1. CEQA’s Impact on Housing Production
2018 Survey of California’s Cities and Counties Preliminary Findings
Welcome
Today we are going to present Preliminary Findings from a Study that Jessica and I have been working on for the past 5 months.
The study is primarily a survey of all cities and counties in California about CEQA’s impact on new housing production.

2. Does CEQA Impact Housing Production?
Many policy studies have cited opinions that CEQA is a major cause of lagging housing production in California. However, long-term permit data shows a more complex story…
CEQA
Many policy studies and press articles cite opinions that CEQA is a major cause of lagging housing production in California, and thus, a major contributor to the CA housing crisis.
There is no question that we are no producing enough units, and as shown above, not nearly as many as we used to.
The question is: Does CEQA explain this lag?
You can see the cyclical nature of housing production in CA, both before and after CEQA passage.
For example, in 1963, CA produced 300,000 units, but by 1966, this had plummeted to just 100,000 units.
After CEQA adoption, production continued to rise, then fall, then repeat.
The peak year since 1960, was 1986, when more than 310,00 units were produced – a good 16 years after CEQA was in place.
More recession, then recovery, but each time, we haven’t recovered to pre-recession levels.
I think this chart shows that CEQA as a whole, doesn’t explain low production some 47 years after its adoption, but we set out to explore this issue in more depth.

3. Does CEQA Impact Housing Production? Summary of Prior Studies
Limited empirical research has been conducted to answer this question.
CEQA in the 21st Century (BAE Urban Economics, August 2016)
Focused on litigation rates – found rate of less than 1% for litigation on all local government-led CEQA review
California Environmental Quality Act (CEQA) Survey (Senate Environmental Quality Committee, October 2017).
Focused on litigation rates for both state agency-led and local government-led CEQA reviews. Found less than 1% litigation rate.
Getting it Right: Examining the Local Land Use Entitlement Process in California to Inform Policy and Process (Center for Law, Energy & Environment, UC Berkeley Law, February 2018)
Compiled application data for projects of 5+ units in SF, Oakland, San Jose, Redwood City, and Palo Alto for period.
Found that 18,000 of the 27,600 units were reviewed using exemptions/streamlining.
Concluded that other discretionary entitlement processes - such as design review - were more substantial barriers to housing development than CEQA.

4. 2018 Survey Overview Purpose of Survey Survey Process
Seeks to measure:
How does CEQA review affect overall housing production for both market- rate and affordable units in California?
How does CEQA review affect the timing of housing project approvals?
Are available streamlining methods being used?
How could CEQA be further refined to increase housing production?
Survey drafted by The Housing Workshop
Reviewed by subcommittee of AEP
Sent to every city and county in CA (541 jurisdictions)
Distributed by , with 2 follow up s + direct contact with about 50 of the larger cities
Presenting preliminary results today, will write more detailed report in next month
If anyone here works for a city not yet responding, and would like to do so, please let us know

5. 32% of CA housing permits since 2010
Survey Respondents
29 Cities & Counties representing…
25% of 2018 CA population (9.76 million)
32% of CA housing permits since 2010

6. Respondents by Population (per 2018 CA Department of Finance estimate)
> 250,000
San Francisco
Sacramento
Los Angeles
Long Beach
Irvine
Riverside
100, ,000
Santa Barbara County
Fremont
Fontana
Elk Grove
Corona
Santa Maria
Modesto
Moreno Valley
Oxnard
Santa Rosa
Salinas
< 100,000
Santa Monica
Foster City
Chico
Mountain View
Napa City
Santa Barbara City
Chino
Merced
Watsonville
Monterey
Loyalton

7. Respondents by Housing Production 2010 - 2017
One way we wanted to check our respondent sample – and also use this metric in our analysis – is to compare the respondent jurisdictions to a benchmark statewide average.
We developed a simple metric, which we call a Production Index, which shows the percent of new housing produced between 2010 and 2017, compared to the baseline of existing units in 2010.
This metric normalizes different sized cities.
California added 5% to its 2010 baseline in terms of new units in those seven years.
All of our cities and counties who responded to the survey so far, also added, but the index ranges from a low of under 1% (see on left side) to a high of 36% in Irvine.
We’ll talk more about below and above-average categories in a few minutes…
Production Index = Permitted Housing Units 2010 – 2017 as % of 2010 Units

