Assembly Select Committee on Regulatory Authority

Good morning, everyone. I'd like to call this hearing of the Assembly Select Committee on Regulatory Authority to order. Thank you to my colleagues—who will be here shortly—staff, panelists, and members of the public who are joining us here today. Before we begin, I have a quick housekeeping announcement. I will maintain decorum during today's hearing, as is customary.

Conduct that disrupts our proceedings will not be permitted. Any individual who is disruptive will be removed. With that, let's get started. Thank you all again for joining us today for the first hearing of the Assembly Select Committee on Regulatory Authority.

Today, we begin our work by examining how California's regulatory framework affects housing availability and affordability. Special thanks to Assemblymember Haney, Chair of the Assembly Housing and Community Development Committee, for joining us today—or should I say will be approximately 15 minutes late.

But he will be here, I promise, and he will be helping us in guiding today's conversation. California's department and commissions play essential roles in protecting public health and safety, stewarding natural resources, promoting sustainability, and supporting economic growth. These responsibilities are critical to the wellbeing of our communities.

At the same time, California's housing shortage and affordability crisis remains one of the most pressing challenges facing our state. Despite significant legislative efforts in recent years to streamline production and reduce costs, we continue to see hurdles that make building housing at the scale needed incredibly difficult.

Builders often cite examples where the number and specificity of regulatory authority adds significant time and cost. For example, a construction detail that might require 15 nails in another state would require closer to 150 here, increasing labor and material cost for the same structural component.

We also frequently hear that regulatory compliance represents a substantial share of a project's overall cost, in some analysis, approaching half of total development expenses. Estimates vary, but the takeaway is consistent: even well intended regulations can add up in ways that affect feasibility.

Requirements related to species protection, energy efficiency upgrades, or water related review can also add months or years to protect timelines—delays that translate into increased costs for homeowners and for renters.

The purpose of today's hearing is to understand how regulatory processes intersect with housing development and to explore whether there are opportunities to improve coordination and reduce unintended barriers, while still meeting California's high standards for environmental protection, safety, and community wellbeing.

We are fortunate to be joined by a diverse group of experts, from developers to academic researchers to state agency directors, who bring valuable perspectives on how regulatory decisions influence the pace, cost, and feasibility of building homes across the state. We hope that today's discussion will inform future policy as we work to meet California's urgent housing needs.

Thank you again to all of our panelists and agencies for your participation and for your engagement. I look forward to a thoughtful and productive conversation. I would now like our first panelists to please approach, and you may sit up here. And everybody should have a copy of the agenda.

But our first panel will be regarding housing development and affordability challenges under California's regulatory framework. And just as a way of introduction, our first panel brings experts and and stakeholders who experience these regulations in their day to day work in the housing space.

First off, we will hear from Bill Fulton, a fellow with the UC Berkeley Turner Center and professor of practice at UC San Diego Design Lab and Department of Urban Studies and Planning. But before we proceed, we have Assemblymember Haney who, when he's ready, he'll give welcoming remarks as well.

Thank you so much, Assemblymember and Chair Pacheco, for, Pacheco, for your incredible leadership on this important topic that we are going to be discussing this morning.

I think it's critically important that on every issue, and I know this is only one of the many issues that this Committee is going to be exploring, that we are looking at how we reduce the cost of living, that we address the growing burdens that all of our constituents are facing from the Giants fans in the north to the Dodgers fans in the South.

And congratulations on that. And especially as a comes to housing. On every poll that I've seen and every conversation, certainly, that I have in my city, housing affordability is the number one concern. Housing costs are the main factor in our state that make living and providing for your family incredibly challenging and unaffordable for many.

Millions of Californians make the hard decision about paying for housing at the expense of food, health care, childcare, and transportation, which directly impacts the quality of life in our state. We've discussed the numbers on this in our housing Committee repeatedly, but it's worth repeating a few of them.

One in three households in our state don't earn enough money to meet their basic needs. At the top of that list is housing and we see in California more families bearing the cost of 30 or 50% of their income going to housing than nearly any other state.

We have done a lot over the last few years to reduce the barriers to constructing housing at the local level. I think this last year was a landmark year for that and the last few years we began—begun—I think to meet the crisis we're facing with a lot more scale and urgency.

But there is a lot more to do. Certainly we have passed major CEQA legislation to expedite infill housing, a series of bills to improve the local permitting process and up zone near transit. We've invested in homelessness response system and additional funding for affordable housing.

But with all of this, we are the state and we—it's not just about telling local governments what to do.

It's also looking at what we can do to make it easier to build housing in our state, to reduce the costs and burdens of those who are engaged in development, and also renters and homeowners themselves, and what we can do to support them directly in reducing the cost of housing so that they can live and thrive and provide for their families in our state.

And as the housing chair, I'm very grateful that this is the first hearing that we are going to be having on regulatory authority, and I think it makes sense because it's number one for so many families in our state as well.

And so, I look forward to hearing from the witnesses today and our state partners so that we can continue to do everything we can to reduce the cost of housing on our residents. And with that, I will pass that over to our chair. Thank you so much.

Thank you. And thank you again, Assemblymember Haney. Thank you for joining us here today. And again, thank you all for joining us, and I will now hand it over to Bill.

Good morning and thank you. I'm Bill Fulton, a fellow at the Turner Center for Housing Innovation at UC Berkeley, also a professor of practice and Co-Director of the Center for Housing Policy Design at UC San Diego. Thank you very much, Madam Chair, and thank you, Assemblymember Haney.

But I would want to make sure that we don't forget about the Padres also. I'm going to and I did hand out a bullet point summary of my remarks. I'm going to talk—many of the people today will talk about specific state regulations such as those that the chair described.

Let me lay out some things in advance here. Most land use regulatory authority rests in California with local governments. The state sets up that system. There is no inherent ability even for the local governments to exist. The state sets up the system for the local governments and their land use authority.

Local governments usually and that is one of several things that happen, several regulatory authorities that often happen without very much coordination or strategy. In a few cases, the state has brought land use authority back to the state level, especially with the Coastal Commission and the Tahoe Regional Planning Agency. The state has a direct role in housing regulation.

In some ways, the state has stepped in in the last few years to play a stronger role. Assemblymember Haney knows this better than anyone.

The state and re—the State Department of Housing and Community Development and the regional planning agencies oversee the regional housing needs allocation process that requires local governments to essentially upzone to make—to, to meet, to meet housing targets.

And as the Assemblymember Haney indicated, over the past decade, the state has increasingly passed the power limiting the power—passed bills limiting the power—of, of local localities to deny or reduce the amount of housing. The Assemblymember mentioned in particular SB 79, which was just signed by the Governor.

That is the Bill that essentially mandates up sounding around major transit stops. In many cases, these laws have not only strengthened—taken power away from the local governments—have strengthened the power of HCD and the power of the Attorney General's Office to enforce state law.

As you know, Governor Newsom recently created a new cabinet level housing and homelessness agency which didn't previously exist. And you see—and oftentimes you see in this debate, I want to say conflict, but kind of a, kind of a structural tension between different state laws.

So, you will recall that when Senator Weiner's SB 35 was updated with SB 423 a year or two ago, that created sort of structural tension between the state's desire to create more housing and the state's desire to protect the coast under the Coastal Act. Many other state agencies, and you're going to hear from them, I don't need to go into this, play a role.

The office of the Governor's Office of Land Use and Climate Innovation along with the Secretary of Natural Resources promulgates the CEQA guidelines, which, even though they're called guidelines, they're not really guidelines, they're really regulations.

The Cal STA integrates housing and transportation planning and the Department of Toxic Substances Control is responsible for brownfield remediation, which is increasingly important as the state focuses more and more on infill development. I would say that the state laws seeking to reduce greenhouse gas emissions play an indirect role and interact with the state's housing goals as well.

As you know, the regional planning agencies such as SACOG, such as MTC in the Bay Area, have to create, under SB 375, a sustainable communities strategy. That Sustainable Community Strategies is intended to—is intended to show how the regions will reduce greenhouse gas emissions based on their transportation investments.

Inevitably, in order to do that, the regional planning agencies have to model future development patterns. So, they sort of—so, these regional agencies, which are of course state chartered, operating under the state SCS Law, kind of have to assume a certain type of housing pattern. That housing pattern does not have to align with local general plans.

I will say as well that the California Air Resources Board is responsible for reviewing all sustainable community strategies. And so, CARB plays kind of an indirect role in understanding how this housing, land use, and transportation mix occurs.

You are well aware of the fact that SB 743 requires CEQA analysis in many cases regarding projects that to make sure that the traffic impact of projects reduces greenhouse gas emissions. That's essentially a state mandate on the local governments.

The regional planning agencies—this is, as the Assembly, as Assemblymember Haney knows, this is a little different in the Bay Area because MTC and ABEG are technically separate, right? But the regional planning agencies typically prepare both the sustainable community strategies and the regional housing needs allocation. And that's, as I say, in the Bay Area, those two are slightly different.

In LA, San Diego, and Sacramento and elsewhere, they are the same. There really is no way to resolve conflicts between those two things.

So, I think what happens on the high level—I'm not going to go into how many nails—but on a high level, I think what you see is a variety of state—of state policies seeking to pursue a wide variety of goals. Coastal, coastal protection, housing, greenhouse gas emissions reduction, et cetera, and wildfire protection.

And in many cases, these, these policy goals tend to conflict with one another. There's really no way at the state level to resolve them. What I always say, and I'll conclude with this, is that in California, housing is kind of a big Rubik's cube, right?

You gotta build a lot of housing, but it's gotta be the right housing, at the right price, for the right people, in the right place, at the right time. And that's a very difficult balance to maintain, given the many different ambitious policy goals the state has. So, thank you very much.

Thank you. And I just want to thank you for providing us that oversight. I am now going to hand it over to Chris Ochoa. Or is it Christopher? Do you have a preference?

Chris is fine, Madam Chair. Thank you.

Chris Ochoa, the Senior Counsel for Codes, Regulatory, and Legislative Affairs at the California Building Industry Association.

Thank you very much. Good morning, Madam Chair, Assemblymember Haney. Thanks for having me here again. Chris Ochoa, Senior Counsel with California Building Industry Association. I'm going to cover a few macro issues with housing and where we're going.

I know Bob and Louis after me will get into some more detailed stuff, but CBIA—I've been Senior Counsel at CBIA now for five and a half years. CBIA is an association, the home builders. We've got nearly 3,000 members statewide. It represents about 90% of the new residential construction in California. That's single family, it's multifamily.

It includes large production builders. It includes builders building the fire safe master plan communities, but also all the way down to small builders who build a handful of custom homes per year. Before my time at CBA, just to give you a little background, I spent 24 years either working for or representing the International Code Council.

The ICC is the developer of the national model building codes adopted by the states, including California, so I've got some history with the California code adoption process, but also the national code landscape. CBIA is—we're proud of our long history supporting California's energy efficiency goals. We also have a strong working relationship with the Energy Commission.

We're still the only statewide building association in the nation that supported solar mandate, which became effective here in California in January of 2020. In 2023, CBI partnered with the California Energy Commission to host forums throughout the state educating home builders on electric heat pump technology.

