November 25, 2008

Governor Signs Senate Bill 375, Designed to Connect Regional Planning to Reduction of Greenhouse Gas Emissions

Holland & Knight Alert
Jennifer L. Hernandez

Governor Arnold Schwarzenegger has signed into law Senate Bill (SB) 375. The bill is designed to limit greenhouse gas (GHG) emissions from cars and light trucks by improving the efficiency of regional land development patterns. To promote regional land use patterns that would limit GHG emissions, the bill links transportation funding to regional plans that will effectuate GHG emissions reduction targets, and streamlines California Environmental Quality Act (CEQA) review for certain transit-oriented projects. The bill also amends certain provisions of housing element law so that regional transportation planning can consider regional housing needs. Breaking new ground nationally, SB 375 concludes that even with improved lower carbon fuels and better mileage standards for light trucks and cars, “it will be necessary to achieve significant additional greenhouse gas reductions from changed land use patterns and improved transportation.”
SB 375 is the latest of several California climate change bills. These include Assembly Bill (AB) 1493 (the first law in the nation to address greenhouse gas emissions from automobile exhaust and for which waiver litigation with the Department of Environmental Protection is pending), AB 32 (mandating statewide greenhouse gas emission reductions from multiple sectors), and SB 97 (mandating development of CEQA thresholds of significance). The California Air Resources Board (CARB) is the primary agency responsible for setting the rules and regulations that will effectuate the goals of SB 375, AB 1493 and AB 32. CARB is also providing technical guidance to the Office of Planning and Research regarding what regulations it should adopt in furtherance of SB 97. CARB’s “Climate Change Draft Scoping Plan,” issued in June 2008 pursuant to AB 32, received criticism for requiring minimum reductions from the land use sector. Greater reductions from the land use sector are now expected from SB 375.

Impact on Regional Transportation Planning and Funding
1. Cities and Counties Located Within Metropolitan Planning Organizations
Metropolitan Planning Organizations (MPOs) are federally-mandated regional organizations responsible for comprehensive transportation planning and programming within urbanized areas of the United States. MPO work products include regional transportation plans. Pursuant to Section 176 of the Clean Air Act, regional transportation plans must conform with regional air quality attainment plans in order to receive federal funding for proposed transportation projects.
SB 375 enhances this existing connection between transportation planning and air quality by requiring regional transportation plans to incorporate a “sustainable communities strategy,” which is explained below. There are 18 federally designated MPOs in California, some of which include multiple counties. 21 counties located in the eastern and northern areas of the state, which are largely rural and unincorporated, are not part of an MPO; these areas are encouraged but not required to develop sustainable communities strategies pursuant to SB 375. Figure 1 below identifies California MPOs and the counties within them.

2. MPOs Required to Meet Regional GHG Emissions Reduction Targets
As explained below, the sustainable communities strategies that MPOs must incorporate into regional transportation plans must meet a specified GHG emissions reduction target. A Regional Targets Advisory Committee (RTAC), which will include representation from the League of California Cities, the California State Association of Counties, MPOs, developers, planning organizations and other stakeholders, will advise CARB on how to set and enforce regional GHG reduction targets. Before setting the targets, CARB must consider the likely reductions that will result from other regulatory actions to improve the fuel efficiency of vehicles and the carbon content of fuels, and must exchange technical information with each MPO and the affected air district.

3. Expanded Regional Transportation Plans Required

MPOs are already required to comply with a series of state and federal laws in developing acceptable regional transportation plans, but the primary focus of these plans has been on federal funding for proposed roadway and transit system improvements. SB 375 substantially expands the content requirements of these regional transportation plans to include a transportation policy – including goals and objectives for roadway, transit and other forms of transportation – along with a funding estimate that accurately quantifies the cost of achieving these goals and objectives. SB 375 encourages but does not mandate that this policy element address:

  • Measures of mobility and traffic congestion, including daily vehicle hours of delay per capita and vehicle
    miles traveled per capita.
  • Measures of road and bridge maintenance and rehabilitation needs.
  • Measures of modes of travel for work and non-work trips made by single and multiple-occupant vehicles, public transit, walking and bicycling.
  • Measures of transportation safety and security, including injuries and fatalities from each transportation mode.
  • Measures of equity and accessibility, with percentage of homes and jobs served by frequent and reliable public transit, further broken down by income bracket.

