• CEQA Transportation Mitigation Fees and Other Key Reforms in AB 130 and SB 131

    This is our third update on the important changes in the two budget trailer bills, AB 130 and SB 131, after previous posts addressing the new CEQA exemption for infill housing and the “near miss” CEQA streamlining process. While the first two posts covered the most significant changes, the legislation also introduced changes to the mitigation options for vehicle miles traveled (VMT), additional focused CEQA exemptions, and other amendments to land use processes.

    New VMT Payment as Mitigation Option

    SB 743, enacted in 2013, directed that CEQA’s analysis of transportation impacts no longer study intersection “level of service,” or congestion, and instead study VMT, a requirement that finally went into effect on July 1, 2020. The topic has been challenging for many projects, especially outside of transit-rich urban areas and projects that do not fit into residential, office, or retail categories. The ruling in Cleveland National Forest Foundation v. County of San Diego (2025) 110 Cal.App.5th 948 created additional uncertainty by rejecting locally adopted thresholds that “screened out” infill and smaller projects because the City relied on generalized assumptions rather than location specific evidence. While the court acknowledged that SB 743 was intended to promote infill development, it found that infill development does not by definition have a less than significant VMT impact. AB 130 creates a new funding regime allowing projects to mitigate their VMT impact, at the lead agency’s discretion, by paying a fee to fund transit-oriented development and affordable housing.

    The fees will be deposited into a fund administered by the Department of Housing and Community Development (HCD) that will fund VMT reducing projects, including “affordable housing or related infrastructure projects, including infrastructure necessary for higher density uses.”

    The theory is that this option will make mitigating VMT impacts predictable and feasible. However, AB 130 does not specify the amount of the fee, nor does it confirm whether payment of the fee will fully mitigate project impacts. The Governor’s Office of Land Use and Climate Innovation (LCI, previously the Office of Planning and Research) is required to issue initial guidance for using this new mitigation by July 1, 2026 that will set forth the following details:

    • Methodology for determining the amount of the fee;
    • Definition of “location-efficient areas” that reflects a reasonable nexus between the transportation impact of the development project and the location of the project to be funded as mitigation;
    • Process for validating that the fee satisfies mitigation requirements for significant transportation impacts; and
    • Methodology for estimating the anticipated reduction in VMT resulting from payment of the fee.

    LCI is required to issue subsequent guidance at least once every three years, which includes starting the rulemaking process for any subsequent guidance by January 1, 2028.

    The unresolved issues that LCI is directed to resolve are challenging, and critical to whether the mitigation is a feasible and predictable option to address VMT. When LCI starts the official rulemaking process, it will include opportunities for developers and other interested parties to provide input. Developer input may be critical to making the program workable.

    Additional CEQA and Land Use Amendments

    In addition to the topics we’ve written about before and above, the two bills also provide a number of significant changes:

    • Legislative Intent of CEQA: SB 131 clarifies the legislative intent that CEQA is primarily an environmental safeguard that should not be used for reasons unrelated to environmental protection (e.g., economic leverage, competition, or to delay projects). While this intent language does not change CEQA requirements, it will be an important tool in litigation regarding whether a CEQA petitioner is using the litigation to pursue an improper, non-environmental purpose.
    • Coastal Commission Appeals: AB 130 narrows the type of residential projects that can be appealed to the Coastal Commission.
    • Removal of Sunset Dates: A number of important provisions in 2019’s SB 330 had sunset dates, which were originally set for January 1, 2025, and which were later extended until January 1, 2034. AB 130 eliminates several of these sunset dates entirely, including: the “vesting” provided by submittal of a preliminary application; limiting the number of hearings to five; requiring that historic properties are identified up front; and prohibiting enacting policies that are more restrictive to housing in areas already zoned for housing.
    • Housing Element Rezoning Exemption: SB 131 creates a new statutory exemption that exempts from CEQA certain rezonings that implement a schedule of actions in an approved housing element.
    • Advanced Manufacturing Exemption: SB 131 also creates a statutory exemption for projects consisting exclusively of “advanced manufacturing” facilities, as defined in Public Resources Code section 26003, when located on sites zoned exclusively for industrial uses and not located on certain “natural and protected lands” as defined in Public Resources Code section 21067.5.
    • Administrative Record: SB 131 narrows the scope of the administrative record contents for CEQA litigation by excluding staff notes, memoranda related to the project or CEQA compliance, and other internal agency communications (unless the project includes certain distribution centers or oil-and-gas infrastructure). Compiling the administrative record can be one of the more time consuming steps in CEQA litigation, so this is an important reform.
    • Temporary Freeze on Local Agency Modifications to Building Codes: Effective October 1, 2025, through June 1, 2031, AB 130 bars cities or counties from establishing more restrictive building standards, including green building standards, applicable to residential units, unless limited exceptions apply.
    • Urban Infill Mapping: SB 131 tasks LCI with posting, by July 1, 2027, a statewide online map of “eligible urban infill sites” in every Census-defined urbanized area or cluster, which may qualify for infill-based exemptions or streamlining.

