The California Environmental Quality Act (CEQA) requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of, an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have that effect. CEQA also requires a lead agency to prepare a mitigated negative declaration for a project that may have a significant effect on the environment if revisions in the project would avoid or mitigate that effect and there is no substantial evidence that the project, as revised, would have a significant effect on the environment. CEQA requires the Office of Planning and Research to prepare and develop, and the Secretary of the Natural Resources Agency to certify and adopt, guidelines for the implementation of CEQA. CEQA requires the guidelines to include a list of classes of projects that have been determined not to have a significant effect on the environment and that shall be exempt from CEQA (categorical exemption). Existing guidelines for the implementation of CEQA exempts from the requirements of CEQA infill development meeting certain requirements, including the requirement that the proposed development occurs within city limits.

This bill would expand revise the above-categorical above-described categorical exemption to include proposed developments residential and mixed-use housing projects occurring within the an unincorporated areas area of a county. Because a lead agency would be required to determine the applicability of this exemption, this bill would impose a state-mandated local program. The bill would require the office to recommend proposed regulatory amendments for the implementation of these provisions and would require the secretary to certify and adopt the changes on or before January 1, 2019.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

The California Environmental Quality Act (CEQA) requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of, an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have that effect. CEQA also requires a lead agency to prepare a mitigated negative declaration for a project that may have a significant effect on the environment if revisions in the project would avoid or mitigate that effect and there is no substantial evidence that the project, as revised, would have a significant effect on the environment. CEQA requires the Office of Planning and Research to prepare and develop, and the Secretary of the Natural Resources Agency to certify and adopt, guidelines for the implementation of CEQA. CEQA requires the guidelines to include a list of classes of projects that have been determined not to have a significant effect on the environment and that shall be exempt from CEQA (categorical exemption). Existing guidelines for the implementation of CEQA exempts from the requirements of CEQA infill development meeting certain requirements, including the requirement that the proposed development occurs within city limits.

This bill would expand the above-categorical exemption to include proposed developments occurring within the unincorporated areas of a county. Because a lead agency would be required to determine the applicability of this exemption, this bill would impose a state-mandated local program. The bill would require the office to recommend proposed regulatory amendments for the implementation of these provisions and would require the secretary to certify and adopt the changes on or before January 1, 2019.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

The California Environmental Quality Act (CEQA) requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of, an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have that effect. CEQA also requires a lead agency to prepare a mitigated negative declaration for a project that may have a significant effect on the environment if revisions in the project would avoid or mitigate that effect and there is no substantial evidence that the project, as revised, would have a significant effect on the environment. CEQA requires the Office of Planning and Research to prepare and develop, and the Secretary of the Natural Resources Agency to certify and adopt, guidelines for the implementation of CEQA. CEQA requires the guidelines to include a list of classes of projects that have been determined not to have a significant effect on the environment and that shall be exempt from CEQA (categorical exemption). Existing guidelines for the implementation of CEQA exempts from the requirements of CEQA infill development meeting certain requirements, including the requirement that the proposed development occurs within city limits.

This bill would expand the above-categorical exemption to include proposed developments occurring within the unincorporated areas of a county. Because a lead agency would be required to determine the applicability of this exemption, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2017 - 2018 Regular Session

AB 1404 (Berman) - California Environmental Quality Act: categorical exemption: infill development

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

1. AB 1404 expands the current categorical exemption to the California Environmental Quality Act (CEQA) for infill development projects in urban areas to create a categorical exemption for a proposed residential or mixed-use housing project occurring in an unincorporated area of a county, on a project site of no more than five acres substantially surrounded by urban uses, if all other conditions outlined in regulations are met. The bill also requires the Office of Planning and Research (OPR) to recommend proposed amendments to regulations to implement the bill which must be certified and adopted by the Secretary of the Natural Resources Agency (CRNA) on or before January 1, 2019.

Fiscal Impact:

One-time costs of $250,000 (General Fund) over a two-year period to the CRNA to review and adopt proposed amendments.

Unknown, likely under $100,000 one-time costs (General Fund) over a two-year period for OPR to review regulations and develop recommendations.

Background:

The California Environmental Quality Act (CEQA) is a statewide environmental protection policy enacted in 1970. CEQA requires state and local agencies to analyze and publicly disclosure the environmental impacts of proposed projects, and requires that all feasible measures to mitigate those impacts are undertaken. CEQA includes various statutory exemptions, as well as categorical exemptions in the CEQA Guidelines.

Under CEQA, lead agencies (those responsible for carrying out or approving a proposed discretionary project) must prepare one of the following: (1) a negative declaration (ND) if the Initial Study determines that the project will not have a significant effect on the environment; (2) a mitigated negative declaration (MND) if  the Initial Study identifies potentially significant environmental impacts and the project is revised to eliminate or mitigate impacts to less than significant levels; or (3) an environmental impact report (EIR), that identifies and analyzes each significant environmental impact and identifies mitigation measures, if the Initial Study finds that the project will have a significant impact on the environment.

Categorical exemptions. Public Resources Code requires the CEQA Guidelines to include a list of classes of projects which have been determined not to have a significant effect on the environment and which must, therefore, be exempt from the provisions of CEQA. The guidelines outline 33 categorically exempt project classes including, among others, small habitat restoration projects, minor additions to schools, and conversion or new construction of small structures. The guidelines also specify and define exceptions to categorical exemptions for locations, cumulative impacts, or unique circumstances that may result in significant impact. If applicable, the project cannot be exempt.

Infill development. “Infill development” occurs in already built-up areas with existing transportation and utility infrastructure, often repurposes or replaces existing buildings, parking lots, or other impervious areas, and adds homes and/or businesses near the center of cities and towns. Since infill builds within an existing development footprint of development, it can provide a variety of environmental and economic benefits such as reducing development pressure on open space and agricultural land; reducing miles driven which helps improve air quality and reduce GHG emissions; and reducing blight. Also, by locating new developments near population centers and amenities, communities can take advantage of existing water, sewer, and transportation systems, avoiding the cost of installing expensive new infrastructure. Several changes have been made to CEQA to encourage infill projects, including an abbreviated review process, categorical exemption for infill (as specified below), and a statutory exemption for infill housing projects meeting certain requirements.

Class 32 consists of projects characterized as infill development meeting the conditions described below:

• The project is consistent with the applicable general plan designation and all applicable general plan policies as well as with applicable zoning designation and regulations.
• The proposed development occurs within city limits on a project site of no more than five acres substantially surrounded by urban uses.
• The project site has no value as habitat for endangered, rare or threatened species.
• Approval of the project would not result in any significant effects relating to traffic, noise, air quality, or water quality.
• The site can be adequately served by all required utilities and public services.

Proposed Law:

This bill:

• Applies the categorical exemption specified in Section 15332 of Title 14 of the California Code of Regulations to a proposed residential or mixed-use housing project occurring in an unincorporated area of a county, on a project site of no more than five acres substantially surrounded by urban uses, if all other conditions of that section are satisfied.
• Requires the OPR to recommend proposed amendments to Section 15332 of Title 14 of the California Code of Regulations to implement the bill which must be certified and adopted by the Secretary of the Natural Resources Agency on or before January 1, 2019.

Related Legislation:

SB 743 (Steinberg, Chapter 386, Statutes of 2013) made several changes to CEQA for projects located in areas served by transit (i.e. transit-oriented development (TOD)). Among the changes, SB 743 directed the Governor’s Office of Planning and Research (OPR) to develop a new approach for analyzing the transportation impacts under CEQA. SB 743 also created a new exemption for certain projects that are consistent with a Specific Plan and eliminates the requirement to evaluate aesthetic and parking impacts of a project if the project is a residential, mixed-use residential, or employment center project located on an infill site within a transit priority area.

