One of the big reasons that California has a housing crisis is, ironically, an environmental law, the California Environmental Quality Act (CEQA). CEQA (pronounced SEEK-wha) is a major obstacle to building new housing. Governor Newsom is expected to sign a reform bill on Friday exempting new urban apartments from CEQA.
Wait. How could something called the California Environmental Quality Act possibly be bad?
Really, it's because of the law of unintended consequences. But to explain why, I'm going to first give some background on what CEQA actually is. CEQA, signed into law by Ronald Reagan in 1970, requires state and local governments to study the environmental impacts of public projects before approving them. Look before you leap, in other words.
OK. So what's so bad about studying things?
There's three problems with this, as it applies to housing. One, the CEQA studies are incredibly expensive and time-consuming, enough to make many new buildings financially unviable. Two, any crank can sue, arguing that the project hasn't been studied enough. There are no consequences for filing a meritless CEQA lawsuit, as long as you're willing to pay the lawyers. Three, CEQA as written doesn't distinguish between categories of projects. So even if a particular project is obviously good for the planet (like, say, an apartment building next to a train station), you still have to go through the whole process. This creates a whole lot of shitty incentives.
These days, the single largest source of CEQA litigation is new urban apartment buildings, as opposed to (e.g.) factories in protected habitat. CEQA has even been used as extortion. In one particular case, there was a RICO suit about this relating to a hotel in Hollywood.
Fine then. What does the reform bill actually do?
The reform bill, AB609, exempts apartment buildings in urban areas from CEQA entirely, removing the source of delay. This is a good thing - there's a housing shortage, people have to live somewhere, and it's better that you build new apartments in cities instead of subdivisions in the Mojave.
There's precedent for this change to the law as well. Before 2020, CEQA litigation was a huge impediment to improving public transit. That year, Newsom signed bill SB 288, which eliminated CEQA review for pedestrian, bike, and public transit improvements. The rationale for this change is the same. Better public transport is good for the planet, since it gets people out of their cars. No more nonsense like when the Beverly Hills school district sued Metro to stop the Westside subway extension of the D Line. I expect something similar to happen for housing.
So what's the big takeaway?
TL;DR: Eliminating CEQA review for new urban apartments is a big deal. I'd caution against expecting any immediate impact, because buildings still take too long to build and there need to be more reforms - but this is a huge step in the right direction.