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 exempts certain projects from its requirements.

Existing federal law authorizes the governor of a state to nominate a specified number of census tracts that meet certain requirements as a qualified opportunity zone and authorizes the Treasury Secretary to designate those tracts as qualified opportunity zones. Existing federal law provides certain federal tax incentives to a taxpayer who invests in a qualified opportunity fund, which is an investment vehicle organized for the purpose of investing in qualified opportunity zone property, as prescribed.

This bill would exempt a project that is financed by a qualified opportunity fund and that meets certain requirements from CEQA. The bill would require the project proponent to make certain certifications regarding the project. The bill would require a lead agency, before making a determination that the project is exempt from CEQA, to hold a noticed public hearing on the project, as specified. The bill would require the lead agency, if it determines that a project is exempt from CEQA under the above exemption and determines to approve or carry out the project, to file a specified notice with the Office of Planning and Research. Because a lead agency would have to determine the applicability of the exemption, to take certain specified action before determining that a project is exempt, and to file a notice with the Office of Planning and Research, the 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.

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 exempts certain projects from its requirements.

Existing federal law authorizes the governor of a state to nominate a specified number of census tracts that meet certain requirements as a qualified opportunity zone and authorizes the Treasury Secretary to designate those tracts as qualified opportunity zones. Existing federal law provides certain federal tax incentives to a taxpayer who invests in a qualified opportunity fund, which is an investment vehicle organized for the purpose of investing in qualified opportunity zone property, as prescribed.

This bill would exempt a project that is financed by a qualified opportunity fund and that meets certain requirements from CEQA. The bill would require the project proponent to make certain certifications regarding the project. The bill would require a lead agency, before making a determination that the project is exempt from CEQA, to hold a noticed public hearing on the project, as specified. The bill would require the lead agency, if it determines that a project is exempt from CEQA under the above exemption and determines to approve or carry out the project, to file a specified notice with the Office of Planning and Research. Because a lead agency would have to determine the applicability of the exemption, to take certain specified action before determining that a project is exempt, and to file a notice with the Office of Planning and Research, the 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.

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 exempts certain projects from its requirements.

Existing federal law authorizes the governor of a state to nominate a specified number of census tracts that meet certain requirements as a qualified opportunity zone and authorizes the Treasury Secretary to designate those tracts as qualified opportunity zones. Existing federal law provides certain federal tax incentives to a taxpayer who invests in a qualified opportunity fund, which is an investment vehicle organized for the purpose of investing in qualified opportunity zone property, as prescribed.

This bill would exempt a project located in a qualified opportunity zone and that is financed in whole or in part, directly or indirectly, financed by a qualified opportunity fund and that meets certain requirements from CEQA. The bill would require a proponent of this type of project to comply with certain prevailing wage and skilled and trained workforce requirements. a lead agency, before making a determination that the project is exempt from CEQA, to hold a noticed public hearing on the project, as specified. The bill would require the lead agency, if it determines that a project is exempt from CEQA under the above exemption and determines to approve or carry out the project, to file a specified notice with the Office of Planning and Research. Because a lead agency would have to determine the applicability of the exemption and exemption, to take certain specified action upon a determination of exemption, before determining that a project is exempt, and to file a notice with the Office of Planning and Research, the 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.

The Planning and Zoning Law, among other things, requires the legislative body of each county and city to adopt a comprehensive, long-term general plan for the physical development of the county or city and of any land outside its boundaries that relates to its planning, and provides for the adoption and administration of zoning laws, ordinances, rules, and regulations by counties and cities.

This bill would make nonsubstantive changes to those provisions.

SENATE COMMITTEE ON

Senator Anthony Portantino, Chair

2017 - 2018 Regular Session

AB 3030 (Caballero) - California Environmental Quality Act: exemption: qualified opportunity zones

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

Bill Summary:

This bill would exempt from the California Environmental Quality Act (CEQA) residential and mixed-use projects with 50 percent affordable housing, financed by a "qualified opportunity fund," that meet numerous specified requirements, including that it is consistent with local land use plans, ensures the payment of prevailing wage, and does not have any significant impacts that have not been publicly disclosed, analyzed, and mitigated.

Fiscal Impact:

• Unknown cost pressures on trial courts for increased litigation.
• Minor and absorbable costs for Judicial Council to review and revise the rules of the court to meet the requirements of this bill.
• Minor and absorbable costs for the Office of Planning and Research to process a judicial streamlining request.

Background:

CEQA requires state and local agencies to follow a set protocol in order to disclose and evaluate any significant environmental impacts associated with proposed projects and to adopt feasible measures to mitigate those impacts. Projects determined to have significant environmental impacts generally are required to create an Environmental Impact Report (EIR). The 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. To enforce the requirements of CEQA, a civil action may be brought under several code sections to attack, review, set aside, void, or annul the acts or decisions of a public agency for noncompliance.

Existing law provides a framework for expediting CEQA review of major projects. AB 900 (Buchanan, Ch. 354, Stats. 2011) established specified administrative and judicial review procedures for the review of the EIR and public agency approvals granted for designated residential, retail, commercial, sports, cultural, entertainment, or recreational use projects, or clean renewable energy or clean energy manufacturing projects. To qualify as a leadership project, the project must:

1. exceed a cost of $100 million and not result in any net additional emissions of greenhouse gases;
2. create high-wage, highly skilled jobs that pay prevailing and living wages and provide construction jobs and permanent jobs for Californians; and
3. be subject to an agreement with the lead agency that all mitigation measures will be enforced and monitored.

Additionally, the applicant bears the burden of costs for any hearing or decision before the Court of Appeal. The Governor has the discretion to certify the project. If the Governor does so, the application is submitted to the Joint Legislative Budget Committee for its concurrence.

Proposed Law: This bill would exempt from CEQA housing projects where at least 50 percent of the project is affordable housing and at least two-thirds of the square footage is for residential use, if the project is located in a qualified opportunity zone, is financed by a qualified opportunity fund, and:

• Pay all construction workers at least the general prevailing wage and uses a skilled and trained workforce to complete the project (which requires at least 50% of the workforce to be graduates from apprenticeship programs by January 1, 2019, and 60% by January 1, 2020).
• Not require demolition of affordable housing, conversion of rental units, or impact a site with mobile homes or special occupancies.
• Be consistent with applicable local plans and policies and any housing element that is adopted within 10 years of the date of project application for which an EIR has been certified, complies with previously approved mitigation measures, and has existing utilities and schools available.
• Satisfy specified environmental assessment and mitigation measures specified by the ASTM International for Standard Practice for Environmental Assessments.
• Not be located on a "site that has culture or historic resources" or is located in the coastal zone, on farmlands or wetlands, in a flood area, or on the list of facilities or site complied by DTSC containing hazardous waste facilities or property.