SB 375 also expands the content requirements of regional transportation plans to include a sustainable communities strategy that:

  • Identifies current development patterns including the “general location of uses, residential densities, and building intensities” within each region. While the level of detail is not specified, it is important to note that this requires a description of current development patterns rather than planned development patterns (e.g., General Plan designations or zoning code designations).
  • Identifies areas in the region that are sufficient to accommodate housing for all income segments of existing and planned population growth, taking into account migration into the region, population growth, employment growth, and household formation, both for the long-term horizon of the plan (i.e., 2030) as well as for eight-year planning periods that correspond to the Regional Housing Needs Assessment allocations assigned to each city and county by the California Department of Housing and Community Development (HCD).
  • Identifies a transportation network to serve the transportation needs of the region.
  • Identifies the “best practically available scientific information” regarding natural resource areas and farmlands1 in the region.
  • Sets forth a “forecasted development pattern for the region, which, when integrated with the transportation network, and other transportation measures and policies,” will reduce GHG emissions from automobile and light trucks to achieve the CARB GHG emission reduction targets and conform to the transportation-related provisions of the federal Clean Air Act.
  • If the sustainable communities strategy is unable to reach the GHG reduction targets, then the MPO may propose an “alternative planning strategy” that achieves GHG reduction targets by “alternative development patterns, infrastructure, or additional transportation measures or policies.”2

4. Economic and Political Considerations

Regional transportation plans, including these new sustainable communities strategies, may only be approved in compliance with CEQA. (Pursuant to Public Resources Code Section 21065, a regional transportation plan constitutes a “project,” an activity that may cause a reasonably foreseeable indirect physical change in the environment, and one that is undertaken by a public agency.) Regional transportation plans generally require preparation of an Environmental Impact Report (EIR) that must comprehensively examine all environmental impacts of this regional plan, and that mandate adoption of all feasible mitigation measures or alternatives that reduce or avoid adverse environmental impacts.3 The large scale of these substantially expanded regional transportation plans, their new focus under SB 375 on establishing growth management policies and regional development patterns, and the mandatory CEQA process that must be completed before these plans can be adopted, present MPOs with a daunting economic, political and legal task.
Economically, in an era of highly constrained public sector funding for transportation and many other sectors, SB 375 does not create a funding source to pay for the development of these regional plans or accompanying EIRs. Much of this cost will be borne by the cities and counties that will be compelled to provide staff and documentation to assist MPOs in developing “regional land use patterns” that are acceptable to city and county leaders and voters. MPOs will also incur substantial direct costs in engaging in the mandatory public outreach and hearing process set forth in SB 375, and in preparing and revising regional growth plans and accompanying EIRs.
On the political front, for the past several decades all attempts to force regional land use planning have failed. This is the case for many complicated structural reasons, and other reasons including, but by no means limited to, the land use powers conferred on local government and the often passionate views of local voters and leaders in support of or opposition to economic growth and development.

5. Transportation Funding Considerations
By requiring regional transportation plans to include CARB-endorsed sustainable communities strategies, SB 375 could result in limiting federal transportation funding for those regions that do not successfully comply with its numerous new regional planning requirements. Even though the bill promises that adopted sustainable communities strategies would not regulate local land use, individual jurisdictions may sustain political pressure to comply with the regional transportation plans in order to be able to maintain access to federal transportation funding. Conversely, the bill places no obligations or restrictions on the 21 California counties that are not located within MPOs, potentially placing them in a better position to receive federal transportation funding.

6. Similar in Concept to “Blueprint” Plans
By integrating regional transportation and land use planning, sustainable communities strategies are generally similar to a concept first developed by the Sacramento Area Council of Governments (SACOG) in designing its Sacramento Region Blueprint. Like sustainable communities strategies, the Sacramento Region Blueprint links transportation projects to land development forecasts and air quality considerations in an effort to promote smart growth and limit sprawl. In support of this integrated regional planning model innovated by SACOG, CalTrans established the California Regional Blueprint Planning Program, a voluntary, discretionary grant program to fund regional transportation and land use plans designed by MPOs working in cooperation with Councils of Governments.
Unlike sustainable communities strategies, however, those regions within California that have drafted blueprints have generally not made them part of their regional transportation plans; they are separate documents designed to inform regional transportation plans. In addition, these blueprints have generally not been reviewed under CEQA, whereas regional transportation plans are reviewed under CEQA and will need to be re-reviewed under CEQA once they are amended to incorporate sustainable communities strategies. Finally, unlike the Regional Blueprint Planning Program, the implementation of sustainable communities strategies is not voluntary. Pursuant to SB 375, MPOs must implement sustainable communities strategies (or an alternative planning strategy) that will meet GHG emissions reductions targets and are accepted by CARB.

