Assembly Select Committee on Select Committee on Permitting Reform

Wow. Hello, everyone. Got a gavel? You got to use it, right? Good morning. Thank you for joining us for the inaugural hearing of the Select Committee on Permitting Reform. Over the course of the year, we will systematically examine our permitting processes and develop meaningful reforms to address some of California's most urgent challenges.

The things that keep me up at night as a Legislator and as a mom. This impacts our housing crisis, our climate emergency, and our clean energy transition. Today's hearing really is just the start. And I want to say, you know, I think the Select Committee on Permitting Reform has a certain ring to it, doesn't it?

Like, incredibly unsexy. But it's probably some of the most critical work that we actually need to be doing here in California to ensure that we're really preparing our state for the modern environment that we live in.

This is going to provide us an opportunity for us to understand the problem that the sort of byzantine permitting process has created, as well as what the cost of doing nothing is. There is a cost to this in action that we see. Sorry, lift the mic. There we go.

There's a cost of this inaction that we see in our communities every day. We are facing multiple interrelated crises. Our housing crisis has left us with over 180,000 of our residents without homes, with millions of tenants sacrificing basic needs to pay the rent and home prices that only the wealthiest households can afford.

Simultaneously, our unfolding climate crisis threatens to pummel the state with ongoing series of devastating and costly droughts, floods, and wildfires. Addressing these challenges will require that California rethink how we plan for and manage our environment. It will require that we build millions of homes, primarily in infill locations.

It will require that we upgrade and build systems to store and move water, and it will require that we facilitate the generational transmission of clean energy. Unfortunately, we are poorly positioned to make that change that California desperately needs right now, given the current State of affairs with our regulatory system.

One of the main primary reasons for this is that beneficial projects face a daunting regulatory regime. To receive permitting approval to build projects often face years of review at multiple levels of government in arcane and oblique processes.

For example, in San Francisco, it takes over 18 months to permit a housing project, whereas in New York City, it takes four months. Flood control projects can require permits from 15 different agencies, and Texas is permitting 3.5 times more solar annually than California is.

Despite these and many more examples, we are not here to besmirch the regulators, or even the regulations themselves. Many of these regulations are well meaning and reflect the needs and interests of the period in which they were created.

But most were also created before the housing and climate crisis and have proven to be insufficient for addressing these existential and current threats. The purpose of this Select Committee is to understand how we recalibrate our regulatory regime to address these threats head on, to make us better at getting to yes, when it comes to tackling the housing and climate crisis. And this hearing truly is just the beginning.

We are going to hear from an amazing series of panelists for you today, including academic experts, state agency representatives, national and international experts, and practitioners. Over the next few months, we're going to continue the conversation, focusing on one on one interviews with all interested stakeholders.

And if you're all watching out there, if you're in the room, we welcome individual conversations. We're going to be putting together further analysis on this and we genuinely want everyone from all sides of the debate to come and have conversations with us. And I just, you know, these Select Committees and many of us have chaired them.

You know, they're, they're only as good as the energy you put into them. So I also want to thank my colleagues for being here today, and I want to give them an opportunity here. You know, the colleagues that are on this Committee are here for a very intentional reason. They've expressed direct interest in this issue.

They chair important committees. They're on the other side of the aisle. It's truly going to take, I think, all of us to work on this. And I will say, you know, many of us are drinking from a fire hose on 8000 emergencies that are out there right now.

And there's negotiations on the budget and there's deadlines and there's all this stuff coming up. And what I think the Select Committee really allows us to do is take a beat, take a second, actually think about the problems that we're trying to solve. Bring in people with all different points of view to truly understand how we can build a coalition that can get to yes on solving the problems.

And again, I just want to be very intentional about, we genuinely welcome everyone in this conversation and it's going to take all of us thinking creatively on how we rectify some of these issues. In the fall, we expect to have at least three topic specific hearings to further flush out the issues and start discussing the solutions.

And those will be probably outside of Sacramento. As much as I love Sacramento, I also love being out in the community. So we're going to be across the state having different hearings by early next year. We will have a white paper that will lay out a series of potential solutions to address these issues.

And that's going to be driven exclusively by the conversations arriving here, as well as the additional one on one conversations we have with key stakeholders. Everyone's encouraged to participate in this. We all know that we can't keep doing things the way that we've been doing them.

If we want to actually reach our climate change goals, if we want to actually address the housing crisis, if we want to actually guard against some of the climate catastrophes that we know are coming, we have to change how we think about building. We have to get to. Yes, and we have to do so in a way that reflects our California values. And today we start with that conversation, which I'm really looking forward to.

Before we get to our first panel, which is going to be perspective from academic experts, I want to offer opportunity for the Members of the Committee who are sitting here if they would like to provide any opening remarks for the discussion today. Why don't we go to Mister Flora?

Thank you Madam Chair. And I just want to say thank you for taking the time to put this together. It's in eight years and we've been here, we've passed a lot of lofty goals, a lot of good goals, goals that we need to meet.

But if we don't have the ability to build infrastructure, if we don't have the ability to build projects that voters passed on the ballot, then I think we have to take a step back and look at what we're doing here.

So I'm just thankful that you've taken leadership and we all know that when you decide to sink your teeth into things, things typically start happening. And I am looking forward to the conversation over the next few months and getting that white paper put together.

Thank you, our Housing Chair, Mister Ward.

Thank you Assemblymember. I appreciate you convening us and really putting together a very thorough and robust first hearing for this as the chair of the Housing Committee.

It's not lost on me for all the work that we've done and we are doing and we need to do around housing reforms that are going to be able to help us unlock and produce more housing that California desperately needs.

HCD's own data shows an average of 150 days to be able to issue a permit, let alone all the construction challenges and everything costs of materials and everything else that we're working on.

I think the Legislature has been more aggressive and focused on some of the streamlining efforts that have been working on other regulatory questions have really caused us to think critically, that there should be no third rails or sacred cows when it comes to trying to do the right things.

And the focus on permitting reform, I think, is the next natural extension of what we need to do in that area. You mentioned that, you know, we're not here to. I think I wrote down the word besmirch any of the issues, but we should besmirch them.

We should think really critically about ideas, laws, regulations that were passed in a time where it was easier to build housing, where it was necessary to have. It is necessary to have appropriate safeguards for the health and safety of our communities.

But you have to wonder, especially when inspections, you know, follow any construction where there are other safeguards in place, how many of these are redundant and how many of these are necessarily adding to the cost and the time that it takes to be able to get housing underway. So I think that this is going to be helpful.

I know that colleagues have already started to introduce bills in the space, little areas to be able to get at questions around permitting reform or associated fees, but the whole scale focus of what we are trying to do through this Select Committee's hearing and really laying everything on the table, I think will be incredibly informative for a robust package of reforms that maybe could come our way next session. So thank you for convening us. I'm looking forward to all the perspective here today and taking a lot of notes. Thank you very much.

Thank you, Mister Wood.

Thank you, Madam Chair, very much. Appreciate this opportunity. And, you know, I sit on the natural resources Committee and we meet in this room, and the last couple of years we've had a number, quite a number of bills looking for exemptions from CEQA for housing in the natural resources Committee.

And to me, that's an indication that something's not quite right. And I think we all know that they're huge challenges. I look at this from a perspective of, I respect CEQA. I think CEQA has been an amazing tool to protect our environment unlike any other state in the union. We've done a fabulous job.

From my perspective, what I don't like is the redundancy. What I don't like is the delays that come with that. And so I look at this from a standpoint. I don't like the word streamlining. I prefer efficiency, because I think we can do this in an efficient way that doesn't circ.

We're not trying to circumvent a process here. We're trying to make sure we don't duplicate it multiple times at hideous cost. And then at a time extension that makes projects completely untenable. So that's how I'm looking at this. I'm really looking forward to a broad discussion here.

And I think we need to get everything on the table table if we're really going to look at seriously about moving forward on a number of fronts here in California. So thank you, Madam Chair.

Miss Petrie-Norris.

Well, thank you, Madam Chair. And as other Members have said, I'm really looking forward to digging into this conversation. I think it's incredibly important and I think really incredibly foundational.

I think as I was reflecting on coming into this hearing, I think the simple truth is that there is just a yawning and widening gulf between our priorities, our values, our intentions and our results.

I think we all recognize the urgency of our housing and homelessness crisis, yet it is taking us decades to actually build new housing units and costing exorbitant sums. We all recognize the urgency of the climate crisis and recognize that we need to dramatically accelerate the pace of clean energy deployment.

But we're not going to solve the climate crisis by talking about the climate crisis or having press releases about the climate crisis. We've got to build clean energy infrastructure and we need to dramatically accelerate the pace.

And I think also want to acknowledge that none of us want to throw the baby out with the bathwater, but it's really, really important for us to dig into the unintended consequences of some of the rules, regulations, laws that are on our books and understand. And like you, Assembly Member, would, I too, don't use the word streamlining.

I like to use the word rationalize. And I think that there is a real opportunity for us to rationalize our regulations, rationalize our regulatory framework, and just looking forward to working with all of you and moving California forward. Thank you.

Thank you, Chairwoman of utilities and energy, for your participation. Also, we'll do some message development wordsmithing here on how we discuss this in front of the live, in front of the public, which I love. And last but not least, Mister Grayson.

Thank you, Madam Chair, for this hearing that you're putting together. Informational hearing. The more we talk, the less we get to hear from them. So I'll be really quick. However, I do want to say, also concur with my colleagues on the Committee here.

Time is more valuable than money when it comes to construction and on the local level, there was something we would refer to when someone was coming in to present an idea for development or for permitting. And that was if it wasn't desirable, instead of telling them no, we would just hug the project to death.

In other words, we would use this process as a way to time out the project to make it to where it wasn't financially feasible. So for me, when I think of permitting, I also think of, in some cases, entitlement. Because the two go hand in hand. They exist together, and entitlement obviously precedes and ultimately results in permitting.

So I'm very interested in hearing what our guests have to say about the process of permitting, and also how entitlement brings the idealism and the values of the community together with a development, and it connects the present with the future. So with that, excited to get into the hearing. Thank you.

Thank you, Mister Grayson. I think that's an excellent point in looking at that holistically. That is certainly part of the process of the permitting process. Great. So with that, let's have our first set of panelists come up, please. Come on up and I'll introduce you all.

We're going to be hearing from Nick Moranz, Associate Professor of Urban Planning and Public Policy at the University of California, Irvine. He's going to talk to us about housing. We're going to hear from on clean energy, Michael Awara, Director of the climate and energy policy program at Stanford University come on, sit up. Come on, everyone.

We won't bite on water. Newsha Ajami, Chief Strategic Development Officer for research in the Earth and Environmental Sciences area at Lawrence Berkeley National Laboratory and on Climate Resiliency, Steve Boland, Senior Director, Government and External Affairs, Lawrence Livermore National Laboratory so with that, why don't we hear from. We'll just go in order of the agenda, why don't we hear from Nick first?

Thank you for inviting my testimony. I'm an Associate Professor at the University of California, Irvine. I teach and write about housing, land use and environmental law, and state and local government.

Today, I would like to outline California's challenges in permitting multifamily housing, explain why these challenges matter for Californians at all income levels, and suggests how the Legislature could more effectively address the problem. California's economy is strong and dynamic.

Among the 50 states, California ranked fourth in per capita Gross Domestic Product as of 2022, demonstrating that there is great demand for housing in this state. But California's multifamily permitting rate has long lagged behind the rates of other states.

Whereas California ranked fourth in GDP per capita, it ranked 22nd in multifamily permitting from 2011 through 2022, measured as a percentage of 2010 population. This time period covers the recovery from the great Recession as well as the trough in permitting during the pandemic phase of Covid-19.

In both good times and bad, California's multifamily permitting lags far behind other economically dynamic states, including Washington, Texas, and Oregon. This comparison, illustrated in a handout that I have provided, shows that California's permitting challenges cannot be attributed solely to national factors such as high interest rates, high materials costs, or labor shortages.

While it's perhaps not surprising that California lags behind Texas, which has a far more laissez faire approach to regulation, it is noteworthy that California is also far behind both Washington state and Oregon. I will have more to say about what California could learn from our West Coast counterparts in a moment.

It is probably clear to everyone that California would benefit from more deed restricted, below market rate housing. But California would also benefit from more market rate housing, and the two needs should not be pitted against each other. Thanks to high quality empirical research, we know that new market rate housing frees up existing lower cost housing.

Higher income households that move into the new housing vacate existing units, the people who move into those vacated units also free up existing units, and so on and so forth. Research covering 12 large us cities, including San Francisco, studies these chains of moves. The result?

A new market rate building that houses 100 people will, within roughly three years, lead 45 to 70 people to move out of below median income neighborhoods. In short, new market rate housing in one neighborhood loosens up the housing market for lower income households in other neighborhoods.

Many people are also concerned that new market rate housing in areas with substantial lower income populations will result in displacement, but rigorous recent research suggests that this may generally not be the case.

A study of lower income neighborhoods in 11 major us cities, including Los Angeles and San Francisco, finds that large new apartment buildings in areas with substantial lower income populations decrease rents in nearby existing units by roughly 6% in comparison with otherwise similar units in in otherwise similar neighborhoods.

Research focusing exclusively on San Francisco demonstrates that new market rate housing causes monthly rents in nearby existing units to fall by 1.2 to 2.3% relative to otherwise similar existing units elsewhere. That study also finds that new market rate housing reduces displacement risks for incumbent lower income residents.

Research concerning new development in New York City has reached similar conclusions. Cities that have engaged in large scale upzonings, allowing denser development to a degree not observed in California, have experienced declines in housing costs.

The most wide-scale rezoning has occurred in Auckland, New Zealand, which has increased allowable density on roughly 75% of its residential land and experienced rent decreases of 21% to 33% relative to a control group. In the US, cities as different as Portland, Oregon, and Houston, Texas, have experimented with broad, albeit smaller, scale up zonings.

In both cases, these reforms have yielded encouraging results. Reducing rents and enabling homeownership by facilitating multifamily permitting would have benefits across the income spectrum. Below market rate housing is not available to most middle income or most lower income households in California.

Even if the state were to double its production of below market rate housing, which is not likely to happen, most of these households would continue to rely on market rate housing. Adding more market rate multifamily units would moderate housing costs for these households.

In addition, research indicates that lower rents are associated with lower rates of homelessness and overcrowding, pointing to the important role of multifamily permitting in addressing California's homelessness crisis. And, of course, facilitating multifamily permitting is essential to meeting California's climate change mitigation and adaptation goals.

Multifamily housing is less carbon intensive than single family housing, and it facilitates commuting patterns that are less environmentally harmful. In addition, infill housing is less likely to expose its inhabitants to wildfire risks than new single family housing at the urban fringe.

Given all the benefits associated with facilitating multifamily housing, why does California lag so far behind other West Coast states, not to mention more laissez faire sunbelt states? First, local governments continue to impose a myriad of restrictions on multifamily housing, including flat prohibitions on its construction in most areas.

Second, even in zoning districts where multifamily housing is allowed, it often requires discretionary approvals, triggering long and unpredictable permitting processes. Third, the need for discretionary approvals also triggers review under CEQA, the California Environmental Quality act. Although the Legislature has made numerous attempts to address these challenges, it has not taken sufficiently bold action to make a meaningful impact.