Related Legislation:

• AB 734 (Bonta, 2018) would establish procedures specific the Oakland Sports and Mixed-Use Project in the City of Oakland that would provide expedited administrative and judicial review procedures.
• AB 987 (Kamlager-Dove, 2018) would establish specified administrative and judicial review procedures for the EIR and approvals granted for a project related to the development of a specified sports and entertainment project in the City of Inglewood.
• AB 2267 (Wood, 2018) would exempt the City of Santa Rosa from CEQA until January 1, 2024, with regard to the adoption or approval of amendments to land use plans that meet certain requirements. The bill would also authorize streamlined judicial review for the adoption or amendment of a specific plan, general plan, zoning ordinance, or other planning document by a local public agency for purposes related to promoting housing development and infill.

Staff Comments:

It makes sense to consider this bill in the context of several CEQA-related bills currently before this committee. There are several CEQA-related bills currently before this committee that staff recommends evaluating as a comprehensive package rather than on an individual basis. First, it makes sense for the committee to apply a uniform approach to all of the CEQA-related bills that it is considering. Second, these bills would require resources from the same program areas of the same departments. While the impact of each bill individually might be absorbable, some or all of the bills implemented collectively could result in significant cost pressure and a need for additional resources.

Exemptions and Alternative Processes Could Reduce Protections Offered by CEQA. CEQA was enacted in order to offer specific environmental protections to both Californians and the California environment. Some projects, especially large-scale ones, can experience significant delays under the current CEQA process. Providing an exemption or alternative to some projects can make sense in certain circumstances when the overall public benefit of the project is clear. However, when that is the case, staff recommends ensuring that a similar level of environmental protection is required.

-- END --

SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Wieckowski, Chair

2017 - 2018 Regular

Bill No: AB 3030

SUBJECT: California Environmental Quality Act: exemption: qualified opportunity zones

ANALYSIS:

Existing federal law:

Pursuant to H.R.1, which enacted fundamental changes to the federal income tax, among other things, allows state governors to designate certain census tracts as Opportunity Zones in their states. Investments made by individuals through special funds in these zones can defer or eliminate federal taxes on capital gains. The Governor can designate up to 25 percent of census tracts that either have poverty rates of at least 20 percent or median family incomes of no more than 80 percent of statewide or metropolitan area family income. 

Existing state law:

1. Pursuant to the Planning and Zoning Law (Government Code §65000 et seq.):
   
   1. Requires a city or county to prepare and adopt a general plan, including a housing element, to guide future growth of a community. The housing element must consist of an identification and analysis of existing and projected housing needs and a statement of goals, policy objectives, financial resources, and scheduled programs for the preservation, improvement, and development of housing.
      
   2. Requires the housing element to identify adequate sites for housing, including rental housing, factory-built housing, mobile homes, and emergency shelters and to make adequate provisions for the existing and projected needs of all economic segments of the community.
      
   3. After the adoption of a general plan, permits localities to prepare specific plans for the systematic implementation of the general plan for all or part of the area covered by the general plan. A specific plan must include a statement of the relationship to the general plan, and a text and diagram(s) specifying all of the following in detail:
      
      1. The distribution, location, and extent of the uses of land, including open space, within the area covered by the plan.
      2. The proposed distribution, location, and extent and intensity of major components of public and private transportation, sewage, water drainage, solid waste disposal, energy, and other essential facilities proposed to be located within the area covered by the plan and needed to support the land uses described in the plan.
      3. Standards and criteria by which development will proceed, and standards for the conservation, development, and utilization of natural resources, where applicable.
      4. A program of implementation measures including regulations, programs, public works projects, and specified financing measures.
         
   4. Requires localities, upon the approval of a general plan, to submit an annual report to the Office of Planning and Research (OPR) and the Department of Housing and Community Development (HCD), which includes the following:
      
      1. Status of the general plan and progress of its implementation.
      2. Progress in meeting its share of regional housing needs and local efforts to remove governmental constraints to the maintenance, improvement, and development of housing.
         
2. Pursuant to the California Environmental Quality Act (CEQA) (Public Resources Code (PRC) §21000 et seq.):
   
   1. 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. Provides various statutory exemptions and streamlining provisions applicable to housing and 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 SCS or an APS (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).
   3. 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. Exempts a residential infill project, as specified. (CEQA Guidelines §15195).
      4. Exempts 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, as specified (CEQA Guidelines §15332).

This bill:

1. Exempts from CEQA a project that is financed by a qualified opportunity fund and that meets the following requirements:
   
   1. Is financed by a qualified opportunity fund.
   2. At least 50 percent of the project is affordable housing and at least two-thirds of the development’s square footage is designated residential.
   3. Is not located on a site requiring demolition of affordable housing or conversion of rental units to for-sale units, or a site with mobilehomes or other special occupancies.
   4. Is consistent with the general plan land use designation and policies, zoning and municipal or county ordinances, policies, and mitigation.
   5. Complies with previously approved applicable mitigation measures and standards.
   6. Does not require a water supply assessment.
   7. Has available existing utilities and schools to serve the project.
   8. Does not have any risk of exposure to hazardous substances that exceed local, state, or federal standards.
   9. Is not located on a site that has culture or historic resources.
   10. Is not located on a site that is in or on any of the following:
       1. Farmland.
       2.  Wetland.
       3.  Flood area.
       4. Land subject to ground failure or designated for protection of natural resources.
       5. Land under a conservation easement.
   11. Does not have any significant impacts that have not been publicly disclosed, analyzed, and mitigated.
2. Prior to determining that a project is exempt pursuant to this section, the lead agency shall do all of the following:
   1. Issue and publish a draft determination that the project is exempt pursuant to this section.
   2. Hold a noticed public hearing no earlier than 30 days following the publication of the draft determination and at least 30 days prior to the issuance of a final determination in areas affected by the project to hear and respond to public comments.
   3. Publish a notification no fewer times than required by Section 6061 of the Government Code, by the lead agency in a newspaper of general circulation in the area affected by the proposed project. If more than one area will be affected, the notice shall be published in the newspaper with the largest circulation from among the newspapers of general circulation in those areas.
3. Requires a lead agency, before making a determination that the project is exempt from CEQA, to hold a noticed public hearing on the project, as specified. Requires the lead agency, if it determines that a project is exempt from CEQA under this exemption and determines to approve or carry out the project, to file a specified notice with the Office of Planning and Research.