Projects to Benefit From Limited CEQA Review
1. Few Transit Priority Projects Likely to Qualify for Total CEQA Exemption
Under SB 375, a transit priority project (1) contains at least 50 percent residential uses based upon total building square footage and, if the project contains between 26 percent and 50 percent nonresidential uses, a floor area ratio of not less than 0.75; (2) provides a minimum net density of at least 20 dwelling units per acre; and (3) is located within one-half mile of a major transit stop4 or high-quality transit corridor5 included in a regional transportation plan. To qualify for total exemption from CEQA as a “sustainable communities project,” a project must be a transit priority project that the local legislative body has declared to be consistent with the CARB-endorsed sustainable communities strategy, and one that also meets all of the following requirements:

  • The project can be adequately served by existing utilities and the applicant has paid or committed to pay all
    applicable in-lieu or development fees.
  • The project site does not contain wetlands or riparian areas and does not have significant value as a wildlife habitat (even if avoided by the development footprint); does not harm any species protected by the federal Endangered Species Act, the Native Plant Protection Act, or the California Endangered Species Act; and does not cause the destruction or removal of any species protected by a local ordinance in effect at the time the application for the project was deemed complete.
  • The project site is not included on any list of facilities and sites compiled pursuant to Government Code Section 65962.5. This Section requires the Department of Toxic Substances Control, the Department of Health Services and the State Water Resources Control to compile lists of hazardous waste facilities, sites, wells and tanks to be provided to the Secretary for
    Environmental Protection.
  • The project site is subject to a preliminary endangerment assessment prepared by a registered environmental assessor to determine the existence of any release of a hazardous substance on the site and to determine the potential for exposure of future occupants to significant health hazards from any nearby property or activity.
  • The project does not have a significant effect on historical resources pursuant to Public Resources Code Section 21084.1, the CEQA Section that states that a project that may cause a substantial adverse change in the significance of an historical resource constitutes a project that may have a significant effect on the environment.
  • The project site is not subject to a wildland fire hazard, as determined by the Department of Forestry and Fire Protection, unless the applicable general plan or zoning ordinance contains provisions to mitigate the risk of wildlife fire hazard.
  • The project site is not subject to an unusually high risk of fire or explosion from materials stored or used on nearby properties.
  • The project site is not subject to risk of public health exposure at a level that would exceed the standards established by any state or federal agency.
  • The project site is not subject to seismic risk as a result of being within a delineated earthquake fault zone or seismic hazard zone, unless the applicable general plan or zoning ordinance contains provisions to mitigate the risk of an earthquake fault or seismic hazard zone.
  • The project site is not subject to landslide hazard, flood plain, flood way or restriction zone, unless the applicable general plan or zoning ordinance contains provisions to mitigate the risk of landslide or flood.
  • The project site is not located on developed open space.6
  • The buildings in the project are 15 percent more energy efficient than required by Title 24, Chapter 6 of the California Code of Regulations, and the buildings and landscaping are designed to achieve 25 percent less water usage than the average household use in the region.
  • The project site is not more than eight acres in total area.
  • The project site does not contain more than 200 residential units.
  • The project does not result in any net loss in the number of affordable housing units within the project area.
  • The project does not include any single level building that exceeds 75,000 square feet.
  • Any applicable mitigation measures or performance standards or criteria set forth in the prior environmental impact reports and adopted in findings have been or will be incorporated into the project.
  • The project is determined not to conflict with nearby operating industrial uses.
  • The project meets at least one of the following three criteria:
    • At least 20 percent of the housing will be sold to families of moderate income, or not less than 10 percent of the housing will be rented to families of low income, or not less than 5 percent of the housing is rented to families of very low income−and the project developer provides sufficient legal commitments to the appropriate local agency to ensure the continued availability and use of the housing units for very low, low-, and moderate-income households at monthly housing costs with an affordable housing cost or affordable rent as defined in Section 50052.5 or 50053 of the Health and Safety Code, for the period required by applicable financing. Rental units must be affordable for at least 55 years, and ownership units must be subject to resale restrictions or equity sharing requirements for at least 30 years.
    • The project developer has paid or will pay in-lieu fees pursuant to a local ordinance in an amount sufficient to result in the development of an equivalent number of units that would otherwise be required pursuant to the preceding provision.
    • The project provides public open space equal to or greater than five acres per 1,000 residents of the project.
      Judging from these 19 requirements that a transit priority project must fulfill in order to qualify as a sustainable communities project, it is unlikely that many will be exempt from CEQA review under the new provisions proposed by SB 375.

