As summer begins and the presidential race heats up, “It’s the economy, stupid,” has never meant so much: Around the country, voters’ top priority is improving the economy. Here in California, there’s at least one barrier to economic growth that could be removed: the California Environmental Quality Act (CEQA) in its current litigation-crazy form.
I recently attended a panel discussion about this issue. The talk, “CEQA Reform—Ripe for Fundamental Change?”, was organized by Urban Land Institute (ULI). It featured as panelists, state Sen. Michael Rubio and Jennifer Hernandez, a partner with Holland & Knight. David Waite, a partner with Jeffer Mangels Butler & Mitchell LLP, moderated.
The problem with CEQA as it currently exists is that it allows people lacking substantive complaints to delay construction projects (or stop them completely). This creates uncertainty around real estate development in California and discourages banks from financing projects. Just half the environmental impact reports filed with the state in the last fifteen years prevailed in CEQA challenges, the panelists said—a coin-toss probability that obviously doesn’t look very good to banks.
A person may challenge a project under CEQA even if the developer complies with or exceeds state law, Sen. Rubio explained: No other law in the country grants people that much power to challenge real estate development. What’s more, many of the projects CEQA challenges are holding up would bring to communities projects that most of the community’s residents want: bicycle amenities, transportation facilities, etc.
So, is CEQA “ripe for change”? The panelists thought so. First, Ms. Hernandez explained that CEQA has become a much broader law than it was intended to be: When it went into effect in the early 70s, the law was meant to apply only to public projects, but a 1972 court ruling expanded its purview to include private development. At the same time it’s been broadened, CEQA has become less necessary, Sen. Rubio argued, because there are now other policing bodies (e.g., those that regulate water quality) that didn’t exist when the law was passed. Finally, the panelists pointed out that Gov. Brown might be especially amenable to CEQA reform, because as the mayor of Oakland, he experienced firsthand the frustration of frivolous CEQA lawsuits.
Here’s hoping they’re right. CEQA is basically reasonable, but forty years after its passage, the law is badly in need of updates to make real estate development in California sensible and boost the state’s economy.
-By Berbay Principal Sharon Berman