And more recently, we partnered with the Energy Commission to develop the California Electric Homes Program. This brought $75 million of incentive funding for builders to build all-electric homes. And we've been very worked very closely with the Energy Commission too in the last six code cycles with their energy code proposal packages.

I think it's important to note that the California builders—we already build the most energy efficient homes in the nation. In fact, new homes today are built 70% more energy efficient than homes built in California in 2010. 70% more energy efficient.

And compared to homes built in 1980, a comparable three bedroom home with four occupants constructed to today's stringent water standards, the homes use 50% less water, yet our energy grid capacity limitations, transmission line backlog, and electric product availability add costs and delays to home construction, which further limits housing production.

Currently, California electric prices are 58% over the past five years and have more than doubled since 2008. California now has the nation's second highest electricity prices, which are almost double the national average. Just three years ago, California new grid capacity issues were on the horizon.

In March of 2022, the PUC President, Alice Reynolds, was quoted in the LA Times, stating, "There's batteries, there's electric vehicles, there's energy efficiency, there's heat pump, water heaters, there's load flexibility. All of those are going to impact electricity demand. And that's happening now." Again, that was three and a half years ago.

California knew grid capacity issues were coming. And it doesn't even take into account the recent growth now of AI data centers.

In recent years, California builders have experienced significant utility delays associated with utility company approvals of electric line extension plans for future housing development as utilities must adhere to restrict time frames enforced by the PUC, being able to depend on utility commitments to energize future housing development due to extreme pressure on the utilities to provide adequate capacity for a rapidly growing array of demands including the AI data centers, electric vehicle charging, and electrification efforts for new and existing housing.

And lastly, residential building industry is facing staggering supply chain shortages still of electrical transformers, which are needed for grid infrastructure serving new housing development. These delays on new projects, we've seen as much as 18 months in delays on these transformers.

So, while the PUC is studying these issues and attempting to improve the current situation, the crisis deserves a much higher priority for state regulators. Regarding building codes in California, the last six code adoption updates have increased the cost of housing by more than $51,000 per home.

In some cases, depending on local water purveyor fees for mandatory residential fire sprinklers, that cost can reach up to $120,000 per home. The National Association of Home Builders recently completed a study which found government regulations and impact fees add roughly 24% to the cost of a typical home nationwide.

The National Multifamily Housing Council Study found that government regulations are nearly 40% cost of multifamily development nationwide. So, California has now hit the pause button on some of these costly code adoptions. This was AB 130 trailer bill, which put in a code pause for the next two code cycles.

And codes admittedly in California have become much more complex and much more costly. And I gave a handout to your staff. Hopefully you have it. And this is an example. If you look at the top photo, this is the 1985 California codes which was four and a half binders.

The bottom picture shows our current code until the next 25 codes become effective in January. These are the 2022 codes, which is 26 binders deep, so the complexity and the cost is easy to see here in this photo. Like they say, you know, a photo's worth a thousand words.

But however, despite the code pause, California will continue to make progress on its climate goals with the adoption of the 2025 building and energy codes. Those, again, become effective January 1, and California has been the national leader in code adoptions for the past several decades.

In fact, California is so far ahead of other states that in six years during this code pause, California will still lead the nation in almost every energy efficiency indicator. I took a recent look at ICC's national map that shows the adoptions throughout the country.

The National Energy Code, which is far less stringent than California's own energy codes, shows that 23 states nationwide are at least 10 years behind California or have not adopted an energy code at all. As far as the building code, 20 states are at least 10 years behind California.

So, this code adoption pause, in our estimation, is a perfect opportunity for California to focus on the true culprit of most of the carbon emissions in buildings, and that's California's existing building stock, not new energy efficient homes. Stanford University recently completed a study titled "Pathways to Carbon Neutrality in California."

In the report, Stanford University states that just a 5% energy savings for legacy homes is the same impact as driving 10 years of net zero new construction. So again, five years of just energy efficiency improvement in our existing housing stock is the same as 10 years of net zero new construction, according to Stanford.

And that's because California has 14 million existing homes, nearly 10 million of which were built prior to 1983, when California first adopted mandatory statewide energy standards. So, to put this in perspective, two out of every three homes in California has never had to comply with any energy efficiency mandate.

And furthermore, in the past several years, California has only been building about 100,000 new homes per year. So, at this rate, it will take a century just to match the current number of homes built prior to 1983 in California.

And then finally, the California Air Resources Board's recent scoping plan highlights what California needs to do in order to meet its climate goals. The document this is—and again, the CARB, the most recent CARB scoping plan is the document driving California's climate goals.

It projects that California needs 30 times more electric vehicles on the road, 6 times more electric appliances, 60 times more hydrogen supply, and 4 times more wind and solar generation capacity.

It also states an additional 10 gigawatts of natural gas capacity would be needed by 2045 to support the power grid if sufficient renewable power is not available by then. This is all impacting housing. And according to CARB's scoping plan, and right in the Executive Summary, it says the plan is fundamentally based on hope.

So, if I can leave you with one thought today, it's that California's newly built homes are the most energy efficient in the country. We're the most water efficient in the country and most wildfire hardened homes in the nation, by far really.

So, I would ask that please don't let costly and any unrealistic efforts get, to try to be perfect, get in the way of being very good. Thank you.

Thank you, Chris. Thank you for that very important information. I definitely took a lot out of it. And next, we will hear from Bob Ramer, President and Manager of California Coast Consultants, representing his client, the California Apartment Association, and Bob will be participating remotely.

Thank you, Madam Chair and Members. I'm Bob Ramer representing the California Apartment Association, which represents over 60,000 owners, managers, and developers of multifamily housing in California. And as Chris indicated, I'll be getting into the weeds dealing with building codes and other such issues. For over four decades, I've been representing California home builders and apartment builders in proceedings conducted by the Building Standards Commission, Department of Housing, State Fire Marshal, Department of Water Resources, State Architect, Air Resources Board, and of course the California Energy Commission.

And the first problem I'd like to talk about is the fact that the state agencies aren't explicitly required to consider housing affordability when updating residential building codes.

Now, the Building Standards Commission can be portrayed as sort of the end of the funnel for all of these code adoption proceedings done by state agencies. The Commission is required to determine whether each proposal compliance complies with a 9-point criteria. And one of those 9-point criteria is dealing with economics is, is the cost of the regulation reasonable?

And over the years, I can tell you that 100% of all of the agencies' proposals, and there have been thousands of these, all of them 100% are considered reasonable.

The agencies may not have a clue as to what the cost of the regulation is, but they're absolutely certain that the cost is reasonable. To be fair, the agencies lack the resources and the staff to be able to analyze the impact on housing affordability.

Now, in addition to the 9-point criteria, the California Energy Commission is tasked with another additional economic analysis, and that is they're required to adopt only those mandatory standards that are cost effective. And to do this, the CEC looks at the present value of the monthly utility bill savings that the consumer is going to, did.

And if that present value of the savings exceeds the cost of the the upfront cost of the item the CEC is adopting, then that item is considered cost effective. And in my experience, the CEC does a great job of this. They really do. They spend a lot of time and effort.

And to give you an example here, in 2020, the CEC mandated solar panels on all new homes and apartments. The upfront cost was roughly 10,000 to $12,000 for a new home and 4 to 6,000 for a new apartment. The CEC performed a detailed analysis of this and determined that the PV mandate was cost effective.

And I have to tell you, industry agreed with this analysis. Consumers who can't afford the related increase in rent or the increase in the cost of the home will enjoy significant savings that will more than cover the cost of the solar panels.

The problem that we have is that some consumers are going to be knocked out of the market. They won't be able to enjoy these utility bill savings because they cannot afford the increase in rent or the price of the home.

Now, please understand that these concerns apply to all the state agencies that we're dealing with and I would suggest some potential solutions. In our view, each agency does not need its own separate economic analysis team.

A much cheaper, more efficient way to deal with this would be for the Legislature to establish a single entity that each of these agencies could access to analyze a regulation's impact on affordability.

Now, once this is accomplished, the agencies would then be required to include this analysis in the regulatory package and state whether or not the proposed regulation could negatively impact the ability to purchase a home or rent an apartment. And lastly, once this is done, the BSC should be required to reject proposals that lack this analysis.

Now, moving on to the CEC's retrofit standards. Retrofitting of existing homes and apartments is a great way to face—to fight—climate change and lower monthly utility bills. However, the cost and complexity of the CEC's retrofit standards, for example, air conditioning change outs are, you know, relatively complex, but they're also costly.

And this is unintentionally led to an underground work being done without a permit or inspection, which is not only unsafe, it's illegal.

And so, a potential solution here, that the CEC is already working on with the Contractor State License Board and local building departments, is to track the retail sales of heating and air conditioning systems so that you can ensure permit gets pulled on this, but the CSLB and local building departments need the resources to do these inspections.

It does take time and obviously it takes money, and so, that is one way to deal with this. Now, my second concern relates to transportation planning in the Bay Area. That's already been referenced by your first panelist. The Metropolitan Transportation Commission, MTC, in the Bay Area, is the agency charged with implementing SB 375 transportation planning provisions.

Now, to accomplish this, the MTC adopted the Transit Oriented Communities, the TOC, policies, which jurisdictions must follow in order to gain access to federal transportation funds.

Now, the problem here is the MTC's policies adds significant costs and barriers to new housing construction and the desperate need for this transportation funding effectively coerces local agencies and into adopting these barriers for new housing construction. Let me give you some examples.

Number one, these local entities are required to implement a 15% inclusionary zoning mandate without any offsetting incentives. Number two, the required to adopt rent control laws that are more stringent than the Tenant Protections Act.

Number three, they're required to adopt strict parking rules that can hinders a project's ability to meet market demand and to basically comply with lenders' requirements. And lastly here, adopt housing density requirements that are far more stringent than those deemed appropriate by the Legislature.

These mandatory minimum densities are often economically infeasible and apply it to areas that the Legislature intentionally excluded with the recent passage of SB 79, which the first panelist referenced.

To make matters worse, the alternative options that MTC offers are programs the local jurisdiction must fund for at least four years encouraging and this encourage these jurisdictions to adopt harmful housing policies, like those I just cited, rather than put a strain on their already strained local budget.

More importantly, some of these policies conflict with state statutes and undermine and compromise the compromises made when the Legislature passed the law. Let me give you an example. When an MTC funded transportation project in the Bay Area includes neighboring regions, other regions are required to make every effort to ensure the cities comply with the MTC's policies.

But this directly conflicts with the provisions of SB 375 which stipulates that cities and counties are not required to conform their housing and land use policies to the regional plans implemented by agencies such as the Bay Area MTC. So, some proposed solutions here—just, just three.

The Legislature should determine if these MTC barriers to affordable housing violate state statutes and if they do, they should take action. The Bay Area MTC should use evidence-based criteria in its transit-oriented program to ensure increased housing production and at a minimum, lastly, the Bay Area MTC should be required to analyze its policies to determine if they actually increased housing supply, which was one of the directives.