SB 226 (Simitian, Chapter 469, Statutes of 2011) establishes abbreviated CEQA review procedures for specified infill projects, where only specific or more significant effects on the environment which were not addressed in a prior planning-level EIR need to be addressed. An EIR for such a project need not consider alternative locations, densities, and building densities or growth inducing impacts. Any unmitigated effects specific to the project can be analyzed in an “infill” EIR that limits review only to those impacts without the need to analyze alternatives or growth-inducing impacts. SB 226 required OPR to develop CEQA Guidelines for purposes of this bill.

SB 1925 (Sher, Polanco, Chapter 1039, Statutes of 2002) exempts from CEQA specified residential housing projects which meet criteria established to ensure the project does not have a significant effect on the environment, including urban infill housing projects not more than 100 units on a site not more than four acres in size which is within one-half mile of a major transit stop.

Staff Comments:

Purpose of Bill. According to the author, “Under [CEQA], there is a categorical infill exemption, which is intended to promote infill development with in urbanized areas. However, the existing categorical infill exemption is limited to only cities despite the fact that there are urbanized areas in our counties. AB 1404 would allow counties to utilize the existing categorical infill exemption within urbanized areas under the same narrow conditions for cities. This bill would not change the existing categorical infill exemption, except to allow projects in counties to also be eligible for the exemption. AB 1404 would encourage infill development more effectively in urbanized areas in our counties without adversely impacting the environment.”

OPR survey shows CEQA is not a significant barrier to infill projects. OPR’s “2012 Annual Planning Survey Results” asked city and county planners to explain the primary barriers their jurisdictions have experienced to implementing infill projects. Of the 238 responses, 4% of jurisdictions reported that infrastructure constraints were a primary barrier to implementing infill projects. CEQA ranked 12^th out of 16 primary infill barriers.

Expanding a dated exemption could undermine state investment in climate change programs. The state invests billions of dollarsannually into programs intended to stave off climate change and improve environmental outcomes. To protect this investment, all policies that have the potential to impact these programs should be developed and implemented in a manner consistent with requirements and desired outcomes of these programs. Expanding this antiquated exemption class that was developed before many of the state’s landmark legislation, such as the Global Warming Solutions Act and the Sustainable Communities Strategies, were implemented. Given recent amendments to CEQA aimed at increasing infill and developed with consideration of landmark environmental legislation as well as co-benefits, such as increasing housing stock, it’s unclear why state resources should be directed to expand this exemption.

State mandate not reimbursable. This bill constitutes a state mandate. However, under the California Constitution, cost associated with the following are not reimbursable (1) legislation defining a new crime or changing an existing definition of a crime; (2) mandates on local agencies or school districts because have the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated; or (3) legislative mandates requested by the local affected agency

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SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Wieckowski, Chair

2017 - 2018 Regular

Bill No: AB 1404

SUBJECT: California Environmental Quality Act: categorical exemption: infill development.

ANALYSIS:

Existing law:

1. Requires lead agencies with the principal responsibility for carrying out or approving a proposed project to prepare a negative declaration, mitigated declaration, or environmental impact report (EIR) for this action, unless the project is exempt from CEQA (CEQA includes various statutory exemptions, as well as categorical exemptions in the CEQA guidelines). (Public Resources Code (PRC) §21000 et seq.).
   
2. Requires the Governor’s Office of Planning and Research (OPR) to prepare and develop guidelines for public agencies to implement CEQA. (PRC §21083).
3. Requires the Guidelines to include a list of classes of projects that have been determined not to have a significant effect on the environment and that are exempt from CEQA, commonly referred to as “categorical exemptions”. (PRC §21084).
4. Provides various statutory exemptions and streamlining provisions applicable to infill development projects in CEQA, which do the following:
   1. Exempts from CEQA residential, mixed-use, and “employment center” projects, as defined, located within “transit priority areas,” as defined, that meets specified criteria. (PRC §21155.4)
   2. Establishes abbreviated CEQA review procedures for specified infill projects, where only specific or more significant effects on the environment which were not addressed in a prior planning-level EIR need be addressed. An EIR for such a project need not consider alternative locations, densities, and building intensities or growth-inducing impacts. Infill projects may include residential, retail, commercial, transit station, school, or public office building projects located within an urban area. Requires OPR to develop CEQA Guidelines to implement these infill provisions, including statewide standards to promote smart growth, reduction of GHG emissions, reduction in water use, energy efficiency improvements, and protection of public health. (PRC §21094.5).
   3. Requires metropolitan planning organizations (MPOs) to include a sustainable communities strategy (SCS), in their regional transportation plans, or an alternative planning strategy (APS), for the purpose of reducing greenhouse gas (GHG) emissions; aligns planning for transportation and housing; and creates specified incentives for the implementation of the strategies, including CEQA exemption or abbreviated review for residential or mixed-use residential “transit priority projects,” if the project is consistent with the use designation, density, building intensity, and applicable policies specified for the project area in either an approved SCS or APS. (PRC §21155 et seq.).
   4. Exempts residential housing projects that meet criteria established to ensure the project does not have a significant effect on the environment. (PRC §21159.20 et seq.). This exemption is available for the following:
      1. An affordable agricultural housing project not more than 45 units within a city, or 20 units within an agricultural zone, on a site not more than five acres in size;
      2. An urban affordable housing project not more than 100 units on a site not more than five acres in size; and,
      3. An urban infill housing project not more than 100 units on a site not more than four acres in size within one-half mile of a major transit stop.
   5. Provides streamlining provisions for a residential or mixed-use residential project that is consistent with the use designation, density, building intensity, and applicable policies for the project area in either a sustainable communities strategy or an alternative planning strategy. (PRC §21159.28).
   6. Defines “tiering” or “tier” as the coverage of general matters and environmental effects in an EIR prepared for a policy, plan, program or ordinance followed by narrower or site-specific EIRs which incorporate by reference the discussion in any prior EIR and which concentrate on the environmental effects which (a) are capable of being mitigated, or (b) were not analyzed as significant effects on the environment in the prior EIR. (PRC §21068.3)
5. Provides various exemptions and streamlining provisions applicable to infill development projects in the CEQA Guidelines, including:
   1. Provides an exemption or limited environmental review to a project that is consistent with the development density established by existing zoning, community plan, or general plan policies for which an EIR was certified, except as might be necessary to examine whether there are project-specific effects which are peculiar to the project or its site. If an impact is not peculiar to the parcel or to the proposed project, then an additional EIR need not be prepared for that project solely on the basis of that impact. (CEQA Guidelines §15183).
   2. Provides a streamlined environmental review process for eligible infill projects by limiting the topics subject to review at the project level where the effects of infill development have been addressed in a planning level decision or by uniformly applicable development policies. No additional environmental review is required if the infill project would not cause any new site-specific or project-specific effects, or if uniformly applied development standards would substantially mitigate such effects. (CEQA Guidelines §15183.3).
   3. Provides an exemption for a residential infill project, as specified. (CEQA Guidelines §15195).
   4. Provides an exemption for a residential project pursuant to a specific plan, as specified. (CEQA Guidelines §15182).
   5. Provides for a more focused EIR for a project that is a multiple family residential development of 100 units or less or is a residential and commercial or retail mixed-use commercial development of not more than 100,000 square feet, and that meets specified conditions, including:
      1. Surrounded by immediately contiguous urban development;
      2. Previously developed within urban uses; or,
      3. Within one-half mile of an existing rail transit station.
   6. Provides a categorical exemption for new construction or conversion of small structures, as specified. (CEQA Guidelines §15303). For urbanized areas, examples include:
      1. A multi-family residential structure designed for not more than six dwelling units.
      2. Up to four commercial buildings not exceeding 10,000 square feet in floor area on sites zoned for such use.
   7. Provides a categorical exemption for an infill development project within city limits (CEQA Guidelines §15332), as follows:
      1. The project is consistent with the applicable general plan designation and all applicable general plan policies as well as with applicable zoning designation and regulations.
      2. The proposed development occurs within city limits on a project site of no more than five acres substantially surrounded by urban uses.
      3. The project site has no value as habitat for endangered, rare, or threatened species.
      4. Approval of the project would not result in any significant effects relating to traffic, air quality, or water quality.
      5. The site can be adequately served by all required utilities and public services.
         