There are many steps the Legislature could take to more effectively promote multifamily permitting, and I am pleased that this Committee will thoroughly investigate this matter. Today, I would like to suggest five reforms that are likely to have a substantial impact and that would build on the incremental reforms that the state has already adopted.

First, the Legislature could unconditionally exempt multifamily housing in infill priority areas from CEQA. Infill housing is environmentally beneficial because it promotes the state's climate change mitigation and pollution reduction goals. Many states have environmental impact assessment laws, but CEQA is unique in its chilling effect on housing.

To be sure, the Legislature has adopted many exemptions intended to facilitate infill development, but as demonstrated in recent research that I've conducted with colleagues at UC Berkeley and UC Davis, the existing exemptions for infill development do not provide certainty for developers and, as a result, do not effectively promote infill development.

It is noteworthy that Washington state has recently exempted infill housing from state environmental review requirements, a move that is likely to further bolster its superior performance in permitting multifamily housing. Clearly, identifying infill priority areas on a map and exempting multifamily housing in those areas from CEQA would significantly contribute to remedying California's severe multifamily housing shortage.

Second, the Legislature could create a statewide permitting board for multifamily infill housing. Such a board would not preempt local rules governing housing. It would simply ensure that local rules are appropriately applied without undue delay. Municipalities would retain control over zoning ordinance adoption and revision, but permit applicants would have the option of seeking approvals from a state board.

Other states, including Oregon, have implemented statewide boards that can effectively override local permitting decisions. California could go further to provide a board that can make permitting decisions in the first instance to shorten the timeframe for such decisions.

Alternatively, the State Board's jurisdiction could kick in only if a city takes more than a specified number of days from the filing of project application to approve a project. As in Oregon, the board could be composed of attorneys who are experts in land use planning law.

Third, the Legislature could do more to limit local fees for multifamily housing. Fees can provide much needed support for local services, but California municipalities impose unusually high fees.

Some of those fees may not even be tied to the direct impacts of new development, and it is often difficult for a developer to determine the amount of fees that a project will generate. Since 2021, the Legislature has adopted several laws to address these issues, although it is not clear how effective the new laws have been.

As with permitting, the Legislature might consider providing for expedited review of fees for multifamily development projects by an appointed state level board. Fourth, the Legislature should consider placing some limits on local inclusionary requirements for multifamily housing. Inclusionary zoning requirements either mandate or provide incentives for the inclusion of below market rate units in new housing development projects.

Under these arrangements, the market rate units in a project cross subsidize the below market rate units. Although it is clear that mandatory inclusionary programs can produce below market rate units, it is also clear that mandatory inclusionary requirements preclude development of some projects that might otherwise have been built.

A recent study sponsored by UC Berkeley's Turner Center for Housing Innovation estimates very large negative impacts on market rate housing production from even small inclusionary requirements and for large inclusionary requirements, negative impact even on below market rate housing production.

While it is appropriate for local governments to create inclusionary zoning programs, it is also appropriate for the Legislature to set limits on those programs to ensure that they do not unduly inhibit housing production. Assembly Bill 1893, which is currently pending, is an important attempt to strike this balance.

Finally, this Committee should consider two reasons that the Legislature's statewide upzoning laws have not yielded more multifamily housing. The first reason involves the inclusionary requirements in those laws.

The state's density bonus law AB 2011, which allows the conversion of commercial buildings to multifamily residential use and permit streamlining bills such as SB 35 all require the inclusion of below market rate units in qualifying projects.

As with local inclusionary requirements, such statewide mandates may well be appropriate, but it is important for legislators to recognize that these mandates are likely to impede overall housing production and could even impede below market rate production.

The Legislature should carefully weigh potential incremental gains in below market rate units against potential losses in both market rate and below market rate units. In addition, many of the Legislature's statewide upzoning bills include union labor requirements that render many projects cost prohibitive.

As the scholars Christopher, Elmendorf, and Clayton now less than 10% of California's residential construction workers belong to a labor union, and trying to solve a housing crisis by requiring builders to use union labor is like trying to solve a famine by disqualifying 90% of farmworkers from planting crops.

As with inclusionary requirements, this Committee should assess trade offs between labor requirements and housing production. Over the past eight years, the Legislature has adopted well over 100 bills intended to spur housing production. Only one set of laws, those related to the development of accessory dwelling units, or adus, has been unambiguously successful.

One analysis of building permit data furnished to the California Department of Housing and Community Development indicates that ADU production increased by nearly 2800% between 2016, when the state launched its recent ADU reforms in 2022. By contrast, multifamily production increased by just over 11% during the same interval.

The ADU laws restrict local parking requirements, eliminate fees, establish default by right development standards, limit permitting timelines, eliminate the possibility of sequel, review, and preempt homeowners associations from adopting a variety of relevant prohibitions. Notably, there are no labor or inclusionary requirements associated with the ADU laws.

In short, the ADU laws simply make it easier to build housing without imposing additional conditions on housing development. This simple, perhaps obvious principle should guide the Committee as it works to decrease permitting timelines and increase permit applications for multifamily housing. Thank you.

Thank you. Appreciate that. And before we get on with our other guests, we've had a couple other Members join us. I want to give them an opportunity if they'd like to provide some opening remarks. Mister Carillo, Chair of our Local gov Committee, would you like to provide any opening remarks?

Thank you, Madam Chair. I want to say thank you for putting this together and allowing to be part of this Committee. I'm a city planner by profession, with about 20 years of experience working for jurisdictions like the City of Palmdale, City of Coachella, and Desert Hot Springs. I know the struggles firsthand.

I know how time consuming it is even for staff to go through an entitlement process and at the end of the day, not seeing multifamily projects being developed throughout the jurisdictions that I worked on and throughout the state. As you mentioned, I'm really looking forward to these conversations and see how we can be more supportive legislatively.

I do agree with the IDU's comments that you made. I think that that's successful program and I think that that's one way that we can continue to increase the housing units that we need. However, that's not going to be sufficient.

We need to work on the very things that you mentioned making possible for multifamily developers to be able to continue to build the units that we need. I want to say thank you Madam Chair, and looking forward to these conversations. Thank you.

Thank you both. Said, Mister Alvarez, would you like to provide any opening remarks?

Thank you, Madam Chair, for the opportunity to be part of the Committee. I want to thank the speaker, obviously, for setting up the Committee. As I look around the days here, I think we have individuals in the Legislature who have already, some of us in a short period of time, some of us a little bit longer, worked on trying to really focus on building the infrastructure that we need just generally in California. And so I'm really, really.

Honored to be part of this group. Like many colleagues who are here, I come from local government, and my perspective really is that local governments, at least when it comes to housing and other projects that are locally controlled, such as inclusionary ordinances and things like that, have tried to step up where I think state government has failed.

And I think we should acknowledge that state government has failed and that things like CEQA, the Coastal Act, have been inhibitors of the infrastructure that we need to build in the State of California when it comes to projects like transportation, infrastructure, and housing certainly.

I have had the opportunity myself to author a few bills to tackle this problem, such as creating CEQA exemptions for affordable housing or permitting reform from the coast for the reform for the coastal zone. However, these have been sort of one-off bills that I think, although are necessary, are not sufficient.

We have more work to be done. I do think these are attempts by good attempts and worthy attempts by many legislators in trying to solve these problems. And so we need to do more. We need to have the tough conversation about how well-intentioned laws from decades ago are again inhibiting and are getting in the way of building housing and transportation projects that are important.

Again, I want to reemphasize CEQA, the Coastal Act, the California Endangered Species Act, and others that have other legislation and other policy goals that, again, were worthy and worthwhile need to be revisited. So I'm looking forward, Madam Chair, to this conversation for sure. And I hope that looking forward to all of you, the experts who will be coming before us today and asking some questions on how we can move forward. Thank you, Madam Chair.

Thank you, Mr. Alvarez, and thank you for all your good work. Since you've joined the Assembly, your perspective has been very critical. I also want to offer Miss Quirk-Silva the opportunity for some opening remarks. She's done a lot of work in the housing space in particular. Would you like to provide opening remarks?

Yes. Thank you, members, and thank you for putting this select committee together, as we know, focusing on permitting not just with housing, but other forms of permitting throughout California and really the United States. We know that it is a very slow process when we compare ourselves.

Some of us have actually gone out on delegations to other countries where, whether it's transportation or housing, and we're saying, well, I had a chance to go to Medellin, Colombia, and how did they build high-speed rail? How did they build gondola? How did they build and change lives, by the way, connecting the upper part of Medellin to the civic center? These were not easy decisions, and yet they have many less regulations than we have.

And so, as much as we want to fix a problem, which we know is housing production and homelessness, it has been very slow and painstaking to see the steps that are being made. And there are some wins, as I think I walked in and heard about ADUs. We know that there's been some progress. We know that there's some bright lights out there. But the pace that we are moving is too slow for what we need.

And if we continue at this pace, we in a decade will not only be talking about this very same issue, but we will see many, many others who have fallen into homelessness. And so that is my sheer focus. This does not mean protecting places in California that are iconic, our state parks, certain areas in California, and having that balance of the environment and building. But it also means we can't just say no. Thank you.

Thank you. I appreciate the testimony in housing, I was taking copious notes. We'll allow time for Q&A after everyone gets to present. Let's see. Michael Wara, I believe you are next. And you're going to be discussing clean energy.

Yes. Thank you very much, members of the committee, for having me today. I'm going to talk about permitting, and I would actually step back a little bit and say, in the energy context, planning, siting, and cost allocation are key issues for building out the energy infrastructure we need.

And when I say the energy and protection we need, I want to be clear about what that means in the California context. As I'm sure all of you know, probably from getting phone calls from your constituents, we face an energy affordability crisis in California. The crisis is now, not at some point in the future.

I think particularly as we enter the hot months of the year in the hotter parts of our state, many people will face very difficult choices about not just whether to have a comfortable home, but if they are older, if there are children in the home, if they have cardiovascular disease, any other kind of pre-existing condition, whether they can afford to have a safe place to be during hot times.

And that's a crisis that our state confronts for a variety of reasons, notably our collective failure to manage wildfire threats more proactively and the resulting damages and costs that that has imposed on our electric utilities. But even as we face that affordability crisis, we need to have a safe system, a system that doesn't kill customers.

We also need to have a reliable system that provides energy, especially during shortage events, hot afternoons in the summertime, or actually not so much the afternoon. These days, but the evenings in the summertime are the most challenging time for the grid to be maintain bulk power system reliability. And we need to build out the system that all of your hard work over many years has produced a policy mandate for, which is ultimately a zero-carbon electricity system. And in general, all of that together. I'll just add one additional point.

We need to build a system that takes account of the rapid electrification that we're seeing across a variety of domains, but most notably in transportation, where light-duty vehicles are at the beginning, not the end, but the beginning of a transition toward electrification that's going to place additional demands on the electricity system. So that's a challenge.

The challenge is made more complex by the fact that we are a state that today relies heavily on natural gas-fired electric power for a substantial fraction of our electricity supply. And as a matter of state policy, because we care about climate change in the State of California or we prioritize it as an issue, we've committed to moving away decisively away from reliance on fossil-fired electric power. So we have to build. We have to build not only to ensure reliability and safety.

We need to build to meet the demand that's coming. And that demand, I guess most recently we've seen a lot of, you probably have seen a lot of stories in the papers around growing demand due to data centers. That's also an important issue to keep in mind.

But I think for California, it's not right away the predominant one, but we need to meet that growing demand and we need to change how we supply that reliable, affordable electricity from a system that relies quite heavily on centralized large power plants that burn fuel to one that relies on a more distributed network of solar, utility-scale solar and wind, both in California and outside of California.

And we need to, and we also need to manage to build substantial new distributed energy resources that, you know, rooftop solar, and not just residential rooftop, but commercial rooftops, industrial rooftops, all over California. So that's a lot of planning, siting, and figuring out how to pay for it. What I would tell you is that we're not doing enough yet. The largest challenges have to do with siting of large utility-scale renewables in sufficient quantity to meet the goals that we've set as a state.

And probably more importantly than that, a challenge associated with siting, planning, and constructing the new electric transmission, the wires that will bring that renewable power where it is produced, to the sources of demand in California, which are largely, not entirely, but are significantly concentrated in the south coast and in the Bay Area.

So what are we doing about this? The good news is that the. Well, the bad news is that the state has a very complex siting and planning process for electric infrastructure that involves close coordination or requires close coordination between a set of agencies and independent actors, most notably the California independent system operator, which is not an agency.

It's a nonprofit that stands apart from the state and operates transmission that's owned by utilities, but collaboration between the independent system operator, the Energy Commission, and the PUC, and that has been challenging in the past. But thanks to executive orders from Governor Newsom and a real concerted effort on the part of all, all of the agencies, is actually going better today, I'd say, than it has in a long time.

Nevertheless, and I should say the agencies are starting to plan in a way that is truly long-term for the first time in a long time. And the most notable effort there, I would argue, is the 20-year plan that the California independent system operator recently has started producing.

They produced the first one last year and the second one this year. And it's allowing a longer look forward in the planning process, which takes account of the reality today, which is that it takes about 10 years on average to build a new transmission line. So we need to be thinking more than 10 years ahead. Thinking 10 years ahead is like just-in-time delivery in the transmission planning process. The ISO recognized this, started looking 20 years ahead.

In addition, the ISO, which is an important control on which kinds of generation get connected to the system, is also starting to think in more innovative ways about how to, I mean, the metaphor that I use, and maybe this shows my age, but there's a movie from a long time ago where someone says, if you build it, they will come.

And that is the way that we need to be thinking about building electric transmission at this point. We need to proactively identify areas where we want to have more renewable energy, and then we need to build the transmission to those areas and then allow projects to cluster around that available transmission.

That kind of clustering approach is something that the ISO has been a leader on, is working on, I would say no one would argue that this is a done project that we have the, that we have. We're building enough transmission and enough generation to be confident at this point that we will achieve our goals.

So that's the sort of within-the-state picture. There's another aspect to this, which is planning our collaboration with other regions. This is also a very important part of the siting and planning challenges that we confront now. Today, we are, we plan within California and to some degree, to a very limited degree, we are.

California is building transmission lines to other attractive renewable energy resources, especially wind and solar, especially wind, actually, that are located outside of California. I would argue, and I think many in the power sector would agree, that we need to deepen our collaboration with other states so that we can plan these inter regional lines that.

That connect one region, California, to other regions. And that that collaboration again, is being led by our agencies, in particular by the CEC and the CPUC, in what's called the Pathways Initiative, which is an effort to develop a set of services that and a sort of governance structure that would deepen and allow for deepening of that collaboration.

As we do that, we need to maintain our ability to stay close to our values on climate because we're collaborating with folks that may not share those values. But I think that is a doable outcome. And it recognizes also a reality that we're not an energy island. We never have been.

In the old days when I used to have to teach my environmental law students about coal fired electric power, I would say California doesn't have coal fired electric power plants anymore, but we have in California. But that's because we have them on the res in Arizona and we have them in Nevada. We have them over the horizon.

We have them in Utah, at Inner Mountain, and then we bring that coal fired power in over wires. We have never been an island. We will not be an island in the energy transition in terms of our electricity system. And we are better off, both from an affordability and a reliability perspective, if we are not an island.

The last point that it's very important to make in this context is that I'm sure, maybe not right now, but at various points in the past, you probably have heard from constituents that are very upset about changes to rooftop solar in the State of California.

