Happy Thanksgiving.

Short post for a short week.

tHANK YOU, watchdogs

We depend on a network of volunteer watchdogs to make cities plan their fair share of housing. The housing shortage is unimaginably deep, and it’s going to take a mass movement to fix it.

You are that mass movement.

I listed dozens of names in an earlier draft, but it felt rushed and corny. I also don’t know that everyone wants their name published, not least—and this is both necessary and underappreciated—because a handful of you serve in planning departments, planning commissions, and city councils. (Congratulations, by the way!) Thank you, sincerely, to everyone who has flagged a housing issue for us this year, and please keep those reports coming.

Builder’s Remedy Projections for Santa Barbara County

November 17 was the last day for jurisdictions in Santa Barbara County to submit a draft housing element in time to avoid the builder’s remedy.

Affordable-housing developers, get ready: Carpinteria, Guadalupe, Lompoc, Santa Maria, Solvang, and unincorporated Santa Barbara County—home to expat and media royalty—will be subject to the builder’s remedy starting February 16.

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Happy Thanksgiving, and safe travels to all who are traveling. We’ll post again next week.

Does It Matter that CEQA Refers to “Applicable” Planning and Zoning?

Last week, we toasted the impending suspension of 33 Bay Area zoning codes under the Housing Accountability Act’s “builder’s remedy,” and began exploring the California Environmental Quality Act. This week, we’ll tie the two together.

How Does the Builder’s Remedy Affect CEQA?

Mostly, it doesn’t. “Nothing” in the HAA “relieve[s]” a city from “complying with the California Environmental Quality Act.” (Cal. Gov. Code § 65589.5(e).)

This, along with CEQA’s notorious complexity, is why we advise consulting an experienced CEQA lawyer on any builder’s remedy project.

That said—

CEQA Exempts Some Kinds of Housing

The easiest way to approve a CEQA “project”is when the project is exempt. We recommend the State’s video on CEQA exemptions. At this point, most CEQA lawyers would switch into legalese and define the terms “discretionary,” “ministerial,” “statutory,” and “categorical”; they’re all legally meaningful, but we won’t dwell on them here.

CEQA and other laws exempt some kinds of housing projects from CEQA. Here are the big ones:

• “Ministerial” approvals. For our purposes, this mainly means 10% (or 50%) affordable projects in cities that are behind pace in producing housing. (See Gov. Code § 65913.4.) This works through a different process, separate from the builder’s remedy.

• Small projects, or “Class 3.” This is how single-family homeowners get around CEQA, but it can cover a sixplex too. (CEQA Guidelines § 15303.)

• Infill development, or “Class 32.” (CEQA Guidelines § 15332.) “Infill” isn’t defined in the regulation, which covers “project site[s] of no more than five acres substantially surrounded by urban uses.”

• Farmworker, low-income, urban infill near transit, and urbanized infill in unincorporated counties—if there’s “[c]ommunity-level environmental review” on file. (See CEQA §§ 21159.20–.28.)

• “Transit priority projects” as part of a “sustainable communities strategy.” (See CEQA §§ 21155–21155.4.)

Here’s more State guidance. All of these exemptions are vastly more complicated than presented here, so don’t file a bar complaint against me for failing to tell you so.

CEQA Exemptions and the Builder’s Remedy

In a builder’s-remedy context, one key issue with all these exemptions—except for class 3—is the requirement for “consisten[cy] with the applicable general plan designation … as well as with [the] applicable zoning designation.” (E.g., CEQA Guidelines § 15332(a); accord CEQA § 21159.21(a); see also CEQA § 21155(a).) This is important because a builder’s remedy project, almost by definition, isn’t going to be consistent with the general plan and/or zoning designations. (See Cal. Gov. Code § 65589.5(d)(5).) Most CEQA lawyers and veteran housers I’ve talked to believe that a CEQA exemption’s requirement for general plan and zoning consistency would make the exemption inapplicable to a builder’s remedy project. So, that’s a problem.

As I see it, however, these consistency requirements raise an interesting question about the builder’s remedy:

CEQA Lawyers, What Am I Missing?

The builder’s remedy expressly states that a local government “shall not disapprove a housing development project” on the basis of “inconsisten[cy] with … the jurisdiction’s zoning ordinance and general plan land use designation.” (Ibid.) To me, this suggests an argument that the builder’s remedy renders the general plan and zoning inapplicable to the project. Therefore, if a CEQA exemption only requires consistency with any “applicable” general plan or zoning designation, then the exemption ought to be available under the builder’s remedy when the builder’s remedy preempts the general plan and zoning.

