Why Developers Shouldn’t Blame Environmental Review for the Lack of Infill

Members of the business community are smelling blood when it comes to effectively dismantling environmental review statutes like the California Environmental Quality Act (CEQA).  They now have a political opening with the high unemployment rate, some well-publicized bad outcomes of CEQA litigation, and examples of lawsuits by rival businesses abusing the process for competitive purposes and not for environmental ends.  The New York Times picked up the thread recently about the battles in California, and Governor Brown has been generally supportive.

I frequently hear developers who focus on infill projects in urban areas joining the chorus. But making CEQA Public Enemy #1 for infill development doesn’t make sense. Certainly CEQA can be a problem for individual projects, creating uncertainty that hampers investment, lawsuits that drive up costs and diminish projects, and a cumbersome entitlement process built around avoiding lawsuits. But when it comes to the big factors stopping infill, at least in California, CEQA ranks below a host of other barriers, such as local zoning codes that outlaw infill, lack of infrastructure investment, high construction costs, tax incentives that favor strip malls over housing, and poor neighborhood schools.

But don’t take my word for it. The Governor’s Office of Planning and Research released its 2012 annual survey results of California’s local governments. Of the 423 cities (88% of all cities) and 49 counties (84% of all counties) responding to the survey, less than 5% cited CEQA as the primary barrier to infill development. Instead, the big “winners” were infrastructure constraints, lot issues, lack of funding, community opposition, and the economy, among others. CEQA was way down on the list (see the chart below from p. 24 of the survey). This finding of the relative unimportance of CEQA to urban development patterns corresponds to my and Ed Stone’s survey of affordable housing developers back in 2006, which also found CEQA to be a low priority factor in the state’s provision of affordable housing.

So why do infill developers make such a big deal about CEQA? My theory is that individual developers will be focused solely on their own projects, and if CEQA is a threat to their investment and risk-taking, they will understandably become CEQA haters. But perhaps this project-based focus distorts the view of the larger forces that stifle infill business opportunities throughout the state, such as in the suburb with the major rail line that won’t zone for more downtown development or the rundown neighborhood near jobs and services that needs new infrastructure. Ending CEQA tomorrow won’t magically lift these barriers and create new infill opportunities, and it won’t convince local communities to support new downtown development. Ultimately, the hard work of building a better California won’t take place in a backroom CEQA negotiation in Sacramento. It will happen community by community — ideally with the input of local developers. A statewide CEQA “fix” alone won’t get us there.

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Reader Comments

26 Replies to “Why Developers Shouldn’t Blame Environmental Review for the Lack of Infill”

  1. This is very flawed – developers with economically viable projects are the ones that claim CEQUA is a major barrier. Most of these categories should be eliminated from the survey because, of course, economics are always going to trump other constraints when it comes to development

  2. This is very flawed – developers with economically viable projects are the ones that claim CEQUA is a major barrier. Most of these categories should be eliminated from the survey because, of course, economics are always going to trump other constraints when it comes to development

  3. The point is that there are many economically viable infill projects that developers can’t even consider because of local zoning and poor infrastructure in the area, among other issues. CEQA is and isn’t an obstacle for all sorts of projects, although my read of the data is that its impact is less about actual litigation and more about the threat of litigation changing people’s behaviors. But we would need more study on that question.

  4. The point is that there are many economically viable infill projects that developers can’t even consider because of local zoning and poor infrastructure in the area, among other issues. CEQA is and isn’t an obstacle for all sorts of projects, although my read of the data is that its impact is less about actual litigation and more about the threat of litigation changing people’s behaviors. But we would need more study on that question.

  5. Experienced and successful real estate developer have known for years that California is an awful place to do business so they seek opportunities elsewhere. California has become a backwater hellhole where real estate development is discouraged and severely punished. Folks who choose to live there must adapt to higher prices, less freedom, and a lower standard of living.

  6. Experienced and successful real estate developer have known for years that California is an awful place to do business so they seek opportunities elsewhere. California has become a backwater hellhole where real estate development is discouraged and severely punished. Folks who choose to live there must adapt to higher prices, less freedom, and a lower standard of living.

  7. Consider the source.. Of course the regulators (local governments) cite regulations as minor barriers and aspects beyond their control (economy, etc) as major barriers. I’d like to see this survey from the developer side.