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. A CEQA exemption does not alleviate a project proponent from its obligation to obtain mandatory permits or adhere to specified regulatory programs. CEQA assists in moving a project through the multi-disciplinary, regulatory process because responsible agencies 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. Opportunity Zones. The federal tax bill passed at the end of December 2017 allows the Governor to designate certain census tracts as Opportunity Zones. Investments made by individuals through special funds in these zones would be allowed to defer or eliminate federal taxes on capital gains. The Governor can designate up to 25 percent of census tracts that either have poverty rates of at least 20 percent or median family incomes of no more than 80 percent of statewide or metropolitan area family income. There are 3,516 census tracts in 54 California counties that would qualify under one or both of the mandatory criteria, allowing the Governor to designate up to 879 tracts. As census tracts are designed to capture geographic areas of around 4,000 people, more than 3 million Californians would potentially be located in one of these areas.
3. 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 (Núñez, Pavley, Chapter 488, Statutes of 2006) 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.
   
4. Infill development and CEQA. Several changes have been made to CEQA to encourage infill projects, including the following:
   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, 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 author, “An emergency exists in California due to the number of citizens living in real world poverty, and California should be committed to respond with emergency measures to stem the growing poor population. The federal government developed a creative program to put to work trillions of dollars of unrealized capital gains, aimed directly at the nation’s poorest communities. California can leverage that opportunity by ensuring that Opportunity Zone Fund capital flows freely into California’s designated Opportunity Zones. AB 3030 creates the right investment market conditions for California Opportunity Zone projects to capture private investment capital. AB 3030 provides relief to those poor communities most impacted from widening economic and income inequality, by creating an attractive investing environment for rapidly developing affordable housing in designated California Opportunity Zones.”
2. Streamlining provisions already available in CEQA applicable to housing and infill development.
   
   1. Streamlining provisions for housing and infill development. Several provisions in CEQA provide streamlined approaches, including:
      

• Master and focused EIRs; 

• Infill residential, mixed-use, and transit priority project streamlining (SB 375, Steinberg, Chapter 728, Statutes of 2008); 

• Special procedures for various types of housing projects (SB 1925, Sher, Polanco, Chapter 1039, Statutes of 2002); 

• Various litigation, mediation, tiering, and other revisions (SB 1456, Simitian, Chapter 496, Statutes of 2010); 

• Exemption for transit priority projects that are consistent with a previously adopted Specific Plan and the relevant regional Sustainable Communities Strategy (SB 743, Steinberg, Chapter 386, Statutes of 2013);
• Expansion of the statutory exemption for infill residential housing by increasing the allowable percentage of neighborhood-serving commercial uses within a project (SB 674, Corbett, Chapter 549, Statutes of 2014);
• Amendments to procedures relating to findings of overriding consideration (AB 231, Huber, Chapter 432, Statutes of 2010); 

• Infill project and other streamlining provisions (SB 226, Simitian, Vargas, Chapter 469, Statutes of 2011);
• Authorization to mediate a CEQA lawsuit (SB 894, Senate Local Government Committee, Chapter 699, Statutes of 2010); and, 

• Several categorical exemptions contained in the CEQA Guidelines. 

  

1. 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 development. 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 any of them.

1. Is CEQA a major hindrance to building houses? The Construction Industry Research Board (CIRB) Report is a research service provided by the California Homebuilding Foundation and produces current and historical statewide building permit statistics.
   
   The following data is from the CIRB chart, Housing Production In California 2003-2017, and reflects the total number of housing units built annually for the past 15 years (including projected numbers for 2017):
   

According to the U.S. National Bureau of Economic Research, the Great Recession began in December 2007 and ended in mid-2009. The economy began to recover in June 2009 and has averaged 2.1% annual growth since then. Similarly, the table above shows that in 2007, total housing production was at 113,034 units; hit its low in 2009 with a total of 36,421 units; and has steadily increased since 2009. The number of housing units built each year seems to follow a similar trajectory as that of the economy. Meanwhile, CEQA has been a constant, as well as for decades prior. A question arises as to whether CEQA actually hinders the number of housing units built in the state or whether other factors, such as the economy, have a much greater influence.

1. Does CEQA make building affordable housing more expensive? According to HCD’s study, Affordable Housing Cost Study (2014), the major components of total development costs (excluding land cost) across 400 affordable housing development projects analyzed are as follows: construction (69%); demolition and site preparation (8%); development fees (7%); permits and development impact fees (6%); architect, engineering, and site surveys (4%); acquisition costs (1%); offsite improvements (1%); and “other costs” (4%).
   
   The Rose Foundation report notes of HCD’s affordable housing study that the “study did not identify CEQA compliance costs, so the issue of CEQA’s effect on development costs cannot be discerned. Indeed, few of the projects included in the study identified an EIR as part of their project. Information pertaining to the type of CEQA review required of a project was collected through a Developer Survey, which generated 330 useable responses. Just 31 responses (9% of all projects surveyed) stated that an EIR had been prepared or was anticipated.”
   
   For whom does a CEQA exemption make housing more affordable? For the developer or housing residents? Does reducing a developer’s costs with CEQA exemption translate into savings for the low-income resident? Rents and property values are generally determined by the market, not by the cost of a project. Or is this solely a cost reduction for the developer?
   
2. 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?

A lot of changes can happen in a community and environment over the course of ten years. Regardless of the ultimate goal of increasing housing quickly, 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 civil litigation. So, attempts to eliminate the possibility of litigation means taking away the ability to enforce the law.
   
   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 mentioned above, 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 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. Environmental Justice? In California there is a need to create more affordable housing. However, are there two different classes of environmental protection created when CEQA exemptions are granted for projects meant to help serve low-income populations? Does an exemption for an affordable housing project mean that it is okay to turn a blind eye to possible significant environmental health impacts that may await the residents once they move in, such as toxic contamination?
   