This bill expands the CEQA categorical exemption for an infill development project within a city (CEQA Guidelines §15332) by allowing the same type of project be located in an unincorporated area of county. Specifically, this bill:

1. Exempts from CEQA, an infill development project in an unincorporated area that meets the same criteria as an infill development project within a city, pursuant to CEQA Guidelines §15332.
   
2. For the purpose of implementing this bill, requires OPR to recommend proposed changes amendments to the infill categorical exemption, to the Secretary of the Natural Resources Agency for certification and adoption by January 1, 2019.
   

Background

1. Background on CEQA.
   
   1. Overview of CEQA process. CEQA provides a process for evaluating the environmental effects of a project, and includes statutory exemptions, as well as categorical exemptions in the CEQA guidelines. If a project is not exempt from CEQA, an initial study is prepared to determine whether a project may have a significant effect on the environment. If the initial study shows that there would not be a significant effect on the environment, the lead agency must prepare a negative declaration. If the initial study shows that the project may have a significant effect on the environment, the lead agency must prepare an EIR.
      
      Generally, an EIR must accurately describe the proposed project, identify and analyze each significant environmental impact expected to result from the proposed project, identify mitigation measures to reduce those impacts to the extent feasible, and evaluate a range of reasonable alternatives to the proposed project. Prior to approving any project that has received environmental review, an agency must make certain findings. If mitigation measures are required or incorporated into a project, the agency must adopt a reporting or monitoring program to ensure compliance with those measures.
      
      If a mitigation measure would cause one or more significant effects in addition to those that would be caused by the proposed project, the effects of the mitigation measure must be discussed but in less detail than the significant effects of the proposed project.
      
   2. What is analyzed in an environmental review? Pursuant to CEQA, an environmental review analyzing the significant direct and indirect environmental impacts of a proposed project may include water quality, surface and subsurface hydrology, land use and agricultural resources, transportation and circulation, air quality and greenhouse gas emissions, terrestrial and aquatic biological resources, aesthetics, geology and soils, recreation, public services and utilities such as water supply and wastewater disposal, and cultural resources. The analysis must also evaluate the cumulative impacts of any past, present, and reasonably foreseeable projects/activities within study areas that are applicable to the resources being evaluated. A study area for a proposed project must not be limited to the footprint of the project because many environmental impacts of a development extend beyond the identified project boundary. Also, CEQA stipulates that the environmental impacts must be measured against existing physical conditions within the project area, not future, allowable conditions.
      
   3. CEQA provides hub for multi-disciplinary regulatory process. CEQA assists in moving a project through the multi-disciplinary, regulatory process because responsible agencies may rely on the lead agency’s environmental documentation in acting on the aspect of the project that requires its approval and must prepare its own findings regarding the project. A variety of issues, many of which involve permitting and/or regulatory program requirements, should be coordinated and analyzed together as a whole. CEQA provides a comprehensive analysis of a project’s impacts in those subject areas.
      
2. CEQA Guidelines. The fundamental purpose of the CEQA Guidelines (California Code of Regulations Title 14, §15000 et seq.) is to make the environmental review process comprehensible to the public agencies that administer it, those who are subject to it, and to those for whose benefit it exists. The Guidelines provide objectives, criteria, and procedures for the orderly evaluation of projects and the preparation of Negative Declarations, Mitigated Negative Declarations, and EIRs by public agencies. Also, interpretation of statutory changes and principles advanced by judicial decisions may become incorporated into the Guidelines.
   
   OPR prepares and develops proposed amendments to the Guidelines at least every two years and transmits them to the Secretary of the Natural Resources Agency. The Secretary is responsible for certification and adoption of, amendments to, the Guidelines.
   
3. What is a categorical exemption? A categorical exemption is different than other exemptions (e.g. statutory or emergency) because if an exception to a categorical exemption applies, then the project cannot be exempt. Exceptions to a categorical exemption include:
   
   1. Location. Consideration of where the project is located – a project that is ordinarily insignificant in its impact to the environment may be significant in a particularly sensitive environment.
      
   2. Cumulative impact. Although a particular project may not have a significant impact, the impact of successive projects, of the same type, in the same place, over time is significant.
      
   3. Unique circumstances. Although a project may otherwise be exempt, there is a reasonable possibility that the project will have a significant effect due to unusual circumstances (e.g. historical or scenic resource).
      
4. Infill development. “Infill development” occurs in already built-up areas with existing transportation and utility infrastructure, often repurposes or replaces existing buildings, parking lots, or other impervious areas, and adds homes and/or businesses near the center of cities and towns. Examples of infill project locations include a disused parking lot, an old commercial property, or a former industrial site. Infill development is considered a vital strategy for efficient growth.
   
   Infill builds within an existing footprint of development, which can reduce development pressure on outlying areas, helping to safeguard lands that serve important ecological functions and preserve open space and prevent conversion of agricultural land; can reduce the amount that people drive, improving air quality and reducing GHG emissions; and can lead to the cleanup and reuse of formerly economically viable but now abandoned sites, including those contaminated with hazardous substances. Also, by locating new developments near population centers and amenities, communities can take advantage of existing water, sewer, and transportation systems, avoiding the cost of installing expensive new infrastructure.
   
   According to the US Environmental Protection Agency (US EPA), several trends point to a sustained increase in demand for infill development and a market opportunity for developers. Consumer preferences for the amenities that infill locations offer are likely to grow as changing demographics affect the housing market. In the next couple of decades, the needs and preferences of aging baby boomers, new households, and one-person households will drive real estate market trends – and infill locations are likely to attract many of these people. As more people choose to live in infill neighborhoods, employers are following, and vice versa. Many corporations are moving to infill locations, in part because they recognize the competitive advantages of being closer to the central city. (US EPA, “Smart Growth and Economic Success: Investing in Infill Development,” February 2014.)
   
   The Strategic Growth Council (SGC), as a part of its broader legislative mandate, has identified “infill” development as an important strategy for achieving AB 32 greenhouse gas (GHG) emissions reduction targets. While contributing to reductions of GHG emissions, achieving infill development can confer a broad range of benefits, such as increased economic vitality of the state’s urban centers; decreased consumption of energy, water, and other natural resources; reduced conversion of farmland and natural habitat areas; and the opportunity for more efficient infrastructure investment and delivery of municipal services.
   