  8. Consider the source.. Of course the regulators (local governments) cite regulations as minor barriers and aspects beyond their control (economy, etc) as major barriers. I’d like to see this survey from the developer side.

  9. I wouldn’t assume that local government officials have a pro-CEQA bias. CEQA can be just as much an obstacle for them getting desired projects approved and can create extra work and controversy. And they are also most likely to have a broad view of the barriers, rather than a view of the barriers to just one specific project site, as with a developer. But I agree it would be useful to hear the developers’ perspective, and we need a broad-based study of the costs and benefits of CEQA. Based on our 2006 study (cited above), which did survey developers, we found that CEQA was not a top obstacle for them. The typical reaction was: “why would you choose to build on a site that required an EIR to get your project entitled?”

  10. I wouldn’t assume that local government officials have a pro-CEQA bias. CEQA can be just as much an obstacle for them getting desired projects approved and can create extra work and controversy. And they are also most likely to have a broad view of the barriers, rather than a view of the barriers to just one specific project site, as with a developer. But I agree it would be useful to hear the developers’ perspective, and we need a broad-based study of the costs and benefits of CEQA. Based on our 2006 study (cited above), which did survey developers, we found that CEQA was not a top obstacle for them. The typical reaction was: “why would you choose to build on a site that required an EIR to get your project entitled?”

  11. The author seems to contradict the conclusions of his own paper, which states in its conclusion:

    “This study has demonstrated that both the statutory and categorical
    exemptions do not allow the majority of affordable housing developers to avoid
    a sometimes hostile CEQA process. Statutory exemptions with rigid
    requirements have seen only minimal use by developers. However, developers
    have been able to utilize the broader categorical exemptions more frequently,
    which provide a good starting point for further CEQA reform.”

    Additionally, if you look at the narrative responses provided by the communities, which resulted in the graph pictured above, one will see that the graph is a very poor representation of what turn out to be non-quantitative data. It does not appear that cities were given a list of barriers and asked to choose which ones applied. Instead, the survey takers solicited narrative responses and attempted to classify them qualitatively. Given this methodology, it’s entirely possible that categories like “Community opposition/concerns” and “Regulations” actually relate directly to CEQA challenges, but were not explicitly noted as such. In many cases, respondents only provided very terse answers, such as: “Neighborhood activists” (San Bernardino), “Opposition by existing neighbors” (Rocklin), “No lenders” (Emeryville), or “The city is nearly built out” (Laguna Woods). If one interprets the graph as the author would have us do, that would mean that only 1 in 6 of the responding communities believes that the economy has been an impediment to infill development. If one were to ask the question differently by saying “Do you think the economy has been a barrier to infill development in your community?” I bet you’d get a lot more than 17% of respondents answering in the affirmative.

    Furthermore, there was no effort to scale these responses by city size. For instance, Los Angeles County did cite CEQA as a barrier, but despite containing roughly a quarter of the state’s population, its response is weighted no differently than that of Clayton, a community of merely 11,000. It is also worth noting that some large cities did not even respond, including Sacramento and San Francisco.

    Given the severe limitations of the survey methodology and resultant “data,” the author’s claim of a “finding of the relative unimportance of CEQA to urban development patterns” is at best highly premature, and at worst quite disingenuous.

  12. The author seems to contradict the conclusions of his own paper, which states in its conclusion:

    “This study has demonstrated that both the statutory and categorical
    exemptions do not allow the majority of affordable housing developers to avoid
    a sometimes hostile CEQA process. Statutory exemptions with rigid
    requirements have seen only minimal use by developers. However, developers
    have been able to utilize the broader categorical exemptions more frequently,
    which provide a good starting point for further CEQA reform.”