    This list is not exhaustive, but it is indicative of the extensive adjustments the Legislature has made to remove barriers for housing and other prioritized development projects. The Coblentz Real Estate Team has extensive experience with the state’s latest land use laws and can help to navigate their complexities and opportunities. Please contact us for additional information and any questions related to the impact of this legislation on land use and real estate development.

    Categories: Blogs
  • California Releases Final Employee Notice on Victim Leave Rights

    By Fred W. Alvarez, Hannah Jones, Dan Bruggebrew, Allison Moser, Paige Pulley, Hannah Withers, and Stacey Zartler

    The California Civil Rights Department (CRD) just released its long-awaited model employee notice triggering a new compliance obligation for all California employers regarding the rights of employees who are victims of qualifying acts of violence. This is a good time to review your policies and onboarding materials to ensure you’re providing this notice to employees now and going forward.

    What’s New?

    Effective immediately, employers must provide notice to employees about their rights to take protected leave and request workplace accommodations if they or their family members are victims of certain crimes. This requirement is tied to Assembly Bill 2499 (codified as Government Code §12945.8), which expanded existing protections and made notice mandatory now that the CRD model notice is available. The model notice is located here: CRD Model Notice

    Who Needs to Comply?

    All California employers, regardless of size, are required to provide this notice.

    If you have 25 or more employees, additional protections apply to employees whose family members are victims of a qualifying act of violence, including a broadly defined list that covers a child, parent, grandparent, grandchild, sibling, spouse, domestic partner, or “designated person” who can be someone related by blood, such as an aunt or uncle, or someone who is equivalent to a family member, such as a best friend. Employers may limit an employee to one “designated person” per 12-month period.

    When and How to Provide the Notice

    The new law requires you to give this notice in four scenarios:

    • At hire – Include it in your onboarding packet effective immediately.
    • Annually – Distribute it to all employees once per year.
    • Upon request – Provide it to any employee who asks.
    • When notified – If an employee tells you they or a family member are a victim of a qualifying crime.

    You can use the CRD’s model notice or create your own version, as long as it’s substantially similar in both content and clarity. If 10% or more of your workforce at a location speaks a language other than English, you’ll need to provide the notice in that language. The CRD has made translated versions available on its website.

    What the Notice Covers

    The notice explains an employee’s rights, including:

    • Job-protected leave for medical care, counseling, safety planning, or legal help related to the incident.
    • Workplace safety accommodations, like schedule changes, reassignment, or security assistance—subject to an interactive process and undue hardship standard.
    • Protection from retaliation for using these rights.
    • Confidentiality of any information shared regarding the incident or related requests.

    It also reminds employees they may be eligible for wage replacement under State Disability Insurance or Paid Family Leave, and may qualify for bereavement leave and other forms of crime victim leave under separate Labor Code provisions and applicable law.

    What You Should Do Now

    Here’s a practical checklist to help you meet your new obligations:

    • Download and review the CRD’s model notice.
    • Add the notice to your onboarding documents and distribute it to current employees annually.
    • Train HR and managers to respond appropriately when employees raise concerns or request time off or accommodations under this law.
    • Be prepared to provide the notice to current employees if they make a request.

    Want More Details? Read the CRD’s FAQ

    The CRD has also published an FAQ document that answers common employer questions about the law and the notice requirement. You can view it here: CRD FAQs

    Here are a few highlights:

    • What is a “qualifying act of violence”?
      It’s broader than domestic violence or sexual assault—it includes any crime that causes physical or mental injury, or the death of a family member.
    • Can we create our own notice instead of using the CRD version?
      Yes, but it must be substantially similar in both content and clarity.
    • Do we have to provide this notice to existing employees immediately? While there isn’t a specific requirement that notice be provided to existing employees immediately, employers need to provide it annually and we recommend rolling this out as soon as practical.
    • What happens if we don’t comply?
      Non-compliance can lead to enforcement action by the CRD, including penalties for failing to provide the notice or interfering with protected leave rights.

    If you’d like support reviewing your materials, preparing communications, or training your team, we’re here to help. Let us know if you’d like the notice translated into your preferred language(s), or if you’d like assistance adapting it into your onboarding materials.

    Categories: Blogs
  • “Near-Miss” CEQA Streamlining: New Option to Reduce Scope of Review for Housing Development Projects

    By Miles Imwalle, Megan Jennings, and Alyssa Netto

    Following up on our earlier coverage of the new California Environmental Quality Act (CEQA) exemption passed as part of budget trailer bill AB 130, another significant CEQA pathway was created through its companion legislation, SB 131. Among other things, SB 131 includes a new CEQA process that limits the environmental review required for “near-miss” housing development projects—those projects that meet all criteria for a CEQA exemption, except for a single disqualifying condition. Specifically, the environmental review in these instances is restricted to analyzing impacts stemming exclusively from the single condition that disqualifies the project from receiving a statutory or categorical exemption.