2. Other Transit Priority Projects May Qualify for More Limited CEQA Streamlining
Alternatively, those transit priority projects that do not qualify for full CEQA exemption may be eligible for “limited” CEQA review via the sustainable communities environmental assessment (SCEA) process, which roughly correlates to a mitigated negative declaration. To participate in this alternative track, the transit priority project must have incorporated all feasible mitigation measures, performance standards, and/or criteria set forth in the previously adopted regional transportation plan/sustainable communities strategy EIR. The lead agency must find that all potentially significant or significant effects of the project have been identified, analyzed and mitigated to a level of insignificance.
Benefits of the SCEA are that (1) any cumulative effects that have been adequately addressed and mitigated in prior applicable certified EIRs would not be treated as cumulatively considerable; (2) growth inducing impacts of the project are not required to be considered; and (3) global warming impacts are not required to be considered (project specific or cumulative impacts). Importantly, the document would be reviewed under the “substantial evidence” standard rather than the “fair argument” test.
In addition, SB 375 authorizes legislative bodies to adopt traffic mitigation measures that would apply to all transit priority projects, such that individual transit priority projects would not be required to implement additional mitigation measures beyond those previously adopted. Such measures may include, but are not limited to, requirements for the installation of traffic control improvements, street or road improvements, contributions to road improvements or transit funds, or transit passes for future residents.

3. Streamlined CEQA Review for Residential/Mixed-Use Residential Projects
SB 375 offers a more limited CEQA shortcut for residential or mixed-use residential projects that are consistent with the use designation, density, building intensity and applicable policies specified for the project area in a sustainable communities strategy or alternative planning strategy, even if they do not satisfy the full requirements of a transit priority project and/or do not meet the numerous environmental and land use requirements listed above that would warrant total exemption. Such residential or mixed-use residential projects would not be required to “reference, describe or discuss” (1) growth-inducing impacts; or (2) project specific or cumulative impacts from cars and light-duty truck trips generated by the project on global warming or the regional transportation network; or (3) a reduced residential density alternative to address vehicular trips generated. To qualify for the shortcut, such projects must also incorporate mitigation measures required by the prior regional transportation plan/sustainable communities strategy EIR.
4. Bill May Not Result in Significant CEQA Streamlining
As discussed above, few projects will likely qualify for total exemption from CEQA. The existing urban infill exemptions under CEQA (Public Resources Code Section 21159.24) and the CEQA Guidelines (California Code of Regulations Title 14, Chapter 3, Section 15332) are rarely used and yet each of these exemptions imposes fewer requirements than the exemption offered by SB 375. The SB 375 exemption is very similar to the Section 21159.24 exemption. However, it allows for twice as large a project site and twice as many units, and enables a project applicant to provide open space instead of affordable housing or in-lieu fees. It is more restrictive in other capacities, by limiting the size of a single building floor to 75,000 square feet (versus 100,000 in the existing exemption) and requiring energy efficiency and water conservation measures. Like the existing urban infill exemptions in CEQA and the CEQA Guidelines, it is unlikely that SB 375’s proposed exemption will be frequently utilized.
In addition, the litigation and political risks could be high for applicants attempting to benefit from the more limited CEQA streamlining options, depending upon the local jurisdiction’s support for the new processes. For example, the monetary benefit and time savings that a project proponent would receive for omitting analysis regarding global warming and traffic impacts may not outweigh the potential political pushback or litigation threats that may accompany it. It is questionable how much actual CEQA relief SB 375 will end up providing to smart growth projects.

Changes to Housing Element Law
Finally, SB 375 amends Government Code requirements regarding regional housing needs, enabling them to be considered in sustainable communities strategies, by aligning what are currently conflicting deadlines regarding the completion of transportation plans and regional housing needs allocation plans.7 Cities and counties in non-attainment under the Clean Air Act will be required to update their housing elements, a mandatory element of general plans, every eight years rather than every five years. For these localities, the fifth revision of housing elements must be adopted no later than 18 months after the adoption of the first regional transportation plan adopted after September 30, 2010.8

In addition to coordinating the timing of these interrelated regional planning efforts, SB 375 changes housing element law to ensure that adequate lands are zoned to accommodate housing by requiring timetables for implementation and allowing for actions and sanctions against municipalities that fail to do so. Existing law requires housing elements to contain an inventory, identifying those sites that can accommodate the jurisdiction’s regional housing obligation. The bill requires jurisdictions in an eight-year housing element cycle to rezone sites to accommodate that portion of the regional housing needs allocation that cannot be accommodated in the inventory no later than three years after the date that the housing element is adopted, or 90 days after the
jurisdiction has received HCD’s final comments on the housing element, whichever is earlier.9 Existing law also requires housing elements to identify those actions that the agency will take to make additional sites available to accommodate various housing needs. The bill requires agencies to develop a schedule and timeline for when these specific actions will occur.