    Additionally, if you look at the narrative responses provided by the communities, which resulted in the graph pictured above, one will see that the graph is a very poor representation of what turn out to be non-quantitative data. It does not appear that cities were given a list of barriers and asked to choose which ones applied. Instead, the survey takers solicited narrative responses and attempted to classify them qualitatively. Given this methodology, it’s entirely possible that categories like “Community opposition/concerns” and “Regulations” actually relate directly to CEQA challenges, but were not explicitly noted as such. In many cases, respondents only provided very terse answers, such as: “Neighborhood activists” (San Bernardino), “Opposition by existing neighbors” (Rocklin), “No lenders” (Emeryville), or “The city is nearly built out” (Laguna Woods). If one interprets the graph as the author would have us do, that would mean that only 1 in 6 of the responding communities believes that the economy has been an impediment to infill development. If one were to ask the question differently by saying “Do you think the economy has been a barrier to infill development in your community?” I bet you’d get a lot more than 17% of respondents answering in the affirmative.

    Furthermore, there was no effort to scale these responses by city size. For instance, Los Angeles County did cite CEQA as a barrier, but despite containing roughly a quarter of the state’s population, its response is weighted no differently than that of Clayton, a community of merely 11,000. It is also worth noting that some large cities did not even respond, including Sacramento and San Francisco.

    Given the severe limitations of the survey methodology and resultant “data,” the author’s claim of a “finding of the relative unimportance of CEQA to urban development patterns” is at best highly premature, and at worst quite disingenuous.

  13. Most developers we talked to in our 2006 study were able to avoid CEQA disputes with their projects, either by building in a pre-reviewed site (such as in an area with an EIR on a specific plan) or by receiving a neg dec or mitigated neg dec. What we meant in the paragraph you cite is that the CEQA affordable housing exemptions (the subject of our study) were not useful to them to avoid CEQA entirely as intended, leaving developers open to a potentially hostile process. But CEQA was not otherwise a significant barrier to them. Having said that though, CEQA was definitely an “elephant in the room” for them when picking projects sites. And my claim in this post is not that CEQA isn’t a barrier — just that it’s not a top barrier.

    I agree that we need a more detailed, thorough study of this issue and that some of the categories you cite could also be a reflection of CEQA’s effect on infill (or not: factors like community opposition could easily be about restrictive local zoning). But I think the OPR survey provides some powerful insights about the top barriers facing infill (which was the question asked) from the perspective of California’s cities and counties. It’s notable that so few respondents jumped to cite CEQA as the top barrier. If it was really the major, widespread problem that developers claim, shouldn’t that reality be reflected in this survey?

  14. Most developers we talked to in our 2006 study were able to avoid CEQA disputes with their projects, either by building in a pre-reviewed site (such as in an area with an EIR on a specific plan) or by receiving a neg dec or mitigated neg dec. What we meant in the paragraph you cite is that the CEQA affordable housing exemptions (the subject of our study) were not useful to them to avoid CEQA entirely as intended, leaving developers open to a potentially hostile process. But CEQA was not otherwise a significant barrier to them. Having said that though, CEQA was definitely an “elephant in the room” for them when picking projects sites. And my claim in this post is not that CEQA isn’t a barrier — just that it’s not a top barrier.

    I agree that we need a more detailed, thorough study of this issue and that some of the categories you cite could also be a reflection of CEQA’s effect on infill (or not: factors like community opposition could easily be about restrictive local zoning). But I think the OPR survey provides some powerful insights about the top barriers facing infill (which was the question asked) from the perspective of California’s cities and counties. It’s notable that so few respondents jumped to cite CEQA as the top barrier. If it was really the major, widespread problem that developers claim, shouldn’t that reality be reflected in this survey?

  15. A lack of evidence is not evidence of a lack. I would again argue that the open-ended nature of the survey questions and the frequently simplistic responses are inadequate to assert the “relative unimportance of CEQA to urban development patterns.” As I pointed out before, equal weight is given to all respondent communities, despite population differences that are in some cases at a factor of nearly 1,000.

    Imagine a hypothetical state: it has a few large cities, which contain the majority of the state’s population and the vast majority of infill development; the state also has numerous small towns, which contain a lower percentage of state’s population and are generally too small to generate sufficient demand for high-density housing. In this hypothetical state you would have the vast majority of infill projects taking place in a few cities, but a survey might show that for the majority of communities infill isn’t even an issue. In this scenario, to determine what barriers there were to infill housing, it would be better to analyze the impacts to actual infill projects rather than community perceptions. This hypothetical is, in fact, very similar to the reality in California, where the demand for infill housing and thus infill proposals are very clustered. Even CEQA’s staunchest opponents are unlikely to argue that CEQA is the primary barrier to infill housing in the places where no one is considering building infill in the first place. Concern for the effects of CEQA on infill should rightly be focused on those places where infill is most appropriate and in-demand.