We can have arguments until the end of time about the right way to compensate rooftop solar in California. The reality is there's going to be a lot more of it.

Increases in rates mean that there's going to be a lot more of it, because the more that the utility rates go up, the more attractive whatever deal you're getting from rooftop solar looks.

Interacting with that has been a decline in the cost of stationary storage batteries that you can hang on your house and use to essentially arbitrage the time of use prices that utilities are required to offer. If you have rooftop solar plus storage, you can avoid the high cost electricity price that occurs from five to 03:00 p.m.

to midnight on my rate. And just use your batteries at that point and charge your batteries up on Low cost solar in the middle of the day. That's something we actually want to encourage Californians to do. It helps to reduce the need to build utility scale solar.

It helps to reduce the need to build the Trans, the high voltage transmission lines, which we're going to need to build. But the question is sort of how much? Is it an impossible amount or is it a feasible amount?

And the, the biggest challenge, I think, that with rooftop solar is that we pay too much for it in California. Let me just give you a sense for that. And this is important to understand. Australia, New South Wales, a province in Australia similarly situated to California with respect to climate.

They have big wildfire problems, just like we do. They call them bushfire over there. But it's, it's a place that we can look to as sort of a analogous situation. Rooftop solar in Australia costs a dollar a watt for rooftop installed. Rooftop solar in California costs $4 a watt. So a factor of four, difference in cost.

The reasons for that, and I'll just tell you, the hardware going on the roof is the same. There is no difference. So what's happening there is something having to do with siting and permitting. And it does appear that California could make substantial improvements to the cost of rooftop solar by improving on how we, how local governments permit.

In General, in Australia, it's ministerial, right? It's not something that has to go through a planning desk, which means the company installing the solar doesn't need to have a planning expert on their team, which is a major cost, and a planning expert for every jurisdiction in which they work.

In addition, the utility approvals, which are also a major barrier, the interconnection request is much simpler in Australia and more of a ministerial approval. And then the utilities are charged with managing that additional resource that's on the grid. So connect and manage. Right.

And that the, I think that, I'm not optimistic that we could get to $1 a watt in California, but there's no question that rooftop solar could be a lot cheaper than it is, and that we could, and that would come via planning and permitting reform.

And that, that, in turn, would lower the demand for, for building or potentially mediate, or help us to mediate the demand for building. A lot of the very hard to construct stuff where especially high voltage transmission. The last thing I would say on electricity is that there are some technological solutions that we need to pay attention to.

In particular. Probably the most important one is what's called reconductoring this is a technology where instead of using a traditional high voltage conductor, a conductor is fancy electricity speak for the wire on top of the pole. You install a wire that has a carbon fiber core, and that means that the wire doesn't sag when it gets hot.

And that means you can run twice the energy through the wire.

And so you can take the same pole, or maybe you have to replace the pole because the pole was considered, the tower was constructed in the 1920s, during another era or the 1960s, but you can take the same right of way with the same environmental impacts and double the energy flows moving through it.

And that, I think, is a, is a planning and siting and permitting hack that we should take advantage of to the maximum extent possible in California, because I personally think that, I hope that all of you make progress on this issue and that you facilitate easier and more rapid and lower cost permitting and siting that is responsible within California's borders.

But we're not going to go to one year from 10 years. Maybe we could get to seven years, and that would be a major improvement, maybe five. That would be a massive improvement. It would be game changing. But we're still going to need to build really unprecedented amounts of energy infrastructure over the next two decades.

We are transforming a foundation of modern society. When we say we're going to have zero carbon electricity, that means building a lot of stuff. We haven't built a lot of this kind of thing since prior to the OPEC oil embargo. Right? We just haven't. We haven't needed to.

Partly because California has been in a process of deindustrialization and partly because we have been so effective in our energy efficiency programs that demand for power hasn't grown. But we're out of that era. And we're out of that era in multiple ways. Safety first, right? We need to make sure we don't kill anyone with our system.

We need to avoid Lahainas and Napa, Sonoma firestorms and campfires. We need to build an unprecedented amount of new infrastructure to meet the new demand. Right. We haven't had new demand in decades, in not just one generation, but several generations in California.

And we need to find a way to transform the system to a zero carbon system because so many of the effects that we're suffering, like the safety issues with, with the power system in California, they'd be much less of a problem if we had less climate change. And so we need to lead on that. And we are.

I think that the Administration and the three agencies or the two agencies and the CAISO are really are stepping up to this challenge. They are being honest about the magnitude of the challenge, but you can also help them, and you can help them by identifying sort of key barriers to permitting and trying to lighten them.

I would argue that especially recent legislative history indicates that even as we lower siting and permitting barriers in the power sector, given the affordability crisis, we also need to find new money to pay for infrastructure because just lowering the siting barriers is going to lead to higher rates.

And so there's a kind of combined affordability and planning perspectives that needs to occur in order to make progress in this space. With that, I'll just thank you very much for considering the issue, paying attention to this issue.

I think it's incredibly important to California, and I'm gratified that this Committee has formed and is going to be focused on it. Thank you.

Thank you for your testimony. I appreciate that. And again, we'll hear our panelists first, then we can open it for Q and A. Next we'll hear all about our water issues. Newsha Ajamii, please take it away.

Thank you so much to Wicks Members of the Committee. I really appreciate to be here and talking about such an important issue.

I just note that a lot of the work that I'm going to cite here or state is based on the work I've done when I was at Stanford running a water policy program and some of my personal experience when I was on the regional water Quality control board in the Bay Area and currently as a Commissioner at SFPUC.

This was stated a few times, but I say it again. We live in a world governed by 19th century laws supported by 20th century infrastructure, all the while facing the unique challenges of the 21st century.

Our institutions, governance structure and financial tools were designed to address the realities of the past, not the complex and dynamic issues we encounter today. The prevailing linear, once true centralized water infrastructure model, overlaid by a siloed and fragmented governance structure, dominates our water supply portfolio.

We have divided our natural water cycle into three distinct buckets, water, wastewater, floodwater, and designed regulatory and governance system to manage them. As such, human behavior, environmental consequences and ecosystem impacts were not incorporated into this model at time of its inception.

This network of aging pipes, pumps, dams and aqueducts are reaching the end of their design life, creating an inflexible system incapable of withstanding various social and environmental challenges we are facing today. Climate change is further undermining the resilience and reliability of water infrastructure daily, from extreme droughts and rising sea levels to devastating storms, floods, and mega fires.

Our current water infrastructure system and its governance model are under immense pressure. In many cases, they lack the capacity to handle these compounding and cascading risks, further highlighting the inefficiencies and injustices inherent in this system.

Despite this importance as a tool for protecting air and water quality and for mitigating impacts to protected species and ecosystem, the environmental permitting process is widely recognized to be inefficient and marked by delays. These inefficiencies are particularly prevalent for more innovative projects.

While a faster process is not necessarily more efficient, if that speed reduces a permit's environmental protection, it is important to make the permitting process more effective and efficient simultaneously. I'm going to elaborate on some of these systematic challenges and highlight the opportunity areas, especially when it comes to the governance structure and permitting process.

We have a regulatory fragmentation that is really challenging a lot of our decision making process. As I noted earlier, we have segmented our national water cycle into three distinct categories, water, wastewater, and floodwater, while also dividing up our watersheds based on political boundaries.

Separate regulatory governance systems have been established to manage each category individually and across political borders. Financial resources also have been allocated accordingly at the federal, state, and county levels, often resulting in isolated funding streams for each part based on its missions.

Additionally, the Federal Government exercises regulatory oversight over several of these systems through the Clean Water Act or as a water right holder, and or through other federal laws and regulatory frameworks. Furthermore, local and regional jurisdictions have their own ordinances that govern and manage water above and beyond these state and federal governance structures.

This multitude of statutes implementing regulations, agency policies, and court decisions from the permitting process determines the permit required, what agencies look for during the permitting process, and what activities they can authorize. At any given time. At least 12 entities have responsibilities over water supply, another 12 oversee water quality management, and seven are in charge of flood control.

In some cases, these are overlaps, but not always. Obtaining even a single permit requires meticulous adherence to a complicated and conflicting set of laws and regulations. This fragmented approach can lead to inefficiencies and challenges in managing our water resources holistically.

It can also limit access to federally or state appropriate funds, to funds to inconsistently requirements and criteria for larger projects. The complexity increases because multiple permits are typically required, necessitating engagement with several agencies, each governed by different authorization regulations, different authorizing regulations.

Each agency has a specific application, procedure, forms, timelines, which can vary even within different regions of the same agency. Additionally, the permits are sometimes interdependent, meaning one agency must wait for another permit to be issued before making their decisions.

For instance, Clean Water act section 404 certification requires a completed biological assessment under the Endangered Species Act and the issuance of the Clean Water Act section 401 certification, each of which is handled by separate agencies.

In some cases, a minimum requirement provided by one agency matches the maximum requirement of the other, leaving no leeway to adapt to a particular requirement of a site.

Furthermore, innovative climate solutions such as nature based solutions, multiple benefits strategies, circular economy models, and integrated sector of synergies such as including thinking about water, energy and transportation and carbon as a synergistic strategy offers substantial potential for creating a more climate resilience and equitable future.

However, the implementation of these solutions is often hindered by the complexity of existing permitting process. The current regulatory framework struggles to accommodate such integrated approaches, necessitating coordination across multiple jurisdictions and agencies. The fragmented regulatory landscape presents significant obstacles, compounded by rigid laws that often favor traditional solutions over innovative ones.

To fully leverage the benefits of these climate solutions, it is imperative to reform the permitting process, fostering a regulatory environment that support innovative and collaborative processes. Another example is the uptake of water reuse. Many of you might have agencies that are looking at water reuse.

Various water reuse projects, from building scale in San Francisco to regional scale, are transforming the conventional once true water use network that we have, requiring water and base water entities to work together to manage their flows meet the regulatory requirements.

However, many of these projects also suffer from complex and multilayered permitting process, especially the smaller ones, making their implementation difficult and inefficient. For example, in San Francisco we have an on site reuse system ordinance which is actually working perfectly because we are a city and a county, so we actually streamlined or made the permitting process more efficient.

However, this is not true for a lot of other localities, so people need to go to planning Commission and the regional Water Board and their cities and a lot of different other agencies that they have to go. In this case of fragmentation, I offer three suggestions.

Clear definitions and criteria establishing uniform definitions and criteria can certainly promote consistency across jurisdictions and streamline the interpretation of the regulations. Two interagency coordination implementing formal mechanisms for interagency collaboration, such as task forces and shared communication platforms, can harmonize permitting processes and expedite decision making.

Incentivizing collaboration using funding mechanisms to incentivize agencies to work together towards common goals can foster cooperation and reduce bureaucratic barriers. The second point I wanted to note here is lack of digital infrastructure and smart processes. Modernizing a permitting process with digital tools is essential for enhancing efficiency and transparency think about all of us.

We live in a digital era. Our permitting process lives in an analog era. Utilizing online stores, crowdsourcing information, mapping existing data, and building online trackers can significantly improve process efficiency. The permit application process generally involves serial reviews by multiple agencies, despite each agency having slightly different forms and information requirements.

Some information suggest descriptions is often duplicated across multiple applications. This result in multiple forms requesting the same information in different ways. Reform attempts to create integrated permitting process could lead to creation of a single form that collects all necessary information for major permits.

This approach allows applicants to provide information once filling out and filing a single comprehensive form. In addition, building an online database of technical information such as distribution of endangered species, critical habitat, and previous permit requirements can really improve the process.

This database would ensure that new information does not have to be gathered and new for every project operating in the similar watershed or geographic area. Streamlining or making the process more efficient and reducing redundancy.

If we basically end up wanting to permit different kind of projects in a single watershed, every one of those permittees have to do, have to file endangered species, do the biological review and file them, and none of those are included and nobody else can use it again. So that's a very inefficient process.

All of this requires substantial investment in creation of a digital infrastructure to support these processes across the board. Such infrastructure would encompass several critical components. Integrated data management systems developing centralized database that consolidates technical information can eliminate redundancy and provide up to date information for decision making.

Digital platforms for seamless communication and collaboration among agencies can streamline review and accelerate process approval. Process user friendly portals for submitting permit application can simplify the process, allowing applicants to provide comprehensive information in one place and track their application status in real time.

Leveraging AI tools to assist in initial review can expedite preliminary assessment and ensure compliance for regulatory requirements. In conclusion, we are building the future today. Our current permitting process must evolve to meet the demands of the 21st century.

By embracing digital innovation and fostering greater collaboration among regulatory agencies, we can create a more efficient and effective primary framework. This approach not only supports environmental protection, but also promotes sustainable development and resilience in the face of climate change. I really do appreciate for your attention to this critical issue.

The topic of streamlining and efficiency has been in this house for a long time. I used to work here and I do appreciate that everything we do somehow needs to fix this very fragmented and old process. We can call it whatever we can. Thank you.

Thank you very much for the testimony. Lastly, we'll hear on climate resiliency. Steve Boland.

Good morning, and thank you for your invitation to speak before you. My name is Steve Boland. I currently lead government and external affairs at Lawrence Livermore National Lab. Prior to that, though, I led the Energy and Homeland Security program for half a dozen years. I've had the benefit of serving the state twice.

I was the state oil and gas supervisor in 2014 and 2015 and was responsible for the development of the hydraulic fracturing regulations as required by Senate Bill four. So it wasn't the most fun I've had in my life, but it gave me more insights into some of the challenges that you all face as you consider regulatory reform.

The second time I served the state was as the acting state geologist in 2020 and 2021. That gave me a front row seat on many multi, many, many multi agency discussions on how we sequestered CO2 geologically in the state.

The state is blessed with some of the best geology for sequestration of CO2, and that also gave me a really good insight into some of the challenges that you all face in terms of dealing with that issue.

You've heard from all of us on the panel that we will have to have massive infrastructure builds over the next few decades to meet the challenges of climate change. The power needs switching off fossil fuels, a huge transition. The magnitude, though, is really hard for everyone to grasp.

Just to electrify the transportation system, the CPUC estimates that we need three times the amount of power on the grid than we currently have. To electrify all of California's economy, we need five times. So these are massive efforts, and they're at all scales.

From the size of the culvert in the road that you travel to get home, how big is that going to have to be? Given intense rainstorms that are going to be affecting the state? Already do atmospheric rivers. To these issues that my colleague Doctor Wara talked about in terms of the.

The magnitude of the power needs of the state. However, the overriding issue is perfect, as starting to become the enemy of the good in the state. And in trying to solve multifaceted problems and doing so in ways that try to drive towards many policy goals, we end up being paralyzed and actually doing nothing.

And I was reminded of this as I thought about the testimony today when I was a postdoctoral research fellow at UCLA.

The peripheral canal was the big debate of the time, and I had a water engineer colleague say, you know, there's a lot of other ways that it could be done, and a lot of them are worse, but we still have to solve this fundamental problem of how we protect our water conveyance system in the state, which now is still at risk of absolute failure.

And now we have, what, 45 years later? We have tunnels. We're debating. We're debating whether we have one or two. The same problem exists.

You have the risk of having complete failure of your water conveyance system because you mix water from Northern California in the eastern part of the delta, and if you lose levees during a seismic event, that water will be contaminated with salt water. So that's, what, 45 years, and we still haven't solved that problem.

