YIMBY Law is Fighting the NIMBY-Industrial Complex
/The "NIMBY-industrial complex" thrives on financial incentives, allowing attorneys specializing in working with NIMBY groups to literally make a living by blocking housing developments through environmental lawsuits. YIMBY Law is supporting the City of Pacifica and a housing project in the city’s appeal of over $1m in attorneys fees that were improperly awarded to a NIMBY group,
When the City of Pacifica approved a modest, eight-unit apartment complex on a hillside in 2020, they were following the Housing Accountability Act (HAA) and acting in the public’s best interest. Nevertheless, an anti-housing group rallied to try to kill the project by filing an environmental lawsuit. They succeeded in getting a court to block the approval of the project. Even worse, they were awarded over $1.2 million in attorneys' fees in a ruling that, if replicated, could undermine the state of California in its efforts to achieve its housing production goals by making it financially lucrative to halt development.
The financial incentives embedded within CEQA lawsuits are so potent that NIMBYs and their attorneys can literally make a living by using this environmental law to stop housing development, largely due to how California's "private attorney general" concept has been interpreted by the courts to benefit CEQA plaintiffs.
The California Environmental Quality Act, (CEQA, pronounced, see-kwa) was originally signed into law by Gov. Ronald Reagan in 1970 as a tool to empower the general public to challenge government decisions that could impact the environment. But over the years, CEQA's scope has expanded to include government decisions to approve private developments, leading to the formation of an entire industry of lawyers, planners, and environmental consultants centered around filing and defending CEQA claims against development. California’s “private attorney general” rules, specifically Section 1021.5 of the Code of Civil Procedure, which award attorneys' fees to private parties (like plaintiffs filing CEQA lawsuits) when their litigation confers a significant public benefit, offer a strong financial incentive to bring CEQA lawsuits.
This creates an asymmetrical financial risk in CEQA lawsuits, which are typically filed by private parties against public agencies. The rules are written to encourage private party litigation: only private parties, and not public agencies, can typically recover their attorneys' fees if they prevail. This creates a great upside and little downside for anti-housing groups challenging developments with lawsuits: if they win, they can stop projects, and their attorneys get paid by the local agency. If they lose, they generally only have to pay their own lawyers, not the local agency’s. This risk shifting also fosters what are known as “bounty hunter” lawsuits by contingency fee lawyers who agree to be paid only when they win. Even if the likelihood of winning the lawsuit is low, merely filing the lawsuit can introduce so much risk and expense for a developer, who are typically prevented from being issued loans by banks or grants by foundations and public agencies while entangled in legal action. This pressure allows NIMBYs to leverage their lawsuit into a settlement, where they may be paid or receive some other form of compensation for dropping the legal challenge.
Apartments built within city limits, like the Pacifica project, are well-established as being good for the environment, helping to reduce climate pollution. But California’s environmental laws have been weaponized by NIMBYs to stop housing, no matter how good for the environment housing actually is. Lawmakers have begun to realize just how big of a problem California’s environmental laws are for housing projects, and have taken steps to try to rebalance them to support more homes getting built.
Recent law changes in AB 1633 sought to reduce or remove this financial incentive to file CEQA lawsuits by making it clear that housing opponents generally cannot get attorneys fees when they are suing to stop housing that is protected by the HAA.
Crucially, these pro-housing reforms, including the fee-shifting provisions of AB 1633, may not be effective if courts fail to actually apply the recent changes to the law that are supposed to limit the awarding of attorneys' fees to plaintiffs who successfully use environmental laws to block housing.
However, in the Pacifica case, the superior court judge failed to properly apply the new law contained in AB 1633 and improperly awarded attorneys fees to the NIMBY plaintiffs. The developer has appealed the superior court’s decision to the court of appeals. YIMBY Law is writing an amicus brief in support of the City of Pacifica and the developer of the housing project, disputing the awarding of these attorneys' fees in the case, as this represents a critical test for the effectiveness of AB 1633.
We believe that the trial court did not correctly interpret the law, and did not properly consider that the city acted reasonably by following one of California’s most important pro-housing laws, the Housing Accountability Act, when they approved the project.
If we are successful, the precedent set in overturning the lower court’s attorney’s fee award could be a major victory for housing, and a significant blow to the anti-housing NIMBY-industrial complex, by restructuring the financial incentive for blocking housing via CEQA lawsuits. This case is crucial as it tests whether AB 1633's pro-housing reforms will actually be effective.
What happened in Pacifica?