    A truly representative analysis would examine how many infill projects were delayed, scuttled, or rendered significantly more costly by CEQA requirements, litigation, or the threat of litigation. Proving the contention that CEQA is not a or the major barrier to infill would ideally require a study which demonstrated (or at least suggested) that for the majority of delayed, scaled-back, and/or canceled infill projects, such impacts were not related to CEQA or the threat of suit under CEQA. This ties back into the question of how these barriers relate to one another. In a sense, CEQA itself is not the barrier, but is instead the mechanism by which other barriers, like community opposition, actually act to stop projects. As you’ve alluded to, it is likewise difficult to determine the chilling effects of CEQA, whereby projects are never even proposed because the threat of litigation and associated costs act as deterrents.

    I wholeheartedly agree that CEQA is not the only barrier to infill and that its use as an obstacle is largely symptomatic of preexisting opposition. However, I would maintain that CEQA is the primary means by which opponents are able–even when in the extreme minority–to continue exerting disproportional control over land-use decisions.

  16. A lack of evidence is not evidence of a lack. I would again argue that the open-ended nature of the survey questions and the frequently simplistic responses are inadequate to assert the “relative unimportance of CEQA to urban development patterns.” As I pointed out before, equal weight is given to all respondent communities, despite population differences that are in some cases at a factor of nearly 1,000.

    Imagine a hypothetical state: it has a few large cities, which contain the majority of the state’s population and the vast majority of infill development; the state also has numerous small towns, which contain a lower percentage of state’s population and are generally too small to generate sufficient demand for high-density housing. In this hypothetical state you would have the vast majority of infill projects taking place in a few cities, but a survey might show that for the majority of communities infill isn’t even an issue. In this scenario, to determine what barriers there were to infill housing, it would be better to analyze the impacts to actual infill projects rather than community perceptions. This hypothetical is, in fact, very similar to the reality in California, where the demand for infill housing and thus infill proposals are very clustered. Even CEQA’s staunchest opponents are unlikely to argue that CEQA is the primary barrier to infill housing in the places where no one is considering building infill in the first place. Concern for the effects of CEQA on infill should rightly be focused on those places where infill is most appropriate and in-demand.

    A truly representative analysis would examine how many infill projects were delayed, scuttled, or rendered significantly more costly by CEQA requirements, litigation, or the threat of litigation. Proving the contention that CEQA is not a or the major barrier to infill would ideally require a study which demonstrated (or at least suggested) that for the majority of delayed, scaled-back, and/or canceled infill projects, such impacts were not related to CEQA or the threat of suit under CEQA. This ties back into the question of how these barriers relate to one another. In a sense, CEQA itself is not the barrier, but is instead the mechanism by which other barriers, like community opposition, actually act to stop projects. As you’ve alluded to, it is likewise difficult to determine the chilling effects of CEQA, whereby projects are never even proposed because the threat of litigation and associated costs act as deterrents.

    I wholeheartedly agree that CEQA is not the only barrier to infill and that its use as an obstacle is largely symptomatic of preexisting opposition. However, I would maintain that CEQA is the primary means by which opponents are able–even when in the extreme minority–to continue exerting disproportional control over land-use decisions.

  17. Some of the commenters have made some very arguments for why CEQA may be a bigger deal that these results at first blush seem to show. A few additional other points:
    1) The item that comes in as the #1 most important factor, infrastructure, is highly affected by CEQA. My personal favorite example: the 4-year delay to the San Francisco Bicycle Master Plan because of a CEQA lawsuit launched by a single anti-biking crank. I realize that is only one example, but CEQA is just about the only way that I could think of that something as inexpensive and logistically easy and uncontroversial as bike infrastructure improvements could be tied in knots for four years.

    2) I would bet that a lot of people answering this survey have either at some point made a living working for firms that crank out EIRs/Neg Dec/etc, or else see themselves doing so at some point. In other words, an effort to roll back CEQA could be personally threatening to the livelihoods of many of the respondents of this survey. (If I were in the same position and filling out this survey, I’d probably have a similar bias.)