    Which exemptions form the basis for “near-miss” streamlined review?

    Housing development projects may qualify for streamlining if they meet all but one condition for the following exemptions:

    • Any statutory exemption, including the new exemption for housing development projects created by AB 130
    • Certain categorical exemptions, including in-fill development projects, as follows:
      • Class 1: Existing Facilities
      • Class 2: Replacement or Reconstruction
      • Class 3: New Construction or Conversion of Small Structures
      • Class 4: Minor Alterations
      • Class 5: Minor Alterations in Land Use Limitations
      • Class 12: Surplus Government Property Sales
      • Class 15: Minor Land Divisions
      • Class 20: Changes in Organization of Local Agencies
      • Class 27: Leasing New Facilities
      • Class 30: Minor Actions to Prevent, Minimize, Stabilize, Mitigate, or Eliminate the Release or Threat of Release of Hazardous Waste or Hazardous Substances
      • Class 32: In-fill Development Projects

    Which projects qualify?

    This process is only available for “housing development projects” as defined under the Housing Accountability Act. This definition includes mixed-use projects, which typically means that two-thirds of the square footage must be dedicated to residential use (although for projects with over 500 units, this is reduced to 50% and can be less for certain redevelopment projects). Projects must also meet the following conditions:

    • Must not include a distribution center
    • Must not include oil and gas infrastructure
    • Must not be located on specified natural or protected lands
    • Must be “similar in kind” to projects described in the exemption

    What constitutes a “condition” for purposes of nearly missing an exemption?

    SB 131 defines a “condition” as a physical or regulatory feature of the project or its setting or an effect upon the environment caused by the project. The “effect on the environment” category is a familiar concept that should be straightforward to implement. For example, the Class 32 infill exemption requires that projects not have certain impacts, such as to traffic, noise, or air quality; an impact in one of those categories would be a “condition” that disqualifies a project from using the exemption. The exceptions under CEQA Guidelines Section 15300.2 that bar the use of all categorical exemptions in certain situations, such as when there are impacts to historical resources, would also be familiar “conditions” that relate to environmental impacts.

    The term “condition” is broader, as it also includes “physical” or “regulatory” features of the project or the “setting,” which are new concepts. For example, the Class 32 exemption has a 5-acre limit, so if a project’s size is the one reason it does not qualify for the exemption, that would qualify as the single physical “condition.” Or the AB 130 statutory exemption prohibits hotels; including a hotel within a mixed-use project that otherwise meets the definition of a housing development project would likely qualify as a single “condition.” But qualifying conditions are limited by the other requirement that projects must be “similar in kind” to those described in the exemption. Presumably that language was added so that projects could not point to a totally unrelated exemption as the basis for streamlining (as an extreme example, using the Olympic Games statutory exemption, and claiming the one disqualifying “condition” is not being the Olympic Games).

    What type of environmental analysis is required?

    An initial study or environmental impact report must be prepared, but it is only required to examine impacts resulting solely from the disqualifying condition. If an EIR is necessary, it need not address project alternatives or growth-inducing impacts, which would typically be included in an EIR.

    The scope and depth of analysis required will vary depending on the nature of the disqualifying condition. When the condition is an impact on the environment, such as impacts to air quality or historical resources, or the “unusual circumstances” exception to categorical exemptions, the review would focus only on these environmental issues and because the “condition” is an environmental impact, how to conduct that analysis would be relatively straightforward. The result would be a narrow environmental analysis that could be completed more quickly and would generally be more legally defensible because it would cover a single topic.

    However, if the disqualifying condition is not due to an environmental impact, but instead is “physical” or “regulatory” or relates to the “setting,” how to conduct the analysis may be less straightforward. For example, the new AB 130 exemption has a maximum project size of 20 acres, and minimum residential density requirements. It is unclear how to analyze the impacts caused solely by a project being 21 acres instead of 20, or having insufficient density. Or infill projects sometimes meet the criteria for a Class 32 exemption but for the fact that they are located outside of city limits; it is unclear how to address the impacts caused solely by lying in an urbanized but unincorporated area. In practice, the answer may often be that these kinds of conditions do not cause any unique environmental impacts, and the resulting initial study may be brief.

    While this “near-miss” streamlined review is promising, and should help to avoid some full-blown EIRs for projects that are otherwise close to qualifying for an exemption, it creates a new process and raises questions that will require careful consideration for individual projects.

    Categories: Blogs
  • New CEQA Exemption for Housing Development Projects: What it Means for Developers

    By Miles Imwalle and Megan Jennings

    Governor Gavin Newsom signed two budget trailer bills on June 30, 2025, enacting the most substantial reforms to the California Environmental Quality Act (CEQA) in over five decades—most significantly by introducing a new statutory exemption for infill residential projects, although there are other changes to CEQA that apply to additional types of projects.