   For example, in 1976, the Midway Village Project Housing Complex was constructed on a former U.S. Navy property in Daly City. It was built without soil sampling and was later found that there was significant soil contamination of hazardous chemicals that caused residents of the affordable housing facility to become sick and forced to move out of their homes. Decades later, this is still a Superfund site. Had a thorough environmental review been conducted prior to construction, perhaps this unfortunate incident could have been avoided or mitigated.
   
   More recently in January 2016, in the interest of expedience, DTSC proposed that a CEQA exemption be granted for the cleanup of residences surrounding the Exide facility in Vernon, California, where elevated lead levels were found. However, community members and representatives did not want a waiver under CEQA or a modified CEQA review because of health concerns associated with the cleanup.
   
   In this bill, §65623(a) prohibits a local government from denying a development that satisfies specified criteria – This provision essentially deems such a project ministerial for purposes of CEQA. The bill provides an exception to the exemption stating that a local government may deny a development if, “the local government finds, based upon substantial evidence in the record of the public hearing on the project, that a physical condition on the site of the development that was not known at the time the specific plan was prepared would have a specific, adverse impact upon the public health or safety, and there is no feasible method to satisfactorily mitigate or avoid the specific adverse impact without rendering the development unaffordable to low-, moderate-, and middle-income households.”
   
   This provision essentially provides that it is acceptable for the financial costs of a project to outweigh potential impacts to public health of people of low-, moderate-, and middle-income households. Regardless of the fact this language is taken from the Housing Accountability Act, is it acceptable to grant convenience and cost-savings to developers in the short-term if the long-term consequences may be damaging to the health of residents?
   
   A question arises as to why low-income citizens should be deprived of the same protections that CEQA provides for any other project. Environmental protection should be provided regardless of class and this bill does not provide a satisfactory safety net.
   
   If the goal is to provide expediency via an exemption, CEQA Guidelines §15183, also referred to as a community plan exemption (CPE), provides an exemption for projects such as those proposed in this bill. However, §15183 provides a safety net to the CPE exemption so that if circumstances arise, such as environmental effects were not analyzed in the plan’s EIR, then the public agency shall limit its examination to those effects. As noted in §15183, “This streamlines the review of such projects and reduces the need to prepare repetitive environmental studies.”
   
3. Meeting the Criteria of CEQA without conducting a CEQA review? This bill specifies that, in order to be eligible for the exemption provided, a project must meet the following criteria:
   
   1. Be at least 50 percent of the project is affordable housing and at least two-thirds of the development’s square footage is designated residential.
   2. Not be located on a site requiring demolition of affordable housing or conversion of rental units to for-sale units, or a site with mobilehomes or other special occupancies.
   3. Is consistent with the general plan land use designation and policies, zoning and municipal or county ordinances, policies, and mitigation.
   4. Complies with previously approved applicable mitigation measures and standards.
   5. Does not require a water supply assessment.
   6. Has available existing utilities and schools to serve the project.
   7. Does not have any risk of exposure to hazardous substances that exceed local, state, or federal standards.
   8. Is not located on a site that has culture or historic resources.
   9. Is not located on a site that is in or on any of the following:
      1. Farmland.
      2.  Wetland.
      3.  Flood area.
      4. Land subject to ground failure or designated for protection of natural resources.
      5. Land under a conservation easement.
   10. Does not have any significant impacts that have not been publicly disclosed, analyzed, and mitigated.

CEQA is the law that provides for the documentation of all of this information. If you don’t comply with CEQA how else do you gather this information in a thorough and publicly transparent way that allows review?

1. CEQA is more important in economically depressed areas – not less. This bill asserts that CEQA is an impediment to development in opportunity zones. However, CEQA is the documentation that local governments use to ensure that development is done in a way that does not present additional environmental burdens on the residents of a community. Opportunities zones overlay with environmental disadvantaged communities. Development that is undertaken that does not have proper oversight, review, and implementation of mitigation measures presents a real risk of additional environmental and public health harm.

The committee may wish to consider if this bill is in the best interest of our most economically depressed communities in California.

Related/Prior Legislation

AB 2267 (Wood) exempts from the California Environmental Quality Act (CEQA) the reconstruction of wildfire-damaged housing, expanding an existing categorical exemption to allow a 50% increase in density. This bill is set to be heard in the Senate Environmental Quality Committee on June 20, 2018.

SOURCE:

Author

SUPPORT:

California Apartment Association

California Association of Realtors

California Business Properties

Association California Chambers of Commerce

City of Salinas

OPPOSITION:

Sierra Club

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 3030

Author:(Caballero)

As Amended Ver:April 18, 2018

Majority vote

SUMMARY: Exempts from the California Environmental Quality Act (CEQA) residential and mixed-use projects with 50% affordable housing, financed by a "qualified opportunity fund," and meeting other specified criteria. Specifically, this bill:

1. Exempts from CEQA a project that meets all of the following requirements:
   1. Is financed by a qualified opportunity fund.
   2. At least 50% of the project is affordable housing and at least two-thirds of the development’s square footage is designated residential.
   3. Is not located on a site requiring demolition of affordable housing or conversion of rental units to for-sale units, or a site with mobilehomes or other special occupancies.
   4. Ensures payment of prevailing wages and employment of a skilled and trained workforce.
   5. Is consistent with the general plan land use designation and policies, zoning and municipal or county ordinances, policies, and mitigation.
   6. Does not require a conditional use permit, subdivision, zoning variances, or a change to the general plan or zoning land use designation.
   7. Complies with previously approved applicable mitigation measures and standards.
   8. Does not require a water supply assessment.
   9. Has available existing utilities and schools to serve the project.
   10. Does not have any risk of exposure to hazardous substances that exceed local, state, or federal standards.
   11. Is not located on a site that has culture or historic resources.
   12. Is not located on a site that is in or on the coastal zone, farmland, wetland, fire zone or area with high risk of fires or explosions, earthquake fault zone, flood area, land subject to ground failure or designated for protection of natural resources, or land under a conservation easement.
   13. Does not have any significant impacts that have not been publicly disclosed, analyzed, and mitigated.
2. Requires the lead agency, prior to determining that a project is exempt, to:
   1. Issue and publish a draft determination that the project is exempt pursuant to this section.
   2. Hold a noticed public hearing no earlier than 30 days following the publication of the draft determination and at least 30 days prior to the issuance of a final determination in areas affected by the project to hear and respond to public comments.
3. Requires the lead agency shall file a notice of exemption with the Office of Planning and Research (OPR) at least 30 days following the noticed public hearing.

