects begin construction and rights vest.

Further, CEQA needs to be reformed. CEQA is frequently used to slow down and stop development projects, sometimes for reasons that do not involve the environment. There must be some middle ground between no CEQA (as proposed in SB 9) and frivolous abuse of CEQA.