5. Infill development and CEQA. Several changes have been made to CEQA to encourage infill projects, among them include:
   1. SB 743. SB 743 (Steinberg, Chapter 386, Statutes of 2013) made several changes to CEQA for projects located in areas served by transit (i.e. transit-oriented development (TOD)). Among the changes, SB 743 directed the Governor’s Office of Planning and Research (OPR) to develop a new approach for analyzing the transportation impacts under CEQA. SB 743 also created a new exemption for certain projects that are consistent with a Specific Plan and eliminates the requirement to evaluate aesthetic and parking impacts of a project if the project is a residential, mixed-use residential, or employment center project located on an infill site within a transit priority area.
   2. SB 226. SB 226 (Simitian, Chapter 469, Statutes of 2011) establishes abbreviated CEQA review procedures for specified infill projects, where only specific or more significant effects on the environment which were not addressed in a prior planning-level EIR need to be addressed. An EIR for such a project need not consider alternative locations, densities, and building densities or growth inducing impacts. Any unmitigated effects specific to the project can be analyzed in an “infill” EIR that limits review only to those impacts without the need to analyze alternatives or growth-inducing impacts. SB 226 required OPR to develop CEQA Guidelines for purposes of this bill.
      
      In order for infill projects to qualify for the CEQA benefits in SB 226, they must meet statewide performance standards developed by OPR. The statute required that these performance standards promote the state’s GHG emissions reductions goals in AB 32 (Núñez, Pavley) and SB 375 (Steinberg), state planning priorities, water conservation and energy efficiency standards, transit-oriented development policies, and public health.
   3. SB 375. SB 375 (Steinberg, Chapter 728, Statutes of 2008) established the Sustainable Communities and Climate Protection Act of 2008. SB 375 directed the California Air Resources Board (ARB) to set regional targets for reducing GHG emissions, setting up a “bottom up” approach to ensure that cities and counties are involved in the development of regional plans to achieve those targets. SB 375 tied together the regional allocation of housing needs and regional transportation planning in an effort to reduce GHG emissions from motor vehicle trips. According to ARB, transportation accounts for approximately 40% of GHG emissions, with cars and light trucks making up a significant majority of those emissions (30% overall).
      
      SB 375 established a collaborative process between regional and state agencies to set regional GHG reduction targets, and provided CEQA incentives for development projects that are consistent with a regional plan that meets those targets. SB 375 has three major components: (i) Using the regional transportation planning process to achieve reductions in GHG emissions consistent with AB 32 goals; (ii) Offering CEQA incentives to encourage projects that are consistent with a regional plan that achieves GHG emission reductions; and, (iii) Coordinating the regional housing needs allocation process with the regional transportation process while maintaining local authority over land use decisions.
      
   4. SB 1925. SB 1925 (Sher, Polanco, Chapter 1039, Statutes of 2002) exempts from CEQA specified residential housing projects which meet criteria established to ensure the project does not have a significant effect on the environment, including urban infill housing projects not more than 100 units on a site not more than four acres in size which is within one-half mile of a major transit stop.

Comments

1. Purpose of Bill. According to the author, “Under [CEQA], there is a categorical infill exemption, which is intended to promote infill development with in urbanized areas. However, the existing categorical infill exemption is limited to only cities despite the fact that there are urbanized areas in our counties. AB 1404 would allow counties to utilize the existing categorical infill exemption within urbanized areas under the same narrow conditions for cities. This bill would not change the existing categorical infill exemption, except to allow projects in counties to also be eligible for the exemption. AB 1404 would encourage infill development more effectively in urbanized areas in our counties without adversely impacting the environment.”
   
2. Is CEQA a major hindrance to infill development?
   1. From whose point of view? Ethan Elkind, Director of Climate Change and Business, with a joint appointment at UC Berkeley School of Law and UCLA School of Law, states, “[W]hen it comes to the big factors stopping infill, at least in California, CEQA ranks below a host of other barriers, such as local zoning codes that outlaw infill, lack of infrastructure investment, high construction costs, tax incentives that favor strip malls over housing, and poor neighborhood schools.
      
      “So why do infill developers make such a big deal about CEQA? My theory is that individual developers will be focused solely on their own projects, and if CEQA is a threat to their investment and risk-taking, they will understandably become CEQA haters. But perhaps this project-based focus distorts the view of the larger forces that stifle business opportunities throughout the state, such as in the suburb with the major rail line that won’t zone for more downtown development or the rundown neighborhood near jobs and services that needs new infrastructure. Ending CEQA tomorrow won’t magically lift these barriers and create new infill opportunities, and it won’t convince local communities to support new downtown development.” (Ethan Elkind, “Why Developers Shouldn’t Blame Environmental Review for the Lack of Infill,” Legal Planet: Insight & Analysis: Environmental Law and Policy, September 24, 2012).
      
   2. OPR survey shows CEQA is not a significant barrier to infill projects. OPR’s “2012 Annual Planning Survey Results” asked city and county planners to explain the primary barriers their jurisdictions have experienced to implementing infill projects.
      
      The chart (below) from the survey shows the relative unimportance of CEQA as a barrier to infill development. Instead, infrastructure constraints, lot issues, lack of funding, community opposition, and the economy, among others ranked higher.

Based on 238 responses, 25% of jurisdictions reported that infrastructure constraints were a primary barrier to implementing infill projects. Just under 25% reported that they had problems with assembling parcels of the right size and configuration for infill development. Only 4% of respondents identified CEQA as a barrier. CEQA ranked 12^th out of 16 primary infill barriers.

A variety of factors affect the production of infill housing and commercial land uses. Notable infill development constraints include market conditions, physical conditions, infrastructure (e.g., sewer, water, streets), and other community conditions (e.g., schools, public facilities). In places where market demand, physical conditions, existing infrastructure, and community conditions are problematic, current funding and financing options are commonly inadequate, which hinders local and regional agencies’ ability to implement infill development plans. For the assorted issues mentioned above that may hinder infill development, this bill would not alleviate them.

1. Substantial changes have been made to CEQA for infill projects since the inception of CEQA Guidelines §15332. As shown in the “existing law” section and Background #5 of this analysis, significant amendments have been made to CEQA to encourage infill projects over the years. Many of these were created after CEQA Guidelines §15332 and have improved on those efforts by encouraging policies of the state such as development near transit; they also apply regardless of whether the location of the project is in a city or unincorporated area of a county.
   
   Some of these amendments to the statute necessitate changes to the CEQA Guidelines, which can take a fair amount of time to go through OPR’s vetting process and the Administrative Procedures Act. For example, SB 743 required OPR to amend the CEQA Guidelines to provide an alternative to the Level of Service (LOS) for evaluating transportation impacts. Particularly within areas served by transit, those alternative criteria must “promote the reduction of greenhouse gas emissions, the development of multimodal transportation networks, and a diversity of land uses (PRC §21099(b)(1)). Measurements of transportation impacts may include vehicle miles traveled, vehicle miles traveled per capita, automobile trip generation rates, or automobile trips generated. Once the CEQA Guidelines are amended to include those alternative criteria, auto delay will no longer be considered a significant impact under CEQA. SB 743 also amended congestion management law to allow cities and counties to opt out of level of service standards within certain infill areas. Aside from changes to transportation analysis, SB 743 also included several changes to CEQA that apply to transit oriented developments including aesthetics and parking. In January, 2016, OPR released the Revised Proposal on Updates to the CEQA Guidelines on Evaluation Transportation Impacts in CEQA. The final version has not been completed yet.
   
   Considering the many CEQA exemptions and streamlining provisions applicable to infill development in current law that apply to infill projects regardless of whether they are located in a city or unincorporated area of a county, as well as the CEQA Guidelines revisions for SB 743 awaiting finalization now, the Committee may wish to consider the need for this bill.
   