You have to solve major problems with our electrical grid, with our water infrastructure, and so forth in much less time than that. So perfect can't be the enemy of the good. We have to have adaptive approaches to these problems. You're going to learn as you go. We're going to learn. We always learn as we go.

But one thing that hasn't been addressed at this panel is culture.

And when I was the oil and gas supervisor and implementing a new set of regulations, as I said, required by law, legislation, what I discovered was there were multiple agencies that were part of regulating hydraulic fracturing in the state, which was the SB four law was about.

And in my discussions with the Water Board and my discussions with what was then called the Department of Toxic Substance Control and the California Energy Commission, what I found was a culture of regulation where people would say to me, I'm a geologist. I'm not a regulator. So it was a new world to me.

They would say, things will move forward when we have done our work. And there was, I felt, an unfortunate attitude of that we need to do our work. We'll take as long as we want to get it done. So this is primarily an Executive branch problem, and it's going to take leadership in the Executive branch.

But there is a culture of regulation that emphasizes the need to be extra specially careful, extra perfect, that things take an incredible amount of time. And in my view, as a pragmatist trying to right the ship of a regulatory agency that was having troubles meet what Governor Brown had asked me to do.

I need industry to be able to function, and I need to do it in an environmentally sound way. I constantly ran into roadblocks in the execution of my duties by other state agencies who wanted to go slow because they wanted to get it just right.

There is no such thing as just right because the situation changes as you move along. We're moving into a period of rapid change, and so perfect can't be the enemy of the good. It just can't be. It forecloses opportunities that you may need in the future. Another example is in our zeal to move away from fossil fuels.

And that's absolutely. We need to do that as fast as possible. We don't want to foreclose the opportunity to have carbon negative natural gas flowing through the, the natural gas distribution system in the state.

So we have to be careful about what we oppose because there may be other solutions that are actually beneficial from a climate point of view that we need to consider. So my plea to you is to form a partnership with the Executive branch to change the culture of regulation that says it's okay to take time.

It's not okay to take time. We don't have time. Secondly, you're going to have to do some very challenging things and that they're hard. They're absolutely very, very, very hard. Quadrupling, quintupling the amount of power on the grid, reconductoring or putting up new wires. As Doctor Wara said, all of that takes money.

We're going to have to find that money. Public investment is going to be required. The good news is at the moment, and we'll see what happens in the next few years, there's a lot of federal investment that could come if the state's willing to invest some as well.

So I'll conclude my statement, because I think having Q and A is probably more important than listening to me speak. But multi agency efforts are required for just about everything that we need to do, and we need to have those efforts proceed in parallel.

The whole issue around storing CO2 Underground is a requirement for the state to meet its climate's goals. There's no way around it. There are no amount of trees we can plant, there's no amount of wetlands we can restore that are going to solve the problem.

In order to deal with 400 million metric tons a year of carbon emissions, geologic sequestration of CO2 is required until we get farther down the road and have a carbon free electrical system and other carbon free processes. The good news there is that we have the technology.

We can change how we use our waste products, forest waste, municipal solid waste, ag waste, turn it into hydrogen, which the CEC says the state needs, and put the CO2 underground. We won't store our CO2 out of the problem, but it does provide us transition time as we get everything else involved.

But there's a half a dozen agencies involved in permitting a single site. There are over 140 sites around the world, geologic sequestration sites around the world that are being in development right now, there's about 45 that are operational. There's about 50 million tons of CO2 going underground.

As climate mitigation around the world right now we have great geology. We need to do it, but we can't get one permitted. So we have to find a way to parallelize them that gets to efficiency, I think that assemblymember Wood talked about. So that these things can happen fairly quickly because we're out of time.

We just are out of time. And if we're actually in a crisis, we actually need to act like we're in a crisis. Thank you very much. I appreciate the opportunity to speak before you.

Thank you. Appreciate it. We've got a couple Members who I know want to speak first. We'll turn to Mister Wood.

First of all, thank you, this is a great panel and I very much appreciate there are some common themes in your testimony here, which I won't get into a lot, but I do want to go back to Mister Boland. This parallelization, which would be, I think would be hugely valuable in so many things that we see.

Everything happens sequentially, and you're dealing with these silos, and no one's working on the same project at the same time. It takes a huge, huge amount of time to get get anything done. And I would agree the perfect is becoming the enemy of the good. And how do we make that culture shift happen here in California?

With regards to energy? I'm sort of stunned that we in California don't have a secretary of energy. We have the fifth largest economy in the world. We're facing unparalleled fourth. Well, whatever. We're pretty big. Okay, four. Thank you. And while we have.

While some agencies seem to have more influence than another, what I would love to see is an agency or a czar, or somebody who could actually compel agencies to work together and get these things done. And right now it feels like the agencies kind of, they all kind of do their own thing and it's great.

And Doctor Wara talked about the CEC, and Caiso and Puc were coming together. And it seems like the outcome of that is that now we have a 20 year plan, but when it comes to actually getting projects done, we still work in that sequential parallel way, which is duplicative many times around, especially around CEQA, and frustrating there.

It's like we aren't working. It's like we aren't reacting to a crisis that is an absolute, which is a crisis crisis here. So Doctor Worre, you talked about reconductoring, which I think is a fabulous concept. I would imagine that requires a level of CEQA analysis, probably multiple agencies to do that. I don't know the answer to that.

That, but I think it's something we should find out. You said that there are key barriers. I mean, what is that? And that the Legislature should be, you know, directing. So part of it is like in the big world, why us? We don't have the knowledge.

Why are agencies who have a problem more proactive in coming up with solutions and asking us as a Legislature to help them through a process? There's often silence when we know there's a problem out there.

And we know that sometimes agencies actually have authority to do what we want them to do, but they won't do it until we tell them to do it. And that we have seen it in healthcare many times like, no, you have the authority. No, we need you to specifically tell us to use our authority.

So this reluctance by agency to move things forward is really frustrating. I see Mr. Baum nodding over there about that. So I guess I'm coming back to the water piece here. Just in general, the idea of programmatic CEQA analyses would be helpful. So we're not doing duplication.

When I was on a Planning Commission years ago, I remember seeing that a CEQA analysis come to us. And I was reading through the CEQA analysis. I actually read them and came across references to another city. These are cut and paste. These are duplicative, wasteful documents because they're cut and paste.

The same thing for cities over and over and over again. So why are we, why are we doing, why are we doing this? So actually, that's a long statement, but I do, I should call you Doc Graham. If you know your movies well, you'll know who I'm talking about. Okay.

It's like, okay, the CEC CPUC have come together and they've come up with this. You know, they're working together. They got a 20 year plan now. But I have asked repeatedly, what are the goals of your collaboration? What do you, I mean, it's great that you now have a 20 year plan, great.

But we have a huge challenge ahead of us and there's a reluctance to set goals. How this collaboration could be more effective. I've asked in multiple hearings about this. Can you tell me what the goal of your collaboration is and get no answers?

And so as we look at, we know that planning, citing financing of infrastructure is a huge challenge here. Do you have, from your perspective, and I have tremendous respect for you and the work that you do on so many areas, do you have thoughts about how we can do that? I've given you my idea.

I think we should have an energy czar, someone who can pound heads and make all these agencies actually do the work and be responsible to that person, who can then be responsible to the Governor to get stuff done, instead of agencies just kind of all doing their own thing out there.

So if you had a crystal ball, Doctor Ware, what would you, how could we? And focus this on transmission, because that's been a huge issue. State knows it's a problem. Known it for a couple of years. We're making little tiny bits of progress here. Just focus on transmission for a minute.

I would suggest two potential policy ideas, both that have been tried and have been successful in other states. And I think we should not be shy about looking to other states that have successful programs to build out their systems. One is what is called a renewable energy transmission authority.

That's an organization that was created both in New Mexico and Colorado and is designed to facilitate greater build out, especially of the large kind of, not the local projects, but the big lines that sort of connect new areas of renewable energy to load.

RITAs are a way to both sort of circumvent the investor owned utility transmission planning process to some degree, and also to bring new actors and new money into that process. And we need new money in that process.

Our IOUs have lots of challenges due to wildfire that they're still working through and overcoming. Another policy idea that was highly successful in Texas, of all places. Thinking about policy ideas from everywhere is what we should be doing, I think is something called competitive renewable energy zones.

It's competitive because Texas, but the basic idea is to say where we want renewable energy to be. So, for example, in California, we have a lot of ag land on the western side of the Sacramento Valley that is unsuitable for being in production at this point because of the water, lots of reasons.

It's disturbed land, great place to put energy resources. Krez would say, let's build the transmission to go to that area sufficient to fully utilize the renewable resource that's there, and then let the renewable resources show up and connect to that transmission. Build the Trans lead with the transmission.

If you lead to a place where permitting and siting is less painful, if we're not killing Joshua trees and desert tortoises to install the solar right, that will be easier. But our process, as has been pointed out, is very incremental. The way that the process works today is a project comes in and says, I want to interconnect.

And then the grid operator says, the upgrades will be necessary for this project to interconnect, rather than saying, we want to see gigawatts of power in this spot, and therefore we're going to build the transmission to support that in the belief that the power plant developers will show up if there is transmission.

I think those two ideas. Yes, and Texas did that, and they built a wind industry on it and it worked.

Well, there is, and I'll leave. I know you, I don't want to monopolize time here, but there is huge reluctance on that piece of it. In one oversight hearing we had, we heard that asked, you know, there's reluctance to overbuild because there's a fear, fear that we won't be able to accommodate that infrastructure.

So I asked the question, when was the last time we overbuilt transmission in the State of California? 1930s. And guess what, folks, we've used it all up. And so there's this fear of being innovative in that way, and that's paralyzing us, and that's a real problem. So thank you.

Thank you. We really are trying to build a field of dreams here. So we'll do Ms. Quirk-Silva next and then Mr. Alvarez.

Just a few comments. I really appreciated all of your presentations. And actually there's some very specific policy ideas.

I think one of the things that goes across all of them, whether it's housing or climate or water, are things that we have seen not only at local governments, but the state, is this fear and this stall and delay. And so whether it's at a local level or a state bureaucracy, we continue to see no urgency.

And this no urgency, whether it's a Department head, whether it's somebody who has papers on their desk that they need to move a project forward. You know, we've seen audits reports through the state now for a handful of years. It said, you know, on water wells, we've had the funding and yet they weren't processed.

We've seen high speed rail, the tunnels, middle mile, so many big things in California that were not moving. So I will just say that I appreciate your remarks that we are out of time. And I know we have a younger generation. I'm on my last turn.

But some of these things we were talking about when I arrived here and 2013, and we have not made progress on them.

And so unless we get out of the way of ourselves and we get some kind of urgency, this will in fact be the same conversation you will be having and some of you in the audience, because we are not moving on these projects and the balance between environment and building and building these big infrastructures, we have to decide.

Are lives Important, is housing important, is safe water important, is power? And especially in our vulnerable communities, if they cannot get to their jobs, if they don't have safe drinking water, all of these things, there is a road towards the center. And so I'll just end with that.

You said we're out of time, we're paralyzed, and we're actually doing nothing. And I have been on these committees now for 10 years. We have to get moving, California. Thank you. Speaking of that, I have to get moving.

Thank you. Ms. Quirk-Silva. Mr. Alvarez next. And then Ms. Petrie-Norris.

Thank you. Appreciate all your panels. I have questions, probably for all of you.

I think the one, though, the one comment I'll make is the theme that runs through all of the work that needs to happen, that this Committee will be discussing is one of the things that matters the most to Californians, which is the cost of living. All of these have that common theme.

And so I think the Committee is, this select Committee is appropriate because we need to take action on things, but also because we need to be responsive to what Californians are asking for. Cost too much for water, it costs too much for housing. It costs too much for electricity.

And so really, the problems that are regulatory in nature and permitting in nature, as this Committee is focused on, lead to those higher costs. So I, too, am looking forward to a work product with many policy recommendations to be implemented and worked on over the next year. Let me first start with asking about housing.

I do think that local governments have tried to step up in places where the state has failed. I think you see things like, I know when I was on the City Council, we did inclusionary ordinances because we just had no other tools. We did regulatory reform, but we could not reform CEQA. That was something beyond our ability.

And so I think our local government and people on the ground respond a lot faster than state government does. We are much slower to respond.

But I also do know that the Legislature has put forward many laws over the last several years, and you were touching about this, Nick, about how only the ADU laws have had some demonstrable result. And I'm just curious, do you have a policy center who is analyzing some of this legislation and its effects?

Because I'm hearing anecdotal evidence about other laws that seem to have some interest and some are helping to move the ball. But I do fear that we are trying to do a lot, and I think we should do a lot, but then also not really sure.

You know, if it's too surgical and therefore not really making a tremendous impact. And I'm just curious, how can we measure this as we go forward?

Well, I mean, the best way to measure it would be to randomly assign policies within jurisdictions, but I don't. That doesn't seem like a way forward. Short of that, I think the Turner Center for Housing Innovation at UC Berkeley is doing a lot of excellent work to assess these policies.

You know, and I would say that there are many laws that have had small effects in very targeted areas. They are not moving the needle in the big way that state agencies and many independent analysts have identified as necessary to address the severe problem of housing affordability and homelessness in California.

And with respect to local solutions, as you know, there are 482 cities and 58 counties in California. Some, I think, are trying very hard to address the problem, but maybe lack the technical resources to implement effective policies.

Some, quite frankly, are not trying very hard to address the problem and, in fact, are acting in ways that magnify the problem. And certainly, state legislative effort is necessary to address those issues. And with respect to inclusionary zoning, as I said, it can produce below market rate units.

It can also inhibit market rate units, and it can even inhibit below market rate units, because if it prevents projects from being developed at all, then those projects won't have any market rate units or below market rate units.

And so I think this is an area where it is actually quite appropriate for the Legislature to make sure that local inclusionary ordinances are crafted in a way that maximizes the benefits and minimizes some of the problems associated.

Definitely interested in following up on that. You talked about exempting fees. Again, from local government's perspective, fees is what helps us build the infrastructure, our libraries, our police stations or fire stations, our parks that make communities. And so that makes it difficult.

I will note, though, on something very specific on ADUs, there continues to be a conflict, and this is maybe something for us to review. We had exempted or attempted to exempt fees from ADUs, and I know for a fact, because I built an ADU, that's not the case. We're still paying.

I had to pay almost $15,000 for a water connection fee, just the fee, not the construction, and roughly $5,000 for a school fee for a one bedroom unit that will not have children living in it because it would be impossible to have multiple, more than one or two people living at a one bedroom. That's not humane.

And so the type of tenant likely will not be someone with children so you're paying school fees for something. So that continues to be an issue. Are there others that you've identified in terms of fees, fees that maybe are more specific?

Well, I mean, actually what I said about fees was not that multifamily development should be exempt from fees, but that fees should clearly be tied to the impacts of the development.

And the problem that you're identifying with respect to your ADU is exactly the problem that I think many builders of multifamily housing experience with respect to multifamily housing, which is that they are required to pay fees that may not actually mitigate the impacts of that particular development.

And so I do think that there are a variety of ways. One would be to provide some form of state review for fees. Another would be, for example, to create an exactions budget for a municipality, for municipalities so that they could sort of determine how the total magnitude of exactions and then determine how to allocate them.