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. Federal tax law defines "qualified opportunity zone" as a population census tract that is a low-income community that is designated as a qualified opportunity zone and "qualified opportunity fund" as any investment vehicle which is organized as a corporation or a partnership for the purpose of investing in qualified opportunity zone property (other than another qualified opportunity fund) that holds at least 90% of its assets in qualified opportunity zone property.

FISCAL EFFECT: According to the Assembly Appropriations Committee, negligible, if any, state impact.

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 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. 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.

In 2017, the Legislature passed three bills to streamline the CEQA process for affordable housing projects. SB 35 (Wiener), Chapter 366, Statutes of 2017, establishes a ministerial approval process (i.e., not subject to CEQA) for certain multifamily affordable housing projects that are proposed in local jurisdictions that have not met regional housing needs. SB 540 (Roth), Chapter 369, Statutes of 2017, authorizes a city or county to establish a Workforce Housing Opportunity Zone (WHOZ) by preparing an EIR and by adopting a specific plan. Once a WHOZ is established, and for five years thereafter, approval of eligible housing developments within a WHOZ is required within 60 days without requiring the preparation of an EIR or negative declaration under CEQA. AB 73 (Chiu), Chapter 371, Statutes of 2017, authorizes a city or county to create a "housing sustainability district" (HSD) to complete upfront zoning and environmental review in order to receive incentive payments for residential and mixed-use development projects with an affordable housing component. Once an EIR has been prepared for designation of an HSD, housing projects within, and consistent with, the HSD are exempt from CEQA.

The federal tax bill passed in December 2017 allows the Governor to designate certain census tracts as Opportunity Zones. Investments made by individuals through special funds in these zones would be allowed to defer or eliminate federal taxes on capital gains. The Governor can designate up to 25% of census tracts that either have poverty rates of at least 20% or median family incomes of no more than 80% of statewide or metropolitan area family income. There are 3,516 census tracts in 54 California counties that would qualify under one or both of the mandatory criteria, allowing the Governor to designate up to 879 tracts. As census tracts are designed to capture geographic areas of around 4,000 people, more than 3 million Californians would potentially be located in one of these areas.

The U.S. Department of the Treasury has certified California's nominated eligible census tracts and has designated all 879 nominated tracts as Qualified Opportunity Zones. The selected tracts are heavily consistent with the designation of disadvantaged communities for Cap and Trade purposes. Of the chosen tracts, 96% overlap with AB 1550 (Gomez), Chapter 369, Statutes of 2016, designations and 64% have SB 535 (De León), Chapter 830, Statutes of 2012, designations.

The new exemption created by this bill is limited by the bill's conditions to a very small area of the state, then further limited by project-specific conditions. Considering the array of existing pathways to lessen or eliminate CEQA review for housing projects, it's not clear this bill would apply to any project that is not already eligible for CEQA exemption. In addition, the bill won't operate like an ordinary statutory exemption because some of its conditions require project-specific analysis and monitoring. For example, the project must comply with "previously approved applicable mitigation measures and standards," which would have been adopted in a prior EIR and may require ongoing monitoring to ensure compliance. Also, the lead agency must make findings regarding exposure to hazardous substances, site-specific cultural and historic resources, and any other significant impacts that have not been publicly disclosed, analyzed and mitigated. Meeting these conditions implies a level of CEQA review similar to a project that is not exempt.

Analysis Prepared by: Lawrence Lingbloom / NAT. RES. / (916) 319-2092 FN: 0002914

Date of Hearing: May 9, 2018

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 3030

Author:(Caballero) – As Amended Ver:April 18, 2018

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

SUMMARY:

This bill exempts from the California Environmental Quality Act (CEQA) residential and mixed-use projects with 50% affordable housing, financed by a "qualified opportunity fund," that meet numerous specified requirements, including that it is consistent with local land use plans, ensures the payment of prevailing wage, and does not have any significant impacts that have not been publicly disclosed, analyzed, and mitigated. Additionally, this bill requires the lead agency, prior to determining that a project is exempt, to:

1. Issue and publish a draft determination that the project is exempt pursuant to this section.
2. Hold a noticed public hearing no earlier than 30 days following the publication of the draft determination and at least 30 days prior to the issuance of a final determination in areas affected by the project to hear and respond to public comments.

Lastly, this bill requires the lead agency to file a notice of exemption with the Office of Planning and Research (OPR) at least 30 days following the noticed public hearing.

FISCAL EFFECT:

Negligible, if any, state impact.

COMMENTS:

1. Purpose. According to the author, “AB 3030 creates a fast path to new economic development and affordable housing development in California’s poorest communities by creating a new code that exempts from CEQA certain projects in defined Opportunity Zones.”
2. Background. CEQA requires the principal public agency with responsibility for carrying out or approving a proposed project, known as the lead agency, to prepare a negative declaration, mitigated negative declaration, or environmental impact report for the action, unless the project is exempt from CEQA.

In 2017, the Legislature passed three bills to streamline the CEQA process for affordable housing projects. SB 35 (Wiener), Chapter 366, Statutes of 2017, establishes a ministerial approval process (i.e., not subject to CEQA) for certain multifamily affordable housing projects that are proposed in local jurisdictions that have not met regional housing needs.

SB 540 (Roth), Chapter 369, Statutes of 2017, authorizes a city or county to establish a Workforce Housing Opportunity Zone (WHOZ) by preparing an EIR and by adopting a specific plan. Once a WHOZ is established, and for five years thereafter, approval of eligible housing developments within a WHOZ is required within 60 days without requiring the preparation of an EIR or negative declaration under CEQA. AB 73 (Chiu), Chapter 371, Statutes of 2017, authorizes a city or county to create a "housing sustainability district" (HSD) to complete upfront zoning and environmental review in order to receive incentive payments for residential and mixed-use development projects with an affordable housing component. Once an EIR has been prepared for designation of an HSD, housing projects within, and consistent with, the HSD are exempt from CEQA.

This bill creates another CEQA exemption for housing with very project-specific conditions.

1. Qualified opportunity zones. The federal tax bill passed in December 2017 allows the governor to designate certain census tracts as Opportunity Zones. Investments made by individuals through special funds in these zones would be allowed to defer or eliminate federal taxes on capital gains. The governor can designate up to 25% of census tracts that either have poverty rates of at least 20% or median family incomes of no more than 80% of statewide or metropolitan area family income. There are 3,516 census tracts in 54 California counties that would qualify under one or both of the mandatory criteria, allowing the governor to designate up to 879 tracts. As census tracts are designed to capture geographic areas of around 4,000 people, more than 3 million Californians would potentially be located in one of these areas.