2. Class 32 exemption: “in-fill development”.
   
   1. Applicable general plan. All California cities and counties are required to adopt a general plan, which serves as the agency’s long-term blueprint for the community’s vision of future growth. As of 2015, more than half of local jurisdictions had general plans that were over 15 years old.
      
      It is questionable how many of these general plans, especially older ones, have incorporated state planning priorities, including: promoting infill, increasing renewable energy, and conservation of natural and working lands; as well as recently enacted laws, such as SB 379 (Jackson, Chapter 608, Statutes of 2015), which requires cities and counties to review and update their general plans’ safety elements to address risks posed by climate change.
      
      The exemption in this bill, Class 32 (CEQA Guidelines §15332) for an infill development project, requires the project to be consistent with applicable general plan designation and all applicable general plan policies. The term, “applicable” could refer to a woefully outdated general plan and may provide broader latitude in fulfilling a requirement than may be prudent.
      
      In the next update of the CEQA Guidelines, OPR should consider revising this term to a more definitive time period, so that the exemption applies to a project in an area with a general plan that more accurately reflects the priorities of the state.
      
   2. “Substantially surrounded by urban uses”. The Class 32 exemption was established at a time when the concept of infill was relatively new and was spelled “in-fill” as it is shown in CEQA Guidelines §15332. As the idea of infill has advanced, so has the term and how it is defined in other parts of CEQA.
      
      The Class 32 exemption applies to an infill project that is on a site that is “substantially surrounded by urban uses.”
      
      1. “Substantially surrounded by”. A question arises as to what “substantially surrounded by” means. For example, does an urban use need to be adjacent to or simply nearby the project site? If nearby, then how close? And how much of a project’s perimeter is “substantially” surrounded? Is it half, majority, or maybe two-thirds of the project site’s boundary?
         
         More recent exemptions and streamlining provisions to CEQA regarding infill development provide much clearer and defined requirements. For example, PRC §21094.5 definition of “infill project” includes one that is “located within an urban area on a site that has been previously developed, or on a vacant site where at least 75 percent of the perimeter of the site adjoins, or is separated only by an improved right-of-way from, parcels that are developed with qualified urban uses.”
         
         Because the term “substantially surrounded by” is too ambiguous, OPR should consider revising the Class 32 provisions in order to define “substantially surrounded by” in quantifiable and measurable terms consistent with current law as well as specify that the urban uses must be adjacent to the project site in the next update of the CEQA Guidelines.
         
      2. “Urban uses”. The term, “urban use,” is not defined. However, PRC §21072 defines “qualified urban use” as “any residential, commercial, public institutional, transit or transportation passenger facility, or retail use, or any combination of those uses.” Being adjacent to urban uses may provide accessible and existing urban resources and infrastructure, which should be encouraged so as to reduce the pressure for urban sprawl development.
         
         Because the term, “urban use” is not defined, OPR should consider defining the term in the CEQA Guidelines to be consistent with the statute.
         
      3. Project does not have to be in an urban area. The Class 32 exemption does not include any requirement that the project be located in an urban area.
         
         In 2011, SB 226 (Simitian), which provides an abbreviated environmental review process for an infill project helps ensure that projects allowed to use this process are located in an urban area. PRC §21094.5(e)(5), provides that “urban area” includes either an incorporated city or an unincorporated area that is completely surrounded by one or more incorporated cities that meets both of the following criteria: (A) The population of the unincorporated area and the population of the surrounding incorporated cities equal a population of 100,000 or more. (B) The population density of the unincorporated area is equal to, or greater than, the population density of the surrounding cities.”
         
         Without requiring the project to be in an urban area, concern is raised that the Class 32 exemption allows for development along the fringes beyond an urban area that may result in incrementally contributing to urban sprawl.
         
         In order to ensure that a project pursuant to Class 32 does not unintentionally promote urban sprawl, OPR should consider revising the Class 32 exemption to specify that a project must be located in an urban area in the next update of the CEQA Guidelines.
         

Because of the nebulous terminology in CEQA Guidelines §15332 for the Class 32 “in-fill development” exemption, OPR should consider revising the provisions of this exemption for purposes of clarity and consistency with the state’s priorities in the next update of the CEQA Guidelines. In addition, because of the vague requirements, the Committee may wish to consider whether expanding this exemption to development projects in unincorporated areas of counties may have unintended consequences of increasing urban sprawl, which seems antithetical to the intent of this bill.

1. What do we lose with a CEQA exemption? It is not unusual for certain interests to assert that CEQA impedes on a project coming to fruition or that a particular exemption will expedite construction of a particular type of project and reduce costs. This, however, frequently overlooks the benefits of environmental review: to inform decisionmakers and the public about project impacts, identify ways to avoid or significantly reduce environmental damage, prevent environmental damage by requiring feasible alternatives or mitigation measures, disclose to the public reasons why an agency approved a project if significant environmental effects are involved, involve public agencies in the process, and increase public participation in the environmental review and the planning processes.
   
   If a project is exempt from CEQA, certain issues may not get addressed. For example:
   

• How can decisionmakers and the public be aware of impacts, mitigation measures, and alternatives of an exempt action?
  
• Is it appropriate for the public to live with the consequences of exempt projects where impacts are not mitigated and alternatives are not considered regarding certain matters, such as air quality, water quality, noise, cumulative impacts, and growth inducing impacts?
  
• Because adverse project impacts do not disappear when they are not identified and mitigated with an exemption, does the exemption result in a direct transfer of responsibility for mitigating impacts from the project applicant/developer to the public (i.e., taxpayers) if impacts are ultimately addressed after completion of the project?
  
• If taxpayers, rather than a developer, are ultimately responsible for mitigating impacts of an exempt project after project completion, what assessments or taxes will be increased to fund mitigation or pay for alternatives at a later date?

Regardless of the ultimate goal of increasing infill development, the short-term, long-term, and/or permanent consequences of a project should be known by the decisionmakers, the project proponent, and the public before a project is approved, and mitigated or avoided if possible before it is too late – CEQA specifically provides for that informed and responsible decisionmaking.

Does bypassing CEQA potentially create more of a liability for those decisionmakers who should have known about potential impacts, but chose not to? Also, does the short-term benefit of expediency justify potentially long-term, permanent consequences/damages to the community?

1. CEQA litigation. It is not unusual for certain interests to blame CEQA lawsuits for causing problems to a project. However, it should be noted that the only tool for enforcing CEQA is litigation.
   
   Those citing CEQA litigation as a problem do not indicate the result of that litigation. For example, were significant impacts that were not evaluated in the initial document ultimately addressed? What would have been the result if those impacts had not been mitigated (e.g., flooding, exposure of people to hazards, inadequate public services, congestion)?
   
   Also, how prevalent is CEQA litigation? According to the CEQA in the 21^st Century report by BAE Economics and commissioned by the Rose Foundation for Communities and the Environment (August 2016), the number of lawsuits filed under CEQA has averaged 195 per year since 2002. Fewer than 1 out of every 100 projects reviewed under CEQA (that were not considered exempt) were subject to litigation. The estimated rate of litigation for all CEQA projects undergoing environmental review (excluding exemptions) was 0.7% for the past few years.
   
   To help put this in perspective, the total number of CEQA cases filed make up approximately 0.02% of 1,100,000 civil cases filed annually in California.
   