There isn’t much law on what counts as “applicable,” but I’ve found one case. In Harroman Co. v. Town of Tiburon (1991) 235 Cal.App.3d 388, a developer sued for approval of a 70-home project that was consistent with the general plan in effect at the time of the application, but inconsistent with a draft revision of the general plan under consideration at the same time. (Id. pp.390–92.) The HAA provision on which the developer relied, today codified in Government Code § 65589.5(j)(1), supported approval for projects compliant with “applicable” planning and zoning standards. 

The relevant issue in Harroman was which version of the general plan—the one in force, or the draft under consideration—was “applicable.” (Id. p.394.) The Harroman court ruled that the draft general plan was the “applicable” one, based on another planning statute that made it so. (See id. pp.394–97.) In other words, housing lost in that case—but the case yields a legal principle that the operation of other statutes should bear on whether a general plan or zoning designation is “applicable.”

Back to CEQA, perhaps Harroman could support an argument that the builder’s remedy makes the general plan and zoning inapplicable, such that a CEQA exemption, otherwise requiring general-plan and zoning consistency, would be available for a builder’s remedy project that met the exemption’s other requirements. Again, I’m new to CEQA, and I’ve yet to research the issue exhaustively. It’s true that the builder’s remedy doesn’t preempt CEQA, but that doesn’t necessarily mean it doesn’t preempt general plan and zoning designations when they’re relevant under CEQA. I’m curious to hear what CEQA veterans think. After all, isn’t it obvious that all these CEQA exemptions are supposed to support various kinds of affordable, infill, and/or transit-oriented housing?

If I’m wrong—and I admit that I could be—please email keith@yimbylaw.org and tell me how. If I don’t hear from anyone, then YIMBY Law’s work on the builder’s remedy might be a little easier than we currently think.

CEQA: What's Up With That?

Happy Friday. We’re doing a doubleheader this week because I wrote too much for Tuesday’s post about where the builder’s remedy will apply in the Bay Area. Today, an introduction to CEQA and the key takeaway for builder’s remedy projects.

In the Name of the Environment

Here at YIMBY Law, we like the environment. We’re affiliated with Urban Environmentalists, a part of the YIMBY Action network that supports infill housing specifically because of its environmental benefits. (In six words: walking doesn’t pollute, and driving does.) 

Coastal California is rightly famous for its climate: it’s one of the few places on Earth where humans (almost) never need to heat or cool their homes to live comfortably. Heating and cooling both pollute too. So it’s a shame that so many places in California make it illegal to build homes for people who would love to live in this magical climate if only it didn’t cost a million dollars.

The California Environmental Quality Act was enacted in 1970 out of a desire to preserve the State’s environmental resources. It’s a nice idea. It’s also a ghastly complicated law.

At an extremely basic level, CEQA mandates environmental review for any “project,” defined for our purposes as the issuance of a permit for any “activity which may cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.” (Cal. Pub. Res. Code § 21065(c).) There’s a tangle of law about what is and isn’t a “project,” what is and isn’t exempt from CEQA, and what kind of and how much environmental review is and isn’t required for different projects. 

When CEQA requires environmental review, and sometimes even when it doesn’t, it can generate litigation. Litigation can delay a project for years, or block it forever. To be sure, that’s a good thing when the project would be a toxic asbestos dump in a residential neighborhood. But we think it’s a bad thing when the project is missing-middle homes in a residential neighborhood.

CEQA has become a frequent tool of abuse for special interest groups, such as anti-housing activists, with a nonenvironmental axe to grind. In 2015, the law firm Holland & Knight published a report finding that 4 out of 5 CEQA lawsuits against construction projects challenged infill development—the environmentally friendly kind—as opposed to the kind of “greenfield” developments that exacerbate urban sprawl.

I have my own CEQA anecdote. The first case I ever litigated was against the San Diego Transportation Association, which invoked CEQA to try stopping San Diego from issuing new taxi permits. At the time, taxi drivers had to pay the Association’s taxi lords to lease the permits the Association had hoovered up under the city’s old medallion scheme. I represented a pair of immigrant taxi drivers who wanted their own permits so they could feed their families with the money they were then paying to the taxi oligopoly. (The Association called me and my co-counsel “cheap ambulance chasers” in a court filing for daring to represent the taxi drivers. The Association lost that motion.)

A CEQA litigation target for V-8 taxi owners.

