Gov. Newsom Makes Housing Shortage a Priority in Budget Proposal

Keith B. DunnaganToday, we take time to look at Gov. Newsom’s recent budget proposal as it relates to housing shortages in California. The shortage of affordable housing has long been a problem and today we look at some of the implications of Gov. Newsom’s recent remarks related to addressing housing shortage in California.

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Gov. Newsom Makes Housing Shortage a Priority in Budget Proposal

By: D. Keith B. Dunnagan, Esq.

Kids riding bikes in neighborhoodOn January 10, newly elected Gov. Newsom unveiled his first budget proposal for the state of California. Housing shortage and affordable housing has been a central issue in California as housing costs continue to rise and outpace income. It came as no shock, that as part of the budget proposal Gov. Newsom made affordable housing a central platform.

As part of the budget proposal, Gov. Newsom pledged the construction of 3.5 million units over the next 7 years in California, a significant increase over what has typically been constructed. To bolster this promise, Gov. Newsom threatened to withhold state funds generated from gas tax or other transit related revenue if housing goals are not met. It is no secret that California has some of the highest housing costs in the nation and that the housing shortage is a significant contributor, if not the primary contributor, to the rising costs of homes in California. While the Governor’s proposals are commendable, they do not address the major problems in the California development scheme.

From a legal standpoint, there is a significant and costly development process to go through. Large scale developments require significant environmental review and compliance before they can be approved. The Environmental Impact Review (“EIR”) includes, among others, soils and mineral resources surveys, air quality review, traffic and noise studies, biological and natural resource studies, cultural resource studies, hazardous materials studies, aesthetics analysis, hydrology and water quality studies, transportation, utilities and service studies, and climate change and greenhouse gas studies. These studies have to be analyzed together to complete a cumulative impact analysis of the proposed development project. Everyone wants a sound environmental approach to development, but in doing so, the cost of development skyrockets. These studies require a significant investment in time and money to complete.

During the process of completing the environmental review there are a number of federal, state and local agencies that have to review the EIR. A few of the regular participants in an environmental review would include the municipal planning commission, the US BLM, Cal Fire, Cal Trans, Cal Air Resources Board, Cal Dept of Fish and Wildlife, Cal Energy Commission, Cal PUC, US EPA, US Army Corps, US Fish and Wildlife Service, US Geological Survey and a number of other agencies. Each of these agencies reviews the EIR for compliance with its own set of regulatory requirements.

Once the reviews are done and the EIR is published for comment, there is a time for public comment prior to a public hearing or more likely a series of hearings. Eventually, if the project is approved it can then become subject to a legal challenge through a writ proceeding. California has some of the broadest standing requirements in the nation for challenging projects based on environmental review. The California Environmental Quality Act (“CEQA”) provides for taxpayer standing in challenging a project subject to CEQA review, which when loosely interpreted means that anyone with an environmental concern can challenge the determination. Because of the loose rules many environmental groups use the taxpayer standing rules to challenge decisions. There is a financial incentive for these environmental groups to make the challenge because under CCP 1021.5 the petitioners attorney may be awarded attorneys fees in such an action.

However, the budget proposal tying funds to meeting housing goals without addressing all of the issues that cause delays in housing starts misses the mark. Without conscientious reforms to the development process and legal and regulatory schemes involved you unnecessarily punish municipalities for delays caused by legal procedures. In order to make the goals that have been outlined by the Governor, CEQA reform would likely have to be part of the solution.

States are beginning to examine the taxpayer standing rules as it relates to environmental issues. The question we will be following over the next several months is whether legal reform will accompany these new proposals related to addressing the housing shortage. Budget proposal and guidelines without the regulatory and legal reforms does not solve the delays created from the litigation process.

The attorneys of BPE Law Group, PC. have been advising our clients on real estate, business and estate planning issues for over 20 years and have assisted numerous clients in business and real estate matters and have represented and advised brokers on their professional obligations as well as consumers on their rights. If you have questions concerning legal matters, give us a call at (916) 966-2260 or e-mail Keith at Our flat fee consult for new clients may get you the answers you need for the questions you have.

The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.