   Furthermore, the California Attorney General’s office conducted a case study of CEQA challenges in the City and County of San Francisco from July 2011 through December 2011 and found that 18 lawsuits were filed out of 5,203 projects considered under CEQA.
   
   According to the Natural Resources Defense Council, a review of CEQA challenges in the City of Los Angeles from January 2011 through July 20, 2012, shows that of 1,182 projects reviewed under CEQA, 18 were challenged, which is a litigation rate of 1.5%.
   
   Although certain interests believe CEQA litigation to be a swathing impediment to some projects, the numbers above seem to indicate otherwise. The volume of CEQA litigation is low considering the thousands of projects subject to CEQA each year as well as the volume of civil litigation in general statewide. And if a project is the subject of litigation, perhaps the cause of action has merit and ensures compliance with the law.
   
2. Conclusion. Increasing infill is a laudable goal. Some environmental benefits could include reduced vehicle miles traveled, less air pollution, reduced energy consumption, and conservation of natural resources and open space. Exemptions and abbreviated environmental reviews have evolved since the Class 32 exemption was originally established that better reflect state policies for land use development, climate change, and conservation of natural and agricultural lands. However, the terminology used in the Class 32 exemption is vague at best and expanding the exemption to counties may unintentionally create more urban sprawl.
   
   Also, the exemption applies to any kind of development, including commercial and industrial projects; and a question arises as to the need for it to apply to all types of development. Currently, the state is facing a housing shortage. The Department of Housing and Community Development estimates that California needs to build an additional 100,000 units per year over recent averages of 80,000 units per year to meet the project housing needs in the state. A question arises as to whether this exemption should be limited to residential and mixed-use developments.
   
   In an effort to provide parity for counties that the author seeks and address infill housing issues in this state, should the Committee choose to move this bill forward, the Committee may wish to consider requiring OPR to limit the types of development projects subject to this categorical exemption, in a city and an unincorporated area of a county, to residential and mixed-use projects.
   

SOURCE:

Author

SUPPORT:

American Council of Engineering Companies

American Planning Association

California Association of Realtors

California Housing Consortium

California State Association of Counties

Contra Costa County

Council of Infill Builders

County of Sacramento

County of San Bernardino

Non-Profit Housing Association of Northern California

Rural County Representatives of California

Santa Clara County Board of Supervisors

Sonoma County Board of Supervisors

Urban Counties of California

OPPOSITION:

None received

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 1404

Author:(Berman)

As Amended Ver:April 17, 2017

Majority vote

SUMMARY: Expands the California Environmental Quality Act (CEQA) categorical exemption for infill development projects within cities to include projects in unincorporated areas, on sites of no more than five acres substantially surrounded by urban uses. Specifically, this bill:

1. Requires infill projects in unincorporated areas to meet the same conditions as infill projects in cities in order to qualify for the categorical exemption.
2. Requires the Office of Planning and Research (OPR) to recommend proposed amendments to the infill categorical exemption, for the purpose of implementing this bill, to the Secretary of the Natural Resources Agency (NRA) for certification and adoption by January 1, 2019.

EXISTING LAW:

1. CEQA requires lead agencies with the principal responsibility for carrying out or approving a proposed project to prepare a negative declaration, mitigated negative declaration, or environmental impact report (EIR) for this action, unless the project is exempt from CEQA. (CEQA includes various statutory exemptions, as well as categorical exemptions in the CEQA Guidelines.)
2. Requires OPR to prepare and develop proposed guidelines for the implementation of CEQA by public agencies, then transmit them to the Secretary of the Natural Resources Agency, who must certify and adopt the guidelines, and update them at least once every two years. Requires the CEQA Guidelines to include a list of classes of projects that have been determined not to have a significant effect on the environment and that shall be exempt from CEQA (i.e., "categorical exemptions").
3. The categorical exemptions are subject to exceptions to assure eligible projects do not have a significant effect on the environment, including when cumulative impacts of successive projects of the same type in the same place may result in significant effect or there is a reasonable possibility that the project will have a significant effect due to unusual circumstances.
4. CEQA includes the following statutory exemptions and streamlining provisions for infill projects:
   1. Exempts residential housing projects which meet detailed criteria established to ensure the project does not have a significant effect on the environment. [SB 1925 (Sher), Chapter 1039, Statutes of 2002] The SB 1925 exemptions are available to:
      1. affordable agricultural housing projects not more than 45 units within a city, or 20 units within an agricultural zone, on a site not more than five acres in size;
      2. urban affordable housing projects not more than 100 units on a site not more than five acres in size; and,
      3. urban infill housing projects not more than 100 units on a site not more than four acres in size which is within one-half mile of a major transit stop.
   2. Requires metropolitan planning organizations (MPOs) to include a sustainable communities strategy (SCS), as defined, in their regional transportation plans, or an alternative planning strategy (APS), for the purpose of reducing greenhouse gas (GHG) emissions, aligns planning for transportation and housing, and creates specified incentives for the implementation of the strategies, including CEQA exemption or abbreviated review for residential or mixed-use residential "transit priority projects" if the project is consistent with the use designation, density, building intensity, and applicable policies specified for the project area in either an approved SCS or APS. [SB 375 (Steinberg), Chapter 728, Statutes of 2008]
   3. Establishes abbreviated CEQA review procedures for specified infill projects, where only specific or more significant effects on the environment which were not addressed in a prior planning-level EIR need be addressed. An EIR for such a project need not consider alternative locations, densities, and building intensities or growth-inducing impacts. Infill projects may include residential, retail, commercial, transit station, school, or public office building projects located within an urban area. [SB 226 (Simitian), Chapter 469, Statutes of 2011] SB 226 requires the OPR to develop CEQA guidelines to implement its infill provisions, including statewide standards to promote smart growth, reduction of GHG emissions, reduction in water use, energy efficiency improvements, and protection of public health.
   4. Exempts from CEQA residential, mixed-use, and "employment center" projects, as defined, located within "transit priority areas," as defined, if the project is consistent with an adopted specific plan and specified elements of a SCS or APS adopted pursuant to SB 375. [SB 743 (Steinberg), Chapter 386, Statutes of 2013]
5. The CEQA Guidelines include a categorical exemption for infill development projects (Section 15332), as follows:
   1. The project is consistent with the applicable general plan designation and all applicable general plan policies as well as with applicable zoning designation and regulations.
   2. The proposed development occurs within city limits on a project site of no more than five acres substantially surrounded by urban uses.
   3. The project site has no value as habitat for endangered, rare, or threatened species.
   4. Approval of the project would not result in any significant effects relating to traffic, noise, air quality, or water quality.
   5. The site can be adequately served by all required utilities and public services.

FISCAL EFFECT: According to the Assembly Appropriations Committee:

1. Increased one-time OPR costs of $150,000 General Fund (GF) over a two-year period to complete the CEQA guideline development and rulemaking.
2. Increased one-time NRA costs of $250,000 GF over a two-year period for guideline certification and adoption.

COMMENTS: CEQA provides a process for evaluating the environmental effects of applicable projects undertaken or approved by public agencies. If a project is not exempt from CEQA, an initial study is prepared to determine whether the project may have a significant effect on the environment. If the initial study shows that the project would not have a significant effect on the environment, the lead agency must prepare a negative declaration. If the initial study shows that the project may have a significant effect, the lead agency must prepare an EIR.

Generally, an EIR must accurately describe the proposed project, identify and analyze each significant environmental impact expected to result from the proposed project, identify mitigation measures to reduce those impacts to the extent feasible, and evaluate a range of reasonable alternatives to the proposed project. Prior to approving any project that has received environmental review, an agency must make certain findings. If mitigation measures are required or incorporated into a project, the agency must adopt a reporting or monitoring program to ensure compliance with those measures.