8. Summary of Data Projects & Units by Type of Review
This slide shows an overall summary of the data we have collected so far from the 29 jurisdictions that responded to our survey.
The first survey question we asked: between 2015 and 2017, how many housing projects of five or more units were subject to environment review?
On the left, project applications are shown; the right graph shows number of actual housing units.
First thing that stands out: streamlining/other exemptions was the predominant environmental review process used for housing projects in the cities responding to our survey. 553 projects. And this includes tiering from Community/Specific Plans, infill exemptions, transit priority projects, and affordable housing exemptions.
The second most common review type for projects were MNDs.
If you look at the chart on the right, which is units, you’ll see a slightly different relationship, which MNDs the most common, followed by streamlining and EIRs.
Average project size varies: 380/90/55
It should be noted that LA uses MND’s frequently, which shifted the overall totals.
a) Streamlining/Other Exemptions refers to: CP/SP Exemption CEQA Guidelines and / Govt Code 65457; Affordable Housing Streamlining Exemption govt Code 15194; Infill Exemption CEQA Guidelines and / PRC ; and Transit Priority Project PRC
b) Other Types of Review include addendums to previous EIRs.

9. Summary of Data Distribution of Projects & Units by Type of Review
Predominant review types are MND and Streamlining
Few projects subject to EIR but appear to be larger projects (based on higher percentage of EIR for units)
Nonetheless, one interesting finding is that EIRs are not the predominant type of CEQA review.
a) Streamlining/Other Exemptions refers to: CP/SP Exemption CEQA Guidelines and / Govt Code 65457; Affordable Housing Streamlining Exemption govt Code 15194; Infill Exemption CEQA Guidelines and / PRC ; and Transit Priority Project PRC
b) Other Types of Review include addendums to previous EIRs.

10. Units by Type of CEQA Review Detail by Production Level
When looking at production level status, the higher production cities
a) Streamlining/Other Exemptions refers to: CP/SP Exemption CEQA Guidelines and / Govt Code 65457; Affordable Housing Streamlining Exemption govt Code 15194; Infill Exemption CEQA Guidelines and / PRC ; and Transit Priority Project PRC
b) Other Types of Review include addendums to previous EIRs.

11. Units by Type of CEQA Review Distribution by Production Level
a) Streamlining/Other Exemptions refers to: CP/SP Exemption CEQA Guidelines and / Govt Code 65457; Affordable Housing Streamlining Exemption govt Code 15194; Infill Exemption CEQA Guidelines and / PRC ; and Transit Priority Project PRC
b) Other Types of Review include addendums to previous EIRs.

12. Units by Type of CEQA Review Detail for Above Average Production Cities
a) Streamlining/Other Exemptions refers to: CP/SP Exemption CEQA Guidelines and / Govt Code 65457; Affordable Housing Streamlining Exemption govt Code 15194; Infill Exemption CEQA Guidelines and / PRC ; and Transit Priority Project PRC
b) Other Types of Review include addendums to previous EIRs.

13. Units by Type of CEQA Review Market-Rate & Affordable Units
a) Streamlining/Other Exemptions refers to: CP/SP Exemption CEQA Guidelines and / Govt Code 65457; Affordable Housing Streamlining Exemption govt Code 15194; Infill Exemption CEQA Guidelines and / PRC ; and Transit Priority Project PRC
b) Other Types of Review include addendums to previous EIRs.

14. Units by Type of CEQA Review Market-Rate and Affordable Units
a) Streamlining/Other Exemptions refers to: CP/SP Exemption CEQA Guidelines and / Govt Code 65457; Affordable Housing Streamlining Exemption govt Code 15194; Infill Exemption CEQA Guidelines and / PRC ; and Transit Priority Project PRC
b) Other Types of Review include addendums to previous EIRs.

15. Units by Type of CEQA Review Streamlining Exemptions
a) Streamlining/Other Exemptions refers to: CP/SP Exemption CEQA Guidelines and / Govt Code 65457; Affordable Housing Streamlining Exemption govt Code 15194; Infill Exemption CEQA Guidelines and / PRC ; and Transit Priority Project PRC
b) Other Types of Review include addendums to previous EIRs.

16. Use of Streamlining/Other Exemptions
Reasons Why Not Used (or not used more often):
No applicant has requested it.
Few projects qualify.
Sometimes applicant wants “bullet-proof” EIR even if another method would apply.
Affordable exemption size limit prevents use (city has larger affordable projects).

17. % of GP Residential Buildout Potential in CP/SPs
Use of Community Plans/Specific Plans for Streamlined CEQA Review (Per CEQA State Guidelines §15183, §15152, or Government Code §65457)
% of GP Residential Buildout Potential in CP/SPs

18. Withdrawn Projects/Units 7 Jurisdictions Reported Withdrawn Projects 22 Reported None Withdrawn

19. Reasons for Project Withdrawal
More of this…
Less of this…
No respondents cited unavoidable adverse environmental impacts.