The U.S. Department of the Treasury has certified California's nominated eligible census tracts and has designated all 879 nominated tracts as Qualified Opportunity Zones. The selected tracts are heavily consistent with the designation of disadvantaged communities for AB 32 cap-and-trade-revenue funding purposes.

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

Date of Hearing: April 25, 2018

ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT

Tony Thurmond, Chair

ABPCA Bill Id:AB 3030 (

Author:Caballero) – As Amended Ver:April 18, 2018

SUBJECT: California Environmental Quality Act: exemption: qualified opportunity zones

SUMMARY: Exempts from the California Environmental Quality Act (CEQA) residential and mixed-use projects with 50% affordable housing, financed by a "qualified opportunity fund," and meeting other specified criteria. Specifically, this bill:

1. Exempts from CEQA a project that meets all of the following requirements:
   1. Is financed by a qualified opportunity fund.
   2. At least 50% of the project is affordable housing and at least two-thirds of the development’s square footage is designated residential.
   3. Is not located on a site requiring demolition of affordable housing or conversion of rental units to for-sale units, or a site with mobile homes or other special occupancies.
   4. Ensures payment of prevailing wages and employment of a skilled and trained workforce.
   5. Is consistent with the general plan land use designation and policies, zoning and municipal or county ordinances, policies, and mitigation.
   6. Does not require a conditional use permit, subdivision, zoning variances, or a change to the general plan or zoning land use designation.
   7. Complies with previously approved applicable mitigation measures and standards.
   8. Does not require a water supply assessment.
   9. Has available existing utilities and schools to serve the project.
   10. Does not have any risk of exposure to hazardous substances that exceed local, state, or federal standards.
   11. Is not located on a site that has culture or historic resources.
   12. Is not located on a site that is in or on the coastal zone, farmland, wetland, fire zone or area with high risk of fires or explosions, earthquake fault zone, flood area, land subject to ground failure or designated for protection of natural resources, or land under a conservation easement.
   13. Does not have any significant impacts that have not been publicly disclosed, analyzed, and mitigated.
2. Requires the lead agency, prior to determining that a project is exempt, to:
   1. Issue and publish a draft determination that the project is exempt pursuant to this section.
   2. Hold a noticed public hearing no earlier than 30 days following the publication of the draft determination and at least 30 days prior to the issuance of a final determination in areas affected by the project to hear and respond to public comments.
3. Requires the lead agency shall file a notice of exemption with the Office of Planning and Research (OPR) at least 30 days following the noticed public hearing.

EXISTING LAW:

1. Requires, pursuant to CEQA, 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.
2. Exempts from CEQA any residential development project, including any subdivision, or any zoning change that is undertaken to implement, and is consistent with, a specific plan for which an EIR has been certified after January 1, 1980, unless substantial changes or new information require the preparation of a supplemental EIR for the specific plan, in which case the exemption applies once the supplemental EIR is certified.
3. Exempts from CEQA specified residential housing projects which meet detailed criteria established to ensure the project does not have a significant effect on the environment, including urban affordable housing projects not more than 100 units on a site not more than 5 acres in size, and urban infill housing projects not more than 100 units on a site not more than 4 acres in size, which is within one-half mile of a major transit stop.
4. 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.
   
5. 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.
6. 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 an SCS or APS adopted pursuant to SB 375.
7. The CEQA Guidelines include a categorical exemption for infill development projects, 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; and,
   5. The site can be adequately served by all required utilities and public services.
8. Federal tax law defines “qualified opportunity zone” as a population census tract that is a low-income community that is designated as a qualified opportunity zone and “qualified opportunity fund” as any investment vehicle which is organized as a corporation or a partnership for the purpose of investing in qualified opportunity zone property (other than another qualified opportunity fund) that holds at least 90% of its assets in qualified opportunity zone property.

FISCAL EFFECT: Unknown

COMMENTS: According to the author, “AB 3030 creates a fast path to new economic development and affordable housing development in California’s poorest communities by creating a new section in the Public Resources code that exempts from the California Environmental Quality Act certain projects in defined Opportunity Zones.”

The author continues, “California’s legislature has created statutory and categorical exemptions from CEQA. Emergency projects to property or facilities damaged or destroyed as a result of a disaster, in which a state of emergency has been proclaimed by the Governor pursuant to the California Emergency Services Act are statutorily exempt. The designation of Opportunity Zones to fight poverty is certainly synonymous. Specific commuter and passenger rail projects, regional and statewide transportation projects, family day care homes, and even projects related to hosting or staging the Olympic Games all have statutory CEQA exemptions.”

Background on CEQA

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 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. 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 five 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 an SB 375 strategy.  SB 743 also required OPR to propose revisions to the CEQA Guidelines for transportation impacts to better support infill development.

In 2017, the Legislature passed three bills to streamline the CEQA process for affordable housing projects. SB 35 (Wiener) establishes a ministerial approval process (i.e., not subject to CEQA) for certain multifamily affordable housing projects that are proposed in local jurisdictions that have not met regional housing needs. SB 540 (Roth) authorizes a city or county to establish a Workforce Housing Opportunity Zone (WHOZ) by preparing an EIR and by adopting a specific plan. Once a WHOZ is established, and for five years thereafter, approval of eligible housing developments within a WHOZ is required within 60 days without requiring the preparation of an EIR or negative declaration under CEQA. AB 73 (Chiu) authorizes a city or county to create a "housing sustainability district" (HSD) to complete upfront zoning and environmental review in order to receive incentive payments for residential and mixed-use development projects with an affordable housing component. Once an EIR has been prepared for designation of an HSD, housing projects within, and consistent with, the HSD are exempt from CEQA.

Arguments in Support

The California Apartment Association (CAA) and others argue in support that this measure, “creates a fast path to new economic development and affordable housing in California’s poorest communities.” CAA and others argue, “Unfortunately, the elimination of redevelopment agencies has left our poorest communities with few tools to generate economic growth.”