CEQA includes various statutory exemptions, as well as categorical exemptions in the CEQA Guidelines. SB 1925 (2002) established CEQA exemptions for certain residential projects providing affordable urban or agricultural housing, or located on an infill site within an urbanized area, and meeting specified unit and acreage criteria. The stated intent of the Legislature in enacting those provisions included “creating a streamlined procedure for agricultural employee housing, affordable housing, and urban infill housing projects that do not have an adverse effect on the environment.” For purposes of qualifying for the CEQA exemption for affordable housing, among other criteria, projects must be located within an urbanized area, not more than 5 acres in area and fewer than 100 units.

Since SB 1925, additional legislation has provided CEQA exemptions and streamlining for residential (not specific to, but including, affordable housing) and certain other projects in infill areas.  SB 375 (2008) provided a CEQA exemption for a narrow set of eligible residential projects in infill areas adjacent to transit.  SB 226 (2011) provided abbreviated CEQA review procedures for a broader set of urban infill projects, including retail, commercial, and public buildings.  SB 743 (2013) established a new exemption for residential, mixed-use and "employment center" projects located within one-half mile of a major transit stop, if the project is consistent with an adopted specific plan and specified elements of a SB 375 strategy.  SB 743 also required OPR to propose revisions to the CEQA Guidelines for transportation impacts to better support infill development.

Section 15332 was adopted in the 1990s. Its stated purposed is to promote infill development within urbanized areas. The class consists of environmentally benign infill projects which are consistent with local general plan and zoning requirements. This class is not intended to be applied to projects which would result in any significant traffic, noise, air quality, or water quality effects. Application of this exemption, as all categorical exemptions, is limited by the exceptions described in Section 15300.2.

Since Section 15332 was adopted in the 1990s, CEQA has been amended to add definitions for "infill site" and "urbanized area" and offer exemptions or streamlining for projects that meet these definitions and other criteria. Unlike Section 15332, these statutory provisions are not strictly limited to cities, but unincorporated areas must be surrounded by cities and be at least as dense as the surrounding cities. These provisions prevent the use of exemptions for "sprawl" projects on greenfield sites and/or in relatively sparsely populated unincorporated areas. Because the Section 15332 exemption targets infill projects on sites surrounded by urban uses, it may be appropriate for OPR to revise the exemption to reflect definitions of these terms added to CEQA since the exemption was adopted.

Analysis Prepared by: Lawrence Lingbloom / NAT. RES. / (916) 319-2092 FN: 0000767

Date of Hearing: May 3, 2017

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 1404

Author:(Berman) – As Amended Ver:April 17, 2017

Urgency: No State Mandated Local Program: Yes Reimbursable: No

SUMMARY:

This bill expands the California Environmental Quality Act (CEQA) categorical exemption for infill development projects within cities to include projects in unincorporated areas, on sites of no more than five acres substantially surrounded by urban uses. This bill requires infill projects in unincorporated areas to meet the same conditions as infill projects in cities in order to qualify for the categorical exemption.

This bill also requires the Office of Planning and Research (OPR) to recommend proposed amendments to the infill categorical exemption, for the purpose of implementing this bill, to the Secretary of the Natural Resources Agency (NRA) for certification and adoption by January 1, 2019.

FISCAL EFFECT:

1. Increased one-time OPR costs of $150,000 GF over a two-year period to complete the CEQA guideline development and rulemaking.
2. Increased one-time NRA costs of $250,000 GF over a two-year period for guideline certification and adoption.

COMMENTS:

1. Purpose. Under CEQA, there is a categorical infill exemption provided to only cities. According to the author, as counties have urbanized, it makes sense to utilize the exemption to promote infill development in counties as well. This bill allows counties to utilize the existing categorical infill exemption for 5 acre or smaller projects within urbanized but unincorporated areas of a county that meet the existing conditions that qualify for the exemption.
2. Background. CEQA provides a process for evaluating the environmental effects of applicable projects approved or undertaken by public agencies. For projects that are not exempt from CEQA, an initial study is prepared to determine if the projects may have a significant impact on the environment. If the initial study shows no significant impacts, a negative declaration is issued. If the project may significantly impact the environment, a full Environmental Impact Report (EIR) must be prepared, including the identification of environmental impacts and required mitigation, compliance and reporting measures intended to reduce the environmental impacts to the extent feasible. CEQA also provides for public process and legal challenges.

CEQA requires OPR to prepare and develop proposed guidelines for the implementation of CEQA by public agencies, then transmit them to the Secretary of NRA, who must certify and adopt the guidelines, and update them at least once every two years. CEQA Guidelines are required to include a list of classes of projects that have been determined not to have a significant effect on the environment and that must be exempt from CEQA (i.e., categorical exemptions).

1. Infill Development Conditions. CEQA Guidelines require infill development projects seeking categorical exemption to meet the following conditions:
   1. The project is consistent with the applicable general plan designation and all applicable general plan policies as well as with applicable zoning designation and regulations.
   2. The proposed development occurs within city limits on a project site of no more than five acres substantially surrounded by urban uses.
   3. The project site has no value as habitat for endangered, rare, or threatened species.
   4. Approval of the project would not result in any significant effects relating to traffic, noise, air quality, or water quality.
   5. The site can be adequately served by all required utilities and public services.

This bill requires projects in unincorporated areas to meet the same conditions and requires OPR to recommend proposed changes to the categorical exemption for infill in the CEQA Guidelines.

Analysis Prepared by: Jennifer Galehouse / APPR. / (916) 319-2081

Date of Hearing: April 3, 2017

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Cristina Garcia, Chair

ABPCA Bill Id:AB 1404 (

Author:Berman) – As Introduced Ver:February 17, 2017

SUBJECT: California Environmental Quality Act: categorical exemption: infill development

SUMMARY: Expands the application of the California Environmental Quality Act (CEQA) categorical exemption for infill development projects within cities to include unincorporated areas as well.

EXISTING LAW:

1. CEQA requires lead agencies with the principal responsibility for carrying out or approving a proposed project to prepare a negative declaration, mitigated negative declaration, or environmental impact report (EIR) for this action, unless the project is exempt from CEQA. (CEQA includes various statutory exemptions, as well as categorical exemptions in the CEQA Guidelines.)
   
