Gov. Gavin Newsom’s recent signing of two bills limiting the California Environmental Quality Act, or CEQA, could pave the way for more housing developments in Los Gatos, a town with a significant housing quota and a reputation for lagging on development applications.
CEQA is a state law passed in 1970 that requires developers to assess the environmental impacts of their projects and take measures to mitigate any adverse effects. But critics who pushed for its reform say the law has been used to block or delay high-density housing developments.
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The two bills signed into law on June 30 will make it easier for developers to build high-density housing in California. AB 130 exempts housing-rich infill developments smaller than 20 acres, or under five acres for builder’s remedy projects, from CEQA analysis. SB 131 protects any rezoning required by a municipality’s Housing Element from CEQA analysis. It also streamlines the CEQA process for housing projects that would qualify for an exemption “but for a single condition,” requiring developers to only conduct a CEQA review for the single condition.
Chris Elmendorf, a law professor at UC Davis, said that since these laws took effect immediately, all projects that were already going through the approval process and meet these requirements are no longer subject to CEQA regulations. This could open up Los Gatos to a flood of high-density housing that some town officials have been trying to fend off.
Los Gatos’ Housing Element was certified by the California Department of Housing and Community Development in July of last year, and requires around 2,000 new housing units to be built by 2032. The town is processing 11 builder’s remedy applications, according to its SB330 application tracker. Several builder’s remedy projects, including Capri Fruitstand, Ace Hardware and the Oswalt Building, may receive CEQA exemptions as a result of the new laws.
Erik Hayden is the manager of Urban Catalyst, a real estate equity fund and supports developers with projects in Silicon Valley, and all its affiliated entities. Hayden’s project in Los Gatos, Walnut Orchard on Oka Road, is a builder’s remedy project that would see 138 townhomes constructed, with 28 affordable housing units among them. He said the CEQA process can cost $1 million for analysis since developers have to foot the bill, and creating an environmental impact report can delay a project by a year and a half. He says the new laws will save him both time and money.
“Instead of spending six months, it’ll take me four months to create my application,” Hayden said, adding that prior to the laws’ passage, “I’ll submit, it’ll take the city six months to process my application to get to the point where they deem it complete to start CEQA, and then it’ll take a year to do CEQA. Just take that year off.”
However, residents have been outspoken about the perceived environmental issues associated with high-density developments. In May, several community members expressed concern over traffic, safety and evacuation routes for an apartment building to be constructed near Los Gatos High School. Similarly, residents near the North 40 claimed that the development was putting their homes at risk of flooding and earthquakes or worsening sewer issues.
In fact, environmental concerns over these high-density housing projects led the town council to consider implementing a cumulative environmental impact report for all projects in town, with the explicit goal to find possible factors that would allow the town to deny projects.
During an April 7 study session with the planning commission, Councilmember Mary Bedame asked if building applications could be suspended until a cumulative report was finished, which may take months. Town Attorney Gabrielle Whelan answered affirmatively.
In a letter from Holland & Knight Law Firm on behalf of Urban Catalyst, developers expressed their concern that this approach was illegal.
“It is quite apparent that the town’s purpose is to try to find a method by which to deny the projects, or delay and/or burden them with process to such an extent that the proponents cannot afford to move forward,” the letter stated
UC Davis’s Elmendorf said CEQA itself doesn’t authorize municipalities to stop a project if the analysis reveals environmental concerns, but it provides the information that they can use to impose conditions for a project’s approval.
However, Los Gatos is largely an environmentally healthy zone, a
According to the town’s Housing Element, around three-fourths of Los Gatos has a low vulnerability to pollution sources like ozone, particulate matter, toxic release, hazardous waste, groundwater threats and solid waste sites. The Housing Element found that no neighborhoods in the town were ill-equipped to respond to disasters and that there was no anticipation that new housing production would constrain the provision of public services like water, sewer and storm drains.
“Los Gatos almost uniformly had the lowest possible scores according to the CalEnviroScreen metric for 2021, meaning the town has more positive environmental factors,” stated the Housing Element.
At the April 7 meeting, Los Gatos councilmembers asked if they could deny developments that threatened health and safety standards, but they were advised that they would need to prove that a development would violate an objective standard, like fire or building codes, and that there is no way to mitigate it. Additionally, traffic congestion is no longer considered an environmental impact under CEQA. Elmendorf said that, for Los Gatos, wildfire safety and evacuation concerns could be considered a valid public health and safety risk as long as they’re measured by an objective standard.
Los Gatos Mayor Matthew Hudes said CEQA and environmental impact reports come into play in ensuring public health and safety. He said his concerns around builder’s remedy projects have to do with making sure that they are addressing the affordable housing issue and that these developments are in reasonable places with access to transit, are consistent with the safety considerations of the neighborhood and do not present fire evacuation issues.
“I believe two-thirds of the SB330 applications that we have are not on our site inventory, and so for me, those need to have additional perspective and analysis to make sure that they are meeting the environmental impact, health and safety requirements such that those can be built in a place that makes sense,” Hudes said.
Hayden would likely agree that municipalities should decide for themselves what types of land use is appropriate, but he said that as Los Gatos has “failed so miserably at doing that for the last 30 years,” that it’s understandable why there’s been a proliferation of builder’s remedy projects in town.
Despite all the efforts to deter construction of high-density projects, Los Gatos still must build the housing mandated by the state. According to the town’s Housing Element, “For communities like Los Gatos that are largely built out, bounded by hillsides with restricted developments opportunities due to fire danger and surrounded on all sides by other communities, redevelopment and densification is the only practical solution to providing a fair share of future housing for the San Francisco Bay Area.”