If not, they should be required to amend or terminate those policies so that they do increase housing production. And Madam Chair, that concludes my testimony, unless there's some questions. Thank you.

Thank you for your remarks. And next, we will hear from Louis Morante, Senior Vice President of Public Policy for Housing at the Bay Area Council.

Good morning. Good morning, Madam Chair and Assemblymember Haney. My name is Louis Morante.

I'm Senior Vice President of the Bay Area Council, which represents about 400 of the region's largest employer. Since 1945, the Council has worked to make the Bay Area the best place to live and work, and few challenges to that goal are greater than California's housing crisis.

Over the last several years, the Legislature has made tremendous progress on housing, especially improving how local governments plan and permit for homes, but it's time to turn that focus inward to the state's own role in driving housing costs, so I'm very grateful for this hearing today. The core reason housing is so expensive in California is simple.

Demand for it vastly outstrips supply. One of the reasons that supply lags is it's extremely costly to build in California. According to a recent RAND Corporation study entitled "The High Cost of Multifamily Housing in California," multifamily housing construction is more expensive than in any other state.

The same project in California costs 2.3 times more here than it does in Texas. You can build two and a third apartments in Texas for every one home you can build in California with the same amount of money.

Research from UC Berkeley's Turner Center and the Bay Area Council's own Economic Institute finds publicly financed affordable homes cost between $700,000 to a million dollars to build regularly in the Bay Area and across California, which is close to double other national averages. RAND identified two key cost drivers that are relevant to our conversation today.

First, processes. Uncertainty, inconsistency, and delay all drive costs in the regulatory process. Second, high regulatory cost of compliance. State agencies play a role in both, yet they lack a statutory requirement to consider how housing costs are affected by the regulations.

There's no goal to reduce housing costs and no way to weigh trade offs against other important objectives. The Legislature could fix this by doing two things. One, establish a clear statewide goal for what it should cost to build a home in California and two, create a framework to evaluate tradeoffs between costs and other goals within the Executive Branch.

California has a whole of government climate strategy. With a statutory emissions target and a lead agency, we can analogize that model to housing set a maximum regulatory cost for housing, designate a lead agency, and require a scoping plan to lower those costs while balancing California's other important priorities.

The point I most hope to make today is that the Legislature has simply not enacted credit—credible—expectations that the regulatory process lead costs to any specific, specific direction. That means in practice, agencies given broad goals to see—given broad goals see—cost increases generally as acceptable, indeed, perhaps mandatory expectations of the laws they enforce.

I set three—I see three main vehicles by which state action drives housing costs: project review, direct regulatory costs, and indirect costs. First, project review. Developers consistently tell the Council that the Department of Toxic Substances Control creates enormous delay and uncertainty when developers are clearing sites for infill housing.

Reviews regularly seem to take two years, and the actual process depends heavily on the staff person assigned. New Jersey solved a similar problem by licensing independent remediations professionals who can act when the state backlog grows. Others defer extra work to competent local agencies. California should follow these examples to speed up this review process.

Likewise, Caltrans review can drag on for months to years. One affordable housing developer told me that she spent $1.5 million in delay costs waiting for sequential permits on multiple related sites, even when legislators urged Caltrans to issue the permits all at once.

Agencies should face clear legislatively enacted timelines and financial accountability, just as local governments do under the housing accountability act. AB 301 by Assemblymember Schiavo from this session makes important progress in this direction, but there's a lot of work still to do. Second, direct regulatory costs. Agencies often increase housing costs without any change in statute.

For example, Cal EPA recently issued new vapor intrusion guidance that my members tell me adds hundreds of thousands of dollars to millions of dollars of cost to infill projects specifically. This wasn't legislation. It was an external memo that made the perfect the enemy of the good.

Similarly, as multiple witnesses have testified, the California Building Code is among the most expensive in the nation. The Legislature should require a 30% cost reduction, as proposed in AB 6 by Assemblymember Ward, and relatedly by the Governor's pending Executive Order to E O224, which just called for general reductions.

And it should consider the 1% Lumber Product Tax that directly adds to the cost of inputs for every new home. Third, indirect costs. The San Francisco Regional Water Quality Control Board recently revised its municipal stormwater permit, which permits local agencies to enforce the requirements of the federal Clean Water Act.

It removed permission for local governments to grant a streamlining that benefited mixed income and market rate dense infill housing. Their staff's stated reason for doing so included disparaging references to developers profiting on home construction.

This regulatory change improves stormwater flood conditions, no doubt, but forced local governments to make the most environmentally beneficial housing, infill housing close to transit, more expensive and less likely to happen. Likewise, the new Bay Delta plan reserves more water for natural uses, again, no doubt a worthy goal.

However, it has effectively forced cities like Foster City, which is a city in San Mateo County, to adopt water neutrality ordinances that block housing. Their Porter Cologne Act, which governs the Bay Delta Plan, specifically Water Code Section 13241, even requires the plan to consider housing needs as a part of the plan update.

But the word housing appears only once in the Bay Delta Plan's 127 pages, and then only as a statement of what the statute says. There is no statutory prohibition—I'm sorry, there's no statutory prohibition that the plan, even after considering housing costs, not raise them. That's emblematic of how major departments, probably rightly, view their policymaking role.

Adherence to the responsibilities you have given them, which does not now include lowering the cost of housing. This could—could and should—change with statute.

I have seven recommendations for the Legislature to consider as a part of this work. To set a binding cap on regulatory costs per prototypical home and then create a fair, transparent process for allocating those costs across departments.

Regulations and tradeoffs. Create a housing-focused review board for state costs on housing to establish a statewide plan for meeting the Legislature's goal for how much housing here should cost. Adopt a lease cost principle, similar to the Least Cost Zoning Principle in current law.

Agencies should be able to meet their statutory obligations at the lowest feasible cost to housing, and there should be credible enforcement mechanisms for developers to validate that principle. Impose timelines and accountability for state project review, including financial penalties now in play for local governments for unlawful delay or denial, analogizing from the state's Housing Accountability Act.

I suppose I'm on five. Require Department directors to create specialized housing processes in teams inside major departments to make review clear, fast, and affordable, and probably most importantly, consistent.

The departments should report on these plans and their plan outcomes regularly to the Legislature and when the backlog is too great, allow departments to license external professionals to offer the important services the state now requires them to provide, especially by establishing meaningful third party review processes.

And finally, focus on the costs driven by the Building Code, as Assemblymember Ward and the Governor have proposed. If it's the Legislature's intent that state agencies not increase housing costs or that they reduce them, that expectation must be importantly written in statute, incredibly so. Right now, it mostly is not.

Most of what I see is state agencies who say housing is a priority, but then act in accordance with their statutes in a way that reveals it is not. And as a result, agencies raise cost, even as the Legislature makes local governments bring them down.

It took decades to reach a point where building a house in California cost 2.3 times the cost of building a house in Texas. It will take sustained focus to change that, but we know it's possible.

And for the 8.1 million Californians who cannot afford their current home and for the 187,000 who have no house at all, it is absolutely worth that effort. The Bay Area Council is eager to be your thought partner for that long term work.

And I want to leave you with one quote from one of my members I interviewed to prepare for today: "The regulators generally do not allow a project to do the practical solution; they require me to do the perfect solution. I hope we change the law to weigh the cost of housing heavier on that scale."

Thank you for your time today and your focus on this important issue.

Thank you. I want to thank you all for sharing your insights on regulatory authority in the housing sector. I'd like to now invite our next panelists to come to the front and take their seats. This panel brings together representatives from seven state agencies to discuss their roles and how they intersect with housing availability and affordability—affordability.

So, if I can have our next panelist please come up.

Thank you. And thank you again, all of you, for joining us here this morning here in Sacramento. I'd like to first hand it over and welcome Megan Kirkabee, Deputy Director of Housing Policy Development with the California Department of Housing and Community Development. I'll hand it over to you to speak now, or do we have a change?

All right. Yeah. Megan actually wasn't able to make it today, so I'm here in her stead. Good morning.

Can I have your name?

Yep. I'm David Zisser, Assistant Deputy Director for Local Government Relations and Accountability at the Department of Housing and Community Development, or HCD.

Thank you, David. Thank you.

Thanks. I'm grateful to be here with you and HCD state partners to discuss this important topic. This Administration has shown a dedicated focus on developing and implementing real solutions to confront the housing crisis.

It's why the Administration has created, with the Legislature support, a housing and homelessness agency that will enhance the state's ability to accelerate progress towards our housing goals. And it's why HCD has a clear mandate and goal to ensure every Californian has a home.

HCD's mission is to promote safe, affordable homes and vibrant, inclusive, sustainable communities for all Californians. We are multifaceted. HCD administers loans and grants for the development of affordable housing and supportive housing through programs like the Multifamily Housing Program, hap, homekey and others.

We also provide review and provide guidance on housing elements and provide oversight and regulatory functions for a variety of state housing laws. For example, I oversee a branch within our Housing Policy Development Division that is responsible for several programs aimed at making it easier and faster to build housing at all income levels throughout the state.

These include planning grants to local and regional jurisdictions, the Pro Housing Designation Program for cities and counties that go above and beyond reviewing local plans known as housing elements to address local jurisdictions fair share of the statewide housing need, technical assistance to local jurisdictions and other stakeholders about how to comply with state planning and housing laws and enforcement of those state laws to ensure they're being implemented at the local level.

In our role as a regulator, we we work to ensure that cities and counties are implementing the robust framework of state housing laws. This Administration grants affordable housing supportive housing through programs like the Multifamily Housing Program, app, Home Key and others. That's pretty surreal.

Provide review guidance on housing elements and provide oversight and regulatory functions for a variety of state housing laws. For example, I oversee a branch within our Housing Policy Development Division that is responsible for several programs end up making Are we good?

I have no idea what that was about, but you may proceed.

Are we okay? No.

Okay, you may proceed now.

All right, thank you. That was fun. And in our role as a regulator, we work to ensure that cities and counties are implementing the robust framework of state housing laws that this Administration and our legislative partners have passed to help address our state's housing needs.

HCD oversees and can enforce, in partnership with the California Department of Justice, a variety of land use planning and housing laws, the vast majority of which prioritize or require some amount of affordable housing. Many of these laws create faster, more streamlined processes for housing development or encourage local jurisdictions to make land use decisions that create more housing.

This includes laws such as the Permit Streamlining act, the Housing Accountability Act, Density Bonus Law, and countless others. Our role is to make sure jurisdictions are following these state requirements so housing development, especially affordable housing, is not unduly delayed.

We have issued more than a thousand technical assistance and enforcement letters to hundreds of cities and counties to help them maintain compliance with the law and help them meet their their housing needs. And when necessary, we have worked with the DOJ to pursue further enforcement. HCD is also tasked with implementing and enforcing housing element law.

This integral work ensures that jurisdictions are making land use and planning decisions that align with their housing needs in their housing elements. Cities and counties must identify adequate sites to address their fair share of the regional housing needs allocation or RHNA, sometimes resulting in rezoning land to allow greater density.