    Assembly Bill 130 and Senate Bill 131 were adopted on the last day of the 2024-25 fiscal year after the Governor made it clear he would not approve the budget without meaningful CEQA reforms. Although the final legislation moved quickly, the bills drew heavily from earlier proposals by Senator Scott Weiner (SB 607) and Assemblymember Buffy Wicks (AB 609), respectively, to streamline review for infill housing and other priority projects. (See our earlier coverage of those bills here).

    While not the sweeping “rollback” of environmental review that some sources have claimed, the legislation will undoubtedly smooth the road for approval for certain kinds of development, particularly infill housing. Below, we focus on the criteria for using the new exemption for housing development projects in AB 130, and a subsequent post will address other CEQA reforms in both bills.

    How Do I Know if my Housing Project Qualifies for the New CEQA Exemption?

    To qualify for the new CEQA exemption, a housing development project must meet all of the following conditions (codified at Public Resources Code section 21080.66):

    Size & Location:

    • No larger than 20 acres (5 acres for “builder’s remedy” projects)
    • Located within an incorporated city or urbanized area
    • Site was either previously developed with urban use or substantially surrounded by urban uses
    • Not located on certain sensitive sites, such as certain sites in the coastal zone, fire hazard zones, and sites with certain natural resource features, among others

    Land Use Compatibility:

    • Must be consistent with the general plan and zoning ordinance, or if the general plan and zoning ordinance are not consistent with one another, consistency with either one (not necessarily both) is sufficient
    • Use of density bonus waivers or concessions does not make the project inconsistent with zoning or the general plan

    Density and Use Characteristics:

    • Must be at least 50% of the applicable density identified in Government Code section 65583.2(c)(3)(B); this equates to a density of between 5 and 15 units per acre, depending on how urbanized the jurisdiction is
    • May be fully residential or mixed use, as defined in Government Code section 65589.5(h); this generally requires two-thirds of the square footage to be dedicated to residential, but this can be reduced to 50% for projects with at least 500 units

    Development Features:

    • No demolition of any structure listed on a historic register before the preliminary application was submitted
    • No part of the project may be used as a hotel, motel, or for transient lodging (with exceptions for residential hotels and post-occupancy short-term rentals)
    • Generally, no ongoing releases of hazardous substances that could cause significant health hazards for future occupants (see discussion below regarding Phase I Environmental Site Assessment)
    • For projects within 500 feet of a freeway, particular air quality management requirements apply

    Will any Labor Requirements Apply to my Project?

    Only projects that meet any of the criteria listed below are subject to labor requirements; there are no labor standards for other projects.

    Projects Subject to Prevailing Wage Requirements:

    • Projects where 100% of the units are affordable to lower-income households
    • Buildings over 85 feet above grade; must also comply with health care and “skilled and trained” workforce requirements of Government Code section 65913.4(a)(8)
    • San Francisco projects of 50 units or more, for certain construction crafts

    Enforcement:

    • If a subcontractor or lower-tier contractor fails to pay workers properly on a CEQA-exempt housing project, the developer can now be held liable for those unpaid wages, pursuant to Labor Code section 218.8
    • Joint labor-management cooperation committees may enforce compliance through court actions

    Are There any new Procedural Requirements?

    The legislation includes two unique procedural requirements for all projects using the new exemption, beyond the typical procedure for a statutory exemption:

    Consultation with Native American Tribes:

    • Local governments must formally notify all California Native American tribes traditionally and culturally affiliated with the site, within 14 days of the application being deemed complete (or for projects deemed complete before July 1, 2026, within 14 days of the lead agency being notified that the project qualifies for the exemption)
    • Tribes have 60 days to accept the invitation to consult; if no response is received, the consultation is deemed waived
    • If consultation is requested, it must start and conclude on a specified timeline
    • Unless mutually waived, certain conditions must be included in project approvals, including tribal monitoring, treatment of discovered resources, and adherence to appropriate tribal cultural protocols

    Phase I Environmental Site Assessment:

    • All projects must complete a Phase I Environmental Site Assessment as a condition of approval, and must take appropriate steps to address releases of hazardous substances as warranted by that analysis

    Because AB 130 and SB 131 were adopted as part of the budget process, they became effective immediately upon the Governor’s signature.

    While the legislation is complex and contains many new conditions that will require fact-specific interpretation, we do expect that many projects will qualify. This is a meaningful change in the law that promises to remove CEQA as a barrier to the approval of many housing projects. Developers should work closely with land use counsel to ensure compliance with all statutory criteria and procedural obligations.

    Categories: Blogs
  • What We’re Reading, Watching, and Listening To: June 2025

    A roundup of news and multimedia from the Unfamiliar Terrain team:

    San Francisco

    Mayor Lurie names new S.F. planning director (SF Chronicle): Sarah Dennis Phillips has been named the City’s planning director, replacing Rich Hillis.