    3) The author opines that CEQA as a barrier to infill development is a red herring, and cites an unwillingness on the part of local governments to rezone as a more important example. But a rezoning (and general plans and any other discretionary planning process that might help replace outdated, anti-infill planning rules) itself requires going through the CEQA process! Just a few months ago I came across a specific example of a local govt in Marin County that could not rezone an attractive parcel to allow MF development (for a site that would be perfect for affordable housing to help it meet its RHNA requirements) because the city is too cash-strapped to hire a consultant to go through CEQA. To me, it is simply insane that a city can’t even make a decision about its own land use policies without going through an expensive and cumbersome CEQA process.

    4) Possibly the worst effects of CEQA on infill development are that people who are opposed to infill have tremendous leverage to inflict NIMBY concerns on developers. Even if no lawsuit is ever filed, developers have to gold-plate their projects in anticipation of a real or threatened lawsuit. This is only possible because of CEQA. The worst effects of CEQA aren’t even visible in terms of open, public conflict.

    I really, really think that this survey needs to be repeated with people who actually build infill development.

  18. Some of the commenters have made some very arguments for why CEQA may be a bigger deal that these results at first blush seem to show. A few additional other points:
    1) The item that comes in as the #1 most important factor, infrastructure, is highly affected by CEQA. My personal favorite example: the 4-year delay to the San Francisco Bicycle Master Plan because of a CEQA lawsuit launched by a single anti-biking crank. I realize that is only one example, but CEQA is just about the only way that I could think of that something as inexpensive and logistically easy and uncontroversial as bike infrastructure improvements could be tied in knots for four years.

    2) I would bet that a lot of people answering this survey have either at some point made a living working for firms that crank out EIRs/Neg Dec/etc, or else see themselves doing so at some point. In other words, an effort to roll back CEQA could be personally threatening to the livelihoods of many of the respondents of this survey. (If I were in the same position and filling out this survey, I’d probably have a similar bias.)

    3) The author opines that CEQA as a barrier to infill development is a red herring, and cites an unwillingness on the part of local governments to rezone as a more important example. But a rezoning (and general plans and any other discretionary planning process that might help replace outdated, anti-infill planning rules) itself requires going through the CEQA process! Just a few months ago I came across a specific example of a local govt in Marin County that could not rezone an attractive parcel to allow MF development (for a site that would be perfect for affordable housing to help it meet its RHNA requirements) because the city is too cash-strapped to hire a consultant to go through CEQA. To me, it is simply insane that a city can’t even make a decision about its own land use policies without going through an expensive and cumbersome CEQA process.

    4) Possibly the worst effects of CEQA on infill development are that people who are opposed to infill have tremendous leverage to inflict NIMBY concerns on developers. Even if no lawsuit is ever filed, developers have to gold-plate their projects in anticipation of a real or threatened lawsuit. This is only possible because of CEQA. The worst effects of CEQA aren’t even visible in terms of open, public conflict.

    I really, really think that this survey needs to be repeated with people who actually build infill development.

  19. I would argue that CEQA lawsuits–often NIMBYism in action–are not quite the same thing as CEQA. In any public decision making process there is and should be robust public participation. It’s the NIMBY aspect of it that grates and slows to a crawl what is, at the end of the day, simply a disclosure process.

    Yes, CEQA is nothing more than a disclosure process. Not an environmental law, for all the “E” in the middle.

    The only meaningful CEQA reform necessary is a means for ensuring that the disclosure is adequate and the process followed. The public should not be able to hold a project, city, and developer hostage.

    Master EIRs are actually a pretty good method, absent litigation reform, for facilitating CEQA review. If you do a thorough, credible job of planning and analysis early in the process, subsequent projects can be found consistent with the Master EIR. The subsequent conformity finding does not require separate notice (unless it’s an MND or some level of EIR), so only the discretionary action is publicly noticed.

  20. I would argue that CEQA lawsuits–often NIMBYism in action–are not quite the same thing as CEQA. In any public decision making process there is and should be robust public participation. It’s the NIMBY aspect of it that grates and slows to a crawl what is, at the end of the day, simply a disclosure process.

    Yes, CEQA is nothing more than a disclosure process. Not an environmental law, for all the “E” in the middle.

