Morgan Miller Blair

SB 375, a landmark land use bill aimed at reducing greenhouse gas emissions by encouraging “smart growth” was signed into law September 30, 2008, by Governor Arnold Schwarzenegger.  After a different iteration of the bill was shot down last year, the current version arose from an unlikely coalition of local governments, the building industry and environmental groups. The Governor called the bill “the most sweeping revision of land-use policies since Gov. Ronald Reagan signed the California Environmental Quality Act (CEQA) [in 1970].”  Whether the law will actually live up to that billing is questionable, and won’t be known for years. 

What SB 375 does:  Studies estimate that passenger vehicles account for about 30% of the state’s greenhouse gas emissions.  SB 375 seeks to reduce such emissions, as required under AB 32, the Global Warming Solutions Act (adopted in 2006), through land use regulations intended to encourage infill and transit-oriented development.  Relative to projects that are not located in infill or transit oriented locations, such projects should reduce the number and distance of vehicle trips.

The main thrust of SB 375 is to align regional housing and transportation planning.  Specifically, the law requires that the regional transportation plan (the long-term blueprint of each region’s transportation system) for the state’s 17 metropolitan planning organizations must include a new “sustainable community strategy” (SCS), intended to meet targets set by the California Air Resources Board (CARB) to reduce greenhouse gas emissions caused by cars and light trucks.  Each region’s Regional Housing Needs Assessment (RHNA) – the existing state-mandated process for local jurisdictions to address their fair share of regional housing needs – will be aligned with the SCS for that region. 

The SCS will act as the regional land use baseline over which transportation programs, projects and investments contained in the federally-mandated regional transportation plan are implemented.  Each SCS is to project long-term growth patterns using existing general plans as a starting point, and identify the general location of uses, residential densities and building intensities within the region sufficient to meet an eight-year RHNA allocation and, when integrated with the regional transportation network, achieve, where feasible, the CARB greenhouse gas targets.  CARB will review and approve each proposed SCS.  If CARB finds that a region’s SCS will not achieve the greenhouse gas target, the region must prepare an alternative planning scenario to demonstrate how the target could be reached.

Under SB 375, funding preference is to be given to transportation projects that are consistent with the SCS.  However, local elected officials sitting on regional planning boards will continue to have decision-making authority regarding transportation funding decisions. 

When it takes effect:  The effect of SB 375 will not be immediate.  CARB must set regional carbon emission targets by September 30, 2010.  Those must be in place before an SCS can be adopted.  Also, since adopting an SCS will require preparation of an environmental impact report (EIR), full implementation is not expected until at least 2011.  Once regional emission targets are set, they are required to be updated every eight years.

CEQA incentives:  As an incentive under the new law, certain residential, mixed-use and “transit priority projects” consistent with the applicable SCS will be eligible for streamlined environmental review under CEQA, potentially reducing the time and cost of project approval.  Qualifying residential or mixed-use developments, consistent with the applicable land use designation, density, and other land use policies, that have incorporated mitigation measures set forth in the EIR prepared for the regional transportation plan/SCS, do not need to conduct CEQA analysis regarding (1) growth-inducing impacts, (2) project-specific or cumulative impacts on global warming, or (3) a reduced residential density alternative.  Certain “transit priority projects” may qualify for a CEQA exemption, or streamlined review if the project is consistent with the SCS.  “Transit priority projects” are those that contain at least 50 percent residential use, have a net density of at least 20 units per acre, have a floor area ratio of 0.75 for the commercial portion of the project, and are located within a half-mile of a transit stop.

Effect on RHNA and Housing Element Updates:  SB 375 extends the cycle for general plan housing element updates from five years to eight years, placing it in line with the transportation planning cycle.  If local governments must rezone sites under the RHNA allocation, they must do so within three years and must include minimum density and development standards for the site.  (Regional planning agencies provide local governments with a housing allocation representing their “fair” share of regional growth.)  A local government may get an extension on the rezoning period, but only if it has completed 75 percent of is required rezoning.  Jurisdictions that fail to comply with housing element deadlines or required rezoning are exposed to court-imposed sanctions and may be penalized by having their housing element cycle accelerated from eight to four years.  Further, suitable residential projects (i.e., those that include 49 percent affordable housing) on sites not rezoned within the required timeframes may be denied only for health and safety reasons.  The anticipated end result is that local governments with transit nodes will likely receive a greater regional housing allocation share.

What SB 375 does not do:  Notably, the bill does not mandate which directions cities and counties grow, and does not give land use authority to regional planning agencies.  The SCS is not itself a land use plan, i.e. a city’s or county’s approved general plan need not be consistent with the SCS. 

Also, the bill does not address purely commercial projects, which prompted opposition from certain business groups.  The Governor has asked lawmakers to bring forth a business-supported proposal affecting commercial development in the future.  The bill was also opposed by transportation groups who fear the new law will spur litigation over new projects.

The Great Unknown:  Despite the good intentions behind SB 375, looming questions remain, such as whether market demand will exist to support transit-oriented and infill projects, whether the law’s CEQA streamlining provisions are sufficiently meaningful to incentivize project proponents, whether the traffic funding incentives or preferences are sufficient to guide cities’ and counties’ decisions as to where growth should occur, and whether regional planning agencies will strongly direct funds to projects in line with the SCS.  Ultimately, the greatest unknown may be whether the hoped-for reductions in greenhouse gas emissions will be achieved through vehicle trip reductions at projects in infill and transit-centric locations.