They must also identify constraints to producing housing and include programs to address those constraints and facilitate housing development. The Department reviews these plans and to ensure to ensure that they meet statutory requirements. This includes providing countless hours of guidance and technical assistance to ensure we're helping local governments make the right decisions to positively impact housing production.

The passage, implementation and enforcement of these laws is having a real impact on increasing housing production, growing our affordable housing stock, and reducing approval timelines. Just a few examples. California increased construction from 70,000 homes in 2018 to to over 110,000 in 2024, a nearly 57% increase.

During that same seven year period, California permitted approximately 867,000 homes, including an estimated 366,000 multifamily homes, a 20% increase from the previous seven year period. Notably, nearly 40% of the multifamily permits were for units affordable to low and very low income families earning less than 80% of the area median income, up from 27% in the previous period.

Finally, the state's various streamlining laws have allowed the approval of nearly 45,000 homes that would have otherwise faced discretionary review and on quicker timelines through SB35. In particular, entitlement times for multifamily projects fell from 256 days to 122 days, more than a 52% decrease. Shorter approval periods mean reduced construction costs and getting homes online faster.

In conclusion, HCD's role as a regulator remains focused on removing barriers and to facilitating housing production through funding incentives, technical assistance and accountability and enforcement. And this work is making a difference. Thank you again for having me. Of course. I'm glad to answer questions later.

Thank you, and thank you for joining us here today, David. I'd now like to welcome David Garcia, Legislative Director of the California Air Resource Board.

Good morning Chairs. My name is David Garcia. I am the Legislative Director for the Air Resources Board. Thank you for the opportunity to be here today. My testimony will focus on the questions that were posed to us in advance of the hearing.

CARB's mission is to promote and protect public health, welfare and ecological resources through effective reduction of air pollutants and greenhouse gases while recognizing and considering effects on the economy.

CARB is the lead agency for climate change programs and oversees all air pollution control efforts in California to attain and maintain health based air quality standards set by the Federal government as well as the state. This is principally governed by Divisions 25.5 and 26 of the Health and Safety Code.

CARB engages in multi year stakeholder process when developing regulations. We typically host extensive pre regulatory outreach including informal workshops and individual meetings with stakeholders prior to initiating a formal rulemaking under the California Administrative Procedures act or apa. Pursuant to the APA and other state laws, CARB is required to assess the economic impact of our regulatory proposals.

This analysis includes, but is not limited to, both economic costs and savings as well as quantification of public health and environmental benefits. Also, pursuant to the apa, CARB must respond to all objections and recommendations submitted during the public comment periods in our rulemakings.

As for the One CAR program questioned as having an impact on housing today, let me correct the record. The SB375 program does not limit housing availability or decrease affordability. SB375 is a planning law.

It requires metropolitan planning organizations to develop what are called Sustainable community Strategies or ses that integrate transportation and land use planning to achieve greenhouse gas emission reduction targets set by carburetor.

SB375 requires SESs to identify areas within the region sufficient to address regional housing needs and the law provides CEQA streamlining benefits for projects that are consistent with SCS's. Furthermore, SB375 explicitly clarifies that the process it creates does not regulate land use or supersede local land use authority.

Cities and counties still make all zoning and permitting decisions and their plans and policies are not required to be consistent with an scs. The law is explicit about this and it excuse me, the law is explicit about this and it is consistent with what we observe in practice.

In other words, these SCS plans hold no housing regulatory power. Nothing in the law nor CARB's implementation of it has a negative impact on housing availability or affordability. Neither the law nor any guidance provided by CARB even requires that SESS be implemented.

That said, fully implementing SESS and acting to reduce greenhouse gas emissions through land use actions could assist in addressing the housing crisis. Empirical data regarding progress achieving the region's GHG reduction goals underscores this point. Every four years, CARB evaluates progress meeting regional GHG emission reduction targets pursuant to SB150.

The last SB150 report in 2022 found that per capita GHGs were not on track to achieve the targets in nearly every region. When looking at other anticipated outcomes of these plans relative to observed on the ground data, we see wide discrepancies that show us that plans aren't being fully implemented.

Notably, total new housing units in most regions are not coming to fruition as expected by the plans. Furthermore, according to the Department of Housing and Community Development, the number of permitted units across the state is not meeting housing needs.

For example, permits are only meeting about 18% of the housing need for the very low income households and only 27% of need for low income households. CARB staff are currently working on the 2026 progress report and anticipate similar results. This is indeed a problem for housing availability and affordability, but not one created by SB375.

In fact, if SESS were fully implemented, we would expect to see an increase in housing production. Before I finish, let me also quickly touch on the scoping plan. The Legislature requires CARB to develop a scoping plan and update it every five years.

To the extent that CARB programs are mentioned in the scoping plan, we act to align our programs with the goals of the scoping plan. After the scoping plan is updated, however, no other state agency or local government is required to act in accordance with the scoping plan.

As former Chair Randolph of the Air Resources Board once said when challenged about one of the findings in the scoping plan that called for a reduction in vehicle miles traveled or vmt, then Assemblymember Friedman had asked her well VMT is still increasing in the state. So what is CARB going to do about it?

And she said nothing because that is not within our authority to address the scoping plan. In this case is a call to action for the Legislature and our sister agencies to do what is within their power to achieve greenhouse gas emission reduction goals set by the Legislature.

In summary, SB 375 nor any other CARB program have negative impacts on housing by law or practice. Housing growth assumed in SESS is not coming to fruition and in fact, fully implementing SESs could assist in meeting the state's housing needs. Thank you, and I'd be happy to answer any questions you have at the appropriate time.

Thank you, David. Next, representing the California Coastal Commission, we have Chief Deputy Madeline Cavallari and Legislative Manager Sean Drake.

Good morning, Madam Chair and Assemblymember Haney. My name is Madeline Cavalieri, Deputy Executive Director of the Commission. Coastal Commission thank you so much for including us in today's hearing. Housing is an incredibly important issue for the Coastal Commission.

The Commission implements the Coastal act in partnership with local governments in the state's coastal Zone, with which is a narrow strip of land along the coast representing about 1% of California's land area. In urban areas, it often extends only a few blocks inland. In 90% of the coastal zone.

Local governments are implementing the Coastal Act through local coastal programs that are certified by the Commission, which give them permitting authority. These local plans implement the Coastal Act on the local level and include the local zoning and development standards that apply to new housing proposals.

The main objectives of the Coastal Act are to protect public access to the state's beaches and coastline, to protect coastal resources like sensitive habitats and water quality, and to ensure that new development is safe from coastal hazards like flooding and erosion.

Achieving these objectives protects the coast for current and future generations and also protects the state's $40 billion coastal economy. The Coastal act is also the state's primary mechanism for addressing sea level rise hazards.

A recent report from USGS estimates that 150,000 residents and $30 billion in property value will be vulnerable to sea level rise in the next 30 years, and by 2100, that will rise to 600,000 residents and $150 billion in property value. That represents more than half of the current population of the coastal zone.

To avoid future economic harm and displacement of residents, the Commission has scientists and technical staff that work with local governments to ensure that new development, including new housing, is out of harm's way. Without this planning, the housing crisis in the Coastal zone will get significantly worse in the coming decades, not better.

Prior to 1982, the Commission also had authority to protect affordable housing, and in the first five years after the Coastal Act was passed, the Commission required approximately 5,000 new units of affordable housing, prevented the demolition of another 1200 units, and and collected about $2 million in in lieu fees.

That authority was removed by the Legislature in 1981, and the coastal act now includes a policy that encourages but does not require or specifically protect affordable housing. Nonetheless, the Commission has been increasingly emphasizing housing availability and affordability along the coast, especially in the last several years. In its planning and regulatory actions.

The Commission works closely with HCD and provides guidance and support to local governments to ensure new legislation related to housing is effective in the Coastal Zone.

Commission issued guidance memos to help local governments update their local coastal programs to implement SB9, SB423, and AB2097 in the coastal Zone, all of which streamline housing approvals, and the Commission regularly approves new density bonus and ADU ordinances to further increase density.

In addition, AB3093 requires local governments to update their local coastal programs in sync with their housing elements to ensure that the RHNA targets are met in the coastal zone. Also, just this year, The Commission supported SB 484, which establishes a pilot program by which the Commission will exempt certain affordable housing from coastal permit requirements.

All of this work has resulted in the Commission regularly approving well over 99% of the housing proposals that come before it and has greatly improved the speed of these approvals. In areas where the Commission is still responsible for permitting, it now approves new coastal permits in less than 45 days on average, down from 75 days in 2020.

The Commission's district offices are located all along the coast, so housing in coastal communities is something that we care deeply about both professionally and personally.

I've lived and worked in the Santa Cruz area as a staff member of the Commission for almost two decades, and I am proud of the work we are doing related to housing in my community in partnership with local governments.

The City of Santa Cruz in particular, has been proactive in maintaining a local coastal program that puts the City on track to meet their arena targets, and the Commission has been working with them side by side to move projects forward.

There have been almost 1,000 new housing units approved in the city's coastal zone, and a coastal plan to approve more than 1500 more just in the last few years. Our Commissioners are also deeply concerned about the housing crisis and are acutely aware of the need of especially for Housing for workers who support California's coastal economy.

We know there is much more work to be done in the coastal zone related to housing, but we believe that our work over the last several years demonstrates that coastal protection and housing development are not mutually exclusive.

In fact, Coastal act policies that require new development to be safe from sea level rise, flooding, and other hazards will result in housing that will be sustainable for generations to come. Thank you so much.

Thank you. And I do have a question for you. I know you mentioned the Coastal Act, and under the Coastal Act, the Commission has broad authority to protect coastal resources, manage development intensity, and ensure public access, like you mentioned. But the question is, which specific sections of the act most directly limit residential density or height?

So the Coastal Act doesn't have specific sections that talk about density and height. Those rules are implemented by the local governments. And so local governments develop local coastal programs that apply the Coastal Act, the broad policies of the Coastal Act to their local jurisdiction.

And as I said, we've been working with local governments to incorporate the density increases and the streamlining measures that have been coming through legislation in the last couple of years. And so we've been seeing a lot of changes on the ground in terms of providing for increased density, allowing for additional heights.

And so that's kind of the direction that we've been seeing in the last couple of years.

Okay, thank you. And next up, we have Michael Sokol, Director of the Efficiency division at the CEC, in place of Andrew McAllister, is that correct?

That's correct. And good morning, Chair. And good morning, Assemblymember. I'm Michael Sokol. I am the Director of the Efficiency Division at the California Energy Commission and filling in for Commissioner McAllister today.

So the California Energy Commission oversees all aspects of energy supply and demand, but really in this context, oversees California's building energy efficiency standards, which is commonly referred to as the Energy Code. Important to remember that affordability is the foundational principle of energy efficiency, but also the Energy Code.

And we are required to enact measures that save people money on their energy bills. The CEC's authority to adopt standards under the Public Resources Code exists to save people money on their energy bills, while also limiting energy infrastructure costs and associated emissions.

Standards ensure that Californians can afford their energy bills by keeping demand low and shifting it away from peak periods when energy is the most costly. Standards also help keep electricity rates lower for all customers by reducing the need for utility capital investments on new energy infrastructure.