    The only meaningful CEQA reform necessary is a means for ensuring that the disclosure is adequate and the process followed. The public should not be able to hold a project, city, and developer hostage.

    Master EIRs are actually a pretty good method, absent litigation reform, for facilitating CEQA review. If you do a thorough, credible job of planning and analysis early in the process, subsequent projects can be found consistent with the Master EIR. The subsequent conformity finding does not require separate notice (unless it’s an MND or some level of EIR), so only the discretionary action is publicly noticed.

  21. CEQA = poverty in California and prosperity in Texas. California deserves CEQA and will never abandon it. CEQA is one of the reasons that people choose to live in California and it also the reason that other people decide not to live there. The people of California do not control CEQA, it controls them. Rest in pain.

  22. CEQA = poverty in California and prosperity in Texas. California deserves CEQA and will never abandon it. CEQA is one of the reasons that people choose to live in California and it also the reason that other people decide not to live there. The people of California do not control CEQA, it controls them. Rest in pain.

  23. While I love and respect Ethan, I challenge his conclusions above.

    To summarize the key comments already made effectively by others, CEQA is huge problem, though not the only problem. That said, the threat of CEQA abuse profoundly influences what projects developers and cities undertake, and it causes both developers and cities to proceed in a highly defensive manner. The fact only a fraction of CEQA documents lead to litigation is irrelevant. But the fact that anyone with $300 and a contingency lawyer *can* derail any project for any reason, real or imagined, is hugely important. Just as even a slim possibility there might a mugger with a gun in a dark alley causes most people to walk around rather than through, a small chance someone might tank our project with a frivolous lawsuit means many developers will prefer sprawl locations where potential CEQA petitioners are few. I remember when a single shooting in Westwood Village caused a generation of potential patrons to start hanging out in other neighborhoods. The chances developers and cities will get challenged by a petitioner brandishing his or her rights under CEQA are many times higher than the chance we will get shot walking through Westwood. So developer and city anxiety about this is understandable.

    Also, as another commenter noted, the two biggest issues Ethan cites–infrastructure and zoning–are both as hamstrung by CEQA as private development. The EIR process for zoning updates (not to mention major infrastructure projects) is so lengthy, expensive and risky, that many cities choose just to leave old zoning in place much longer than good planning would warrant.

    So, yes, CEQA is not the only problem. But I’m not sure how anyone can defend a law that does little to create good environmental outcomes and instead just requires a “public” process so complex as to be farcical, and arms any vigilante without regard to merit or righteousness.

  24. While I love and respect Ethan, I challenge his conclusions above.

    To summarize the key comments already made effectively by others, CEQA is huge problem, though not the only problem. That said, the threat of CEQA abuse profoundly influences what projects developers and cities undertake, and it causes both developers and cities to proceed in a highly defensive manner. The fact only a fraction of CEQA documents lead to litigation is irrelevant. But the fact that anyone with $300 and a contingency lawyer *can* derail any project for any reason, real or imagined, is hugely important. Just as even a slim possibility there might a mugger with a gun in a dark alley causes most people to walk around rather than through, a small chance someone might tank our project with a frivolous lawsuit means many developers will prefer sprawl locations where potential CEQA petitioners are few. I remember when a single shooting in Westwood Village caused a generation of potential patrons to start hanging out in other neighborhoods. The chances developers and cities will get challenged by a petitioner brandishing his or her rights under CEQA are many times higher than the chance we will get shot walking through Westwood. So developer and city anxiety about this is understandable.

    Also, as another commenter noted, the two biggest issues Ethan cites–infrastructure and zoning–are both as hamstrung by CEQA as private development. The EIR process for zoning updates (not to mention major infrastructure projects) is so lengthy, expensive and risky, that many cities choose just to leave old zoning in place much longer than good planning would warrant.

    So, yes, CEQA is not the only problem. But I’m not sure how anyone can defend a law that does little to create good environmental outcomes and instead just requires a “public” process so complex as to be farcical, and arms any vigilante without regard to merit or righteousness.

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About Ethan

Ethan Elkind

Ethan Elkind is the Director of the Climate Change and Business Program, with a joint appointment at UC Berkeley School of Law and UCLA School of Law. In this capacity, h…

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