The City of Salinas writes in support, “Like many communities in California we have seen our housing costs rise at a dizzying rate, with serious consequences for our residents, many of whom have begun to have two, three, or more families living in apartments built for far fewer.” The City of Salinas continues, “We have taken many actions to support the development of additional housing in the City of Salinas – however, it has been challenging to make the proposed projects ‘pencil.’ They argue that in order to leverage the resources of the private sector to help solve this issue and attract investment, “our projects must be competitive with those from all across the country,” which are not subject to CEQA.

Arguments in Opposition

The Sierra Club of California (SCC) and the California League of Conservation Voters (CLCV) write in opposition, “This bill lays out a system of requirements that include many of the protections that CEQA requires, which makes us wonder why a project would not just go through the CEQA process.” They argue that the CEQA process helps promote informed decision making and a better environment for all. They continue, “It has not been found to be the main driver of the housing crisis.” SCC and CLCV further argue, “We also note that numerous exemptions for housing already exist for which projects can avail themselves.

REGISTERED SUPPORT / OPPOSITION:

Support

California Apartment Association

California Association of Realtors

California Business Properties Association

California Chamber of Commerce

City of Salinas

Opposition

California League of Conservation Voters

Sierra Club California

Analysis Prepared by: Jennifer Richard / L. & E. /

Date of Hearing: April 23, 2018

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Al Muratsuchi, Acting Chair

ABPCA Bill Id:AB 3030 (

Author:Caballero) – As Amended Ver:April 18, 2018

SUBJECT: California Environmental Quality Act: exemption: qualified opportunity zones

SUMMARY: Exempts from the California Environmental Quality Act (CEQA) residential and mixed-use projects with 50% affordable housing, financed by a "qualified opportunity fund," and meeting other specified criteria.

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. Exempts from CEQA any residential development project, including any subdivision, or any zoning change that is undertaken to implement, and is consistent with, a specific plan for which an EIR has been certified after January 1, 1980, unless substantial changes or new information require the preparation of a supplemental EIR for the specific plan, in which case the exemption applies once the supplemental EIR is certified.
3. Exempts from CEQA specified residential housing projects which meet detailed criteria established to ensure the project does not have a significant effect on the environment, including urban affordable housing projects not more than 100 units on a site not more than 5 acres in size, and urban infill housing projects not more than 100 units on a site not more than 4 acres in size, which is within one-half mile of a major transit stop. [SB 1925 (Sher), Chapter 1039, Statutes of 2002]
4. 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]
   
5. 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]
6. 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 an SCS or APS adopted pursuant to SB 375. [SB 743 (Steinberg), Chapter 386, Statutes of 2013]
7. 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; and,
   5. The site can be adequately served by all required utilities and public services.
8. Federal tax law defines “qualified opportunity zone” as a population census tract that is a low-income community that is designated as a qualified opportunity zone and “qualified opportunity fund” as any investment vehicle which is organized as a corporation or a partnership for the purpose of investing in qualified opportunity zone property (other than another qualified opportunity fund) that holds at least 90% of its assets in qualified opportunity zone property.

THIS BILL:

1. Exempts from CEQA a project that meets all of the following requirements:
   1. Is financed by a qualified opportunity fund.
   2. At least 50% of the project is affordable housing and at least two-thirds of the development’s square footage is designated residential.
   3. Is not located on a site requiring demolition of affordable housing or conversion of rental units to for-sale units, or a site with mobilehomes or other special occupancies.
   4. Ensures payment of prevailing wages and employment of a skilled and trained workforce.
   5. Is consistent with the general plan land use designation and policies, zoning and municipal or county ordinances, policies, and mitigation.
   6. Does not require a conditional use permit, subdivision, zoning variances, or a change to the general plan or zoning land use designation.
   7. Complies with previously approved applicable mitigation measures and standards.
   8. Does not require a water supply assessment.
   9. Has available existing utilities and schools to serve the project.
   10. Does not have any risk of exposure to hazardous substances that exceed local, state, or federal standards.
   11. Is not located on a site that has culture or historic resources.
   12. Is not located on a site that is in or on the coastal zone, farmland, wetland, fire zone or area with high risk of fires or explosions, earthquake fault zone, flood area, land subject to ground failure or designated for protection of natural resources, or land under a conservation easement.
   13. Does not have any significant impacts that have not been publicly disclosed, analyzed, and mitigated.
2. Requires the lead agency, prior to determining that a project is exempt, to:
   1. Issue and publish a draft determination that the project is exempt pursuant to this section.
   2. Hold a noticed public hearing no earlier than 30 days following the publication of the draft determination and at least 30 days prior to the issuance of a final determination in areas affected by the project to hear and respond to public comments.
3. Requires the lead agency shall file a notice of exemption with the Office of Planning and Research (OPR) at least 30 days following the noticed public hearing.

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 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. 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 an SB 375 strategy.  SB 743 also required OPR to propose revisions to the CEQA Guidelines for transportation impacts to better support infill development.

In 2017, the Legislature passed three bills to streamline the CEQA process for affordable housing projects. SB 35 (Wiener) establishes a ministerial approval process (i.e., not subject to CEQA) for certain multifamily affordable housing projects that are proposed in local jurisdictions that have not met regional housing needs. SB 540 (Roth) authorizes a city or county to establish a Workforce Housing Opportunity Zone (WHOZ) by preparing an EIR and by adopting a specific plan. Once a WHOZ is established, and for five years thereafter, approval of eligible housing developments within a WHOZ is required within 60 days without requiring the preparation of an EIR or negative declaration under CEQA. AB 73 (Chiu) authorizes a city or county to create a "housing sustainability district" (HSD) to complete upfront zoning and environmental review in order to receive incentive payments for residential and mixed-use development projects with an affordable housing component. Once an EIR has been prepared for designation of an HSD, housing projects within, and consistent with, the HSD are exempt from CEQA.

1. Qualified opportunity zones. The federal tax bill passed in December 2017 allows the Governor to designate certain census tracts as Opportunity Zones. Investments made by individuals through special funds in these zones would be allowed to defer or eliminate federal taxes on capital gains. The Governor can designate up to 25% of census tracts that either have poverty rates of at least 20% or median family incomes of no more than 80 percent of statewide or metropolitan area family income. There are 3,516 census tracts in 54 California counties that would qualify under one or both of the mandatory criteria, allowing the Governor to designate up to 879 tracts. As census tracts are designed to capture geographic areas of around 4,000 people, more than 3 million Californians would potentially be located in one of these areas.