And our standards also consider the grid impacts of new construction as part of the larger policy perspective. By statute, our measures are required as they're adopted in the Energy Code to be cost effective and technically feasible.

While energy efficiency measures often have an incremental first cost, those costs are far outweighed by the energy savings benefits realized by those customers. And those incremental first costs are not the main driver of housing costs.

For example, the 2025 Energy Code Update alone is projected to save Californians an estimated $4.8 billion in avoided energy costs over the next 30 years, and that's just compared to the prior version of the Energy Code 33 years ago.

And in total, state efficiency standards for buildings and appliances together have saved Californians more than $100 billion and avoided energy costs over the past 50 years since the authority was first introduced. California standards lead the nation, and we heard some discussion of that earlier.

California is proud of of the actions that have been taken and also shows that the latest analysis from the CEC that residents in California save an average of roughly $2,500 per year compared to homes that would be built to national standards.

Building standards are among the cheapest ways to achieve savings for consumers and also negate the need for additional utility investments.

Every three years, the code is updated and the CEC staff works closely with a broad range of stakeholders through a robust public process to ensure that the public has ample time to participate in our analysis and the development of the standards.

The CEC takes pride in ensuring proactive collaboration with a broad range of impacted parties, and the latest 2025 code as an example, were adopted with support from the California Buildings Industry Association, from the California Buildings Property Association, from Building Owners and Managers Association, BOMA designers, the solar and storage industry, environmental advocates and others.

And I want to thank the CBIA reps earlier for the ongoing support and engagement with Chris and Bob's comments that highlighted the level of proactive engagement that we take with builders.

Of course, California is a complicated and diverse state with 16 climate zones, and the codes are customized to account for and make sure that those standards work for all Californians across the state.

Energy efficiency not only saves Californians money, but it does provide residents and occupants with important indoor spaces that are healthier, quieter and more comfortable, and positions for extreme heat events that are anticipated to proliferate across the state where efficient spaces require less energy to cool, which also puts less strain on the grid and helps Californians to survive these extreme heat events.

We also recognize the importance of existing buildings, and there was some discussion of that earlier.

There are a number of efforts and initiatives outside of the Energy Code that are looking to advance efficiency for existing buildings in ways that are cost effective and beneficial, including our Equitable Building Decarbonization Program which is targeting in particular low income customers and disadvantaged communities to ensure that even the most impacted Californians are able to realize the benefits of efficiency savings and improved indoor air quality.

Energy efficiency also supports jobs where energy efficiency workers are by far the largest category of energy related workers in the State of California and that number continues to grow.

The state also oversees Energy Code compliance broadly, but enforcement occurs locally and CEC is taking efforts to foster the partnerships with the local building departments across the state, roughly roughly 500 with the contractor, state license board and other entities to ensure compliance is happening.

Work is ongoing on the statewide level to streamline code compliance processes and provide the support tools and systems necessary to ensure that customers are consistently realizing the bill savings and the other benefits that are in the adopted codes.

And the CC has taken steps in recent years to improve the usability of the Energy Code by streamlining some of the documentation and the forms that are required and even the code itself, eliminating certain outdated regulations and proposing new format of the code itself which is actually just being introduced for a discussion draft.

And this new format has gained a lot of support from both home builders building departments across the state and those discussions continue. We recognize that centralizing, modernizing and streamlining code compliance processes across the state may offer key opportunities for cost savings, moving ahead and improving the stakeholder experience working with the code.

The CEC we hope to continue expanding upon these usability improvements in upcoming code cycles and hope for the legislative support to continue to take those actions. So I'd like to thank you for the opportunity to share these thoughts today and happy to take any questions.

Thank you. And I do have several questions. The first one is how do building energy efficiency standards and renewable energy requirements affect the cost and timeline of new housing development here in the State of California.

Thank you. So just for starters want to acknowledge that we do work closely with the builders as each code cycle is adopted and new measures are considered. And also to hear if there are concerns with measures that may be existing.

We often we have an approach across the state where measures are often piloted at the local level through local reach codes before we'll consider them at the statewide level. And so that that's a valuable source for data to understand regionally how measures are working out and inform a statewide consideration.

And so it is worth acknowledging that some of the requirements of the Energy Code may slightly extend housing construction timelines due to added design documentation and inspection requirements that are aimed at protecting consumers from high energy costs. However, this is rarely a major source of construction delays.

And again, this is where we work closely with the builders to make sure we understand the issues they're seeing and how to address those appropriately in our code measures.

Reiterating that we did have full support from the entities I listed, including the California Building Industry Association in the most recent code update and the past several cycles, and that the code as a whole has to be cost effective, which takes a lot of work with stakeholders behind the scenes just making sure that the net present value of typical project is cash flow positive so that there's benefits that are being realized by the consumers.

Even though the builders do face a cost for certain measures and that solar historically is an important affordability measure, it's a, has been a clearly cost compelling measure for customers to take on. That's, that's true in the Energy Code and that was the case.

Cost benefit was, was highly beneficial when it was adopted originally and went into effect in 2020. We are aware that there's a number of changes happening broadly with, with rates, changes at the CPUC, with tariffs that are affecting certain equipment costs. And we're certainly monitoring the situation closely and we'll continue to do so.

So would you say it takes longer to build because of these energy efficient requirements?

I think there's the cost, the, the time is on the more the design aspect of it. You know, I definitely want to hear, you know, the builder's perspective continuing.

But, but when it comes to actually building the projects, the, the time impacts are more on the design to ensure code compliance with the energy code, which can be somewhat complex.

But we're looking to and, and cost.

Well, again, this is where the cost. Maybe we're in a unique situation, but by statute we're required to have cost effective standards.

And so the standards, there's two sides of the affordability equation, which is looking at the upfront cost, which is to the builders, but also the bill savings benefits and the utility bill costs experienced by the residents. And so we're required to ensure that those resident benefits outweigh the first cost and often significantly so.

And another question, how does the Commission evaluate the cost impacts of retrofit and upgrade mandates that apply to existing housing?

That's a very good question. And I would say, you know, new construction is somewhat an easier case in that, you know, you're designing something from the ground up, but existing buildings, you're retrofitting something that exists and so we still have, we're still required to ensure that cost effectiveness threshold is met even for measures that impact existing buildings.

Now alterations have higher costs because you're changing something that's already there. And so we have to evaluate those costs with a little more sensitivity, knowing that somebody that's the building owner or whoever's living there is going to experience that cost directly as opposed to it being part of the new build and construction.

So we do have cost effectiveness requirements. We're not intending to impose any unplanned retrofits. Right. This is more when somebody is considering a change that they're already contemplating or that they need, that they're considering an energy efficient requirement to make sure they're realizing those bill savings within those cost effectiveness requirements.

And how does the Commission differentiate between impacts to owner occupied housing and rental housing and the downstream impacts to tenants in rental housing as compared to rental housing that are with respect to owners?

Another very good question. And I would say the cost effectiveness requirements are associated with the lifetime of the structure that's built.

And so we use energy and cost modeling on measures to compare those upfront costs that are well informed by the industry and the public process and look at the expected bill savings payback of those measures where we have to take into account the different rates that exist across the states, including time of use and other costs.

We also look at the peak savings to make sure that customers are saving money on their bill while also putting some downward pressure on the broader utility rate issues. There's some unique considerations for deed restricted low income housing where owners are able to upgrade their buildings and cover the costs with higher rent.

We've provided a calculator to ensure that renters are left better off because the bill savings are considered as part of that equation and making sure that the bill savings outweigh the increases in rent. So we update. It's called the California Utility Allowance Calculator.

It's a tool that's intended to help builders, developers, designers assess those utility costs as part of affordable housing projects.

And we of course work with the, the Treasurer's office and other agencies, the Tax Credit Allocation Committee and the Department of Housing and Community Development to make sure that our building standards are coordinated with the affordable housing programs across the state.

Thank you. Next up, we, we have on our panel Charlton Bonham, Director of the California Department of Fish and Wildlife. You may proceed.

Thank you, Chair, Assemblymember. I'd like to break from traditional legislative presentation practice and just be more personal, using some plain language.

Thank you.

But also Based on my experience and reintroduce your Department of Fish and Wildlife to you in the audience today. Our mission is pretty simple, but it is grounded in over a 150 year history. We trace our origins to the state constitution, which created something called the Board of Fish Commissioners. Our mission boils down to saving nature.

We save nature for its own intrinsic value, but also for people. And that connection to people shows up in random places. For example, in panel one. I'm pretty sure Mr. Ramer of the California Apartment Association on the WebEx had a really nice mount of a steelhead or trout behind him when he was presenting.

So we all have some form of relationship to the nature around us. We still do what we did 150 years ago. We tell people how many fish or animals they may be able to catch or keep each calendar year. But we also do things nobody could have imagined way back then.

We have the world's largest network of preserved spaces off our shore in our marine environment. And we're one year after doing the world's largest river restoration project in the Klamath River, by the way, on time and under budget. And our whole mission really leans into this idea of diversity and in three ways.

The economic diversity of California, fourth largest economy standalone in the world, Governor, and your leadership surging to be the third, the second, eventually the first. That's whether we're feeding the world in our agricultural sector, giving birth to innovation in technology, the Hollywood Hill sign. But that economic diversity runs through our people diversity.

More people of perspectives and communities and beliefs than anywhere else in these great United States. And that's been true since the beginning of time. If you go back before what is now what we call California, more types of Native American nations, dialects, indigenous people.

So our economic diversity, our people diversity, all of that runs through our natural diversity. We have more types of animals and plants than any other state in the union. And it makes sense. The highest place and the lowest place on the continent are each within California. Both of them are within 200 miles of the ocean.

We're one of only five places in the world that has a Mediterranean climate. The Sierras, the Cascades, deserts, mountain ranges all over the place. An 1100 mile coastline, 30,000 miles of rivers and streams. The rareness of the natural world in California is found nowhere else in the world. We're one of a few global biodiversity hotspots.

Take plants as an example. The types of plants that are in California, that are found nowhere else in the world is more than all the plant diversity of the other continental US States combined natural diversity, people diversity equals that economic diversity. Here's the last thing I'd say by way of introducing myself. Our department's mission.

There is too much freight in my experience placed on this phrase regulator. I am not a nameless person in some room that lacks compassion. It's the opposite. I struggle with affordability. I live in the Bay Area. My staff are working for the public interest.

And what I'm seeing Now, after almost 15 years, the longest serving Director in the history of California is what I would ask you to help all of us do. From where you sit in your position, what we have to do for California to thrive is serious business. It is not easy in my own life.

If I expect to come to my family or friends with a view that they are always causing the problem or they are the reason why we're not communicating well, I think I'm missing the mark. I actually find that same dynamic in the world of building things.

So our Department touches housing, but it touches energy, it touches water, infrastructure. Each of the things that's being built in California likely has an interface with our Department and Chair, I would say to you, in my experience, we can do more on our side of the table. Efficiency, yes. Expeditiousness, yes. Control cost, yes.

