Housing Developers Cheer State Law to Restrain CEQA Suits

Home developers across the industry, from luxury to affordable, are cheering the recent signing into law of the Housing Accountability Act, AB 1633, which limits appeals based on the California Environmental Quality Act.

Leo Pustilnikov of SLH Investments, a developer and veteran of lawsuits which started with CEQA appeals, said AB 1633 was a long time coming.

“Legislators have realized that local control has gotten out of control,” Pustilnikov said.

He and other developers have complained that projects can be delayed for years by CEQA appeals. Pustilnikov added that the law’s passage won’t boost the number of projects in the pipeline, but there will be fewer headaches navigating city halls.

“It essentially truncates the CEQA process significantly in urban areas. In a normal situation, once you go through the fight with the city on whether you can start a project, it should be fairly easy to get the environmental approvals to start building,” he said. “[This law] should speed larger-scale projects by 50 percent.”

Frank Martinez, policy director for Southern California Association of NonProfit Housing, said development will remain a difficult task.

“There are many bureaucratic barriers to building affordable housing in California,” he wrote in an email. “We are hopeful AB 1633 will eliminate one of many obstacles our members face, so this is a move in the right direction.”

Legal review

AB 1633 only applies to housing projects in “urban” regions, and the project must have a density of 15 or more housing units per acre.

A previous law, the Housing Accountability Act, prohibits local agencies from disapproving a housing project except with a written rationale based on the evidence. AB 1633 broadens the definition of disapproval to include CEQA compliance.

The law stemmed from an experience in San Francisco, in which the Board of Supervisors rejected two housing projects and demanded more environmental studies, but didn’t specify what was required for approval.

“AB 1633 will end the common practice in some cities of indefinitely delaying CEQA certification for new homes that are clearly in compliance with all relevant environmental regulations,” said Brian Hanlon, CEO of California YIMBY, one of the sponsors of the bill.

According to the law, its purpose is “to refine and clarify the standards, as to certain sites, for whether a local agency’s failure to exercise discretion, or a local agency’s abuse of discretion … constitutes a violation of the Housing Accountability Act.”

Attorneys’ fees

Jamie Hall of Channel Law Group, a land use lawyer who has advocated for foes of housing projects and used CEQA, said that AB1633 is misguided.

“It will force cities to make environmental determinations at an earlier date than they would otherwise, and that was the point of the law,” Hall said. “Normally a developer might have to wait until a decision is made on its project. If they don’t make an environmental determination within a certain time period, a developer can go on the offensive and can sue to compel them to do so.”

Hall also noted that some of the fine print in AB 1633 bars plaintiff attorneys from getting paid on a contingency fee basis.

“Even if you win your case, there is no way to get paid. It will be the death knell for a lot of public interest litigation,” he said. “They want to remove financial incentives for bringing this litigation. If there’s no possibility of getting attorney’s fees, no one will bring these cases except for rich people.”

The law’s authority will run until Jan. 31, 2031, when the legislature would have the option to renew the law.