The Association argued that the city needed to do more environmental study, even though new permits could only be issued to drivers with low-emission hybrid cars, while the Association’s existing permits were grandfathered to allow gas-guzzling Crown Victorias. The Association’s environmental theory was bunk, and they ultimately lost, but the case took the better part of a year to resolve. 

Lawyers all over California have similar stories to tell. CEQA is a well-known problem in the housing-law community, but it’s politically sensitive and therefore hard to fix. Reforms have been proposed, but with limited success.

Talk to a CEQA Lawyer

I’m not a CEQA lawyer, and I’m learning how this complex statute regulates housing along with the rest of you. For now, any CEQA advice I can give is about as good as a podiatrist’s advice on a heart murmur. So, builder’s remedy applicants should consult a CEQA lawyer for the best chance of seeing their projects succeed.

More on CEQA next week. Have a great weekend.

These 33 Zoning Codes Are Getting Suspended

Happy Election Day. We can finally project a zoning holiday in 33 Bay Area jurisdictions that haven’t submitted a draft housing element to the State.

The Zoning Holiday Is Coming to These Bay Area Jurisdictions

February will kick off a zoning holiday in Bay Area cities that fail to adopt a compliant housing element. With less than 90 days to go, it’s too late for 33 cities and counties that haven’t filed a draft with the State. That’s because the builder’s remedy applies to cities that haven’t “adopted” a housing element, and the statutes further prohibit the “adoption” of a housing element before the State has had 90 days to review it. (Cal. Gov. Code §§ 65589.5(d)(5), 65585(b)(1).)

A preview of the builder’s remedy in the Bay Area

Homebuilders, take note: American Canyon, Belvedere, Burlingame, Cloverdale, Cotati, Cupertino, Daly City, Fairfax, Half Moon Bay, Healdsburg, Larkspur, Martinez, Napa, Newark, Novato, Pacifica, Palo Alto, Piedmont, Pinole, Pittsburg, Pleasant Hill, Richmond, Rio Vista, Ross, San Anselmo, San Rafael, Vallejo, and unincorporated Alameda, Contra Costa, San Mateo, Santa Clara, Solano, and Sonoma Counties did not submit a draft housing element to the State by November 2. Unless the State dramatically expedites its review process when they do submit, these jurisdictions will not be able to enforce their zoning codes against affordable housing projects on February 1. 

More places are likely to join these 33 in builder’s-remedy jeopardy as the State rejects some drafts that are currently under review. We encourage interested builders to watch the State’s compliance tracker as February 1 approaches.

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We’ll leave this exciting news here for today. Look for another post on Friday to begin our CEQA coverage.

Who’s Afraid of Some Extra Height?

Boo! Happy Halloween to every city that’s terrified of tall apartment buildings. This week: on Steinbeck, Santa Monica, and how to “vest” a builder’s-remedy project.

The Streets of Wrath

I’m nomadic: it’s cheaper than renting. (More on that in a future post.) I spent the weekend relocating from San Francisco to Los Angeles, where I’ll stay for the month of November. On the drive down the 101 past Monterey Bay, there are highway signs memorializing the late author and Salinas native John Steinbeck.

Steinbeck’s most famous work, The Grapes of Wrath, is a novel about the Great Depression. During the Depression, when unemployment peaked at 25%, out-of-control deflation drove desperate farmers to destroy their crops while millions of Americans went hungry. There’s a passage about this moral fiasco in The Grapes of Wrath:

The works of the roots of the vines, of the trees, must be destroyed to keep up the price, and this is the saddest, bitterest thing of all. Carloads of oranges dumped on the ground.… [M]en with hoses squirt kerosene on the oranges…. A million people hungry, needing the fruit—and kerosene sprayed over the golden mountains. And the smell of rot fills the country.… Dump potatoes in the rivers and place guards along the banks to keep the hungry people from fishing them out.…

There is a crime here beyond denunciation…. There is a failure here that topples all our success.… [C]hildren dying of pellagra must die because a profit cannot be taken from an orange.… The people come with nets to fish for potatoes in the river, and the guards hold them back; they come in rattling cars to get the dumped oranges, but the kerosene is sprayed. And they stand still and watch the potatoes float by … watch the mountains of oranges slop down to a putrefying ooze; and in the eyes of the people there is the failure; and in the eyes of the hungry there is a growing wrath. In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage.

I think about this everywhere I see people living in tents and cars on the streets between vacant office buildings. Not even work pays the rent anymore. I wonder what Steinbeck would have written about today’s housing crisis. The economics are a little different—we’ve got high prices mitigated by plentiful jobs, for now—but wasted shelter is just as tragic as wasted food.