Be mindful of the full picture, yes. But this is a world of analysis that predates us in many ways. If you look at the body of academic and expert work assessing why do things take time to build, you will find a vast body of literature often produced by this Legislature.

Take Assembly Bill 1282 about transportation or in the private sector, the McKinsey Company, which I actually have one of their reports in front of me called Stopping the three Ways Improve Contractor Owner Relationships on Capital Projects. In my experience, there are many things we should be doing with the development community that they control as well.

A lot of delay relates to early engagement or not, creativity or not. Project financing, rigidity or flexibility. Willingness to talk about design sooner rather than later. Those are actually very attractive opportunities to improve how we're dealing with each other. So my pitch to you would be Chair your opening remark about exploring opportunities to increase collaboration.

I hear a theme of collaboration need and interest from the first panel and I think those of us that exist in my world believe if we can forge that collaboration sooner, we can do better on issues related to affordability, particularly housing. So thank you for your time and I look forward to any follow up questions.

Thank you, and we have, next up, we will hear from Katherine Butler, Director of the California Department of Toxic Substances Control, and she will be participating remotely.

Thank you. Good morning. Thank you, Chair Pacheco and Assemblymember Haney for inviting the Department of Toxic Substances Control, or DTSC, to this conversation. I appreciate this opportunity to attend virtually as well, which made it possible for me to participate.

Our Deputy Director of Site Mitigation and Restoration, Thanne Berg, is also on the line and present here today to support this discussion. So. our mission at DTSC, fundamentally, is to protect California's people, communities, the environment from toxic substances and specifically, as it pertains to the discussion today, to restore contaminated land.

We are responsible for making sure that the land used for housing development is safe for future occupants and that the cleanup process does not shift pollution burden to surrounding communities. So, we're in the business of preventing exposure to harmful contaminants and ultimately, improving community health.

We oversee cleanups of Brownfield sites, old sites with contamination, to support the health and safety of revitalization projects, including affordable housing. The process to investigate and address contamination does take time to carry out and I understand this can present challenges. However, we have found, and I echo my colleague Mr. Chuck Boneham's message, on collaboration. Early engagement.

Early engagement in the development process helps us to mitigate delays and costs and enables projects to move forward while also protecting public health. To this end, we launched Brownfield's briefing campaign and that has been helping us connect with local governments, developers and community leaders across the state and we'll continue doing these briefings.

Also, vapor intrusion was brought up earlier and how new—and how our alignment with the EPA vapor intrusion requirements has been creating challenges. We don't have any new regulations planned, but we are addressing these concerns together with the Water Board through hosting a series of public workshops to clarify and refine best practices.

We're providing resources on health protective, yet feasible and pragmatic approaches to address vapor intrusion risks. So, I urge environmental consultants and others to participate in these workshops that will continue through spring of next year. We've also found that depending on the type and nature of contamination, there are ways we can get creative.

There's ways that we can bifurcate the process to support building construction timelines while also continuing necessary monitoring and remediation to meet our standards that we all care a lot about in California for environmental protection. While that's not always possible, again, early engagement can allow us to work together to assess those possibilities.

So, in just this next week, two affordable housing projects, one in San Jose and one in Riverside, that were previously contaminated properties are scheduled for groundbreakings. And one of these projects received over $3 million in cleanup funds through DTSC's Equitable Community Revitalization Grant Program.

The DTSC Grant Program is supporting more than 90 revitalization efforts across the state through the investment of $130 million to support environmental cleanup. We estimate that the grant funded projects in this program will result in over 3,000 affordable housing units across the state.

So, thank you all for your time today and the opportunity to speak about DTSC role in the housing development process. We too know there's ways we can be more efficient. We can work through challenges together through strengthened collaboration, proactive communication, early engagement.

And I'm confident that we can continue to meet our state standards for environmental protection while also supporting our state's affordable housing goals with the sense of urgency that it warrants. So, please know DTSC is an eager and committed partner and I'm happy to answer any questions at the appropriate time. Thank you.

Thank you, and I agree, collaboration is important and that's why we're having these Committee hearings. I'm going to hand it over to Assemblymember Haney to ask a couple of questions.

Thank you so much, Director, for those comments and for your leadership. How is DTSC evaluating whether its own regulations are creating duplicative environmental review or unnecessary approval layers, and are there any regulatory reforms that are under consideration to streamline this process for housing?

So, we don't have any upcoming regulatory reforms planned or new regulations planned. Our authority is grounded in the Health and Safety Code and our mandate. Anytime a developer comes to us to review a project, then we go through our environmental review process and it's often because a lender or financing requires our regulatory review.

And that's often how we're brought into the process. As far as preventing overlap with other regulations, you know, we work closely with our BDO partners, for example, at the Water Board, to ensure coordination and that there's not overlap there.

Thank you. And you may have mentioned this a little bit, but we were interested in how the hazardous materials regulations intersect with new housing development and there's anything more you want to add about that.

So, when it comes to our hazardous waste regulations and the authorities there, the primary challenge I understand is when it comes to our generation and handling fee, and this was a fee that was imposed on all generators across the state, including industrial facilities.

But when it pertains to affordable housing development, there's a fee per ton of contaminated soil if it meets the characteristics of hazardous waste. And so we are exploring options as far as looking at how timelines and predictability of that fee could be improved. The fee itself is equitable across all fee payers.

It's not specific to the housing industry by any means. And that's something that we have been clarifying through fee workshops.

If you could speak a bit about the timelines and how timelines are set for monitoring contaminants and if there's any ability or efforts of how we can speed up timelines while also maintaining safety standards.

Yeah, thank you, Assemblymember. Great question. We don't have any set or specific timelines for projects. However, prior to DTSC approving an environmental remediation approach, there are certain things that have to happen.

And those series of steps involve the property—property owner—demonstrating that they've identified the source of contamination, that they've fully investigated the extent of contamination, and that they have a remedy in place that's going to protect public health. And the timelines can vary so much from project to project.

And so, that's why we really encourage the early engagement so we can sit down and work together through those timelines. Sometimes during the course of investigation, new contamination is discovered and that can be especially frustrating. I fully understand. But then there are ways, depending on the nature of contamination, our team can bifurcate the process.

So, there may be ways for construction timelines to continue while monitoring and remediation goes in place. Sometimes the remediation, for example, of groundwater can take decades. And you know, we don't want to wait decades for construction. So, that's where we are able to work with developers and local partners.

Thank you. And last question. What is the status of the vapor intrusion regulations and has there been a cost analysis of the impact of this regulation on the price of housing or on housing generally?

Thank you. So, the vapor intrusion guidance that DTSC and the Water Boards published in 2023 aligned our standards with US EPA's and we heard the feedback from developers and partners that this was increasing costs for projects, that this was increasing timelines, and that in some cases, it may be overly stringent.

So, we heard that feedback, we took it to heart, and we launched workshops with the Water Board where we are clarifying refining the best practices for vapor intrusion investigation, because oftentimes, there are ways to have a more site specific evaluation that is not as stringent if the variables work out at the site, but it's still protective of public health.

And so, that type of site-specific approach is what we are now putting forth in these workshops, and we're hopeful that that will help resolve some of these challenges folks have been facing.

Thank you.

Thank you. And I did want to touch upon one of the questions that was asked about timeliness. I know it varies project by project, but I was curious to know whether a developer, a developer, is provided information as to timelines once a developer has engaged, so that way the developer is aware of the timelines or the timeliness.

Yeah, we can provide those estimates up front. Again, sometimes there are some unknown variables if new or unknown, previously unknown, contamination is discovered, so those timelines can change and that's the flexibility, sort of with funding sources, that comes into play to still make projects happen while also being health protective.

I'm going to ask Deputy Director Berg if she'd like to add anything to that response.

I think you did a great job, Katie. Yeah, I think you did a great job. So, as a matter of practice, we meet with the developer at the very beginning of the project and go through the schedule and timelines so that we're all aware of what the pinch points are so that we can get the development going.

As Director just said, you don't know what you don't know, and sometimes, until you get out there and start moving dirt, you find new things. So, we try to work with the developer as best we can to keep the project moving at a steady clip.

Okay, thank you and thank you both. Thank you, Katherine, again, for joining us. I'd like to finally introduce Michael Lauffer, Chief Counsel at the State Water Resources Control Board.

Good morning, Chair Pacheco and Member Haney. Thank you for having us here today. My name is Michael Lauffer. As you indicated, I'm Chief Counsel for the State Water Resources Control Board and Chair Escobell extends his thank you for inviting the Board to participate in today's Select Committee hearing.

And specifically, I'll be addressing how the Board addresses its important water quality and water rights responsibilities and how those intersect in California is facing the struggle to provide affordable housing to our many citizens. The Water Board's core mission is to preserve, protect, and enhance California's water resources for the benefit of the environment, public health, and the economy.

And that is baked into some of our core responsibilities that the board fundamentally balances, what are, at times, these competing interests. We do this by ensuring safe drinking water, protecting and improving water quality, and managing the state's water rights system to balance those competing demands.

As boards, one of our fundamental aspects of our operations is our dedication to open and public processes and the Water Boards have developed a robust public engagement process. That includes a diverse mix of stakeholders.

And many of the representatives you've heard from, you heard earlier today on panel one, actively participate through their members in our water quality and water right regulatory proceedings. As with all of the state agencies you've heard from today, we have core responsibilities that are not about housing, with the exception of Housing and Community Development.

We have to balance not only the state mandates that we receive, but for the Water Boards, we implement multiple federal laws, including the Safe Drinking Water Act, established by Congress, as well as the federal Clean Water Act.

And at times, one of the Board's most important mission is to try to figure out how to integrate those processes, use the flexibility that's available under state and federal law, and achieve both the water quality protections that we need, as well as providing a flexible process and a fast and efficient process to get to the results that our stakeholders are interested in.

Federal laws, while they're crucial for protecting public health and water quality nationwide, will sometimes limit our ability to accelerate our processes and at times, they will create unbending requirements that the Water Boards cannot forego. We are constantly working within these frameworks to achieve the best possible outcomes for Californians and for the California environment.

We recognize the critical need of housing across the state. We are part of an all of state government approach to trying to find solutions to adapt our processes so that we can address these concerns while continuing to carry out our are crucial mandates.

A key strategy in this effort is our commitment to developing and utilizing general orders so that individual developers, when they have projects, do not need to come to any of our nine regional Water Quality Control Boards or the State Water Board to achieve a permit.

Instead, the boards work through a lengthy, sometimes multi-year process to develop general orders that cover classes of activities so that developers know exactly what will need to be done at the front end.

And when they come into the board offices for a permit, they are essentially just checking a box, paying the required fee, and achieving coverage for both state and federal requirements so they can carry out their activities that may dredge and fill state and federal waters, or that may—and that is the most common activity that still requires an individual permit in the housing development space from the Water Boards—or so that they can undertake the construction activities that may impact water quality.

And again, using those general orders provides certainty for the developers, provides certainty for the environment in terms of the protections, and means that there's no delay in processing when individuals approach the Water Boards. Earlier today you heard from Mr. Ochoa about some of the multi-level impacts that come from state regulatory agencies, and how, for example, one of the challenges that builders have is being able to ensure that there is adequate electricity supply coming into an area.

