CEQA Reform: A Landmark Milestone
This month, the headline news in housing was California Governor Gavin Newsom signing two laws that will make landmark changes to CEQA. The importance of the Governor’s actions is twofold. There’s the policy impact as AB 130 and SB 131 will reform a law that, for decades, has made it more difficult to build new housing in California. There’s also the broader political implications of what it means that our Governor went out on a limb to ensure the state passed legislation to reform. There have been repeated efforts in recent years to scale back CEQA’s power over housing; however, all of these have faced fierce political opposition within California’s mostly democratic legislature. The fact that CEQA reform finally got across the finish line is a signal of a seismic political shift on housing. Legislaters, more than ever, are recognizing that they must introduce and support legislation that addresses California’s housing shortage.
The growing political will in Sacramento is important because while CEQA reform is a big policy win, the policy landscape still isn’t where it needs to be. California won’t solve its housing crisis until we have a housing development ecosystem that makes it easy for new homes to be built efficiently and affordably. To accomplish that, we need to address and improve each stage of the homebuilding process.
Speeding up the process (streamlining)
AB 130 and SB 131 will make it easier to build infill housing by streamlining the process and eliminating the uncertainty and delays that environmental reviews and CEQA lawsuits introduce. Overall, this is a streamlining bill that accelerates a stage of the homebuilding process. The other areas we need to continue to reform are Planning and Building Codes, and financial feasibility.
If the streamlining bills change the process of how we build housing, planning and building code reform involves changing what kind of housing we can build and where. In terms of where we can build, we’ve seen tangible progress on zoning recently in Berkeley and San Francisco. Berkeley passed a rezoning effort dubbed Missing Middle that will allow up to 3-story apartments to be built throughout flatland parts of the city. And in San Francisco, Mayor Lurie has made headlines with his family zoning plan, which will change the zoning laws in large swaths of the city to allow for dense multifamily housing. As the abundance movement grows, I expect more cities to follow suit and change their zoning laws to unlock the potential for more housing growth.
Changing what we build (zoning/code reform)
In addition to zoning, a building code initiative that’s gained steam in pro-housing spaces is a policy called single-stair. Single-stair reform would change building codes to allow for the construction of multi-family residential buildings with a single staircase, rather than the traditional requirement of two or more. Developers and policy experts alike have extoled the potential benefits of the update. Pew Trusts data shows single-stair designs can lower apartment costs by 6 to 13 percent compared with standard construction. It’s an example of how innovative building code reform — changing what kinds of housing we build — can lead to denser projects that are more affordable to build.
Making it pencil (financial feasibility)
Reducing construction costs connects to the third piece of our housing production puzzle: financial feasibility. Even when projects are entitled, a lack of financing to support housing has stalled production rates. I’ve had conversations with folks at Enterprise Community Partners who have told me, there are currently 45,000 approved deed-restricted, affordable units sitting in the pipeline. What’s stopping them from breaking ground? A lack of reliable funding sources.
In terms of market-rate housing, economic uncertainty in recent years has been a significant barrier to ramping up housing production. With high interest rates, skyrocketing construction costs, and a general lack of economic stability, projects have struggled to finance because they simply don’t pencil out. While there isn’t much we can do in regards to the high-interest rates or construction costs, there are financial levers we can pull to improve feasibility and help jump-start housing production.
Embracing abundance
Last week, Buffy Wicks and Scott Wiener were on Derek Thompson’s podcast Plain English, for an episode titled “How Abundance Won in California.” This is a bold claim and it’s easy to look around at the problem of housing in California and feel like it’s premature. California’s most prominent issue hasn’t been solved, far from it. But the thing that’s won in California is the abundance agenda — the intellectual framework that to improve society, government needs to be able to build housing and infrastructure quickly, affordably, and sustainably. The governor signing the CEQA reform legislation is a signal that our political leaders are beginning to accept that premise and build it into their own political agendas.
The next step is continuing to advance smart and innovative policies that match our political goals.