Apartments have been proposed for this particular hillside in Pacifica for over 30 years, with a previous nine-unit apartment proposal rejected by the city in 1991. Since then, the city has declared its expectation for the site to be developed for housing, formally including it in their state-mandated housing planning goals document, the “housing element” of the city’s general plan. The application for the current proposal was submitted in 2018 and was soon after met with NIMBY resistance. The NIMBYs' strategy to kill the project was to leverage the CEQA process by hiring environmental consultants and lawyers to challenge the environmental clearances, aiming to delay approvals by years and significantly increase project costs. This tactic, designed to make developers throw up their hands and walk away, began during the public comment for the environmental review process in 2020, with opponents submitting letters of concern and reports from their hired consultants challenging everything from aesthetics to hillside stability. The city responded to these concerns by issuing 59 conditions of approval and 21 specific environmental mitigation measures. However, this did not satisfy the opponents, who sued the city after project approval, complaining that more environmental review was necessary.
The NIMBYs hired a geologist to write a report ostensibly showing that the eight-unit apartment complex was dangerous to the environment. This geologist’s report was later found to be so flawed that he was reprimanded by the state’s professional licensing board, admitting to erroneous claims, paying a fine, and agreeing to be publicly reprimanded in a settlement.
Despite the dubious nature of the report, the court, believing it could be credible, sided with the NIMBYs and ruled that more environmental review would be necessary, finding that the consultants' reports met the “low threshold” to order even more review. As a direct result, the court found for the NIMBYs and awarded them and their attorneys over $1.2 million in attorneys' fees, illustrating the financial incentives at play in the "NIMBY-industrial complex".
The HAA forces the approval of this project and projects like it, regardless of the environmental impact. CEQA can require cities to mitigate the environmental impact of housing covered by the HAA, but does not allow cities to disapprove it. Even if some environmental impacts can’t be mitigated, the HAA requires cities to approve the projects anyways, because housing itself is good, and building more housing is also environmentally beneficial.
So what’s the problem?
When the City of Pacifica and the developers disputed the awarding of attorneys' fees, which included a multiplier for a case deemed to benefit the public interest (meaning the plaintiffs would financially benefit by winning, receiving more money than they had spent litigating the case, a core element of the "bounty hunter" incentive), they argued a critical point. They contended that, due to a recent change intended to strengthen the pro-housing Housing Accountability Act (HAA), the court was legally required to consider that the apartment complex the city approved was protected by the HAA. They argued that because the HAA protected the development from denial by the city, and approving the project furthered the state’s goals of increasing housing supply, the new law should have prevented the court from awarding attorneys' fees to the plaintiffs, directly demonstrating how AB 1633's effectiveness depends on judicial application.
The court, in awarding the attorneys' fees to the plaintiffs, made an alarming determination: that a small apartment complex is essentially a "drop in the bucket" in the face of California's approximately 2.5 million home shortage. This reasoning is crucial to understanding why AB 1633's fee-shifting provisions are ineffective if ignored. The court absurdly concluded that demanding more environmental review, even if it ultimately found no potential environmental harm, conferred a more substantial public benefit than the new homes themselves. The court decided that because the project was to build only a few homes, approving it did not sufficiently address the housing shortage, and therefore, it did not need to consider the public benefit of approving housing that outweighed potential environmental harms.
The court’s reasoning was clearly erroneous. Every home built, regardless of its size, contributes to addressing the statewide housing shortage, and the law protects projects built in cities that follow local rules, like the one in Pacifica, from being denied. The very purpose of the law is to protect each and every project because each and every project matters. If the court’s reasoning were to stand, it would render the new changes to the HAA, specifically designed to limit attorneys' fees for anti-housing litigation, irrelevant and essentially meaningless. This is because courts could always find, as they did in this case, that a city acted “unreasonably” by not conducting more environmental review when NIMBYs demanded it, as long as the NIMBYs successfully convinced the court that more review was necessary. This precisely demonstrates how judicial interpretation, or misinterpretation, can undermine the legislative intent of AB 1633 and allow the "NIMBY-industrial complex" to continue profiting from blocking housing.
Why were the changes to the state law so important?
California’s Environmental Qualify Act (CEQA) has been called “the law that swallowed California” for good reason.Despite being touted as a law to preserve the environment, CEQA has been widely weaponized to block housing and other critical infrastructure. Examples include likening the sounds of UC Berkeley students to pollution, killing housing projects next to West Oakland and San Lorenzo BART stations, bogging down California’s High Speed Rail project with years of delays and billions in cost overruns, and potentially even contributing to Major League Baseball’s Oakland A’s leaving town.