There are a variety of different mechanisms, but I think the key issue is, as a result of Prop 13, among other laws, local governments certainly are very constrained in terms of resources. Fees are important, but they can be abused.

You also talked about CEQA exemptions and TPAs. As one policy suggestion. I thought we had done, the Legislature had done some pretty significant work around TPAs, transit priority areas, when it comes to regulatory reform, but it sounds like there are still some barriers there.

So, yes, I've done two research projects on this issue. There are a variety of exceptions to the exemptions. And so, I mean, basically the project has to check a large number of boxes in order to qualify, and whether it checks those boxes is often at the discretion of the local decision maker.

I would also note that the strongest predictor of whether a project will reduce vehicle miles traveled is proximity to jobs via auto. So restricting infill development to transit priority areas. I think from a perspective of addressing both the transportation problems of California and the housing affordability problems, is probably overly restrictive.

And what I'm suggesting is a straight up CEQA exemption, a map based exemption of infill projects over a certain unit threshold so that the box checking is very clear. Okay.

Definitely a follow up on those two. You talked about the, and maybe just for time. I have questions for all of you, but for time purposes, I'll focus on the housing at the moment. No, I have to ask energy questions, too. Nick, you talked about certain cities that are maybe not participating.

Is there a general theme as to what these cities look like, what parts of California they're from? Demographics are there any consistent themes?

I mean, certainly, I think historically it's been more coastal, relatively affluent communities. And I think there are exceptions, but there are many instances in which that remains the case. And those are also frequently areas where more housing would have significant benefits in terms of proximity to jobs and other resources. But not exclusively.

I mean, I think there are many cities that intentionally are not. I think many cities unintentionally place obstacles to multiple.

Let me ask a little bit about energy, and I heard. Is it Doctor Wara? Yeah, thank you. Talk about solar and wind quite a bit. Did not hear you talk about hydrogen, although later it was brought up by Mr. Bolin.

Do you have a perspective on that and what role that plays in the future energy needs of California and whether permitting of projects related to that also need to. We need to figure out ways to streamline or to facilitate that.

So let's see. Hydrogen is a complicated issue, because the big question that everyone should ask about any hydrogen proposal is where'd you get your hydrogen from? Because there's a lot of hydrogen that's being offered as like a solution today that is not actually a climate solution. And it would be much better to just burn natural gas.

So until we have large scale proposals to produce what is called green hydrogen, and what that basically means is making hydrogen out of water, splitting the water molecule into an H2 and an O2 or a couple, you know, get the stoichiometry right. But whatever the.

Until we have those kinds of projects, I think hydrogen is not really a solution. And it is. So I'm excited to see that kind of technology development. I think the cost of electrolyzers, the key device that breaks that bond and makes green hydrogen, is coming down.

But the reality is also that we're going to need to power those electrolyzers with a ton of renewable energy for the whole thing to actually be zero carbon. And so I think the state should support that. The state should support pilot projects in that space.

And by pilot I mean both small scale and much larger scale to see if it works.

But we should also be clear eyed that this is not a technology that has been used at the scale that we are contemplating it and integrated into the systems that it will need to be integrated into. Hydrogen in pipelines, in natural gas pipelines is kind of not a great solution.

There's a very limited amount of hydrogen that can be put into those pipelines without causing big issues with the system. So do we want to build a hydrogen specific pipeline system? That is a very open question. Or would it make sense to have an electrolyzer next to a power plant that only runs on the hottest summer afternoons?

And maybe it's a small electrolyzer, and so it's making just enough hydrogen for that peaker to run when it needs to run. Maybe that's a solution. But I guess I think we're early, and we can plan to use a lot of green hydrogen, but the industry does not exist.

And it's really important to be clear when something is like a model outcome, where we're like, we need to get to this amount of carbon by this year, so we need to have some hydrogen. That's one thing. Another thing is, are there investable, finance able projects and that we're much further away from, I would argue.

Let me ask you about transmission, and I had written down the question before you mentioned the phrase, which was new to me, I think, correct me. Reconducting.

Reconductor.

Yeah, reconductoring. Okay. I wrote the question. You've talked about building new transmission lines as a need. And then my follow up, my notes, was, what about enhancing existing?

So then you did talk about reconductoring. Let me ask, is that being done today with new installation, or is it not? Are people, is this a technology that you see in the future, or is it actually a real technology available or real system available?

It's a real technology. There have been challenges with supply chain. Getting enough wire of linear feet of wire that you need. I would say creating a clear and sustained demand would help to facilitate solving some of those supply chain issues. And so California could potentially be a leader in that and say, you know what?

We have an older system. We have parts of our system, as we all learned, much to our dismay, that were built in the 1920s. And we have parts of our. A lot of our system was built in the 1960s. And we could take that existing system and really think systematically about reconductoring a large fraction of it to strengthen the backbone. Right.

To strengthen our ability, like on a hot afternoon, to move power into California from the Bonneville Power Authority, which is a key external resource that we rely upon, and also to move our own power out of the state when we have too much of it. On an April day at noon, we have far too much solar power.

Sorry to interrupt. So this is large scale conducting, not transmission lines and communities and neighborhoods.

Ah, okay. Yeah, this is. This is a yes. So there's sort of. There are essentially two systems that we have to support the electric. There's the big system kind of like the interstate highway system of transmission. Right. And then the local roads are what we call the distribution system. This is not so much in the distribution system.

Okay. And last one. And I'll just do housing and energy, although I have questions on water and on, especially on the culture of regulation. I think that's something we need to really talk more about. But ministerial and non-discretionary of solar, is that not currently state law?

So there are still discretionary processes for home solar, residential solar, and small scale commercial.

There are important steps in the planning and permitting process where, for example, the Fire Department is involved because they may want to be up on your roof if you have a house fire.

There's an important permitting process involving interconnection to the distribution system, the wires in your neighborhood that the utility controls and does in a particular way that takes time and expertise to navigate. And in general, the permitting processes require expertise with managing the planning desk at work, whatever local agency. And that's not true in every country.

And those countries have reliable electricity systems and their rooftop solar costs a lot less. I think it is a problem that we have not worked enough on in the United States and especially in California, where we have a lot of interest in the technology.

Thank you. Thank you, Madam Chair.

Thank you, Mr. Alvarez. We will now go to Ms. Petrie-Norris and then Mr. Carrillo.

Thank you, Madam Chair.

Then Mr. Bennett.

Thank you, Madam Chair. And thank you all for being here. Really appreciate you digging in with us and offering really concrete policy proposals. I sometimes think we have conversations. Everyone says, gosh, we need to speed up permitting. We need reforms. And you say, okay, great, we need some ideas.

So I appreciate that you guys have come with those and look forward to pursuing those. I do want to dig in a little bit more to, to the energy conversation. So, and I guess we, Assemblymember Wood talked a bit about concerns, frustration about the length of the transmission planning process.

As you highlighted, it's taken us 10 years to build new transmission projects. We're never going to get it to one. What do you think is the right goal?

Because I think it is really important for us to collectively be oriented around a goal that's ambitious but also realistic and orient the Legislature as well as our agency partners around that. So what do you think should be our goal?

I would be thrilled if we could roughly double the rate of transmission construction in California. So you know that typically that's measured in terms of a funny unit called Gigawatt Miles. But there are different ways to slice it. But I think we need to roughly double what we're doing.

And so you could imagine one way to think about that is cutting the permitting time to five years from 10. Right. Or the average time to placing a new line in operation, or roughly doubling the number of lines that are included in the transmission planning process at present.

And I think that that's kind of a rough order of magnitude of where we need to be. I wouldn't, like, want to get too fixated on a particular number, because for transmission, just like for housing, place matters. Right. It's also building the line that we need, not just building lines.

And so some of those places are particularly hard. You know, we face reliability constraints, particularly in certain parts of the state, because we don't have enough transmission lines, for example, that serve the South Coast area.

That means we have to keep on these once through cooling power plants that are in EJ communities that the state is committed to getting rid of. And year after year, we have to keep them around. The solutions there involve increasing the flexibility of the system.

Then you also said we need to find new ways to pay for this. And I know this is something that we, in the Committee, we've been digging into a bit, but can you say a little bit more about that as well as are there models in other states that we should be looking to?

Is it the Renewable Energy Transmission Authority or, you know, are there some other models that, that we should be looking to?

Well, I think a couple of things. I think we do need to look at sources of, you know, really cost effective use of the money we do have.

And, you know, one option there, I'm not just saying, it has pros and cons, is public finance of transmission, which will lower its overall cost, because then you're not paying a rate of return to shareholders.

Another option is really facilitating the construction of what is called merchant transmission, where a third party owns the transmission and makes money from selling, basically renting out the transmission capacity.

And a third option that I personally think needs to be on the table is a major state led investment that takes Greenhouse Gas Reduction Funds and invest them in high voltage transmission. High voltage transmission is the thing that we need to achieve the clean energy transition.

Whatever your views are about which energy resource, whether it's hydrogen or carbon capture, efervo enhanced geothermal, whatever it is, we're going to need to build a lot of transmission. And it's a one time kind of investment that's driven by the policy goal set by AB 32 and SB 32.

And I guess my view would be we should be willing to invest the resources that are generated by cap and trade in the solution that is delivering reductions in the largest magnitude.

It's called the Greenhouse Gas Reduction Fund. So it seems like indeed we should be looking to maximize the amount of greenhouse gas reduced.

It is always oversubscribed, as I'm sure you know, which is what makes this idea so hard. But it's also a growing pot of money as the price of allowances goes up.

And then just one follow up question on the conversation around grid enhancing technologies reconductoring. We've had a bit of conversation about that this year as well. And advocates are saying we're not doing enough, we're not moving quickly enough in California. The agencies would say, yeah, we're taking all that into account. We're doing all of that.

Sounds like you would perhaps more agree with the advocates. And again, they are, are there states who we can look to who are doing a good job on that front?

I'm not aware of a state that's taken a kind of comprehensive approach to reconductoring at this point. I do think this like another frame to think about when we talk about the energy system.

We have to keep be in touch with the reality of the politics around the energy system where the investor owned utilities are very important in the conversation.

And so I think getting the incentives right for the investor owned utilities to be really excited about reconductoring, perhaps lowering permitting barriers for reconductoring, like to the degree that there needs to be environmental analysis, really streamline that.

Because the reality is you're replacing something that's there with something that looks just like it, only it has different materials that allow it to perform better. And that should not be a major CEQA process. So really streamlining that and prioritizing projects that can be done quickly, prioritizing speed, I think is. And that's where reconductoring will shine.

Yep, got it. Thank you.

Thank you. We'll do Mr. Carrillo.

Thank you. I'll be brief. Since we have two other panels, I just wanted to make some comments on what some of you have said, that the perfect is the enemy of the state. I think that we've really seen that. And the price for perfection is the housing crisis that we have.

I see that as the main obstacle for us to continue to actually build the units that we need when we go for perfection, there's not going to be that point. And to me that's clearly shown, by the way, that we look for perfection in going through entitlement processes, financing processes, and the culture of regulating those processes.

And to me that really starts at the local level when we see development coming in where you have to get plan approval first, building and safety, then engineering, then, and so many other different steps. There's been some improvements. Some local jurisdictions have started to do concurrent review. That's something that is necessary.

But at the same time, when we start looking at not doing anything until we feel that it's perfect, we are seeing the price for that. And that's all the unhoused people that we have across the state.

And I feel the same way about hydrogen, because see, we look for that perfect moment with the three pillars being at 100%, we're going to pay by not being able to electrify the state completely. I fully understand that we need to be conscientious about the environment, but when we strive to get perfection, we're suffering in other fields.

The other thing I wanted to mention is the culture that we have in California, where when I see performance from developers, when I was a planner, they would always have an area for the lawsuits from CEQA, you go through the process, internment process, but then the cost of going through the lawsuits, $1 million or more, and that is also time consuming.

Multifamily development takes seven years in average to build 100 units. At that model, we're never going to be able to solve the crisis. I have not had the opportunity to go overseas to see what other countries are doing, like Vienna and Finland and others.

And one of the issues that I see is that maybe it's the distrust that we've created. Because from my understanding in other countries overseas, if the government says we need to build 1000 units, people say, okay, build them. Whereas we're here in California, the YIMBY, I want to build those units.

I want to see those units because we need to house the people that we see on the streets. As long as you don't do it in my backyard, do it somewhere else. And I think that that's something that we created, that lacking trust in government.

And I acknowledge that because of the tremendous amount of money that we put into addressing the housing crisis that we have. Where is that money? It's nowhere to be seen. And if that investment showed increments of improving the situation, we would have the trust in people that we need to build these housing units. I'm from Southern California.

I go to LA quite often and I see the situation getting worse. So the trust in the people that we represent is not there anymore. I think that's the cultural problem that we face in our state. It's unfortunate, but it's the reality. And we need to find ways to gain that trust again.

And I would just close my segment by asking if you see a potential to create some sort of redevelopment mechanism to incentivize those multifamily developers, because the investment is huge.

Not only, again, waiting seven years to actually put a shovel on the ground to build the units, but the cost of having to go through that CEQA lawsuit, that is inevitably part of the process for development. And that's something I started talking about when I got elected first term.

And I wanted to see we could have that dialogue about maybe not color redevelopment, but something that would incentivize our local governments from attracting those developers so that we can build the units that we need. And again, the ADU is a perfect example of a positive move. I have an ADU.

I have built an ADU property and I see that being part of the solution. But again, it's not going to be enough because we need to build the numbers that we need in multifamily housing. No one's going to do it because it's just so expensive.

It takes seven years to build 100 units and we're just never going to get there.

And for me, quite honestly, getting the trust in people again in having to invest more state money in addressing the housing crisis that we have is going to be a challenge that I don't believe we're going to be able to do. Without having to show that we can actually having the conversations of incentivizing those that want to build housing.

But it's just those are pencil out. So I should like to hear if there's any conversations or any ways that you would suggest so that we can invest again in building the units that we need through multifamily developers.

Yes. So I am, I guess, not particularly optimistic about the prospects for tax increment finance regime along the lines of what redevelopment was previously.

And the reason is, I think a lot of, from local governments perspectives, a lot of the advantages to the redevelopment regime was that it sort of circumvented the overlapping governmental demands on a limited pool of tax revenue.

It also, there's an underlying accounting question about tax increment finance, which is, is the increase in value due to the investment on the parcel or is it due to broader economic changes?

And I think there's abundant evidence that certainly in California, a lot of that increment in value was due to broader economic changes and so probably as an account, as a matter of accounting, it wasn't justified. I think a more promising approach would be to implement parcel taxes along the lines of Mello-Roos districts for multifamily development.

Mello-Roos of course is a key financing tool for single family development. We haven't really thought about ways of transposing it to the multifamily world and I think that is a much more, from my perspective, a much more promising approach and I would be glad to follow up about that as well.

Thank you Mr. Bennett, who by the way is not on the Committee, but who's here just for fun and we welcome him and he can be on the Committee if he'd like.

Thank you very much. This has been a lot of fun, but my comments are partially focused to the Chair and so I appreciate the invitation to be here today and reaching out. Just hearing this comment, my one quick digression is just a reminder that if we're not building truly affordable housing, we're making a mistake.

That's where the crisis is. We keep having those areas subverted by turning around and building market rate housing and we don't solve the problem that we need to solve. But that's not what I wanted to say.