20. Typical Time Periods for Environmental ReviewND
5 Months
Streamlining Exemptions 5
Months
MND 7
EIR 15
Weighted Average Time By Type of Review
29 Respondents

21. Opinion Questions

22. Opinions: Constraints on Housing Production
Top constraint on both types of housing - Costs to build are too high
CEQA shown as minor constraint
Aff – lack of financing and loss of redevelopment are also major constraints

23. Opinions About CEQA
Quotes from Cities: Yes “The CEQA process increases the cost and time for development review. It affects housing production because there is uncertainty with what will arise from the public process.” No “Not seeing an impact on housing due to CEQA. The market for new residential housing is continuing to increase.” Mixed Reaction “CEQA adds time and cost to the development of housing projects, yet it has not affected the production of market-rate or affordable housing within our community. “
First one, No, CEQA does not impact housing production. Third: Yes.

24. Opinions About CEQA
Quotes from Cities: Yes “We think the new package of state legislation will facilitate the development of additional housing.” No “It is a common sentiment among jurisdictions that while the 2017 housing legislation bills were well intentioned, they stripped jurisdictions of local control and has subsequently created increasing ill- will between local jurisdictions and the State.” NA/Too Soon “Environmental preservation is increasing being put aside to promote the building of new housing, but it is going to take more than offering streamlining CEQA procedures to get developers interested in affordable housing.”
First one, No, CEQA does not impact housing production. Third: Yes.

25. Opinions: One Change to CEQA to Increase Housing
Above Avg. Production
Below Avg. Production
Add more exemptions.
Create clear categorical exemption for stand- alone multifamily housing on Housing Element site with zoning.
Make litigators bear the cost, dedicate judges to hear cases
Exempt higher density housing in already high density areas
CEQA is fine.
Broader exemptions for affordable housing.
Promote more of the infill provisions under CEQA.
Allow parcels up to 10-acres to qualify for infill exemption
Change cumulative impact analysis requirements as applied to individual projects.
Don't take the public out of the process, that only breeds resistance and bad feelings.
Allow housing to be exempt from CEQA, but use the classical statutory/categorical exemption structure.

26. Opinions: One Non-CEQA Change to Increase Housing
Above Avg. Production
Below Avg. Production
Bring back Redevelopment (4 respondents).
Increase funding for affordable housing (2 respondents).
Eliminate Prop 13.
Reduce development standards.
Increase options for by-right approval (esp. for 100% affordable)
State oversight of inclusionary ordinances.
One jurisdiction noted that increased housing production isn’t always desirable if jurisdiction is already meeting RHNA.
Bring back Redevelopment (5 respondents).
Increase funding for affordable housing. (4 respondents).
Create state LIHTC similar to impact of federal program.
Reduce development standards on higher density housing. Reduce or waive parking requirements near transit.
Provide for more ministerial approvals for smaller projects.
Reduce fees (3 respondents).

27. Findings
Many cities and counties are successfully using MNDs or Streamlining/ Exemptions to expedite housing projects (which take less time to process than EIRs).
38% of units in survey were reviewed by MND.
29% of units in survey were reviewed by Streamlining/Other Exemptions.
EIRs were completed for only 4.4% of projects and often in above-average production cities, which were still producing more housing than the state average.
EIRs are disproportionately high for affordable housing projects. Why are cities not using the affordable housing exemption more frequently?
Among the barriers to increased housing production in CA, CEQA is not a major cause.
Cost to build, lack of available sites, and for financing for affordable housing were the primary reasons cited.

28. Policy Changes
So, we wanted to come bac to this graph….and pose some conclusions and suggested further research.
Given that CA is not producing as many housing units as it used to, and also given that LAO says we need to start producting at least 180,000 units per year on average into the future, where does CEQA fit in?

29. Conclusion Is CEQA a major barrier to new housing production in CA?
CEQA may have a modest impact on housing production in some jurisdictions, while not in others.
There are certainly ways to continue to improve the law.
Next Steps:
Finish Phase 1: Collect data from more large cities (e.g., San Jose, San Diego)
Phase 2: Project Case Studies
We need to put the “time” and “cost” issues in perspective – how much time, and how much cost?
Challenging b/c will need enough cases to form empirical evidence

30. Study Authors
THEHOUSINGWORKSHOP
Janet Smith-Heimer, MBA
Urban Math Jessica Hitchcock, MCP