News
Roundtable
Nov. 1, 2007
Land Use
A roundtable with:Allen Matkins Leck Gamble Mallory & Natsis Holland & Knight Luce, Forward, Hamilton & Scripps
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EXECUTIVE SUMMARY Land use is one of the legal specialties most affected by new climate change legislation and aggressive regulatory standards. In this discussion, longtime land use attorneys argue that global warming laws reveal profound flaws in the California Environmental Quality Act and may affect whether land use will continue being governed at the local level. Our panel of experts from Northern and Southern California discusses these developments, as well as the challenges of infill and the effects of brownfield redevelopment. They are William Devine and Michael Durkee of Allen Matkins Leck Gamble Mallory & Natsis; Susan Booth and Jennifer Hernandez of Holland & Knight; and Timothy Tosta of Luce, Forward, Hamilton & Scripps. The roundtable was moderated by Custom Publishing Editor Chuleenan Svetvilas and reported for Barkley Court Reporters by Krishanna DeRita. MODERATOR: What is the impact of climate change legislation and CEQA on development? TOSTA: The interface between global warming legislation and CEQA exposes the shortcomings of CEQA. Current environmental legislation treats environmental issues as if they were separate; we treat water separate from air, which is separate from transportation. Global warming legislation has brought to the foreground that everything is interactive. It reveals that CEQA is horribly outdated. On the other hand, the regulatory bodies that need to look at the environment as a whole don't yet exist. So, we are in for interesting times as the inadequacies of CEQA are further revealed and the inadequacies of the regulatory system become apparent. HERNANDEZ: Climate change is a challenge on multiple levels. But one of the most challenging pieces is we have enacted legislation and an executive order that are being interpreted as declarations of a greenhouse gas non-attainment zone. But we lack the science to tell us when or if projects are "significant" under CEQA, and we don't want to start misleading anyone with overrides. What we are in EIRs [Environmental Impact Reports] is telling the climate change and GHG [greenhouse gas emissions] story. When in doubt, tell the truth with all of its murkiness and scientific confusion?tell it all. Because lying is the one thing that could really get you in trouble under CEQA. And we don't lie. We may not know, but we are not going to pretend and say that there is or isn't an effect, and we are not going to understate or overstate the magnitude of the problem. DURKEE: The difficulty is there are a lot of industries that won't say, "I have a significant unavoidable impact." Some of the largest emitters of carbons are not going to come to that easy legal solution. As lawyers, we look at it as a maze that we get our clients through. We say, "You should do this at this time, even though it's counterintuitive, because that's going to put us in the best position when a challenger comes after us." But they are going to say, "I'm not going to admit to the world that I have a significant unavoidable impact." I can't, from a legal perspective, absolutely say to clients, "This is the safest route." But from a client perspective, you want the laws to tell you what compliance involves. "What do I have to do so that I'm not fodder for somebody deciding to use the uncertainty to get something from me?" The attorney general has done two or three settlements in which it has gotten something from the party. BOOTH: Part of the problem with the attorney general settlements is they are focusing more on residential development, transportation plans, and general plans as opposed to industries and they are focusing on the lower levels of greenhouse gas emissions. It's one thing if you have an industry that doesn't want to say, "I'm a big bad boy," but that's not even what the attorney general is targeting. They are targeting producers of lower levels of greenhouse gases. In the San Bernardino settlement, they have to inventory it, they have to establish standards and they have to reduce emissions, but nobody has come up with what those standards are. DEVINE: AB 32 establishes a timetable for the adoption of regulations by the California Air Resources Board to reduce GHG emissions. The initial proposals for regulation don't target land development per se but in time there will be regulations that address GHG emission impacts from site planning, geographic location, energy efficiency, and a variety of other things related to land development. At the same time, as a result of AB 97, the Office of Planning and Research will be developing CEQA Guidelines relating to the effects and mitigation of GHG emissions. So how does it affect development? In the short term it will affect the level of analysis required in an EIR. Since there is no clear path to mitigation because there's no clear analytical approach, CEQA documents will be more vulnerable to legal challenge, which will increase development costs and add delays to ultimate development. CEQA has historically dealt with local impact and now we've got a global warming issue, which is worldwide. So how do you deal with that? Because there is no statewide program, local jurisdictions are going to take varying approaches to mitigation, and in the long term, it's going to affect economics and development. In the long term there will be regulations and mitigation requirements that will add to the cost of development. MODERATOR: Will land use continue to be handled at the local level? HERNANDEZ: There's a notion that postage-sized cities aren't really doing the best that they can for their people or society. Where is the affordable housing in Tiburon? Climate change has reignited the statewide land plan debate in the form of AB 375. The bill in its original form had two fatal flaws, one of which was to only provide infrastructure funding to areas that conformed with higher density, pre-existing regional plans; and the second was to allow regional plans to dictate at a property-specific address level what belongs on each piece of property. The funding issues have started to be addressed, but the issue of using regional plans that dictate what belongs on each piece of property remains flawed. This is a true philosophical and political divide. I can't remember the last project that truly conformed to the general plan in all respects, let alone if you abstract out a city or a county general plan to a regional plan to address these issues on a