The bill extends what is currently called the Housing Accountability Act (an anti-NIMBY law) to protect housing development projects of which at least 49 percent of the units are affordable. If (1) an agency has failed to zone for low- and very low-income households within the three year time limit; and (2) an affordable project is proposed on a site that would require rezoning; and (3) the project complies with applicable general plan and zoning standards and design review standards, then the agency may not disapprove the project nor require any discretionary permit or impose a condition that would render the project infeasible, unless the project would have a specific adverse impact upon the public health or safety and there is no feasible method to satisfactorily mitigate or avoid the adverse impact.
Any interested person may bring an action to compel compliance with the re-zoning deadline and other timelines, and a court may compel the local government to complete a required rezoning within as few as 60 days, retaining jurisdiction to ensure that the rezoning is carried out. Regardless, it is unlikely that the bill will successfully add meaningful teeth to housing element law or create change in those municipalities that have historically failed to accommodate high-density or affordable housing, given how few housing projects include 49 percent or more affordable dwelling units.

In sum, SB 375’s multiple new requirements will require MPOs to issue new or significantly altered regional transportation plans. The bill links federal transportation funding to the implementation of these multi-faceted sustainable community strategies, including the requirement that these new and improved regional transportation plans will satisfy CARB GHG emission reduction goals. As a result, SB 375 may mean that California’s cities and counties within MPOs lose federal transportation dollars as they struggle to jump through more numerous regional planning hoops. One unintended and ironic consequence of the bill may be that federal transportation funding goes to California’s more rural counties that are not located within MPOs and are therefore not bound by any regional transportation plans. Another is that federal transportation dollars might be diverted to other states altogether, where regional transportation planning processes are less complicated.

The bill is unlikely to result in total CEQA exemption for many smart growth projects because of the extremely long list of requirements such projects must meet to qualify for exemption. More smart growth projects will be able to qualify for streamlined CEQA review, although the time savings this affords to project applicants will depend upon the degree to which localities embrace their respective regional transportation plans and support the procedural short-cuts a sustainable communities strategy affords for those individual projects that comply with it.

1 The bill adds these definitions to the Government Code as Sections 65080.01(a) and (b). “Resource areas” include publicly owned parks and open space, open space or habitat areas protected by conservation plans, sensitive habitats protected by federal or state law, lands subject to conservation or agricultural easements, areas designated for open space or agricultural uses in adopted general plans or ordinances, and areas contains subject to flooding. “Farmland” is defined as farmland that is outside all existing spheres of influence or city limits as of January 1, 2008 and that is classified as prime or unique farmland or farmland of statewide importance, or that is classified by a local agency in its general plan that meets or exceeds the standards for prime or unique farmland.

2 The alternative planning strategy is not made a part of the regional transportation plan and therefore would not affect the distribution of transportation funding. However, like a sustainable communities strategy, CARB is required to approve the alternative planning strategy, and projects that comply with it can qualify for CEQA process streamlining.

3 As discussed in greater detail below, SB 375 offers certain CEQA “shortcuts” for proposed projects that meet the regional transportation plan sustainable communities strategy requirements and incorporate those same mitigation measures implemented in the regional transportation plan/sustainable communities strategy EIR.

4 A major transit stop is defined in Public Resources Code Section 21064.3 as “a site containing an existing rail transit station, a ferry terminal served by either a bus or rail transit service, or the intersection of two or more major bus routes with a frequency of service interval of 15 minutes or less during the morning and afternoon peak commute periods,” except that SB 375 also includes major transit stops that are identified in the applicable regional transportation plan.

5 For purposes of this proposed section, a high-quality transit corridor means a corridor with fixed route bus service with service intervals no longer than 15 minutes during peak commute hours.

6 The bill defines developed open space as land that is (1) publicly owned or financed in whole or in part by public funds; and (2) is generally open to and available for use by the public; and (3) is predominantly lacking in structural development other than structures associated with open spaces (playgrounds, pools, ballfields). This includes land that has been designated for acquisition by a public agency for developed open space, but does not include lands acquired with public funds dedicated to the acquisition of land for housing purposes.

7 Under existing law, the Council of Governments adopts a regional housing allocation plan which distributes to each city and county the share of regional housing that it is obligated to accommodate. SB 375 requires that this regional housing allocation plan be consistent with the development plans included in respective sustainable communities strategies.

8 Local agencies that fail to submit a housing element to HCD within the 18-month deadline will lose the privilege of the eight year planning cycle and must submit their housing element to HCD every four years.

9 One-year extensions may be available to jurisdictions that cannot meet this deadline because of one of a series of stated reasons, provided they meet certain conditions.

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