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How friction between two major California laws impedes housing construction

This story appeared on Calmatters

Residential single family homes under construction in the community of Valley Center on June 3, 2021. Photo by Mike Blake, Reuters

In summary

A new research paper pinpoints how the California Environmental Quality Act collides with another state law to make housing construction more difficult than it should be.

When California Gov. Gavin Newsom made an unusual appearance on Fox News, it was inevitable that conservative commentator Sean Hannity would bore in on California’s chronic housing shortage and homelessness crisis.

Why, Hannity asked, did California have such problems?

“Because housing costs are too high,” Newsom replied. “Our regulatory thickets are too problematic. Localism has been too impactful, meaning people locally are pushing back against new housing starts and construction.”

Newsom’s synopsis of the issue is quite accurate. The state’s housing shortage stems from the over-regulation of development, largely driven by local opposition. It drives up costs to tenants and would-be homebuyers and pushes some into the streets.

That cause-and-effect relationship was confirmed in a recent in-depth study of homelessness by a UC San Francisco research team.

Having pinpointed the underlying causes of the crisis, one might think that Newsom would energetically attempt to address them.

Last week, as part of a broader budget agreement, the governor persuaded the Legislature to modify the California Environmental Quality Act, which is commonly misused to thwart housing developments, but he didn’t do it for housing. Rather, he wants to streamline CEQA’s effect on public works projects, particularly those involving renewable energy and water supply.

Indirectly, therefore, Newsom told Californians that while he says it should be done, he’s not willing to take on the heavy lifting to lessen CEQA misuse on housing. His posture continues predecessor Jerry Brown’s position of declaring CEQA reform to be “the Lord’s work,” but being unwilling to do it.

By happenstance, the Capitol’s wrangling over CEQA – albeit while ignoring its effect on housing – coincided with the publication of a very lengthy, deeply researched and well-sourced article on how the 53-year-old law thwarts much-needed housing construction.

Christopher Elmendorf, a law professor at UC Davis who specializes in housing issues, and Timothy Duncheon, a San Francisco attorney, focus on “the slow-motion collision” between two overarching “super-statutes,” CEQA and the Housing Accountability Act, or HAA.

They demonstrate through case studies that, while the latter attempts to streamline housing construction, the former is used to slow or even kill housing projects by local interests and labor unions.

They focus on a notoriously torturous case in San Francisco, whose Board of Supervisors used CEQA to block a much-needed apartment project on a vacant downtown parking lot due to special interest pressure, simply by decreeing that they needed more information before giving the development CEQA clearance. But they also cite other cases in which the contradictory priorities of the two laws collide.

Their conflict, Elmendorf and Duncheon say, ties the courts up in knots as judges must, in effect, choose which law is dominant. Sometimes they opt for CEQA and sometimes the HAA, leaving the overall legal atmosphere unclear.

“The ostensible ‘super-ness’ of the two statutes creates a predicament for courts and other actors because CEQA and the HAA could not be more different in their basic institutional and normative principles,” the authors write.

“CEQA’s working premise is that ‘new construction’ is bad for the environment,” they point out. “By contrast, the HAA regards housing construction in urbanized areas as presumptively good for the environment.”

Carefully drafted legislation and/or CEQA implementation guidelines issued by Newsom’s administration could, Elmendorf and Duncheon say, reconcile the two. They could limit CEQA to cases in which there are genuine environmental issues, rather than allowing it to be misused for motives that having nothing to do with the environment, such as forcing developers to use unionized labor.

Their paper lays out the roadmap for the CEQA reform that’s needed to truly address California’s housing crisis. It should be required reading in the Capitol.

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