By and large, CEQA has become the primary tool used to block housing development across California. Study after study show that housing is the number one target of CEQA challenges; a recent study also showed that over 80% of the CEQA challenges to housing tried to block housing in cities or on University of California campuses. In 2020, that same study noted, “nearly 48,000 individual housing units were challenged, which, in turn, is nearly half of all of the housing produced statewide in 2020.”
The necessity of strengthening anti-NIMBY laws became evident when the San Francisco Board of Supervisors blocked a housing project in downtown San Francisco in 2021, using extra, unnecessary CEQA review as a pretext, despite the project being protected from denial by the Housing Accountability Act (Government Code Section 65589.5, aka the HAA). YIMBY Law sued San Francisco over the city’s effective denial of that project at 469 Stevenson street. The San Francisco superior court ruled that, under the law at the time, the city could block the approval of that proposed project indefinitely under the guise of environmental review. This egregious denial of an infill project in downtown San Francisco prompted the legislature to strengthen the HAA against CEQA to keep it too from being swallowed whole, by passing AB 1633 (Ting) in 2023.
AB 1633 was designed to be a pro-housing response to CEQA in a couple of key ways. First, it created a new process to allow a housing developer to challenge the kind of pretextual abuse of CEQA that causes delays to housing projects, as seen in San Francisco. Crucially, it also sought to limit the amount of attorneys' fees that could be awarded to litigants bringing an action against a housing project, directly targeting the financial incentives that fuel the "NIMBY-industrial complex". It achieved this by creating a new subdivision within the HAA, which states:
“Upon any motion for an award of attorney’s fees pursuant to Section 1021.5 of the Code of Civil Procedure, in a case challenging a local agency’s approval of a housing development project, a court, in weighing whether a significant benefit has been conferred on the general public or a large class of persons and whether the necessity of private enforcement makes the award appropriate, shall give due weight to the degree to which the local agency’s approval furthers policies of this section, including, but not limited to, subdivisions (a), (b), and (c), the suitability of the site for a housing development, and the reasonableness of the decision of the local agency.”
Section 1021.5 of the Code of Civil Procedure codifies what is known as the "private attorney general doctrine," which is the very mechanism through which NIMBYs can financially benefit from blocking housing. As noted in California Licensed Foresters Assn. v. State Bd. of Forestry (1994), this section is intended as a “bounty” for pursuing public interest litigation, not a reward for litigants motivated primarily by their own interests who coincidentally serve the public. The private attorney general theory recognizes that significant societal interests often lack individual financial incentives to encourage litigation, thus attorneys' fees are awarded when a significant public benefit is conferred by one whose personal stake is insufficient to otherwise encourage the action. However, in the context of CEQA housing challenges, this intent is often perverted, creating the "NIMBY-industrial complex."
But in the case of CEQA litigation brought by NIMBYs like ones blocking the project in Pacifica, the individuals bringing those cases frequently believe that by stopping new housing near them, they will benefit financially. NIMBYs believe they will benefit via preserving their property values, or even increasing their property values when their desirable neighborhoods continue to have demand for housing, including new housing that they’ve successfully blocked from being built. This inherent personal financial interest means they do not necessarily need the additional incentive of being awarded attorneys' fees for blocking housing, yet the "private attorney general" rules often provide it, further fueling the "NIMBY-industrial complex".
With the passing of AB 1633, if a local government acts reasonably to approve a housing project that is then challenged in court, and that project furthers the aims of the HAA by advancing the state’s interest in increasing housing supply, then the courts are now supposed to consider these factors when determining whether or how much to award attorneys' fees to the prevailing party who sued to block the housing. Put more directly, if approving housing would have benefited the state by increasing its housing stock, NIMBYs are no longer supposed to benefit above and beyond successfully blocking housing by also recovering their attorneys' fees. The effectiveness of AB 1633 in dismantling the financial incentives of the "NIMBY-industrial complex" hinges entirely on courts properly applying this new legal mandate.
This case in Pacifica is important because it is the first test of the new law concerning the awarding of attorneys fees that was added by AB 1633. If the appeal successfully overturns the lower court’s ruling of attorneys' fees, it will affirm that the legislature truly intended to take on the "NIMBY-industrial complex" by preventing NIMBYs from being compensated for attorneys' fees when cities are simply serving the public interest by approving housing that they are legally obligated to approve. Conversely, if the lower court's ruling stands, it will signal that the fee-shifting provisions of AB 1633 are ineffective due to judicial interpretation, perpetuating the financial incentives that block housing production across California.