The U.S. Department of the Treasury has certified California's nominated eligible census tracts and has designated all 879 nominated tracts as Qualified Opportunity Zones. The selected tracts are heavily consistent with the designation of disadvantaged communities for Cap and Trade purposes. Of the chosen tracts, 96% overlap with AB 1550 designations and 64% have SB 535 designations.

1. Author's statement:

AB 3030 creates a fast path to new economic development and affordable housing development in California’s poorest communities by creating a new section in the Public Resources code that exempts from the California Environmental Quality Act certain projects in defined Opportunity Zones.

California’s legislature has created statutory and categorical exemptions from CEQA. Emergency projects to property or facilities damaged or destroyed as a result of a disaster, in which a state of emergency has been proclaimed by the Governor pursuant to the California Emergency Services Act are statutorily exempt. The designation of Opportunity Zones to fight poverty is certainly synonymous. Specific commuter and passenger rail projects, regional and statewide transportation projects, family day care homes, and even projects related to hosting or staging the Olympic Games all have statutory CEQA exemptions.

1. Does this bill add new relief from CEQA for housing projects? The new exemption created by this bill is limited by the bill's conditions to a very small area of the state, then further limited by project-specific conditions. Considering the array of existing pathways to lessen or eliminate CEQA review for housing projects, it's not clear this bill would apply to any project that is not already eligible for CEQA exemption. In addition, the bill won't operate like an ordinary statutory exemption because some of its conditions require project-specific analysis and monitoring. For example, the project must comply with "previously approved applicable mitigation measures and standards," which would have been adopted in a prior EIR and may require ongoing monitoring to ensure compliance. Also, the lead agency must make findings regarding exposure to hazardous substances, site-specific cultural and historic resources, and any other significant impacts that have not been publicly disclosed, analyzed and mitigated. Meeting these conditions implies a level of CEQA review similar to a project that is not exempt.
2. Double referral. This bill has been double referred to the Labor and Employment Committee.

REGISTERED SUPPORT / OPPOSITION:

Support

California Apartment Association

California Association of Realtors

California Business Properties Association

California Chamber of Commerce

City of Salinas

Opposition

California League of Conservation Voters

Sierra Club California

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

Date of Hearing: April 16, 2018

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Al Muratsuchi, Acting Chair

ABPCA Bill Id:AB 3030 (

Author:Caballero) – As Amended Ver:March 22, 2018

SUBJECT: California Environmental Quality Act: exemption: qualified opportunity zones

SUMMARY: Exempts from the California Environmental Quality Act (CEQA) any project located in a "qualified opportunity zone" and financed in part by a "qualified opportunity fund," provided the project meets specified wage and workforce requirements.

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. CEQA defines “project” as an activity which may cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment, and which is any of the following:
   1. An activity directly undertaken by any public agency.
   2. An activity undertaken by a person which is supported, in whole or in part, through contracts, grants, subsidies, loans, or other forms of assistance from one or more public agencies.
   3. An activity that involves the issuance to a person of a lease, permit, license, certificate, or other entitlement for use by one or more public agencies.
3. Federal tax law defines “qualified opportunity zone” as a population census tract that is a low-income community that is designated as a qualified opportunity zone and “qualified opportunity fund” as any investment vehicle which is organized as a corporation or a partnership for the purpose of investing in qualified opportunity zone property (other than another qualified opportunity fund) that holds at least 90 percent of its assets in qualified opportunity zone property.

THIS BILL:

1. Exempts from CEQA any project located in a "qualified opportunity zone" and financed in part by a "qualified opportunity fund."
2. Requires the proponent of such a project to certify to the local agency both of the following:
   1. Either (1) the project is a public work or (2) all construction workers will be paid at least the general prevailing wage, subject to specified contract requirements and enforcement provisions.
   2. A skilled and trained workforce will be used to complete the project (i.e., all the workers performing work in an apprenticeable occupation in the building and construction trades are either skilled journeypersons or apprentices registered in an approved apprenticeship program).

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 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. 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.

1. Qualified opportunity zones. The federal tax bill passed in December 2017 allows the Governor to designate certain census tracts as Opportunity Zones. Investments made by individuals through special funds in these zones would be allowed to defer or eliminate federal taxes on capital gains. The Governor can designate up to 25 percent of census tracts that either have poverty rates of at least 20 percent or median family incomes of no more than 80 percent of statewide or metropolitan area family income. There are 3,516 census tracts in 54 California counties that would qualify under one or both of the mandatory criteria, allowing the Governor to designate up to 879 tracts. As census tracts are designed to capture geographic areas of around 4,000 people, more than 3 million Californians would potentially be located in one of these areas.

The U.S. Department of the Treasury has certified California's nominated eligible census tracts and has designated all 879 nominated tracts as Qualified Opportunity Zones. The selected tracts are heavily consistent with the designation of disadvantaged communities for Cap and Trade purposes. Of the chosen tracts, 96 percent overlap with AB 1550 designations and 64 percent have SB 535 designations.

1. Author's statement:

AB 3030 creates a fast path to new economic development and affordable housing development in California’s poorest communities by creating a new section in the Public Resources code that exempts from the California Environmental Quality Act certain projects in defined Opportunity Zones.

California’s legislature has created statutory and categorical exemptions from CEQA. Emergency projects to property or facilities damaged or destroyed as a result of a disaster, in which a state of emergency has been proclaimed by the Governor pursuant to the California Emergency Services Act are statutorily exempt. The designation of Opportunity Zones to fight poverty is certainly synonymous. Specific commuter and passenger rail projects, regional and statewide transportation projects, family day care homes, and even projects related to hosting or staging the Olympic Games all have statutory CEQA exemptions.

1. Will the tax benefits to investors trickle down to the low-income residents? While an argument can be made that any project in an opportunity zone will benefit the community at large by providing additional jobs and taxes, this bill is not limited to the types of projects that might specifically benefit low-income residents, such as affordable housing, employment centers or education facilities. The bill exempts any project from CEQA review, including those that may harm low-income residents by displacing existing affordable housing or increasing cumulative pollution burdens in disadvantaged communities.
2. Double referral. This bill has been double referred to the Labor and Employment Committee.

REGISTERED SUPPORT / OPPOSITION:

Support

California Apartment Association

California Association of Realtors

California Building Industry Association

California Business Properties Association

California Chamber of Commerce

Opposition

California League of Conservation Voters

Sierra Club California

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