2. Requires the Office of Planning and Research (OPR) to prepare and develop proposed guidelines for the implementation of CEQA by public agencies, then transmit them to the Secretary of the Natural Resources Agency, who must certify and adopt the guidelines, and update them at least once every two years. Requires the CEQA Guidelines to include a list of classes of projects that have been determined not to have a significant effect on the environment and that shall be exempt from CEQA (i.e., "categorical exemptions").
3. The categorical exemptions are subject to exceptions to assure eligible projects do not have a significant effect on the environment, including when cumulative impacts of successive projects of the same type in the same place may result in significant effect or there is a reasonable possibility that the project will have a significant effect due to unusual circumstances.
4. CEQA includes the following statutory exemptions and streamlining provisions for infill projects:
   1. Exempts residential housing projects which meet detailed criteria established to ensure the project does not have a significant effect on the environment. [SB 1925 (Sher), Chapter 1039, Statutes of 2002] The SB 1925 exemptions are available to:
      1. affordable agricultural housing projects not more than 45 units within a city, or 20 units within an agricultural zone, on a site not more than five acres in size;
      2. urban affordable housing projects not more than 100 units on a site not more than five acres in size; and,
      3. urban infill housing projects not more than 100 units on a site not more than four acres in size which is within one-half mile of a major transit stop.
   2. Requires metropolitan planning organizations (MPOs) to include a sustainable communities strategy (SCS), as defined, in their regional transportation plans, or an alternative planning strategy (APS), for the purpose of reducing greenhouse gas (GHG) emissions, aligns planning for transportation and housing, and creates specified incentives for the implementation of the strategies, including CEQA exemption or abbreviated review for residential or mixed-use residential "transit priority projects" if the project is consistent with the use designation, density, building intensity, and applicable policies specified for the project area in either an approved SCS or APS. [SB 375 (Steinberg), Chapter 728, Statutes of 2008]
      
   3. Establishes abbreviated CEQA review procedures for specified infill projects, where only specific or more significant effects on the environment which were not addressed in a prior planning-level EIR need be addressed. An EIR for such a project need not consider alternative locations, densities, and building intensities or growth-inducing impacts. Infill projects may include residential, retail, commercial, transit station, school, or public office building projects located within an urban area. [SB 226 (Simitian), Chapter 469, Statutes of 2011] SB 226 requires the OPR to develop CEQA guidelines to implement its infill provisions, including statewide standards to promote smart growth, reduction of GHG emissions, reduction in water use, energy efficiency improvements, and protection of public health.
   4. Exempts from CEQA residential, mixed-use, and "employment center" projects, as defined, located within "transit priority areas," as defined, if the project is consistent with an adopted specific plan and specified elements of a SCS or APS adopted pursuant to SB 375. [SB 743 (Steinberg), Chapter 386, Statutes of 2013]
5. The CEQA Guidelines include a categorical exemption for infill development projects (Section 15332), as follows:
   1. The project is consistent with the applicable general plan designation and all applicable general plan policies as well as with applicable zoning designation and regulations.
   2. The proposed development occurs within city limits on a project site of no more than five acres substantially surrounded by urban uses.
   3. The project site has no value as habitat for endangered, rare, or threatened species.
   4. Approval of the project would not result in any significant effects relating to traffic, noise, air quality, or water quality.
   5. The site can be adequately served by all required utilities and public services.

THIS BILL provides that the exemption specified in Section 15332 shall also apply to a proposed development project occurring on unincorporated areas of a county on a project site of no more than five acres substantially surrounded by urban uses if all other conditions of that section are satisfied.

FISCAL EFFECT: Unknown

COMMENTS:

1. Background. CEQA provides a process for evaluating the environmental effects of applicable projects undertaken or approved by public agencies. If a project is not exempt from CEQA, an initial study is prepared to determine whether the project may have a significant effect on the environment. If the initial study shows that the project would not have a significant effect on the environment, the lead agency must prepare a negative declaration. If the initial study shows that the project may have a significant effect, the lead agency must prepare an EIR.

Generally, an EIR must accurately describe the proposed project, identify and analyze each significant environmental impact expected to result from the proposed project, identify mitigation measures to reduce those impacts to the extent feasible, and evaluate a range of reasonable alternatives to the proposed project. Prior to approving any project that has received environmental review, an agency must make certain findings. If mitigation measures are required or incorporated into a project, the agency must adopt a reporting or monitoring program to ensure compliance with those measures.

CEQA includes various statutory exemptions, as well as categorical exemptions in the CEQA Guidelines. SB 1925 (2002) established CEQA exemptions for certain residential projects providing affordable urban or agricultural housing, or located on an infill site within an urbanized area, and meeting specified unit and acreage criteria. The stated intent of the Legislature in enacting those provisions included “creating a streamlined procedure for agricultural employee housing, affordable housing, and urban infill housing projects that do not have an adverse effect on the environment.” For purposes of qualifying for the CEQA exemption for affordable housing, among other criteria, projects must be located within an urbanized area, not more than 5 acres in area and fewer than 100 units.

Since SB 1925, additional legislation has provided CEQA exemptions and streamlining for residential (not specific to, but including, affordable housing) and certain other projects in infill areas.  SB 375 (2008) provided a CEQA exemption for a narrow set of eligible residential projects in infill areas adjacent to transit.  SB 226 (2011) provided abbreviated CEQA review procedures for a broader set of urban infill projects, including retail, commercial, and public buildings.  SB 743 (2013) established a new exemption for residential, mixed-use and "employment center" projects located within one-half mile of a major transit stop, if the project is consistent with an adopted specific plan and specified elements of a SB 375 strategy.  SB 743 also required OPR to propose revisions to the CEQA Guidelines for transportation impacts to better support infill development.

Section 15332 was adopted in the 1990s. Its stated purposed is to promote infill development within urbanized areas. The class consists of environmentally benign infill projects which are consistent with local general plan and zoning requirements. This class is not intended to be applied to projects which would result in any significant traffic, noise, air quality, or water quality effects. Application of this exemption, as all categorical exemptions, is limited by the exceptions described in Section 15300.2.

1. Author's statement:

Under CEQA, there is a categorical infill exemption provided to only cities. As counties have urbanized, it makes sense to utilize the exemption to promote infill development in counties as well. Therefore, AB 1404 would allow counties to utilize the existing categorical infill exemption for projects within urbanized but unincorporated areas of a county that meet the existing conditions that qualify for the exemption. This bill would not change the existing categorical infill exemption, except to allow projects in counties to be eligible for the exemption. Statutory authority is needed to apply the exemption to counties. Therefore, absent legislation, we do not believe that OPR has the statutory authority to make the change in AB 1404. AB 1404 would allow counties to utilize the existing categorical infill exemption to promote infill development projects, such as housing, in unincorporated areas of a county. As we face a housing crisis, infill development is critical to accommodating growth and redesigning our communities, including counties, to be environmentally and socially sustainable. AB 1404 would encourage infill development more effectively in urbanized areas in our counties and thus help foster economic and smart growth in California without adversely impacting the environment.

1. Should the Section 15332 exemption account for density? As noted above, since Section 15332 was adopted in the 1990s, CEQA has been amended to add definitions for "infill site" and "urbanized area" and offer exemptions or streamlining for projects that meet these definitions and other criteria. Unlike Section 15332, these statutory provisions are not strictly limited to cities, but unincorporated areas must be surrounded by cities and be at least as dense as the surrounding cities. These provisions prevent the use of exemptions for "sprawl" projects on greenfield sites and/or in relatively sparsely populated unincorporated areas. Because the Section 15332 exemption targets infill projects on sites surrounded by urban uses, it may be appropriate for OPR to revise the exemption to reflect definitions of these terms added to CEQA since the exemption was adopted.
2. Technical amendments. Because this bill's objective is to effect an amendment to the CEQA Guidelines, the author and the committee may wish to consider amending the bill to clarify that it is a categorical, rather than statutory, exemption, add a provision requiring the Guidelines be amended to reflect the change by 2019, and make the language uncodified rather than add a new section to the CEQA statute.
3. Related legislation. AB 239 (Ridley-Thomas), pending in this committee, reduces the density requirement for unincorporated areas to be considered "urbanized areas" for purposes of eligibility for specified CEQA exemptions and streamlining, including SB 226.

REGISTERED SUPPORT / OPPOSITION:

Support

American Planning Association, California Chapter

California Association of Realtors

California State Association of Counties

Rural County Representatives of California

Urban Counties of California

Opposition

None on file

Analysis Prepared by: Lawrence Lingbloom / NAT. RES. /