New California law to make housing projects easier can also make them cost more

Two months ago, Gov. Gavin Newsom and legislators from both parties celebrated enacting landmark legislation to remove the California Environmental Quality Act as an impediment to new housing construction.

Lopsided votes in the Legislature for Assembly Bill 130 and Newsom’s immediate signature seemingly ended decades of debate over how the environmental law, signed by then-Gov. Ronald Reagan more than 50 years ago, was being used to delay or kill residential developments.

“Saying ‘no’ to housing in my community will no longer be state sanctioned,” said Assemblymember Buffy Wicks, an Oakland Democrat who has long advocated for CEQA reform. “This isn’t going to solve all of our housing problems in the state, but it is going to remove the single biggest impediment to building environmentally friendly housing.”

Newsom took obvious pleasure in achieving what had eluded other governors, including predecessor Jerry Brown, who once described overhauling CEQA as “the lord’s work.”

As Newsom signed the measure into law he thanked legislators and housing, labor and environmental leaders “who heeded my call and came together around a common goal — to build more housing faster and create strong, affordable pathways for every Californian.

“Today’s bill is a game changer which will be felt for generations to come,” he said.

While AB130 does remove CEQA as a weapon for labor unions and opponents of high-density projects to stall construction, there’s a provision buried in the lengthy bill that could create a new impediment.

Two sections, 137 pages in, declare that if a residential project has “significant transportation impact,” local governments or regional agencies can impose fees to “mitigate the transportation impact to a less than significant level by helping to fund or otherwise facilitating vehicle miles traveled-efficient affordable housing or related infrastructure projects….”

The so-called vehicle miles traveled, or VMT, fees are “a new housing tax families simply cannot afford,” the California Building Industry Association publicly complained, adding that impact fees are already major factors in housing costs.

Local traffic impact fees are not new. In fact, a dispute over a $23,420 traffic mitigation fee imposed nine years ago for a factory-built house in El Dorado County is still pending after going all the way to the U.S. Supreme Court.

However, AB 130 appears to broaden the potential use of these fees not only for roadway improvements, but also to pay for low-income housing projects throughout the state by contributing to the state’s Transit-Oriented Development Implementation Fund.

Drafting AB 130’s CEQA language was a complex process involving multiple stakeholders, not only housing advocates but environmental groups that often employ CEQA to slow or kill major public and private developments and labor unions, which have used the threat of CEQA lawsuits to compel developers to use union workers. The latter issue was a major hang-up that required last-minute amendments to the measure.

The language about traffic fees was never mentioned in analyses of the bill nor in the debates that preceded legislative passage. It’s another example of how such budget trailer bills are used by governors and legislators to enact major legislation on the sly, with little or no public airing of the issues.

Trailer bills often contain language that has little or nothing to do with the budget and are often fleshed out just hours before enactment. Under the guise of being budget-related, the bills can be passed with simple majority floor votes, take effect immediately upon being signed by the governor and cannot be taken to voters via referendum.

Those factors make trailer bills convenient vehicles for legislation that might not survive close scrutiny. Newsom has been especially willing to utilize them for his legislative priorities.