New California Prop Addresses Long Environmental Review Process
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California's housing affordability crisis has been intensified by the growing use of the California Environmental Quality Act (CEQA) to challenge residential and infrastructure projects, particularly within existing communities where new housing is most needed. But that could change with a new Prop if voters approve it this November.
A recent Holland & Knight study of 498 CEQA appellate decisions from 2013 to 2023 found that housing projects were the most frequently targeted category of appeals, accounting for about 25.5% of all cases.
Nearly two-thirds of the challenged projects were infill developments located within established communities and almost 90% of challenged housing projects fell into this category. These findings suggest that CEQA litigation increasingly focuses not on undeveloped land, but on projects intended to add housing in urbanized areas where state policy encourages growth.
The study argues that CEQA-related litigation has become a significant obstacle to California's efforts to address housing shortages and expand essential infrastructure. Although public agencies ultimately prevailed in roughly 75% of appellate cases, the litigation process often delays approved projects for four to five years.
These delays can discourage private investment, complicate financing and increase development costs, which ultimately weighs on housing production and affordability.
NIMBY Proclamation Continues
Jennifer Hernandez, head of Holland & Knight's West Coast Land Use and Environment Group, told GlobeSt.com that the reason for the scrutiny is that neighbors have a longstanding practice of organized opposition to new housing (hence "Not In My Backyard"). That's added to the state's mandates that now require cities to plan for and approve even more housing in existing neighborhoods.
She said that more than 50 housing law reforms have already been enacted to help overcome opposition, but CEQA remains a major obstacle since NIMB advocates can sue even for housing that's "exempt" from CEQA by challenging the project's eligibility for one. As a result, these lawsuits typically take four years to resolve at the trial and appellate level.
"Prop 45 is the solution by imposing shot clocks and clear standards for completing this judicial review process," Hernandez said.
"Voters have made clear that California needs to be affordable, especially on housing and other essential projects, and that they are frustrated by continuous delays and high costs."
She added that there is a misinformation campaign being added on Prop 45, which aims to speed up environmental reviews. However, it does not disregard existing environmental laws in the Golden State, as Hernandez points out.
"They are also alleging that Prop 45 is a ploy by corporations to build polluting projects (it isn't). Voters in multiple rounds of polling identified essential projects and embraced both time limits and clear standards for completing CEQA – that's all that Prop 45 does," she explained.
Study Finds 48,000 Units Challenged
A related trial court analysis cited in the study found that CEQA lawsuits filed in a single year challenged approximately 48,000 approved housing units statewide, representing nearly half of that year's housing production.
Environmental Impact Reports (EIRs), the most extensive and costly form of CEQA compliance, remain the primary focus of legal challenges.
More than half of the appellate decisions reviewed involved EIRs, requiring developers and public agencies to devote substantial time and resources to environmental review processes that may still become the subject of prolonged litigation. Even when agencies successfully defend their approvals, projects can remain stalled while lawsuits work their way through the courts.
Supporters of reform argue that California cannot effectively address its housing shortage and infrastructure needs if projects continue to face years of uncertainty and delay after receiving local approval.
In their view, modernizing CEQA procedures would help balance environmental stewardship with the urgent need to build housing, transportation, water, energy and public-service infrastructure statewide.
California voters will decide in November whether to pass Prop 45. This could be pivotal in eliminating frustrations for developers and delivering housing more swiftly to address the affordability crisis.
Source: GlobeSt/ALM