The important thing that I wanted to say is there's no doubt in my mind of giving what I know about the Chair, that you're going to come up with a work product out of this effort. And so there will be a work product. There's some comments about we have to create a work product.

What I would like to help with and what I think is important is that we try to avoid the. We're going to do streamlining and environmentalists are going to try to block streamlining effort and mentality that is out there.

Because if you look at what they're doing in Denmark, where they have much more collaboration between industry, government and the people that are very concerned, like myself about the environment, is that they have, they realize, and what we have to remind everybody is that streamlining is actually an environmental necessity and streamlining doing it right is the way to get rid of those OTC plants that are polluting in those environments, that if we don't rapidly make the changes that we need, we're going to have more environmental damage.

So my appeal to everybody is don't turn this into a battle, regardless of which side you're on. And there are people on both sides that want to turn this into a battle. Let's see if on this issue we can get it right. But it will take deft political leadership to be able to pull that off.

And that's the challenge. And I have a lot of respect for your ability to do that. And that's the role I will continue to try to play to help this process. Thank you.

Thank you, Mr. Bennett. And that's exactly the point of the Committee, is to bring together all different types of stakeholders to figure out how we can collaboratively figure out the solutions here and work towards solution. And yes, there will be a work product and we would love to have you involved as much as you'd care to be.

Do we have any other questions for this group of panelists?

Yes, I just wanted to say, I know nobody asked about water, but I, since I don't want water to be forgotten, I want to say two things. You heard a lot about energy transition, and we have been in this energy transition process for the past 20-25 years or even longer. The water piece is a lot more complex.

You don't think about it as much because everybody thinks the only way to deal with water is the dams and aqueducts and peripheral canal or something like along that line. But water is much more complex and has a lot of solutions that come in different sizes and shapes.

So as you're thinking about how to deal with water in the permitting process, think about modular solutions.

Solutions that can be built gradually, can be built locally, and actually they're not centralized because we do actually currently have water projects that are oversized, underutilized and potentially may never be utilized because of the way we are transitioning and because of the climate and the way when water comes and when it goes, it just impacts it.

So just wanted to make sure when you're thinking about water, think about innovative water solutions, not the ones from the past century.

Okay, and our last question here, comments from Mr. Wood. And then we'll move to the next panel.

And it's water related. So thank you. I think that one of the things that we don't do well here is we don't, we're not planning far enough ahead for drought.

So we wait until drought happens and then we put a whole bunch of steps that we have to do to get moving on that. And then it just seems strange to me that we had to rely on an Executive order to allow for stormwater recharge.

It's like, why do we have to go through an Executive order process? Why isn't that just part of our existing policy, the beneficial reuse of stormwater to recharge our aquifers. I just don't get it sometimes. But anyway, I suspect there's probably a CEQA problem with that.

Thank you. Well, thank you so much for your participation. And we will definitely be back in touch next. And I know we are having very thorough conversations, which I definitely appreciate. I'm hoping the next couple panels we can move a little bit more swiftly on, though we do want to hear everyone's perspective on the panel.

We have our state government perspective. We will have Christopher Calfy, who I believe is in the audience coming up here, special counsel to the Secretary of California Natural Resources Agency and Shanna West, Housing Accountability Unit Chief, California Department of Housing and Community Development. We have Mr. Calfy go first.

Good morning, Madam Chair and Members of the Committee. Thank you very much for the opportunity to be here this morning. I am Christopher Calfee, a Special Counsel to Secretary Crowfoot at the California Natural Resources Agency. The Natural Resources Agency's mission is to restore, protect, and manage the state's natural, historical, and cultural resources.

We oversee and support more than 26 distinct departments, conservancies, and commissions, many of whom play a role in project permitting, including the Department of Fish and Wildlife, the Coastal Commission, and the State Lands Commission. Thank you.

Many of our departments are also on the front lines of responding to our rapidly changing climate, including CAL FIRE, the Department of Water Resources, and the Energy Commission. The Natural Resources Agency has a long history of collaborating with state and local partners to facilitate projects of all kinds that avoid harm and provide environmental benefits to the state.

This morning, I will provide a brief context for permitting that occurs within our agency and then describe some of this administration's efforts to increase the efficiency of the permitting process.

What we commonly refer to as permitting is, in fact, implementation of values by our Legislature on behalf of its constituents and some cases directly by the people through Proposition. For example, our value for preservation of species and habitat is codified in the California Endangered Species Act.

The Department of Fish and Wildlife oversees projects that may impact endangered species and implements the value of species protection by requiring projects to mitigate impacts in order to get an incidental take permit.

Other examples include the Water Boards protecting water quality, the Air Resources Board protecting air quality, the Coastal Commission protecting coastal resources, the Board of Forestry preserving timber resources, the State Historic Preservation Office preserving cultural resources, and many, many others.

Project proponents may need approvals from each of these agencies pursuant to laws created by the Legislature and, in some cases, delegated by federal statute. When we talk about permitting, we also commonly refer to processes designed to ensure public participation in decision making.

One of the primary drivers behind the California Environmental Quality Act, for example, was to ensure that the public was given information about proposed projects and the potential impact of those projects on the environment and an opportunity to weigh in through written comments and public hearings.

Decision makers are required to make written findings about projects and project impacts precisely so that the public understands that the reasons that those projects are approved or not, and if they disagree, the public can take action at the next election.

Of course, many projects also promote public values, such as providing adequate housing, infrastructure necessary for a high standard of living, energy, facilities that keep the lights on, and many, many more. And so a tension naturally exists between promoting all of our values for environmental protection, public participation, and new development of all kinds.

Similar tensions may exist related to labor standards, public health, etcetera, but I focus my comments on matters within my agency's expertise. Balancing those many volumes occasionally requires some recalibration, particularly in the face of new circumstances. As just one example, climate change and habitat loss are happening rapidly.

We know that we need to increase the pace and scale of renewable energy development, water management, and forest treatments in order to best protect ourselves from a changing climate. We have to think differently about how we preserve all of our values, which leads me to this administration's efforts to improve permitting processes.

One of Governor Newsom's very first Executive actions was to direct CAL FIRE to identify California communities that were most vulnerable to wildfire and then take rapid action to reduce those risks through fuel breaks and forest ending projects.

Even though CEQA was suspended through an emergency declaration, CAL FIRE collaborated closely with the Department of Fish and Wildlife and the Water Boards to develop best management practices that would be incorporated into projects to protect environmental resources. Information about CAL FIRE's work was also posted publicly on its website for full transparency.

Since then, this Administration has taken many steps to improve permitting processes without sacrificing our values for environmental resources or public engagement. I will describe a few here. One very recent example is this governor's work on infrastructure.

In May of last year, he issued an Executive order creating a cabinet level infrastructure strike team to track progress on projects, provide a venue for resolving permitting issues, and to continue to collect ideas for improvements. For more on the strike team's work, please feel free to visit the website, build.ca.gov dot.

At the same time, the Governor also proposed a package of reforms designed to enable infrastructure projects to be built more quickly, and worked with this Legislature to shape those proposals and ultimately enact those measures into law. Those included providing a streamlined judicial process for CEQA challenges, updated protections for species, and more efficient project delivery methods.

Notably, one of the first projects to make use of the CEQA judicial streamlining provisions is already rapidly going through the litigation process. Another important effort underway is the Cutting the Green Tape initiative led by the Natural Resources Agency.

Cutting Green Tape is focused on improving interagency coordination, partnerships, agency processes, and policies to allow ecological restoration and stewardship to occur more quickly, simply, and cost effectively. One example of the Cutting the Green Tape innovations was the development of a statutory exemption from CEQA for habitat restoration projects.

To be eligible, such projects have to meet rigorous environmental standards, result in long term net benefits to climate resiliency, biodiversity and species recovery. There must also be procedures and ongoing management for the protection of the environment, and information about the projects must be publicly available.

To date, 49 projects have moved forward more quickly because of that exemption, with one analysis showing that project proponents saved an average of $77,000 per project and seven months in permitting time, while simultaneously saving state money on processing and staff homes. This is just one example of changes in how the state supports implementation of good environmental projects.

There have also been several improvements in programmatic permitting, cross agency coordination and alignment on permitting processes, and efforts to align with federal partners on their permitting processes through consistency determinations and other tools that have significantly cut down time and costs for doing restoration or stewardship projects.

Information on these improvements is available at the Department of Fish and Wildlife Cutting the Green Tape website, as well as external partner websites including the California Landscape Stewardship Network, Cutting the Green Tape website, and sustainable Conservation's accelerating restoration website.

Much more work continues to improve processes, even if it doesn't attract the attention of some of the items listed above.

I'm happy to dive into more of those if the Committee is interested, but in closing, I want to reiterate that this Administration is very focused on improving our processes in a way that preserves our values but allows us to move at the speed necessary to confront our growing challenges.

Thank you again for the opportunity to approach here, and I'm happy to answer any questions.

Thank you. Ms. West, would you like to go?

Yes, thank you. Hi, I'm Shannan West. I'm here on behalf of the Department of Housing and Community Development. I'm delighted to be here, and when I say that, I would like to just share with you some of my personal experience.

I started my career in the private sector, working for architecture and planning firms, working on permitting from that side of the desk.

I worked in local government and local planning for about five years, so I've worked in current planning with applicants navigating that process, and now I'm at the Department of Housing and Community Development, working with both local governments, navigating new laws, development applicants who are navigating the same laws.

And I've got a little bit of extra background with the Governor's Office of Business and Economic Development, where I focus primarily on permit streamlining. So when I say I'm delighted to be here, it is with authenticity. This is literally my favorite topic.

But today I'm here on behalf of HCD and I'd like to talk to you about our perspective. So as a state, we've been working on reforms that address the housing crisis. The Legislature has made significant legislative changes in recent years, and HCD, alongside local governments, have been charged with implementation of many of these reforms.

While we have made good progress, we need even more housing in the right places, and we need it faster. To this end, it is important to acknowledge our progress and explore ways to build on solutions with demonstrated success.

The evidence of this progress can be found in annual progress report or APR data that HCD collects from cities and counties. Based on the latest APR data available submitted in April of this year, so for 2023, we have seen some impressive improvements.

Housing production has increased total housing units completed, increasing from 70,000 in 2018 to 112,000 in 2020. If we narrow that data set to include units created by streamlining provisions so SB 35, SB 6, AB 2011, we can observe an increase from approximately 5000 units in 2018 to 8500 units in 2023.

And if we slice the data to focus on deed restricted units, those are created out of inclusionary housing ordinances or state density bonus law, we can observe an increase from approximately 30,000 units in 2018 to 50,000 in 2023. Meanwhile, project timelines have been decreasing. We measure this in three different segments.

One is submittal to entitlement, the other from entitlement to permit and finally permit to completion, and all of these timeframes are decreasing. Submittal to entitlement is decreased from 145 days to 64 days in 2023.

Entitlement to permitted has gone from 117 to 85 days from 2018 to 2023 and finally, permitted to completion has decreased from 265 days to 178 days. It's been mentioned here already this morning. Accessory dwelling unit permitting is really impressive, from approximately 9000 units permitted in 2018 to 28,000 in 2023.

Is this evidence that we've solved the state's problem? Obviously not. We're all here because we've got work to do, but it does show that our collective efforts are nudging trends in the right direction and we're ready to keep going.

Our Administration has undertaken a multifaceted approach to tackle our need for housing addressing housing elements, promoting PRO Housing policies, allocating substantial funding to catalyze changes and holding local governments accountable to their responsibilities to comply with state housing laws.

Housing elements are local housing plans in which cities and counties identify how they are going to meet their housing need. This tool requires cities to identify their housing needs and plan accordingly. Cities must identify potential housing sites and then zone for their future housing needs.

Currently, all cities and counties throughout the state are in the process of updating their housing elements. HCD then reviews and approves them as of today, 66% of jurisdictions have approved housing elements and 34% of them are on their way. HCD provides support to jurisdictions through the process, guiding them to compliance with state housing laws.

This collaboration has resulted in significant strides, with many jurisdictions demonstrating a commendable commitment to creating effective housing elements. The success stories are numerous, highlighting innovative strategies such as adoption of missing middle housing solutions and overcoming local resistance through effective policy making.

In addition, recognizing and rewarding jurisdictions that go above and beyond their housing element, the PRO Housing designation program remains an innovative program for removing development barriers and incentivizing housing production. We've witnessed 50 jurisdictions earn the coveted PRO Housing designation as of June 1 of this year, signaling their dedication to accelerating affordable housing production and preservation.

The PRO Housing Incentive program further incentivizes designated Low local governments by providing additional funding and priority processing in various Housing and Community Development programs. As of June 1, we are finishing the second round of funding through this program and a third round as anticipated later this year.

The PRO Housing Incentive program has encouraged jurisdictions to embrace innovative solutions by funding predevelopment activities, providing matching funds for local and regional trust funds, home ownership opportunities and permanent support housing, and more. However, our journey at HCD does not end with the designations and incentives.

We understand the complexities faced by local jurisdictions and we are here as partners, not adversaries. HCD has extended substantial financial support, allocating over $1.0 billion in planning grants and infrastructure funding. We are committed to assisting local governments and navigating challenges and unlocking the true potential of their communities.

Once the planning work is done, the rubber meets the road in local permitting processes. HCD's housing Accountability unit, or HAU, works with housing developers and local governments to ensure housing development applications are being processed consistent with state housing laws.

Since its inception, the HAU has unlocked 23,000 housing units because local permitting processes can be a real barrier to meeting our collective housing goals. The Legislature has passed several bills that require streamlined ministerial review of qualified housing development applications and an entrusted enforcement of those provisions with HCD.

The HCD provides technical assistance to housing developers and local governments about these laws and, when necessary, issues notices a violation and makes referrals to the Attorney General. As a reminder and you may not need it, but I'm going to say it anyway.

There are some recent streamlining provisions, including SB 35 from 2017, which requires streamlined ministerial approval for developments in localities that have not yet made sufficient progress toward their allocation of their regional housing need.

The Affordable Housing and High Road Jobs act, or AB 2011 of 2022, requires streamlined ministerial approval for multifamily developments that are either 100% affordable on properties owned for commercial uses or mixed income projects that abut commercial corridors. And streamlining provisions for by rights supportive housing AB 2162 of 2018 require supportive housing to be allowed as a use by right in zones where multifamily and mixed use are permitted.

These streamlining statutes create pathways that allow projects to move forward without being subject to lengthy and costly environmental review processes under CEQA. Each of these statutes have been crafted to exclude sites with environmental sensitivities.

In addition to streamlining statutes, the Legislature has taken steps to increase transparency for housing developers and limit delays in processing of housing development projects.

The Housing Crisis Act of 2019 created the five hearing rule, which prohibits a local government from holding more than five hearings to consider a proposed housing development project if the project complies with all applicable objective, general plan and zoning standards. The Permit Streamlining Act, or PSA, has existed since the 1960s seventies.

However, HCD's enforcement authority over the PSA is relatively new. The PSA was designed to increase transparency and consistency in the local permitting process. The PSA requires local jurisdictions to provide applicants a submittal checklist. The PSA also limits the amount of time local governments have to review applications for completeness.

This is important because many housing statutes use application completeness as the threshold to freeze applicable standards and, in some cases, start the clock on processing time. While the PSA has existed for decades, it has been consistently ignored.