    Mayor Lurie’s Family Zoning Plan Is a Leap Forward for San Francisco Housing Policy (SPUR): According to SPUR, a proposal to make changes to the City’s zoning code could help the City meet its state-set target for new housing construction.

    Lurie unveils a new San Francisco-specific alternative to state density bonus law (SF Business Times): Mayor Daniel Lurie proposed a local alternative to the state density-bonus law, which would give developers additional options to build more housing units in the city.

    Here’s how many homes downtown S.F. office conversions might create under new incentives (SF Chronicle): A new report found a total of 49 commercial properties in downtown would be most suitable for conversions into housing.

    Balancing San Francisco’s Budget, Part 3: Closing the Structural Deficit (SPUR): Third in a three-part SPUR series examining the City’s structural deficit and the difficult decisions required to close it. Part 1 looked at the budget process. Part 2 outlined the growth of the City’s revenues and expenditures.

    This California Highway Is Now a Park. The Cars Are Gone, but Not the Anger (New York Times): The transformation of a two-mile stretch of the City’s Great Highway into a pedestrian promenade has set off a clash over anti-car culture.

    Bay Area

    Balancing Oakland’s Budget (SPUR): Nine recommendations for closing the city’s structural deficit to move toward fiscal solvency and economic growth.

    Bay Area’s dominance in AI funding fuels real estate boom (SF Chronicle): According to a new report, the Bay Area continues to dominate venture capital funding for artificial intelligence, fueling office demand.

    California and Beyond

    This small California county is building housing at the fastest rate in the state (SF Chronicle): Even while California is facing a post-pandemic construction slump, several of its smaller and midsize counties have produced new homes at more than twice the speed as the state overall.

    Newsom picks more housing over CEQA in backing two bills meant to speed construction (CalMatters): The effort by two Bay Area lawmakers to exempt most urban housing developments from the state’s premier environmental regulation just received a prized endorsement from Gov. Gavin Newsom.

    Is the secret to housing affordability in California buried in the building code? (CalMatters): As lawmakers scramble to turbocharge post-fire recovery efforts in Los Angeles and to tackle a housing shortage across the state, a new addition may be coming to California’s building code: A pause button.

    Controversial land bill faces rewrite after public backlash (Axios): Sen. Mike Lee (R-Utah) says he’s revising a proposal to sell millions of acres of public land to housing developers after backlash from outdoor recreation enthusiasts.

    When Towns Rebuild From Disaster, Some Get Priced Out (Wall Street Journal): In Panama City, Florida, and Paradise, California, money poured in after natural disasters, squeezing some residents out. The dynamic is repeating across the country.

    American Homes Are Shrinking. Why Are They Still So Unaffordable? (Wall Street Journal): More starter homes are being built, but the situation isn’t a return to the 1950s.

    A Former Office Tower Goes Big for Residents (New York Times): With 1,320 rental apartments and a host of amenities, 25 Water Street is the country’s largest office-to-residential conversion to date.

    Categories: Blogs
  • There’s Always This Year? 2025 Legislature Considers CEQA Reforms to Spur Housing

    California’s 2025 legislative cycle includes another ambitious package of housing bills as the state continues to look for ways to ease the housing crisis amidst continued political and economic uncertainty. Reforming the California Environmental Quality Act (“CEQA”) is a perennial focus among developers and housing advocates, although the state has enacted only narrowly targeted measures in recent years to streamline certain types of projects. Two pieces of pending legislation—Senate Bill 607 and Assembly Bill 609—take a bigger swing at CEQA in ways that could have a meaningful impact on the long-stated goal of reducing redundant environmental review for infill housing and other projects, largely by expanding exemptions and making negative declarations and mitigated negative declarations (“MNDs”) more defensible.

    Overview of SB 607

    Senator Scott Wiener introduced this bill, the “Fast and Focused CEQA Act,” as a good government measure that would create opportunities for more streamlined environmental review through common sense amendments. Although these provisions are not limited to housing projects, none would apply to projects involving distribution centers, oil and gas infrastructure, or those located on “natural and protected lands.” Key provisions include:

    • Targeted Review for “Nearly” Exempt Projects: For projects that fail to qualify for a categorical or statutory exemption due to a single “condition,” the bill creates a new CEQA review process that limits CEQA review to the environmental effects caused by that single condition. It is not unusual for a project to barely miss qualifying for an exemption, so this creates a new, narrowly tailored CEQA process. This option is not available if a project does not qualify due to two “conditions.”
    • Replacement of the “Fair Argument” Standard: Courts have interpreted CEQA in a way that favors preparation of a full Environmental Impact Report (“EIR”) by applying what is called the “fair argument” standard of review to negative declarations and MNDs. This standard of review sets a relatively low bar to challenge MNDs in court, often causing lead agencies to prepare EIRs even for projects that meet the criteria for MNDs. SB 607 would alter the status quo by applying the more deferential “substantial evidence” standard to MNDs. The bill also provides that an EIR would be required if the lead agency determines that it is “more likely than not” that the project will have a significant effect on the environment—raising the threshold for preparing an EIR from the current “may have a significant effect” standard. These changes will make lead agencies more confident in preparing MNDs for projects that qualify, and make them more widely available as a result.
    • Infill Project Provisions: Directs the Governor’s Office of Land Use and Climate Innovation (formerly known as the Office of Planning and Research) to expand means of compliance with the urban infill categorical exemption (Class 32), and to map urban infill sites that are eligible for the exemption.
    • Housing Element Rezoning Exemption: Exempts any rezoning that implements an approved housing element, except for rezonings that would allow distribution centers, oil and gas infrastructure, or development on natural and protected lands.
    • Record of Proceedings: Narrows the scope of the administrative record for CEQA litigation by excluding certain internal agency communications that were not presented to the final decision-making body. Currently, internal communications are included, which can make preparation of the administrative record a lengthy and expensive process, resulting in protracted litigation timelines.
    • Judicial Remedies: If a court finds a CEQA exemption was improperly issued, the court’s remedy is limited to addressing only the condition(s) that made the project ineligible for the exemption.

    Overview of AB 609

    Assemblymember Buffy Wicks’ bill, the “Environmentally Beneficial Housing Exemption,” is designed to exempt additional urban multi-family housing projects from CEQA review. The qualifying criteria expand on the existing Class 32 categorical exemption, which is only available for smaller infill projects. The Class 32 exemption is currently one of the more widely used exemptions for infill projects, so AB 609 would expand the types of infill housing projects that are exempt. And by making it a statutory exemption, projects would not be subject to the “exceptions” that apply to categorical exemptions. Key criteria include:

    • Project Size and Location: The project site must be no larger than 20 acres, located either within the boundaries of an incorporated municipality or within a census-designated urban area. The existing infill exemption is limited to sites no larger than 5 acres and within city limits, so is not available to sites that are “urban” but unincorporated.
    • Urban Development Criteria: The project site must either have been previously developed with an urban use or at least 75 percent of the perimeter of the site adjoins parcels that are developed with urban uses.
    • Consistency with Local Plans: Projects must be consistent with the applicable general plan, zoning ordinance, and local coastal program. If the general plan and zoning are inconsistent, consistency with either is sufficient.
    • Density Requirements: The project must provide at least half the minimum density specified for housing element sites under state law.
    • Tribal Cultural Resource Protections: For sites not previously developed with urban uses, the project must not create an impact to tribal cultural resources that cannot be mitigated.
    • Historical Resources: The project does not require the demolition of a historic structure that has been placed on a national, state, or local historic register.
    • Environmental Assessment: As a condition of approval, the local government must require a Phase I environmental site assessment. If contamination is found, further assessment and remediation are required before occupancy.
    • Additional Requirements for Sites Adjacent to a Freeway: Housing projects within 500 feet of a freeway must contain certain design features that address air quality impacts, including (1) centralized HVAC, (2) outdoor air intakes that face away from the freeway, (3) air filtration that provides a minimum efficiency reporting value of 16, and (4) no balconies that face the freeway.

    CEQA reform elicits strong reactions, as evidenced by the lengthy list of supporters and opponents who have already weighed in, so the fate of these two bills is uncertain at this time.

    • SB 607 is co-sponsored by the Bay Area Council, Housing Action Coalition, Prosperity California, and Rural County Representatives of California, with additional supporters including California YIMBY, SPUR, and other pro-housing and business groups. The bill is opposed by a number of environmental and interest groups, such as the Sierra Club California, Center for Biological Diversity, and Natural Resources Defense Council.
    • AB 609 is also co-sponsored by the Bay Area Council along with California YIMBY, with additional support from a range of business and trade groups, the City of San Diego, and a few local elected officials. AB 609 is opposed by Livable California, the State Building & Construction Trades Council of California, and other environmental and environmental justice groups.

    The specifics of each bill will likely change as they work their way through the Legislature, but both promise meaningful improvement for infill projects if passed in their current, or substantially similar, form. We will be monitoring both bills, as well as other efforts to streamline and incentivize housing production in this legislative session.

    Categories: Blogs
  • What We’re Reading, Watching, and Listening To: March 2025

    A roundup of news and multimedia from the Unfamiliar Terrain team:

    San Francisco

    Mayor Lurie launches initiative to speed up S.F.’s slow permitting process (SF Chronicle): The Mayor announced a new effort to streamline the City’s permitting process as he seeks to bolster its economic recovery.

    Lurie under YIMBY pressure to embrace aggressive rezoning plan (SF Standard): Pro-development factions are warning the Mayor that a “too-timid approach” could be politically risky.

    Photos That Capture the Soul of San Francisco (New York Times): Taken in the late 1960s and early 1970s, these long hidden photographs by Barbara Ramos have just been published in “A Fearless Eye.”