That was a challenge that the Water Boards solved, at least from the water quality permitting perspective, by working closely with SoCal Edison and PG&E to develop a general order so that all of their transmission upgrades that would impact waters of the United States and state waters would be covered by a general order.

They would know at the outset what they would need to do for their transmission line upgrades and the Water Board's permitting processes would not become a second order impact to those utility upgrades and then a third order impact for those new housing developments.

At the, at the foundational level, the Water Boards do most of their regulating, what most agencies consider regulations, through basin plan amendments, what are known as water quality control plans. You heard earlier today from Mr. Miramonte about some of the concerns that those water quality control plans tacitly only acknowledge housing.

Porter Cologne, which is our core water quality regulatory statute in the State of California, the California Clean Water Act, if you will, since its inception back in 1969, has included a requirement that whenever the Water Boards adopt these foundational water quality planning documents, like I said, that serve as regulations, that they have to establish what are known as water quality objectives that will protect the waters of the state.

And in establishing those objectives, there are many factors that the board has to consider. One of them is housing, as you heard from Mr. Miramonte. Now, the plans themselves may not say housing because the plans are about identifying what our waters are used for and what's necessary to protect the waters to protect those uses.

And so, in developing those plans, the Water Boards have to consider housing for two sides of a coin. One, we want to ensure adequate clean water for the people of California and an adequate volume of that water, but at the same time, we also recognize that the cost of protecting can have housing impact.

So, it's a two-sided coin, and it's in the documents that the Water Boards develop to establish these water quality control plans that they have to consider the impacts on housing.

And so, while there may be one word about housing that the Water Board considered housing in developing the water quality control plan, the underlying staff report will have, depending on the size of the project at issue, dozens, hundreds, of pages of analysis about what might local land use impacts be and what might be the effect on housing.

So, that is baked into the Water Board's organic statutes. And I'd be remiss, because I focused on sort of our regulatory aspects, if I didn't just briefly mention that the Water Board, with the support of the Legislature, with the support of the Federal Government, is also a critical funder of infrastructure projects in California that actually promote housing affordability.

The Water Board, over the last three years, has put out in the form of grants and low interest loans nearly $5.2 billion to fund critical drinking water infrastructure, critical water quality infrastructure, and storm water infrastructure that protects the quality of our water, ensures safe drinking water, and by issuing it in the form of grants and low interest loans, helps promote the affordability of housing that relies on that infrastructure.

And related to that, we also have a massive $1.6 billion over the last six years funding program to help remediate underground storage tank sites which provides cleaner properties for redevelopment purposes, including residential purposes. All told, as you've heard from others here today, we recognize the need of affordable housing at the Water Boards.

We look forward to working with the Committee and our sister agencies to ensure that affordability is considered in all of our regulatory actions, and yet, already, the Water Board is working to improve its processes and its outcomes to advance affordable housing in California.

Thank you. And I just want to thank all of our panelists for being here today for having this important discussion about housing here in the State of California. I'm going to go ahead and see if Assemblymember Haney has any questions.

Yeah, I appreciate all of the work and the overview. I think there's a lot that I would like to follow up with each of you to get more into the specifics. Sometimes this is not the best environment to really drill down in what I think should be follow up meetings on each of these topics.

And certainly, the Housing Committee is very interested in all of the issues that we raised today. One maybe kind of macro question, and this was brought up in the beginning when we talked about collaboration and coordination, and some of you definitely discuss various ways in which you collaborate with each other.

But I wonder if anybody wants to weigh in further on the cross agency and Department conversations that may take place. And obviously, each of you are given a mandate of some set of responsibility through statute and how to implement that and sometimes with anything that can happen in a silo or not necessarily in cross department dialogue.

So, I wonder if there's anything that you can say about that, either things that we might be able to do to support you all to have that type of coordination or greater clarity within statute in terms of making sure that we're not giving you mandates that you're implementing that may conflict with or provide less than efficient ways to make decisions.

Assemblymember, if I might, maybe three examples in this space of interagency coordination, which, arguably, perhaps have been developed more in other sectors, but I think are transferable into the housing space. So, your region actually is home to a pretty great laboratory.

There's a multi-agency effort that's underway in all agencies that touch issues around the Bay itself where we are meeting regularly to kind of cross compare responsibilities, individual projects, seek to reduce redundancies, and exploit whether like work product by one can be better used by another even though we each have our own entitlements under statute.

So, there are places you can look to that are proving the theory, coordination amongst agencies can produce cost savings for projects.

Second example in the transportation space, this legislative body, around about the time Senate Bill 1, which was transportation infrastructure financing legislation, also passed Assembly Bill 1282, which required many of us who engage with transportation projects to basically go do a lean six sigma type review of the contributing factors to delay.

It produced a pretty good piece of work, and it identified things our agencies should do together to shrink delivery time and we're implementing. So, this idea of a roadmap of pinch points and then putting them on a problem-solving timeline is also an opportunity I've seen play out in the legislative space.

Lastly, I would encourage you to continue to interface with the trade associations that were on the first panel but encourage them to interface with us sometimes differently. No developer is the same. The development space is, you know, not homogenous, just like the regulator space is not homogenous. So, they control an incredible lever.

They make a decision—which consultants, which designers, which lawyers. And depending on those decisions, you can have a great impact to how people will engage us at the agency level. And that first moment of engagement can be the pivot for success or failure.

If the project is maybe over ambitious in scale or hasn't engaged on like could you shift your footprint or is really committed to like let's argue over the studies, you can set yourself back by multiple years on any given project.

So, figuring out a way to incentivize the development space to come to workshops and trainings, almost certifications, for experience with engagement with us I think would also be a great step forward.

Assemblymember, if it's okay. Just wanted to address your good question there. David Zisser again, with HCD. We have really good working relationships with all of our state partners, including I'll just say a word about a couple in particular including the Coastal Commission, including CARB.

We believe that when we work together, we're all working as the entire administration to reach our housing goals. In fact, HCD and CARB are meeting this afternoon to continue our coordination on transportation and housing, and David will say more about that in a sec. I also wanted to say a word about the Coastal Commission.

We meet bimonthly with the Commission to harmonize our objectives. We recognize the importance of coastal resources for all Californians, and we know that the Coastal Commission recognizes the importance of housing, including as an opportunity to provide access to the coast for everybody.

Topics that we regularly discuss with them include ADUs, SB 9 ordinances, LCP amendments, objective standards in the LCP process to better carry out ministerial processes for housing, and we've also coordinated on housing element updates to identify issues early in the process to avoid potential conflicts in a number of jurisdictions.

So again, building a California for all requires balancing a variety of intersectional issues. And through the work of all my colleagues at this table, we're able to do that.

Sure. Thank you. So initially, the Legislature required CARB and the California Transportation Commission to hold meetings twice a year to discuss the intersection of transportation policy and air quality regulations, as well as greenhouse gas emission reduction goals. Later, the Legislature added HCD to those meetings.

We do meet twice a year to keep that conversation going about the intersection with what I had previously mentioned, but now also with regard to housing. And as mentioned, our second meeting for the year is happening later today at 1:00.

And even though these meetings only happen two times a year, as soon as one meeting ends, we basically spend the next several months—like we immediately go into planning for the next one, so those conversations never really stop. The coordination between our three agencies is pretty much ongoing without any kind of break.

I might just, if I may highlight one additional avenue. So, I know in the context of housing and really new buildings, I don't see a building standards commission represented here today, but the building standards development process, there was a discussion around sort of timeline of new rules going to effect.

And I think that building standards triennial process is a great facilitator for bringing the different agencies to the table and having conversations.

Periodic coordinating council meetings with agencies that have a role with measures that are proposed, but also with the impacted parties, to make sure that we're all, you know, talking to each other, evaluating different perspectives on new measures that are being considered and that really drives and normalizes the process for new regulations to be introduced and go into effect in a way that doesn't slow down the housing construction cycle and considers that full perspective.

And I would say even outside of that, there have been discussions. I know we've been engaged with at the CEC with other agencies periodically that look—that look to align—the work on the energy policy space, the decarbonization discussions with broader housing affordability to make sure we're taking a holistic view that considers both the housing affordability front costs piece, but also the long term operational savings and other cost streams and benefit streams that do impact households across the state.

I'll just add quickly. I agree with a lot of—I agree with all of what was just said, but just wanted to say again, you know, the state agency collaboration that's been happening, especially over the last five years, and a lot of the legislation has set us up to be really great partners.

You heard about the HCD and Coastal Commission collaborating and that's just been extremely fruitful. We've been able to make sure that the state direction is aligned with each of the local governments that we're working with.

When we get those local coastal programs updated to provide for the RHNA targets, that's where we're seeing really the most fruitful outcomes in terms of housing permitting and construction. I just also wanted to echo what Director Bonham said about collaboration with applicants and property owners.

We are always working with property owners to identify coastal act issues as early as possible.

When there's collaboration, when we come together and we work with property owners that are flexible in, in and interested in trying to pursue solutions with us, that's when we see the projects that are moving most quickly through the process and, and getting good outcomes. Thank you.

Is there anyone online who wants to make a comment?

Okay. Seeing no one online, I do have a question. I know it was mentioned about engaging with outside stakeholders when considering new regulations. I'm curious to know which stakeholders are engaged with and what does that process look like. If anybody can answer.

I'll start. For the Water Board, I think for us it really is customized to each type of project that we're looking at. For example, I mentioned the general orders before when we did the construction general stormwater permit, which is updated periodically.

It serves as a foundation and allows builders to move forward with construction projects knowing what the rules will be.

The simple one stop enrollment process that was a multi year process to update the prior permit that began with early engagement with the building industry, the environmental community, and workshops before staff generated out a draft permit that was workshopped before the entire State Water Board so the board Members themselves could directly hear the concerns.

And then it went through multiple drafts before finally being adopted by the board. And we've refined that process.

And for certain projects, what we do increasingly is have smaller focused workshops along the way where the individual sectors of the economy that may be affected by it can come in and engage directly with one or more board members participating with staff in a more active engagement than sort of a stilted environment like we might have at a hearing like this.

And we find that that improves the outcomes because people are sharing real practical progress problems, practical solutions. You heard Director Bonham talk about how important it is in terms of who represents the people coming in.

A lot of folks come into each of these proceedings with a zero sum perspective that there is either going to be a cost that they're going to have to pay or a benefit that somebody else is going to receive. And what we find is using these workshop opportunities and breaking things down individually.

We try to find solutions that are not that get past that zero sum and triangulate and find multiple benefits for everybody. And it takes a long time to do those kinds of processes right.

But it's important to recognize that when the Water Board 's doing them, it's designed to create an enduring solution that provides certainty for builders and others. For many years moving forward, and sometimes even for more than a decade.

Chair, for our Department, we have three best examples of engagement. So at the Department of Fish and Wildlife, we actually annually do very little formal rulemaking, producing new regulation. And most of that really doesn't have a nexus to like a development or a housing or affordability. But if it did, we're doing that dynamic through the Administrative Procedures Act.