With that, let’s turn our attention to Santa Monica, a city that wants people to work but not live there.

Santa Monica vs. the Builder’s Remedy

Last week, YIMBY Law hosted a talk with Los Angeles attorney Dave Rand, who’s working on several builder’s-remedy projects in Southern California. The one that’s getting the most attention is a 15-story high-rise in Santa Monica with 2,000 units, hundreds of which will be affordable to people who don’t make six figures. This should be a huge relief for a job-rich community where the median home fetches $2 million, easily more than 20 times what most jobs pay.

Sadly but predictably, the city has vowed to block this and 14 other apartment projects that could house Santa Monica’s priced-out service workers. Teachers and firefighters don’t expect mansions, and for Santa Monica’s gentry, that seems to be exactly the problem. Serve us coffee, they imply, but don’t come here looking for a place to sleep. Just where do these aristocrats expect their baristas to live?

As Dave tells it, the builder’s remedy is testing whether cities are too afraid of “a little more height” to make themselves as affordable as they say they want to be. Santa Monica is failing the test so far, and we can’t wait for the city to explain itself in court.

How to “Vest” a Builder’s-Remedy Project

We’re going to cover the builder’s remedy in this space as long as people have questions. This week, let’s look at the first step in the process, what’s known as a “preliminary application” under the Housing Accountability Act (“HAA”).

Under the HAA, a preliminary application freezes existing development standards for any housing development project that lists seventeen relatively simple criteria. (Cal. Gov. Code §§ 65589.5(o)(1), 65941.1(a).) That—locking in the right to build—is what HCD called “vest[ing]” in its October 5 letter to Dave. That’s the kind of legal assurance builders need to develop the homes the rest of us need. It’s a scandal that cities would litigate this.

As we explained last week, the builder’s remedy creates a zoning holiday in cities without a compliant housing element. (See id. § 65589.5(d)(5).) So, when a property owner files a preliminary application with the builder’s remedy in effect, they “vest” the right to take advantage of the zoning holiday. It doesn’t matter if the city achieves compliance later, as HCD certified Santa Monica did on October 14. Those thousands of new homes are now vested, whether Santa Monica likes it or not. 

The preliminary application is available as a standard form on the California Department of Housing and Community Development’s website. It requires little more than a site plan, and costs $10,000–$15,000 to file with professional help (which we advise). Applicants then have six months to complete a full application. We won’t call it cheap, but it’s less expensive than the legal delays and uncertainties that inflate the cost of most new buildings.

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Next week, we’ll address what we anticipate is the main legal obstacle for most builder’s-remedy projects: the California Environmental Quality Act (“CEQA”). Until then, here’s The Boss with something to rage against.

Why the California "Builder's Remedy" Means What It Says

We’re a week closer to the housequake. This week: why we work with untested law, a plain reading of the builder’s remedy, and a special invitation.

“No One … Underst[ands] the Full Scope” of Housing Reform

Over the weekend, Ezra Klein wrote in depth about Los Angeles’s failure (so far) to build “affordable” housing at less than $600,000 per unit. It’s a great article. In 2016, Los Angeles voters approved $1.2 billion to construct 10,000 new homes. Six years later, just a third of those homes have been built, at a cost north of $2 billion (the city doesn’t fund all of it), and the slow progress is being debated in the Los Angeles mayor’s race. Klein’s article raises excellent questions about why affordable housing is so hard.

The most important part of the affordable-housing equation is time. No one can build a home overnight. Even if there were infinite land and no laws to delay housing production, it would still take time to line up the people and materials builders need to make a new home. Then, if there’s no supply crunch, homes become cheaper with age, as mortgages get paid off and original owners vacate for newer buildings. Jane Jacobs wrote a chapter on this phenomenon in her magnum opus The Death and Life of Great American Cities (see ch. 10). And that’s to say nothing of the fitful way funds are Frankensteined together, which Klein covers in his article.

Unfortunately, we are in a supply crunch: see how home construction crashed after the Great Recession, for one thing. That would be bad enough, but the roots of the supply crunch are deeper than that. California cities’ housing elements report a home-production boom shortly after the baby boom, and close to nothing since the advent of downzoning in the 1970s.

A middle finger to modern generations, from Los Gatos’s draft housing element (p.B-23)

Today’s supply crunch is the product of a half-century of nimby policy. That’s the main problem: we can’t make up for fifty lost years in the next five. Still, housing is a basic human need, and we have to make up for as much lost time as we can. That’s the point of all the prohousing reforms that the YIMBY movement has recently gotten passed.