With HCD's increased authority to enforce key parts of the PSA, housing applicants are finding more success in holding jurisdictions accountable to prescribed time limits.

The preliminary application process created by the Housing Crisis Act of 2019 is nested within the Permit Streamlining Act and provides developers who submit preliminary applications with more certainty about what fees and standards will apply to their projects.

Notably, this is also the process that locks in the status of a jurisdiction's housing element at the time of preliminary application submittal. This matters because the Housing Accountability Act limits a jurisdiction without a compliant housing element from denying a qualifying housing project for inconsistency with objective, general plan and zoning standards.

This is known by the development community as the builder's remedy. In sum, the data I shared at the beginning of my presentation demonstrates the successes of the Legislature and the Governor's efforts to remove barriers and build more housing for Californians of every income level.

HCD and the Housing Accountability Unit remain committed to assisting local governments in implementing state housing laws and assisting housing developers who face unlawful delays and denials. The Department is excited to implement further reforms and work in partnership with local jurisdictions to, to build more and solve our housing affordability crisis. That concludes my testimony.

Thank you. I want to first open it up to any of my colleagues. I have a couple of questions, but Mr. Carrillo.

Thank you. It is encouraging to see the progress that's been made in housing production. And as you noted, we need to improve even more. And I believe you said 130,000 units have been built in 2023. The SCAG region, Southern California Association of Governments was assigned 1.3 million units.

At this rate, if these 130,000 units were built in the SCAC region, we would be in good shape. But this number, 130,000 units statewide. Appreciate the information that we've made that progress in increasing the number of units. But also, as you noted, we need to improve more, and that's where the transparency issue comes in.

As far as how these units are designated, I serve on the ECHA Committee, the allocation of the arena numbers in the SCAG region, and we had very contentious meetings because the numbers that were assigned just didn't make any sense because we were not able to get clear information on how these numbers came about.

But I appreciate the numbers that you gave us. We're making improvements. Still a long way to go. And I just wanted to say that thank you for sharing those numbers, and it's refreshing to see that we're making progress. But again, we still need to work even harder to make sure that we meal those number of units. So thank you.

Thank you, Miss Petrie-Norris.

Well, and I thank both of you all for being here. And Ms. West, I hope what I'm going to say isn't, you know, isn't going to come as a complete surprise.

But I have to say I have found kind of the housing element process, the arena process, to be pretty confounding, and I guess, in my view, somewhat just nonsensically, like, elaborate, confusing, labyrinthian, because the fundamental reality is, like, cities don't build houses. Cities can help facilitate an environment where houses can get built more quickly or more slowly.

And I will say that even some of my cities who are very PRO Housing, who have put initiatives on the ballot to support more housing, do report back that they feel like there's a combative relationship with HCD.

And so I would love to see HCD kind of take on more of a consultative role and more of a role as a clearinghouse, because you're seeing what every city in the state is doing.

So I think you have an opportunity to identify best practices to help put together model ordinances to really be a resource, most like a small business development center model rather than kind of a gotcha model. So I would just sort of leave you with that.

I think it's, and I really appreciate the work that you've done, and we certainly want every city to do their fair share, but I would love for it to feel like the state is partnering with our cities to get that done, rather than sort of viewing it as combative.

So I'd love to hear about what you are doing to be a resource for our cities and what sort of things you're doing to, like I said, be a clearinghouse for best practices and help more of our cities who want to do the right thing. Do the right thing.

Yeah, I'm happy to address that. You know, our housing element team is full of people, and people have personalities, and I think we should acknowledge that that is part of the equation here. Right. But overall, we certainly approach our interactions in the spirit of technical assistance. That includes during housing element preparation.

While we're reviewing housing element drafts and adopted drafts, and further into implementation of programs, I think some of the challenges of housing element compliance is indeed, the laws are complex. They've changed a lot just for the 6th cycle.

So in the beginning of the housing element cycle, there was a lot of challenges about how to even implement these brand new parts of statutes.

I would like to say I hope that it's true that our HCV staff are getting better at being more clear about what the expectations are, because clarity is certainly something that when we're talking about permitting or we're talking about housing elements, if you're on the other end of needing something to be approved, you just need to know what the rules are.

HCD does have tools available both on our website. In the people that you can contact, we have something called building blocks. Some of it does include model programs that can be included in housing elements. We also have technical assistance that includes, I believe, some model ordinances, but certainly some best practices.

Are they easy to find on our website? Maybe not if you're not aware of them, but we do have resources like that, and I'd be glad to follow up with you to provide some of those tools.

Mister Wood.

Thank you. Thank you to you both. I appreciate you being here in your comments, this is just a question to Mr. Calfee. What is the National Resources Agency is broad. It covers a lot. Are there concerted efforts towards programmatic compliance with some of the challenges we're facing?

I've heard over the years that environmental restoration projects require CEQA analyses for projects that may only be separated by 100 yards but have to go through separate CEQA analyses. And I know there have been efforts in that regard as well.

But is there a concerted effort by this Administration to look at more programmatic ways of complying with CEQA so that we can be more efficient, still comply with CEQA, yet eliminate some of the time that it takes? Because the time is money and challenge.

And if you've got agents groups out there trying to do the right thing, especially on habitat restoration projects, having them, having to spend more money and more time is counterproductive to the mission of what a lot of your, a lot of, a lot of the values that we hold.

So is there a concerted effort towards that agency wide, and how does that trickle down to the individual departments?

I appreciate the question, and yes, there are good examples of that type of programmatic thinking. One that I will share is the California Vegetation Treatment program.

And the Board of Forestry has developed a programmatic EIR that covers 20 million acres in the state of different forest types, the idea being to study the impacts of various vegetation treatment, including prescribed burns, mastication, forest thinning, et cetera.

Now that that document is in place, individual projects can look back at that programmatic review and go through a checklist to see if there's anything that that review missed or that's site specific, and only focus on that. As a result, various vegetation treatment projects have gone through in months instead of years.

Another innovation from that is now that that programmatic review is in place, the Board of Forestry has been able to cooperate with the Water Boards, and Water Board has adopted a general permit that covers water quality permitting for projects that are using the CalVTP EIR so they're not having to get individual waste discharge permits.

With that experience fresh in mind, we are also working closely with the Coastal Commission to see what of their processes can be best linked up to the work of the CalVTP EIR, again with the idea of making these projects move much more quickly.

So in my estimation, we've learned quite a bit through that process and can use that as a model.

Appreciate that, and I am aware of that. I think that getting to that point where that process was almost a decade in the making and so great that it's working now. But we've got other challenges. We don't have necessarily a decade to come up with policies to help us streamline housing.

We don't have a decade to come up with policies to streamline energy transmission and building that out so appreciate that. And you are right, those are absolutely valuable projects. I would just like for one to see that we can find a way to compel government to move faster because we don't have a decade to accomplish these others.

It's great that we're piggybacking off of that and there's a value to that, tremendous value to that. So I thank you for that. But I hope you can see my point is that took, that was a knockdown, drag out fight for over a decade, almost a decade or over a decade.

When I first came to the Legislature we were talking about that and I'm in my 10th year. So I think the challenge we find is that that's great policy, but how do we get to great policy faster and make it more efficient and effective so that we can move forward on these other issues?

Completely appreciate that point. And that is absolutely a focus of ours at agency. A thing that I'll say about perhaps a reason that it took as long as it did to get to this point is again, in my remarks I talked about the different values that are at stake.

And so to get to the document that we have now, it took a lot of close collaboration between CAL FIRE, Board of Forestry, Department of Fish and Wildlife, parks and many, many others to resolve how do we conduct the vegetation treatment work that we need to and protect species.

And through that process we have people working together in a way that they hadn't historically. And that I would say is another innovation in this Administration is really looking at these things as we are one state team trying to get to an objective and we're seeing the results.

Thank you.

I appreciate that. And I was just, you know, well why not align my comments with yours, Mr. Wood, you know, one of the previous panels, and I think you guys were listening to the previous panel, it talked about the culture of regulation.

And I think, you know, we are operating under a fierce urgency of now when we see 180,000 homeless individuals on our streets and people leaving California because they can't afford to live here, where we're seeing the climate impacts, all of the stuff that we need to do with regard to the grid and the transmission and the renewable energy projects that we need to permit.

And when you talk to folks who are in solar and wind and these large, large scale utility projects, if it's taking 10-15 years to permit these projects, we're not going to reach the climate goals.

And I think what you said earlier Miss Petrie-Norris, where there's like a gulf between our ambition and reality and our values and our actual implementation of that is, I think, some of the stuff that we're really trying to flush out here.

So I appreciate your willingness to be here and a lot of the good work that you have done in these agencies to try to expedite this stuff. You know, I just have a three and a seven year old that we're trying to like, make the world better for them. And they're growing up quickly.

So we want to make sure that by the time, you know, they have children, that the California is the California that we all want to see here. So appreciate you all being here. Any other last remarks from colleagues? Okay, we will now move to our third panel.

Yeah, and I believe they will be joining via Zoom or technological advancements from Denmark and New York. They won't be here in person today, so whoever's doing the tech, please feel free to pipe them in if they're still here. We have Lars Møller Christiansen, Danish Environmental Protection Agency, and Gillian.

And Gillian Black, New York State Energy Research and Development Authority.

Yes.

I think we're. there we go. Okay, Mr. Christiansen, if you'd like to begin.

Thank you very much. My name is Lars. I'm a Deputy Director at the Danish EPA. And I'm glad to be here to be able to share some of the Danish experiences. I'm going to talk a little bit about speeding up permitting processes in Denmark with digitization.

I'll focus on the main points, as I understand we have my present for further detail. First I'll say a little bit about the Danish context. Then I'll say more about what we have done at the state level. And then I'll be able to say some questions, if you have some.

So first, a little bit about the Danish context. In Denmark. We have a broad coalition of parties in the parliament that have set some rather ambitious goals on which renewable electricity. One of the goals is to four double the wind farm capacity on land and solar capacity on land within 2030.

And on sea the same goal is to five double the capacity for wind farms under sea. Also, the government has proposed to make 32 energy parks national wide with special Commission from at the state level. So the Danish system the dynamics EPA is responsible for environmental assessments or EAs, of construction projects from all state agencies.

This includes energy net that is responsible for the gas and electricity network in Denmark. So we have actually own purchasing process on the environmental side for the national projects for electricity lines and so forth. And as you've heard today, the infrastructure, electricity and so forth is very important to the green transition.

So there's a lot of focus on this also from the parliament and so forth. Also, we have a small organization in Denmark called the Ministry Portal that supports both the state level in the local levels with the data on environment and nature related instance to environmental assessments.

So that's just to give you a short presentation of the content. So what have we done at the state level to speed up processes?

Well, first of all, we have taken legislative initiatives in order to speed of processes, reduced process time, and this includes simplifications of legislative steps and also better guidance for case workers, both on the state level and locally.

And also in the Danish CPA, we have digitized the process with, for instance, Internet and other state actors in order to speed up time. And I will get back to that in a little, in a moment. The third initiative is the development of environmental assessment hubs and tools on various environments for auto.

And finally, we are currently both working on and also using AI on these tools that I've mentioned to speed up processes. All this is to make faster and better decisions, shortening the time from political decision to realizations of the effects.

So firstly, one of the things that we've done was to digitize the process, the permitting process with the energy net. And actually what we did was together with our supplier to make an online application for the environmental assessment. Now we get the application from the beginning with all the necessary data available.

Also we have designed process of approving the application within the game. This means we have an efficient internal case flow. Supporting full process is a great full transparency overview and with checklist, automated documentations, et cetera.

On the other hand, the energy net, they have full access to their own cases, data about their own cases, so where they can see where the cases in the process. This also reduces valuable process time. So what are the responses? See already that we have increased the efficiency and reduced the process time.

Also we expect to have fewer cases that are to be turned down in comparison. And this last point is very important, because one of the time consuming problems with the permitting processes is often that we make mistakes. So we are turning down and complaint parts to start out those losing precious time.

And I think the chemistry processes in Denmark are already shorter than the ones you mentioned in California, five to 10 years. I think we have an average of three to seven years on some of these projects, sometimes even shorter in the best possible improvements. And we hope to reduce this further by digitizing these processes.

So on top of the pace work and so forth, we also want to use AI to further speed up the processes. And for instance, we think AI can help us look for patterns, help us finding known shown such as habitats or endangered species and so forth. So we are very optimistic about further reducing process by using AI.

So what I talked about now was criticization of the permitting processes. Now I'll turn to the data foundations for some of these processes.

So in Denmark, as I said, the Danish environments across also this whole organization, all environmental and Malaysia data in Denmark and within this organization we have made what we call an EA hub, environment hub where we actually gather all existing environmental assessments in Denmark.

And this is interesting not only because we can reuse the data for specific areas, but also because we have training data for diffuse AI on. So actually we have a valuable source of training there. Also we created the EA tool, which is actually a simple tool.

So a developer or a local authority or the state authority can go to the tool and draw down the area where he wants to put, for instance a wind farm or solar farm. There you can see instantly what datas are available, for instance, for instance for endangered species and so forth.

So this not, it doesn't solve all problems, but it makes access to available data faster. So I think also AI on top of these data will try in the process. And so to summon the state level. We have worked intensively the processes but also the data on dates. We are currently youth developing further the youth AI and on on.

And I think some of these experiences that we have had in Denmark are transferable to also to an American or Californian context. For instance, digitizing, permitting processes and also gathering data. It can be done and I think there are some immediate gains when you talk about speeding up. So that was a short presentation. I have to take any questions if you have some.

Thank you very much. Next we have Gillian Black from the New York State Energy Research and Development Authority.

Hi, thank you for having me. Can you hear me?

Okay, we can hear you. We just can't quite see you yet, but give us 1 second here.

Sorry. Give us a second. Okay. Yeah, I think it's going to pop up once you start speaking. If you could speak up a little bit more, that'd be great.

Sure. Is that better? Can you hear me?

A little bit louder would be ideal.

Changing my inputs. How's that?

There we go. Oh, now we see you. Great. Okay. Excellent.

Great. Well, hi. Thank you for having me. It's been a pleasure to listen to all the presenters and all these great questions. My name is Gillian Black. I'm the Director of the Build Ready Program, part of the large-scale renewables group at NYSErda, New York City. State Energy Research and Development Authority.

We're a state authority that basically manages energy policy in the state. My program, the build Ready program, was established in late 2020 to address difficult sites throughout the state that the private sector was not addressing.

We were given the ability and the mandate to originate sites, difficult sites, sites like brownfields, landfills, old fossil fuel generator sites that are closing, closing prisons, parking lots, et cetera, mines where we really should have renewable energy projects developed. But the private sector was not doing so because they were too costly, too bureaucratic or whatever.

So we put our program together and we've been chasing sites, bringing them to the market. We also take nominations from, typically for municipalities or other agencies, some private sector players, and we're a bit of a skunk.

Works within NYSERDA in that we've developed this little private development shop, and we're running through all of the parallel pathways that the Brenda sector would, as developers, utility interconnection, site control through land leases or purchase options. We negotiate all the tax pilots payments in lieu of taxes with the local taxing jurisdictions.

We do all the environmental regulatory, permitting, et cetera. And then at the end of the process, once we have a project that's ready to go, which has received notice, with receipt, essentially, and put it out to the private sector in a competitive solicitation, an RFP, whereby private sector independent power producers bid on the amount of incentive required such that they meet their required rates of return.

