RSG Solutions

July 19, 2021

By Brandon Fender, Associate

New development and environmental policies are inherently at odds. Proponents of the landmark California Environmental Quality Act (“CEQA”) cite high development costs and arduous local planning processes as key issues preventing new housing projects in the State. Development supporters point to high profile CEQA challenges that have delayed or entirely derailed developments. Both can be true; the Atlantic recently profiled a 49-unit housing development in Los Angeles that was delayed by “a single angry neighbor” armed with a CEQA challenge, while the Terner Center detailed an inflation adjusted 25 percent increase to multifamily housing construction costs over the last decade. There’s no shortage of articles profiling delayed housing developments in the last year as a result of the volatility in lumber and raw material prices.

Senate Bill (“SB”) 7 builds on Assembly Bill (“AB”) 900 (2011), which gave the Governor the authority to certify “leadership projects” for expedited environmental review. Under AB 900, leadership projects must meet several criteria to qualify, including a $100 million minimum investment, an infill development site, LEED Silver certification, transportation efficiencies, and alignment with local land use policies. AB 900 was aimed to produce jobs in the wake of the Great Recession by targeting very large developments, such as the now-defunct Farmer’s Field in Los Angeles and the completed Sacramento King’s downtown basketball arena. SB 7 is one of the State’s many efforts that seeks to cure a more recent issue—California’s housing shortage.

When Governor Newsom signed SB 7 into law on May 20th, the State introduced a new way for developers to streamline environmental review on housing developments meeting specific standards. SB 7 not only extended the effectiveness of AB 900 through January 1, 2024, but it expanded the scope of qualifying projects eligible for expedited environmental review to housing development projects. Under the new law, housing development projects must meet several criteria as outlined in the Public Resources Code to qualify for certification:

  • Infill development site,
  • Alignment with local land use policies outlined in a sustainable community’s strategy,
  • Investment of $15 to $100 million,
  • Either (a) 15 percent of the units shall be affordable to lower income households, or (b) meet the affordability ratio specified in a local agency’s inclusionary zoning ordinance, and
  • Unbundled parking (parking spaces are priced and rented/purchased separately from dwelling units)

Certified housing development projects are eligible for streamlined environmental review. The new law requires the judicial review of any challenges to the project’s environmental impact report (“EIR”) to be resolved within 270 days of the filing date. This means that housing developers facing EIR challenges are afforded a timeline for the legal resolution.

One thing is true—most housing advocates see SB 7 as a victory for housing. Whether or not there are enough projects qualifying under SB 7’s definition of a housing development project to make a significant impact on the State’s housing inventory remains to be seen. But either way, the State is leaving no stone unturned in its pursuit for more housing. SB 7 was the first of several housing bills (SB 5, 6, 8, 9, and 10) under consideration during this legislative season to be signed by the Governor, and RSG will continue to actively monitor and review the State’s housing legislation on behalf of our clients.