larger scale. That's a huge challenge with the current version of AB 375. DEVINE: Over the last few years, endangered species, storm water, and water quality have become part of the local process. With regard to climate change, how might it get more integrated into the new local process? It could be that as the area becomes more developed, climate change becomes part of a general plan where there's a focus and specific requirements that come down from above. How that gets treated in each jurisdiction will continue to vary. You will deal with it differently in Fresno than in San Francisco and San Diego or some small community in Redding. But ultimately, land use is going to continue to be local with some additional layers of input and analysis. BOOTH: I agree that at least in the foreseeable future, it will be local, but with an attorney general who has decided to get active, you've got to be aware of that state presence. The city of Hollywood recently passed green building ordinances, and for those developers who increase standards, the city is lowering parking and expediting permitting. So there are a number of things that they are doing to encourage green development, and that's a way you are going to see people go. TOSTA: What I find so disheartening about CEQA is that it promotes protection, not healing. Protection is no longer good enough. That's not the mindset that's going to get us through the forthcoming years. The problem is CEQA has become simple to administer. To do a CEQA document you almost don't have to think about the content. It's a plug-and-play system. It creates a huge mass of information, but little awareness. You can have all these words and long technical documents, unaccompanied by environmental insight. DURKEE: I share your lament. You are looking for a policy shift, a new attitude to the way we treat that which we are burning up quickly, and it's just a scorecard of the burn. It's just saying, "When you are doing it, this is what you are doing." It's not saying, "Do it differently." You just have to have a reasonable range of alternatives. The whole thing is just to get through. MODERATOR: What are the challenges of infill development? DEVINE: I've worked on many successful infill projects and some that have not been so successful. Most face many of the same challenges including neighborhood opposition, environmental contamination, land use compatibility, high infrastructure costs, challenges, site assembly, and high development costs. All those things can be addressed reasonably well as long as the local jurisdiction is involved in developing and supports the vision for the infill development and, is thus able to resist a lot of groups coming in and challenging the project because they don't like one aspect or other another. Critical to this process is outreach to the community, understanding legitimate concerns, and addressing those concerns. For many jurisdictions, the process takes a long time. Since many infill projects are fairly small in terms of acreage, there are some economies of scale that are lost. It takes staying power and public and private coordination and a shared vision. There are a number of successful projects out there, but they are far too few to meet the projected need. BOOTH: This is also one of those situations where somebody at a regional or state level looks at a project and needs to say smart growth is what makes sense to decrease the greenhouse gases and the traffic trips. You see articles on it and practitioners saying it, but you don't see the people making the policy doing anything about it. It is the will of the local jurisdictions that controls the situation because of pressure put on them to move the development elsewhere. They don't want it in their backyard. They don't want the drain on the infrastructure and increased traffic. They want to know what happens with the schools and all of that. DURKEE: Infill property is remarkably expensive. If you are good infill, you are surrounded by a gorgeous address and then it becomes cost-prohibitive. There truly are economies of scale. Large-production greenfield development has made a lot of money, whereas smaller, tighter infill is much more difficult because it's more expensive, and a lot of these places are like GM: they can do a thousand cars, but doing three is hard. HERNANDEZ: The infill challenge of CEQA is the presumption that we shouldn't approve projects that have a significant unavoidable impact, yet which of California's large cities?prime targets for infill?aren't in an air quality non-attainment zone with peak-hour freeway congestion? So CEQA has failed on infill, as far as I'm concerned, in promoting what's good for the environment. AB 375 may still evolve to allow meaningful infill CEQA reforms. The return of a legally defensible negative declaration, which is what AB 375 is trying to promote, should help address the problem that CEQA has with infill. TOSTA: There are incentives to litigating. I recently watched the settlement of a case where a recognized no-growth community leader took the settlement dollars and applied them to his adjacent building entirely. None of the results found themselves back to the community. There are system problems that we have to deal with. You can't get to court within nine months, and if you are appealed, it's another year and a half. I actually started on a project when I was 32 and it opened when I was 49. That was 17 years on the same project. We made two passes through the Courts of Appeal, and ultimately got to the California Supreme Court. That takes a certain stick-to-itiveness on the part of the developer. DEVINE: A lot of the best infill projects have been developed by small, local individuals or companies that are creative and who used good architects and planners that looked at what's going on in other parts of the country and the world, and then tailored great ideas to the local community. Those projects have been successful and people buy them because they are unique. Unfortunately, many of these smaller developers don't necessarily have the staying power of the big companies to sustain a long-term entitlement process often required of such projects. MODERATOR: Has brownfield redevelopment become easier or more difficult? Why? HERNANDEZ: It has definitely become easier, but there is still nothing transparent about the brownfield redevelopment process. In California, the Department of Toxic Substance Control is now trying to take a more programmatic approach toward brownfield clean up and is committed to expediting its process, both of which are critical DTSC reforms. The