What we're seeking to do is up front, spend a lot of time in consultation with all the affected interest to take input on what would be a draft initial statement of reasons, the rationale and draft rule language. If you're at a certain threshold.

We would also be doing an impact analysis kind of statement which would be describing how it could touch things like affordability, housing, et cetera. All that gets put out in a public way.

Then we would be having a series of publicly noticed and comment meetings to in real time with those affected, you know, amend rule and eventually get to final adoption, which only occurs after you submit as you know, over to the Office of Administrative Law. So if we're doing that, we have engagement through those very robust tools.

More often what we're doing is implementing a statute the Legislature would have passed, a Governor would have signed and may touch affordability or housing. For example, this Legislature took interest in an iconic species called the Western Joshua Tree. A couple years ago, it passed the Western Joshua Tree Conservation Act. It's innovative.

It's the first time the state's ever tried in lieu fee payment to expedite permitting for a rare species balancing. So we're in the middle of implementing that, but as we've been implementing, we've been hosting local workshops, often led by your colleagues in the Assembly in their affected districts.

And then we're taking input and we're fine tuning the next phase of legislative implementation. For example, we've just redone some of the guidelines around relocating Western Joshua trees to not require it for existing homeowner projects, the single family homeowner that might add an addition. We're not requiring those individuals now to relocate a tree for that project.

And we know that was an important change because of that local kind of stakeholder engagement for implementing a statute. But almost all of our workload that could interface on the housing front, frankly, the energy transportation occurs through implementing existing law like the California Endangered Species Act, where we're engaging with individual projects to issue permits and approvals.

In my 15 years, I've never denied a permit for a housing development. But what I have found is it's a one on one engagement and we can all do better at the best practices to make that time Shorter, that cost lower and save nature while we're building housing.

I might add from the Energy Commission perspective, the Energy Code development process at the CEC we do a broad range of regulations and those typically will follow the APA unless there's a specific sort of exemption in rare cases.

But for the Energy Code, which is part of the building standards process, this is a very robust process that in many ways is ongoing. It's a three year cycle where the new measures from all the various agencies are considered. I'll speak to the CEC's jurisdiction where we adopt energy efficiency measures and are tasked with that.

But it starts years before that. Consideration of adoption by proposals that come in from various parties to consider. Hey, look at, look at this building system. Look at this specific technology that has shown promise and is achieving some level of scale in the market.

And then we have to take a very close look with a number of supporting parties, including the utilities, including the builders, including the manufacturers, various technologies or industry specific stakeholders, depending upon what you're talking about.

Those go through a robust case measure development and evaluation process where there's a whole informal aspect of this process, where there's workshops and experts are brought to the table, that's compiled into an analysis report which feeds into the CEC's process.

And then we take that and do additional layers of internal analysis and public process to, to make sure that a broader range of stakeholders have an opportunity to weigh in with different perspectives and consider all of that into the formal rulemaking process, which is on its own timeline, roughly six months before it goes to the Building Standards Commission, which then feeds into the larger Building Standards update.

So it's really a years long process that is very tightly coordinated and with controls in place for cost effectiveness and, and technical feasibility, but also other policy considerations that may come up through the course of that process.

I would add from the Coastal Commission process. So we work with local governments on the, the changes to their local coastal programs. We have two types of amendments. We have both major amendments or minor amendments. And so the stakeholder engagement can kind of be, kind of reflects the level of significance of the amendments though.

The stakeholder engagement is happening both at the local level and the Commission level through public hearings. The Commission also collaborates more on an ad hoc basis with different stakeholder groups.

Just last year we were working with a group of affordable housing developers who suggested a potential change to our regulations to make the process for vesting their permits to align better with their funding constraints. And the Commission, within a year was able. Actually, just yesterday the Commission approved those and we're hoping that they'll take effect in February.

And so the Commission is engaging with stakeholders kind of in a lot of different ways, both formally and informally. Thank you.

And I'm going to go ahead and hand it over to Bob Ramer, who is participating remotely to share some comments.

Thank you. Once again, Bob Ramer with The California Apartment Association. And I'd just like to state that I agree with everything that Michael from the Energy Commission had just said and in his initial comments.

The Energy Commission's proceedings, as well as all of the other agencies I mentioned earlier, HCD, the fire marshal, BSA industry, has a great working relationship with these governmental agencies. And the building standards process is a very solid one. We're not suggesting a complete overhaul the process. It's just the opposite.

We're suggesting a tweak in the case of the Energy Commission, where they do an excellent job of analyzing the cost effectiveness and the benefits that you'll receive once you're in that new home or in that new apartment.

We're suggesting this be expanded a little bit to also include sort of a front end analysis of will there be Californians knocked out of the market, the rental market or the home buying market by the increase, the upfront increase in price of a regulation?

And I can tell you from experience over the years, there may have been an issue with the solar mandate, had they looked into that, but also with the fire marshals, adoption of mandatory residential fire sprinklers, very expensive, six to $7,000 cost. But there's also the fees that Chris Ochoa mentioned in his testimony.

So once again, we're saying the existing process is a good one for building codes in California. We just need to tweak a little bit to make sure that we're taking into account and considering the negative impact that there may be on the ability to rent that new apartment or to buy that new home.

That's all we're suggesting here. Thank you.

Thank you. And my next question is what for each and every one of you, if you can answer this question, what's your department's biggest challenge when implementing new regulatory requirements?

It for me is one singular issue. That itself is a really hard conundrum. This type of work for the regulator to permit and approve is labor intensive. So my Department is one of only two state departments that's ever gone through a complete, top to bottom, zero based, mission based budgeting effort.

This Legislature asked us to get expert help for that review. We involved each of your budget committees in both chambers and we hired Deloitte to do it. And we spent several years in that assessment and we published all the results. We updated now annually.

We looked at 2,800 tasks it takes for our Department to do the missions assigned to us in statute. And generally speaking, that published information displays the Department is underfunded by threefold. Since 2001. We've had 400 additional laws that kind of touch this world of permitting and approvals because we have such natural diversity.

Simultaneously, we have serious budget challenges, most recently and potentially again the coming fiscal year. So the delicate dance of investing in the person capacity at these agencies to do the work mindful of serious need to be efficient with government cost is the biggest challenge I face.

When you think about how will we build more of what we need to build faster for people to thrive in California, that is the hardest issue.

Anyone else?

For the Coastal Commission? The somewhat related, our capacity to work with our local government. So when we're working with regulations, we're working with 76 local jurisdictions up and down the state. So that's our biggest challenge. Working. Collaborating. Collaborating with our state agency partners is really key in helping us address that challenge.

That, that coordination with HCD has allowed us to more effectively work with our local governments to get the regulations implemented on the ground level. But that's probably our biggest challenge. Thanks.

I mean, fundamentally, I think the biggest challenge that the Water Board faces in some of its issues are just how. And that is something I think probably all these agencies share. They have difficult missions.

They really have to make challenging decisions about the future of California and what that means from a water quality perspective and balancing the resources and allocating those resources across the state.

But in terms of actually moving beyond that next step, once you've accepted that challenge, and all of our board Members have accepted that challenge, and the staff who work with us are brilliant, committed public servants that have accepted that challenge.

But this past summer, the Administration proposed trailer Bill Lang because one of the biggest challenges that the State Water Board faces and the regional Water Boards face in advancing our water quality control plans. Modernizing them is frankly, the California Environmental Quality Act.

And the analysis that we have to do largely duplicates the analysis we have to do under the federal Clean Water Act and what we have to do under the state's Porter Cologne Water Quality Control Act. But CEQO brings with it unique litigation challenges that have fundamentally slowed down our progress with water quality control planning.

And I would add from a. I would add from a building perspective at the CEC, I think one of the hardest implementation challenges is really the scale of the state and the complexity of the state where we work with. Once, once the code's adopted, we work, we continue to engage with the builders and the.

The broader impacted community to help educate and perform outreach so that everyone understands, what are these new measures? Why are they enacted? What does that mean for me? There's a Broad range of activities that happen there. Over 500 jurisdictions across the state.

We often get a lot of inquiries and questions from, from a broad range of actors up through and well after implementation deadlines. And so outreach and education is of course a key focus. There's also a range of compliance manuals and materials that are intended for contractors, installers that work out in the field.

Okay, how do I work with this? And admittedly that's a complex process. So we're always looking at ways to streamline that, to simplify that. And there's a few efforts underway to make sure we're being responsive to that feedback there.

And I would say part of that is looking at how do we consider and implement regulatory approaches that do consider cost reductions on that compliance side of the equation.

And we're hoping that even given AB130's limitations on new measure development that's in place, that we can still have an opportunity to pursue those sorts of cost savings and process streamlining measures that also, you know, do have some opportunity for improvement here.

Yeah, thanks for the question. I think HCD is a little differently situated. Situated here. The guidance we put out in our Housing Policy Development Division isn't exactly regulating housing, but it is implementing state laws that make it easier and faster to build housing. There are a few challenges I'll just mention quickly.

The many laws that get passed by the Legislature that do facilitate more housing can be complex and sometimes unclear. So it can be challenging to provide additional clarity through guidelines, of course, but it's a challenge we welcome. Laws also change. This Administration and the Legislature's been active in strengthening and creating more laws.

So updating guidelines in a timely manner to keep up with those changes can be challenging, of course. And then lastly, just having the resources, the staff resources to draft guidelines while continuing the day to day work of providing technical assistance and enforcement to local jurisdictions and stakeholders can also be challenging.

So those are just a few that came to mind.

I would say. Currently CARB's biggest challenge is from ongoing, unprecedented, unlawful, unconstitutional attacks on our authority from the Federal Government, the Trump Administration and federal Republicans on our ability to achieve health based air quality standards here in the state.

Thank you, Assembly Member Haney. Do you have any additional questions? Thank you. And I want to thank all of you for being here today. I think a lot of you mentioned collaboration and I believe collaboration is important.

We need to build more housing and we need to collaborate and we need to bring all the stakeholders to the table so that we can have more discussions. I know conversations will not end today and we will continue having conversations. And I know Assemblymember Haney will continue having conversations.

So I want to thank all of you for participating here today and for answering all of our questions. I'm going to go ahead and now open the floor for public comment so our panelists can go ahead and step down. Each speaker that comes up will have 1 minute to share remarks for the record.

And please feel free to come up to the microphone when you are ready. No public comment, I think. I thank you all again and I want to thank the panelists and experts for joining us here at our inaugural Select Committee hearing on regulatory authority. And to Assemblymember Haney, thank you so much for participating here today.

You are the chair of the Housing Committee and it's always a pleasure to see you and always a pleasure to hear your comments and questions. We've definitely heard thoughtful perspectives on how regulations affect housing in California and both the challenges and opportunities for improvement.

Housing affordability remains a top concern for most Californians, and only by bringing all relevant stakeholders to the table can we effectively address this challenge. As we continue to hold these hearings, we hope these informative conversations will generate practical solutions that maintain California's high standards while improving affordability for all of our residents here in State of California.

With that, we are going to go ahead and adjourn the meeting.