California lawmakers further streamlined the environmental review of infill residential, mixed-use and “employment center” projects under a new bill passed at the end of the legislative session in September.
By way of background, all development projects must comply with the California Environmental Quality Act (“CEQA”) prior to project approval. Under CEQA, state and local agencies must identify the significant environmental impacts of a proposed development project and avoid or mitigate those impacts, if feasible.
Senate Bill 743 was initially intended as a CEQA streamlining bill for a new sports and entertainment arena for the Sacramento Kings, an NBA team at risk of being lured away by another U.S. city. Legislative leaders and the business community have been asking for broader CEQA reform, because the environmental review process is time-consuming and fraught with litigation risk for developers and local governments. After last minute talks among the Governor and legislative leaders, the bill was amended to begin to ease requirements for certain classes of urban infill projects statewide.
The most significant changes:
• Inadequate parking and aesthetic impacts cannot be used to challenge a project under CEQA if the project is “on an infill site within a transit priority area.” An “infill site” is a previously-developed lot in an urban area or a vacant lot largely surrounded by urban uses. A “transit priority area” includes any area within a half mile of an existing or planned “major” transit stop. As stated, this exemption applies only to challenges brought under CEQA. A project must still comply with other existing (or future) laws that apply to aesthetic or parking impacts. There is also a backdoor for a CEQA challenge based upon “impacts on historic or cultural resources” that result in a significant impact.
• New guidelines will be developed to determine the significance of transportation impacts of projects in transit priority areas. These new guidelines must promote the reduction of greenhouse gas emissions, the development of multimodal transportation networks, and a diversity of land uses. To that end, OPR must recommend potential metrics that move away from the level of service standards most frequently used in traffic studies and instead focus on vehicle miles traveled, vehicle miles traveled per capita, automobile trip generation rates or automobile trips generated, among other metrics.
• Automobile delay, “as described solely by level of service or similar measures of vehicular capacity or traffic congestion,” shall not be considered a significant impact on the environment under CEQA. This is a huge benefit for project proponents, since many projects wrestle with traffic delay issues at intersections near or adjacent to their proposed projects. Some land use practitioners may point out that the state’s Office of Planning and Research (“OPR”) may promulgate regulations that limit the scope of this carve out in “locations specifically identified in the guidelines, if any.” However, State Sen. Darryl Steinberg has indicated his desire to see OPR move away from level of service standards and the Governor is likely on the same page, which should influence OPR’s rulemaking. In addition, any rulemaking must comply with California’s Administrative Procedures Act. OPR’s rules will need evidentiary support if it makes distinctions between “locations” and the metrics applicable to different locations. We will have to wait and see how OPR handles these issues when the regulations come out, but if specific locations are identified, expect APA related litigation. In the meantime, developers and land use practitioners should note that air quality, noise, safety, “or any other impact associated with transportation” may still rise to a level of significance and be the subject of a CEQA challenge.
• The adequacy of parking for a project shall not support a finding of significance. Presumably, this exemption applies to “transit priority areas,” but does it also apply to “employment center projects” and “infill site[s]” that are also a subject of the “section”? Does it apply more broadly to other projects? This provision of the bill is going to need clarification or it will be litigated.
• Residential, employment center, or mixed use development projects in a specific plan area in which a prior environmental impact report (“EIR”) was prepared are eligible for a new CEQA exemption. The exemption applies if (i) the project is in a “transit priority area,” (ii) the proposed project is consistent with a sustainable communities strategy or an alternative planning strategy for which the State Air Resources Board has accepted a metropolitan planning organization’s determination that greenhouse gas emissions targets will be achieved, and (iii) subsequent or supplemental environmental review is not required because of significant new information or substantial changes must be made to the prior EIR’s environmental impact analysis. This provision further eases the requirements that apply to projects that fit within California’s land use/transportation planning legislation focused on reducing greenhouse gas emissions in the state.
• Review of “environmental leadership projects” returns to the superior court, as well as appellate court, but both rounds of review must be completed within 270 days. The bill fixes a prior legislative attempt at CEQA litigation streamlining that sought to skip trial court level proceedings for certain consequential development projects certified by the Governor. That law was held unconstitutional earlier this year.
• Certain streamlining provisions to CEQA were added for the benefit of a planned entertainment and sports center project in the City of Sacramento. The Legislature continues its practice of granting special exceptions to CEQA for high profile, litigation likely projects.
These changes to CEQA will greatly assist the urban infill projects that qualify. In particular, the elimination of parking and aesthetic impacts as grounds for a CEQA challenge in urban infill areas is particularly welcome. New traffic metrics will bring significant changes to how traffic engineers, land planners and counsel analyze projects and present them in CEQA documents. For developers of projects in infill locations, thoughtful strategic analysis of this new law and its carve outs with counsel is essential.