    Bay Area

    What It Will Take to Close Oakland’s Structural Deficit, Part 2: Budget-Setting, Spending, and Revenues (SPUR): This article provides background on Oakland’s budget-setting process, where its revenue comes from, and how that money is spent.

    California and Beyond

    ‘Too damn hard to build’: An East Bay Democrat’s push for speedier construction (Mercury News): Although “excruciatingly non-sexy,” more California officials want to re-examine how buildings get permitted.

    This wealthy California city just flirted with bankruptcy to avoid new housing (SF Chronicle): Will cities and counties be willing to go bankrupt to fight housing?

    Rebuilding Los Angeles Is California’s Economic Moment of Truth (Wall Street Journal): Wildfires that destroyed two neighborhoods made the state’s housing shortage even worse. Now, opposition is growing to creating more.

    Los Angeles could be the next city to take up single-stair reform (Urbanize Los Angeles): Advocates for increasing the supply of market-generated housing have recently set their sights on reforming building code regulations. 

    California Assembly Select Committee on Permitting Reform, Final Report – March 2025 (California State Assembly): This white paper aims to help accelerate efforts at permitting reform across a range of areas, including housing, electricity, water, and transportation.

    How Progressives Froze the American Dream (The Atlantic): The U.S. was once the world’s most geographically mobile society. Now we’re stuck in place.

    Success on the Street Policy Brief (SPUR): California’s CEQA exemption has helped cities build modern mobility faster — and has become a foundation for future streamlining.

    Categories: Blogs
  • What We’re Reading, Watching, and Listening To: February 2025

    A roundup of news and multimedia from the Unfamiliar Terrain team:

    San Francisco

    Why Mission Bay is recovering faster than anywhere else in San Francisco (SF Standard): The redeveloped neighborhood is booming ahead of its showcase at next month’s NBA All-Star Game.

    Lurie asks of Candlestick Point: ‘How can we go faster?’ (SF Business Times): The City is pacing tens of thousands of units short of its housing target, and Mayor Daniel Lurie says he is focused on faster permitting and other moves to help developers speed up their projects. Candlestick Point is his first big test.

    North Beach as a Historic District? Not Yet, SF Mayor Lurie Says (KQED): Mayor Daniel Lurie is asking a state commission to delay a hearing on whether to designate North Beach as a historic district after pushback from housing advocates.

    This major S.F. street is filled with vacant storefronts. A new plan would allow chain retail there (SF Chronicle): Two of the City’s newest supervisors are looking to get rid of red tape for “formula retail” stores.

    SF’s tourism industry may bounce back in 2025 (SF Standard): A narrative change, a jump in convention bookings, and a slate of major sporting events are rejuvenating the City’s biggest sector.

    Bay Area

    What It Will Take to Close Oakland’s Structural Deficit (SPUR): Some deeply rooted structural issues underlie the city’s fiscal distress, but Oakland is known for its creativity and resilience, and it has navigated bigger challenges before.

    Berkeley is legalizing a type of housing that could add thousands of units to the market (SF Chronicle): Berkeley has opened an amnesty program to convert illegal accessory dwelling units, or ADUs, to legal homes.

    Billionaire-backed plan to build Solano County city could now bypass voter approval (SF Business Times): Suisun City voted to explore annexing land beyond the city’s border that includes some of the 60,000 acres where California Forever is trying to build a walkable, mixed-use community from scratch in Solano County.

    California and Beyond

    Legal battles and funding woes: California housing 2024 in review (Cal Matters): California lawmakers in 2024 made good on a promise to push for more housing construction and hold accountable cities that resist creating affordable homes. But finding money to pay for all that new housing was another matter.

    LA Fires: It’s Time to Rethink Risk Mitigation to Save California’s Home Insurance Market (SPUR): California’s evolving climate crisis underscores the urgent need for an innovative approach to home insurance and risk mitigation.

    Why California keeps putting homes where fires burn (Cal Matters): The L.A. fires have exposed California’s difficult road to navigate between disaster risk and solving the state’s housing crisis.

    L.A. County says state housing laws stand in the way of rebuilding. Advocates disagree (LA Times): A request by L.A. County officials to temporarily waive state housing laws as residents rebuild in fire-ravaged swaths of unincorporated areas drew the ire of housing advocates, who accused the officials of skirting efforts at boosting affordable housing.

    ‘A perfect storm’: California’s housing crisis could worsen as construction slows (SF Chronicle): President Trump’s proposals could lead to a further decline in permitted homes, experts say, contributing to a shortage of available workers and increased inflation.