Klein nods at these reforms toward the end of his article, and this quote jumps out: “no one … underst[ands] the full scope” of California’s new housing laws. They’re all a work in progress, and much remains to be litigated. But it’s clear the new laws are YIMBY in spirit. That will matter when courts interpret their letter.

The Builder’s Remedy Means What It Says

One of the reforms we’re promoting at YIMBY Law is the builder’s remedy. You’ve likely read about it, and we’re getting lots of questions about how it works.

Let’s start this week with the first rule of statutory construction: read the statute. The builder’s remedy was enacted in 1990 as an intentional addition to the Housing Accountability Act (“HAA”). The remedy is available to certain affordable* developments, unless a city proves one of five defenses:

A local agency shall not disapprove a[n affordable] housing development project … including through the use of design review standards, unless … :

(1) The jurisdiction has adopted a [compliant] housing element … and the jurisdiction has met or exceeded its [RHNA]** for the planning period ….

(2) The housing development project … would have a specific, adverse impact …‌. Inconsistency with the zoning ordinance or general plan land use designation[ is not a “specific, adverse impact”].

(3) … [S]tate or federal law [requires disapproval] ….

(4) The … land [is] zoned for agriculture or resource preservation*** … or [needs] water or wastewater facilities ….

(5) The … zoning ordinance and general plan [required disapproval] on the date the application was deemed complete, and the jurisdiction has adopted a [compliant] housing element ….****

(Gov. Code § 65589.5(d) [italics added].) Again, the default rule is that the builder’s remedy applies, unless the city establishes one of these five defenses.

• * "Affordable"

  “Affordable,” for builder’s-remedy purposes, refers to the way California law classifies households as “lower” (well below median) or “moderate” (near median) income. The builder’s remedy applies to projects where either 20 percent of the homes are affordable to lower-income households, or else all of the homes are affordable to moderate-income households.xt goes here

• ** RHNA

  “RHNA” is short for “regional housing need allocation,” determined with reference to “income category.” (Cal. Gov. Code § 65589.5(d)(1).) Mixed-income projects can overcome this builder’s-remedy defense if the city is behind its RHNA in any of the project’s income categories. (Ibid. [enabling HCD to “calculate[]” RHNA progress]; see also id. § 65400(a)(2)(B) [requiring cities to report progress annually].)

• *** "Zoned for Agriculture"

  This defense also requires that the land is “surrounded on at least two sides by land being used for agriculture or resource preservation.” (Id. § 65589.5(d)(4).)

• **** Exceptions to Housing-Element Defense

  Cities may not invoke this defense on sites in their housing-element site inventory. Cities with bad site inventories may not invoke this defense on any residential site. (Id., subd. (d)(5)(A)–(C).)

The main builder’s-remedy defense is when local zoning prohibits the project and the city has a compliant housing element. (Id., subd. (d)(5).) Zoning often prohibits projects. Housing-element law wasn’t well-enforced in the past, but that’s changing. Over 90% of cities in Southern California missed last year’s housing-element deadline, many missed it again after the Legislature extended that deadline, and we’re projecting more than half of Bay Area cities will miss their upcoming deadline on January 31. That will take away the main defense to the builder’s remedy, meaning lots of cities without zoning.

The builder’s remedy means what it says. HCD confirmed this in an October 5 letter supporting a 2,000-home builder’s-remedy project in Santa Monica. We anticipate cities will argue that another HAA provision creates a loophole for “objective … development standards,” but the second rule of statutory construction is: keep reading the statute. The “fundamental task … is to determine the Legislature’s intent so as to effectuate the law’s purpose.” (San Jose Unif. Sch. Dist. v. Santa Clara Cnty. Office of Educ. (2017) 7 Cal.App.5th 967, 975 [quoting People v. Cornett (2012) 53 Cal.4th 1261, 1265].) And the HAA goes on to say that its “development standards” clause “shall not be construed in a manner that would lessen the restrictions imposed on a local agency, or lessen the protections afforded to a housing development project” by the builder’s remedy. (See Cal. Gov. Code § 65589.5, subds. (f)(1), (o)(5).) In other words, the “development standards” clause isn’t a defense to the builder’s remedy: it’s only for cities that have a builder’s-remedy defense in the first place.

A Special Invitation

Join YIMBY Law on Thursday at 1pm Pacific for a conversation with Dave Rand, the lawyer for the Santa Monica builder’s-remedy project. Email me for the registration link, and look forward to seeing you then.