fact that it remains this opaque?unpredictable and costly?is a particular problem for the environmental justice community because these sites are disproportionately located in poor areas. The sites in richer areas have gone through the process because the underlying land value is there; the sites that are in poorer areas can't afford the transaction costs to stumble through these unwritten rules. It would be a benefit to the poorer Californians for brownfield remedies to become more standardized and easily accessible for quicker approvals. DEVINE: The coordination between the local city or county development approving body and the state and federal agencies responsible for cleanup has improved significantly over the last 10 years. However, there is still a disconnect between the local entitlement process and environmental clearance through some of these agencies. As a result, in many cases the local entitlement process is slowed down because of the clearance requirements. I'm working on a matter right now where DTSC wants to tie in their CEQA process into our local entitlement process. Both the city and the developer are resisting this because of the likely delays that will result. TOSTA: I've started to seek dual entitlements. I set up an alternative path that's analyzed in the environmental document. I talk to the city openly about the fact of shifting markets and the need to have a viable product at the end of the clean-up process. My practice has changed in the last two years based on the economy. So when housing is no longer there, it's office that's back or resort hotels or golf courses. It's always shifting. The same thing happens in brownfield settings, except the gestation period for development could take three market cycles. DURKEE: A point that puts the dot on your "I" is the Hacienda business park. It was so well planned that it took an insurance company that could lose hundreds of millions of dollars to actually build the project because that's what they lost, and it made Bishop Ranch instantly popular because the assessments were a fraction. The planners made sure that they had to do all the interchanges first to shift a restaurant use across the street, and it was a major rezone because they had decided that corner should be this. The long-term cure was to ultimately build a flex zone that said, as long as the impact box wasn't exceeded and as long as there was a mix of uses somewhere in the park, we would let the market determine where they should be located. So the planners got their desire, but the marketplace got to flex. BOOTH: It has to do with real estate prices. People have become more comfortable solely because they need to buy something and the only thing they can afford is brownfield development. TOSTA: Only big players can come in and do the work, and one of the social dynamics I've seen is that on a local government level there's an urgency to bring someone in that the developer is given carte blanche to redevelop. This plays very badly with disenfranchised and underrepresented populations. A higher level of exaction, not in terms of dollars, but in thinking about the nature of the communities being created is important. The same "community" is being created throughout California and it's not substandard, but it isn't evocative of any sustainable future either. Because redevelopment has become easier, this kind of schlock has an opportunity to come up everywhere. It takes such deep pockets and staying power to remain in the game. But, that is no excuse for creating mediocre environments. BOOTH: It's even more important now to address the transparency and the costs because brownfield redevelopment is so expensive; nobody is going to want to undertake it. It becomes increasingly important to decrease those costs and encourage the developers. There is the California Environmental Restoration Fund, in which lenders are going to pool together and fund some of this development. I do think it's easier to develop brownfields. More people are aware of it and how to do it. Lenders are backing off individually, but are willing to partake in the fund. Insurers are starting to insure and it is getting easier, but it's still so expensive that in this economy, it's hard to undertake. |
Michael Patrick Durkee, a partner in the Walnut Creek office of Allen Matkins, represents developers, public agencies, and interest groups in all aspects of land use law. He has expertise in general plans, specific plans, planning, zoning, vested rights (development agreements, vesting maps), exactions, Subdivision Map Act, CEQA, and initiatives and referenda. Mr. Durkee is the author of Map Act Navigator (1997-2007), and co-author of Ballot Box Navigator (Solano Press 2003), and Land-Use Initiatives and Referenda in California (Solano Press 1990, 1991). William R. Devine is a partner in the Orange County office of Allen Matkins where he focuses on the land use, environmental, and natural resources aspects of real estate development. He assists clients in a wide range of entitlement and permitting issues before local, state, and federal administrative bodies, as well as in preparing for litigation. Mr. Devine's wide-ranging expertise includes CEQA/NEPA compliance, endangered species, wetlands, coastal law, planning and zoning, water supply/rights, vested development rights, subdivision mapping, redevelopment, and Indian law. Susan J. Booth heads Holland & Knight's West Coast Real Estate Group. She counsels banks, investment funds, REITs and developers on land use and transactional real estate matters, including the acquisition and financing of shopping centers, office and industrial buildings and residential, commercial and mixed-use developments. She has spoken and written on multiple related topics. She earned her B.A. from Stanford University and her J.D./M.B.A. from U.C.L.A., where she was the managing editor of the UCLA Law Review. Jennifer Hernandez leads Holland & Knight's West Coast Land Use/Environmental group, and co-chairs the National Environmental Team. She counsels clients on Southern and Northern California projects, including master planned communities, urban infill, and brownfields. She co-founded and served as general counsel for Landbank, was appointed a trustee of the San Francisco Presidio by President Clinton, and serves on boards for the Center for Creative Land Recycling and the California League of Conservation Voters. Ms. Hernandez is a graduate of Harvard University and Stanford Law School. |
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Megan Kinneyn
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