    Categories: Blogs
  • UPDATE: San Francisco Empty Homes Tax – Superior Court Judge Strikes Down San Francisco Empty Homes Tax, Grants Challengers’ Motion for Summary Judgment

    As discussed in our last update on the November 2022 Proposition M, Empty Homes Tax Ordinance (the “Empty Homes Tax”), the San Francisco Apartment Association, the Small Property Owners of San Francisco Institute, the San Francisco Association of Realtors, and four individual landlords (“Challengers”) filed a lawsuit in San Francisco Superior Court challenging the constitutionality of the Empty Homes Tax. On October 31, 2024, the Superior Court ruled in favor of the Challengers’ Motion for Summary Judgment, finding that the Empty Homes Tax is unenforceable. Accordingly, the Empty Homes Tax is not currently effective, although the City of San Francisco may appeal the decision.

    In May of 2024, the Challengers filed a Motion for Summary Judgment, seeking summary judgment, and asking that the Court enter a permanent injunction prohibiting the enforcement of the Empty Homes Tax. The Challengers argued that the Empty Homes Tax violates the Takings and Due Process Clauses of the Constitution, reasoning that a property owner’s right to keep their property vacant—to exclude others—is an essential element of the property rights protected by the Takings Clause. The Challengers also argued that the Empty Homes Tax violates the Ellis Act, which provides that the government may not compel the owner of any residential real property to offer or continue to offer accommodations in the property for rent or lease, with certain exceptions. The Court’s ruling provided that the Challengers shifted their burden as to all causes of action in their lawsuit, and that the City of San Francisco failed to create any triable issues of fact with competent admissible evidence. The Court tasked the Challengers with preparing an order, which order has not yet been published in the Court’s register of actions.

    We will continue to provide further updates on the Empty Homes Tax, the status of the Court’s decision, and a published Court order as such updates become available.

    Categories: Blogs
  • San Francisco Voters Enact Business Tax Changes

    With support from nearly 70% of voters in the November 2024 election, Proposition M will substantially modify the San Francisco Business and Tax Regulations Code (the “SF Tax Code”), which imposes a number of taxes on entities engaging in business in the City.

    The following is a summary of key existing provisions in the SF Tax Code and the changes outlined in Proposition M:

    Gross Receipts Tax

    Existing Law: The Gross Receipts Tax is a tax on the gross receipts of a business for all taxable business activities attributable to the City. The rates vary, depending on the category of business activity and amount of gross receipts. There are 14 categories of business activities, and the rates range from 0.053% to 1.008%. Most small businesses with gross receipts of up to $2.2 million are exempt from paying the Gross Receipts Tax.

    Proposition M: Proposition M reduces the number of business activity classifications from 14 to 7. The rates of tax on gross receipts are modified for each category, with a new range of 0.1% to 3.716%. For tax years beginning on or after January 1, 2025, the small business gross receipts exemption threshold is increased to $5 million.

    The changes to the Gross Receipts Tax will likely have the greatest impact on small businesses that will fall under the new $5 million threshold to qualify for the small business exemption. On the other hand, businesses that do not qualify for any exemption will face slightly higher rates of tax, with scheduled increases to rates through 2028.

    Homelessness Gross Receipts Tax

    Existing Law: The Homelessness Gross Receipts Tax imposes an annual tax on each person engaged in business in the City that receives or is a member of a combined group that receives more than $50 million in total taxable gross receipts. The tax is imposed at varying rates, based on seven different business categories, and ranging from 0.175% to 0.69%.

    Proposition M: Proposition M lowers the threshold for a person or combined group’s taxable gross receipts to $25 million, with rates of tax ranging from 0.164% to 0.492%.

    The changes to the Homelessness Gross Receipts Tax will primarily impact businesses with gross receipts in the City in excess of $25 million that were not previously subject to the tax. For businesses already subject to the Homelessness Gross Receipts Tax, the changes result in slightly lower rates of tax across business categories.

    Overpaid Executive Gross Receipts Tax

    Existing Law: The Overpaid Executive Gross Receipts Tax (“OEGRT”) imposes an additional gross receipts tax on a person or combined group’s taxable gross receipts in which the highest-paid managerial employee, within or outside of the City, earns more than 100 times the median compensation of employees based in the City, with rates ranging from 0.1% to 0.6%.

    Proposition M: Proposition M modifies the method of calculating the OEGRT for tax years beginning on or after January 1, 2025, with rates ranging from 0.02% to 0.129%.

    The changes to the OEGRT will impact the small number of businesses subject to the tax under the existing rules. The changes to the method of calculating the OEGRT make it less likely that the tax will apply. For those businesses to which it does apply, the rates will be lower.

    Relationship to Proposition L

    The November 2024 ballot included two propositions relating to business taxes: Proposition M, which modifies a number of provisions among various existing business tax ordinances in the City; and Proposition L, which would have created a new gross receipts tax on transportation network companies and autonomous vehicle businesses. Both measures required a simple majority to pass. While both measures achieved the required votes to pass, Proposition M contained a provision that would essentially negate Proposition L if both measures passed. Therefore, Proposition M is the only one of the two City business tax measures that will become effective.

    Categories: Blogs