So we grant that incentive in the form of a 20 year renewable energy certificate contract. This REC is available through our standard tier one group for terrestrial, wind and solar of the larger scale. But it's a competitive process, typically in the private sector.

So we're kind of the orphan drug manufacturer of the industry here, that we find these orphan sites and we bring them to market and we are allowed to award them at a higher value and can award a higher rent contract to make sure that these valuable brown fields turn into renewable generation assets. So it's really a public private partnership and. Yeah, that's me. That's what we do.

Thank you very much. I want to bring it back to the Committee to see if there are any questions. We have one from Mister Alvarez.

Thank you. I have a question to our first presenter on slide four, which we have before us. And from your presentation you provided to us, you talked about simplifications and better guidance for casework. This sort of, to me sounds a little bit like the culture of regulation issue that we heard from a presenter earlier. Can you further clarify what you mean by the simplifications and better guidance for caseworkers?

Yes, actually it's a lot of different initiatives. Some of them started the EU level a little bit like your federal level. So some of the EU initiatives are taking there to speed up processes. But also at the national level we have some possibilities to reduce process time.

And those we have in national legislation, for instance, were broadening hearing periods and so forth. The third level is the actual guidance that we give from the danish EPA to local authorities and to developers about how to tackle, for instance, endangered species that could be bats, for instance, that are affected by wind farms and so forth. So at all these levels, there are some substantive cases that are to be made that would speed.

So what exactly were the legislative changes on the timing? You said there was state level changes on time.

Some of them are hearing periods in different types of processes. For instance, as I mentioned, we have some states, national developers, state permitted areas for energy. So these areas we have special rules that can speed up product.

Okay, is on your digitizing initiatives. Is this a public portal or is this available only to agencies within the government?

No, it's a public portal. So also these data are available for developers, for ordinary citizens and so forth. Of course, the people who use these models are often people with a purpose that could be public organizations, authorities, it could be developers, private contractors and so forth.

But in general, these data are made freely available once they are gathered at the quality. Sure, we put them also available. I think data has huge underrepresented value to be reused in different settings.

And the energy assessments that you included to be used widely, how long did it take for you to develop that? And how difficult was it to develop that, given you probably had a more similar to us, a process with individual agencies doing their own analyses?

Well, actually I don't think the development was that difficult. We use standard software as part of our general digitization process. We have a lot of different processes in the Danish EPA Environmental Assessment is only one of them. But we have some standard software that we use, strategicize this process as well.

And I think it was done in six months or something like that. End to end. We had the first person since we developed further on that solutions, and we are currently working together with our supplier to develop the solution and establish AI functions and so forth. So this is a journey. We started it, I think two years ago, and within a half year we had the first process to run out and how we are developing these things.

Thank you. Mister Black, a question on the I found it really, actually fascinating. So you're identifying underutilized assets that are primarily, I assume, public assets, but not necessarily public assets. And then you are you very briefly. And so I kind of really didn't understand.

You assess them and you sort of prepare them to then go out for competitive bid. As is it for sites for a location of large scale, mainly energy infrastructure projects?

Yes, yes. We focus mostly on solar and energy storage. We've just received approval to develop standalone storage projects, battery energy storage. We have a lot of leeway to look at other renewables, but we focused on those. So you identify those and then you do some assessment of them, and then you make them basically attractive to the private sector.

That's right. We complete turnkey development, De risking and development from start to finish. And then the winning bidder of our RFP finalizes the construction drawings, finances, builds, owns and operates the system. And then NySErda holds the rent contract and we pay them for the environmental attributes that are produced by that project.

And then we retire those renewable energy attributes through our normal system, the NY gas system.

Okay, so you do all the permitting, all the stuff. That is the nightmare scenario of a brown field. When you want to build anything on there, you address all that and you're essentially, is it architecture ready for architectural renderings and or is it ready shovel ready stage?

So they're not quite shovel ready. We would take them through approved permit drawings, but the winning bidder would actually develop the construction drawings issued for construction, and they would pull the permits and procure the equipment, build it, manage it, etcetera.

Does New York Certa assist them in the permitting process? Like you go with them or are they then off on their own?

They're off on their own. At that point. They just need to submit drawings and pull the permits.

But it's just. But is it just building permits? It's not like some other major permits, it's just construction permits.

That's right. But with driveway permits or if we need easements in rights of way for interconnection wiring, we would negotiate those up until a point, and then they would finalize them.

So it's really, you really do the major entitlement for them.

This is correct, yes. Interesting.

Thank you.

Sure.

Thank you. Any other questions from other Committee Members? Well, thank you both for joining virtually. We appreciate the participation, and we will look forward to lessons learned from other places such as New York and Denmark. Okay, we will be. Thank you. We'll be moving now to our last.

We're calling this our rapid fire speed round, where we have a handful of folks who are going to be providing very brief testimony at the main mic up here. And I'll let you all self introduce and give your sort of top line thoughts.

I also want to just note that we'll be having many intentional one on one conversations as we put together the work product for this. That will include lengthier conversations from you all that are testifying today. But we wanted to give an opportunity of some practitioners in the field.

And so if you want to feel free and line up those of you who we queued up to provide some very brief remarks, that would be great. And then we will go to public comment after that.

Hi, good afternoon. I think this afternoon, Nevada Merriman, Vice President of Policy and Advocacy for MidPen Housing since we began 50 years ago, we have 125 communities, and I'll just move along a little more quickly. The state housing legislation has been a game changer.

And although we have been able to move through certain parts of the process much more quickly, we still need some innovation when it comes to actually implementing these and, you know, having them live up to their full potential. Getting stuck in our permitting system at any place is costly. Bankers don't hold their interest rates.

Construction companies don't hold their pricing for a year or two years in advance. And then there are also costs to pick up on what the chair was talking about at the beginning delay to bringing the homes online and also basically just making it so costly that you're going to end up having fewer units.

I shared examples about the coastal zone where we, in a project in Moss Beach, are going on our 8th year of pre development and are currently tied up in a complicated legal proceedings. This is for a project that was identified many years ago in the cycle of the housing element.

And had we not been able to access a law from somebody on your Committee, Assemblymember Alvarez, in order to get the CEQA exemption for 100% affordable housing, essentially pulling our other Eir equivalent process and resubmitting under this, I think we would still not have our coastal development permit and a host of other approvals that needed to come with that.

So the ways that our state moving a little bit further along the ways that a lot of our state agencies interface with each other, also provide a lot of delay. A previous speaker talked about how they are stacked on top of each other instead of somehow streamlined. And these agencies can't rely upon the work that they.

That other agencies do. They can't rely upon the work that their local cities do and tear off of that. So I have some examples I can send to Steve Mister Wertheim here. Around what Department of Toxic Substances control, San Francisco Bay Regional Water Quality, San Francisco Bay Conservation and Development Commission, and a host of these agency.

I've counted 21 that we, that I have touched during my career as a developer. And each project has its own collection of these. But at times, why we need to work with these agencies almost defies common sense. For instance, with a project in Foster City, we were not adjacent to the bay.

We were pulled further off in the high tension, high voltage power lines that run up and down the San Francisco Peninsula had depressed the soil, and that little depression was called a seasonal wetland for migratory birds. And for this reason, we needed to go through about a year. We almost didn't make it. We almost lost our tax credit financing. So, you know, I'll leave it at that to draw your conclusions.

We would definitely love your input in the paper that we want to put together, because I'm sure you have endless examples of similar situations, of things that maybe don't seem a little nonsensical, but.

Just to move to solutions, since I know I have other folks that are here, clear exemptions, like the one we were able to access in the coastal zone, they are powerful, having a way for staff to be able to rely upon each other's work, because oftentimes we have staff members that have an incredible amount of integrity.

They are our partners. We are happy with the work that they are trying to do, and yet they don't have a way to sign off on something between either the city and the state agencies.

And so, even with all of this professionalism, oftentimes we can't take advantage of things like the ministerial processing that's permitted under some of these land use streamlining bills. So something that should take three months, that's delivering permanent support of housing for folks who are homeless, is going to take a year, because that alignment's not there.

Kind of top to bottom. I would love to see mandated timeframes for response mandate pg and e to consider affordable housing priority infrastructure and help us remove that barrier. And the last one, I'll say, is potentially the most important for affordable housing.

But consolidating the state housing finance agencies having some kind of a function within, wherever that would land, that would act as a producer or a ringleader of some of these interagency issues, you know, if that was successful, maybe it could be scaled up to also help market rate development, because the lack of market rate development also exacerbates the need for affordable housing and cities and affordable housing developers can't take that on alone. So thank you.

Thank you.

Thank you, Madam Chair, Members. Keith Dunn here for the Sites Reservoir Project Authority. I'm taking a little different twist than most of our previous speakers and having some good news to share.

You know, I'd love to see here and take on CEQA and all the various challenges that come with that, but, you know, our values here in California make project development difficult sometimes.

I will say that thanks to this Legislature and the leadership of the Governor and SB 149 last year, Sites reservoir is the first project to take advantage of a streamlined review, judicial review of our CEQA document. I will tell you that that process has moved forward successfully.

June 3, we had an initial hearing in which the document that the reservoir authority put forward was upheld 100%. There's a process within the judicial streamlining for an appeal. That process is moving forward. We're anticipating that that will be resolved one way or another by early fall, late summer. This process to date is probably shaved off about 18 months, which equates to tens of millions of dollars.

You know, I'm not here to say that we couldn't use reforms in many different areas, but I can tell you that much like a drug court or other special courts, this process has really, with the guardrails of 270 days of review and approval, shaved off substantial time.

It is something that's going to allow us to move forward and build sites reservoir. I would be remiss if I. I didn't say that due to our climate whiplash and the warmer summers with the winds, we have a fire burning in the Seitz valley today, pretty extensively as of yet, has no containment.

We have fires all throughout our state. We're seeing more and more with our climate change, these warm winds that come in. We've got a warmer winter with less snowpack. And Sykes Reservoir, had it been ready to be filled with the last two years, been filled with 700,000 acre feet of water, so this is an important project for the state.

I think there are ways to uphold our environmental values, which all of you get to talk about in various policy hearings and put your thumb on different priorities. And that's a tough decision for you all to make.

But I can tell you that there is a process that you've established with the review and challenges, once those documents have been produced, that can expedite and make real progress. And again, you got to have guardrails around a real document.

You can't go light on your CEQA documents or your community outreach, but if you do it right, you can go through the judicial review and hold up the documents. So sites is very pleased with the progress with 149. I hope other projects can qualify for that expedited review.

But sites reservoir has been a beneficiary, and this Legislature and Governor had a lot to do with making that available. So on behalf of cites, they thank you. I think that it's worth exploring for other large projects. It wouldn't work for smaller projects, but certainly for projects that are substantial. Expedited judicial review could be cost savings while upholding the values of the community that are being impacted by those.

So thank you.

Thank you.

Good morning. Or at least I hope it's still morning. Happy afternoon by now. My name is Margo Bradish. I'm a partner with the law firm of Cox Castle & Nicholson, and I focus on entitlements for infill projects, primarily in the Bay Area.

Thank you, chair Wicks and members of the committee, for inviting me to share a little bit on the developer perspective on some of the obstacles to housing production through the permitting process.

I think a lot of the earlier speakers touched on the fact that we have a permitting process that is designed to achieve a lot of really important objectives, like climate change and equity affordability, and that oftentimes it's working across purposes to those goals and resulting in the exact opposite outcomes.

So I'd like to focus on two issues, really. I'll touch briefly on the Surplus Land Act also. But the two issues that I'd really like to focus on are sort of the impact of delay and risk on developers, as well as this concept of meeting the market with what we're allowing developers to build.

In terms of delay, you know, the entitlement timeline in the Bay Area ranges from about 12 months to three years or even more for complicated projects during that. And CEQA and CEQA litigation are obviously a major part of that. I mean, that's not including litigation timelines, which can add three years to the process. And during that time, the risks change dramatically.

Right. The housing market could shift, interest rates could change, construction costs could increase. And the result is that developers have to plan for those possibilities. And as a result, their pro formas are very constructive, conservative, because they have to be able to absorb those kinds of risks.

And it means that at a lot of times, projects just don't pencil that otherwise could, because of those conservative pro formas. And in addition, California faces substantial competition for capital deployment. A lot of our homebuilders are nationwide home builders. They're looking at where they can deploy capital throughout the country.

We used to think of California and the home building site as high risk, high reward, and now we think of it as sort of like extremely high risk, medium reward. And all these builders can go to other states and have home run after home run after home run. So we need to find a way to address that time. If you can reduce time, you can reduce risk, you can reduce carrying costs, you can make more housing feasible.

And just a quick, for example, a 300-unit project, infill project near Transit, 100 units an acre was delayed by a year because of a mandatory development agreement requirement that the city had in order to address community benefits. And during that year, the market shifted, and the project is now not moving forward.

It's fully entitled, but it is not currently moving forward. Second, on the issue of meeting the market, and we talked about this earlier, too, that housing is being asked to, new housing is being asked to carry the burden for a broad range of issues. Fees, community benefits, minimum maximum densities, inclusionary housing, green building.

One homebuilder told me that the entitlement and fee component of producing a housing unit is 15% to 20% of the cost that a home buyer pays. It's a remarkable amount of money that could be reduced and make homes more affordable. The outcome of that for housing is more expensive housing. And again, housing projects not penciling.

A 2020 study in San Jose that the city commissioned studied units from 51 units an acre up to 350 units an acre. That's basically where you start podium construction. And they found that in 2022, not a single product type, whether renter or for sale, at any of those densities penciled in the City of San Jose.

And conditions have only gotten worse. Again, just a quick example, 350 unit project infill location near transit, 75 units an acre. By the time they got through the CEQA process, the market had shifted. They withdrew. That project is not going forward.

We really have to reduce the burden on housing projects to make housing feasible and find ways to not make new housing bear all of the state responsibility for addressing the these really important issues.

And lastly, I'd just like to touch briefly on the Surplus Land Act, and in particular in the context of military bases, because I do a lot of military base reuse projects. There's an incredible potential for housing development and former military bases, tens of thousands of units that are on land that's just waiting to be developed.

The infrastructure costs are extraordinarily high. The projects take a long time to build out. And because of the Surplus Land Act, we've injected a whole new layer of risk. Because this federal process requires every single one of those properties to go through a state, a local government agency on its way to the ultimate developer.

It lands in that local government agency as a holding place, and then all of a sudden is subject to the Surplus Land Act. And they may have 5-10 takedowns of land over a 20-30 year period. And every time they're at risk that someone might come and say, well, we're going to give that property to someone else.

And that makes it really hard to justify the infrastructure investment. That's an easy, easy fix to exempt military base reuse projects from the Surplus Land Act. A lot of those projects already have high levels of affordability, high levels of labor participation. It's an easy fix.

I have a lot of other ideas, too, but in the interest of time, I'm going to leave you with sort of those challenges. Be happy to talk to you more about some of the ideas I have about trying to solve some of that.

We would definitely appreciate that. Thank you.

Good afternoon. My name is John Kennedy. I'm with Rural County Representatives of California. We're a 40-county Association, represent counties from Alpine County with a population of 1100 up to Sonoma, about 500,000. So as local governments, we're often caught in the middle on permanent challenges.