California's Builders and YIMBYs at Loggerheads Over Bill Cracking Down on 'Unchecked Sprawl'

Activists who would like to see more housing built and people who build housing for a living would seem to be natural allies.

That's typically the case in the California Legislature, where the building industry and pro-development YIMBY groups ("yes in my backyard") are usually aligned on bills that streamline housing approvals, loosen zoning codes, and reduce red tape.

But a new bill is driving a wedge into this coalition.

Working its way through the Legislature this year is Assembly Bill 68, authored by Assemblymember Chris Ward (D–San Diego). The goals of the bill are twofold: Streamline approval of new multifamily infill housing projects in "climate-safe" areas while adding additional processes to the approval of new housing in unincorporated, exurban land.

"Our current land use policies have left unchecked sprawl," said Ward in a statement. A.B. 68 will "enable more Californians to live in walkable neighborhoods, near jobs, schools, and transit."

Sponsoring the bill is California YIMBY, which has long a history of fighting for zoning reform bills at the state level, and the environmentalist group Nature Conservancy.

It's a "question of human safety and human life and the fact that for most of the last 30 years, most of the homes built in the state have been in high fire hazard zones," says Matthew Lewis, communications director for California YIMBY. "A lot of it is the result of the severe restrictions we place on infill housing in urban areas."

Over one-third of California's 14 million housing units are located in the fire-prone "wildland-urban interface," per The New York Times' parsing of Forest Service data.

But the fact that so much new housing is being built in these outlying areas—where land is cheap and NIMBY ("not in my backyard") opposition is weaker—is a great argument against, not for, making exurban development more difficult, argue the state's builders.

"It wipes out the most likely places [to build] in the future and where we're building the most housing today," says Dan Dunmoyer of the California Building Industry Association (CBIA).

The streamlining provisions in the bill would remove some roadblocks to new housing, he tells Reason, but leave many more in place. "Even though A.B. 68 contends to make it easier to get through some of our environmental regulations, we would contend it's not even going to grow the footprint of urban infill," he says.

A.B. 68 would require local governments to "ministerially approve" new housing projects on "climate-smart" properties near transit or amenities like restaurants and grocery stores.

That means sponsors of these projects couldn't be forced to go through public hearings. They also wouldn't be subject to discretionary review, whereby bureaucrats have the power to shoot down or condition housing that's otherwise compliant with the local zoning code.

A.B. 68 would also exempt qualified housing projects from having to go through the expensive, lengthy, litigious environmental review process created by the California Environmental Quality Act (CEQA).

That process includes requirements that developers produce book-length documents vetting every conceivable environmental impact their project might have. Third parties can sue over the approval of a project if they think that document isn't thorough enough.

Plenty do, either to stop projects completely or to wring concessions out of the developer. In 2020, projects totaling half of California's annual housing production got hit with CEQA lawsuits.

A.B. 68 also slips in some zoning reforms. Local governments would be limited in the kinds of height limits, setback requirements, and massing restrictions they could impose on projects being built on "climate-smart" parcels.

The bill's streamlining, combined with other recent YIMBY-backed reforms, is getting California to the point where "it actually gets harder for cities to block housing than to permit it," says Lewis. "There are provisions in here in that we think are additive enough and different enough from other pieces of legislation where it's going to be one more chink in the armor of cities trying to prevent housing being built."

At the same time, a major goal of A.B. 68 is also to make development outside of these climate-smart areas more difficult.

The bill would prevent counties from increasing allowable housing density or expanding water and sewer infrastructure in unincorporated, "climate resilient" areas unless they get the approval of California's state planning agency, the Office of Planning and Research (OPR). It also couldn't approve new subdivisions in areas with high fire or flood risks without going through OPR.

Getting OPR's approval for exurban development, in turn, requires counties to prove the new housing is immediately adjacent to existing development and necessary to meet state housing requirements and that there are no other properties within already developed areas where this new housing could conceivably go.

Lewis stresses that this isn't a ban on counties approving new suburban development. "There's just an additional step where they'll have to certify that's where we have to build," he says.

Dunmoyer, in contrast, describes it as effectively "outlawing" greenfield, suburban development. The CBIA is calling A.B. 68 a "housing killer" bill.

Ward himself has described his bill as making development in unincorporated areas "very rare or close to impossible" in comments to the San Francisco Chronicle.

The bill is proving divisive even amongst some YIMBYs.

"People are calling [A.B. 68's regulations on sprawl] a 'second look.' That second look could easily turn into a no look at all," says Louis Mirante, a former legislative director with California YIMBY who now works at the Bay Area Council (which is opposing A.B. 68).

Mirante says that in places like the Bay Area, new urban multifamily, infill development is the kind of housing the state needs to be building. Streamlining that kind of development, as A.B. 68 attempts to do, is good and necessary.

The trouble, he tells Reason, is California "does not have as robust a history as I'd like of infill-oriented policies working. The public resources code and the government code are littered with CEQA streamlining that ostensibly helps affordable housing in infill locations that simply go unused." What California does have is "a very long history of enacting policies that stop or slow development successfully," he says.

In other words, A.B. 68's approach of facilitating more urban infill development while restricting single-family, exurban development is a risky bet in terms of housing supply. The benefits of streamlining are uncertain, whereas the exurban development restrictions will almost certainly work.

Indeed, there are lots of conditions a property would have to meet to qualify for A.B. 68's streamlining provisions.

The project couldn't be replacing historic structures or affordable housing. A.B. 68 also excludes projects that would require the demolition of rent-controlled housing from the bill's streamlining provisions. That would include effectively all multifamily housing more than 15 years old, which are subject to California's rent control law.

Local governments could still adopt objective design and zoning standards, as well as "inclusionary zoning" ordinances that require developers to offer a set percentage of units at below-market rates to lower-income buyers and tenants. It's often the case that local governments and anti-development activists will demand higher and higher affordability thresholds from developers until a project becomes economically infeasible.

Recent history includes a few examples of similarly constructed streamlining efforts failing to produce much new housing.

In 2021, the California Legislature passed S.B. 9 which requires that duplexes and lot splits be ministerially approved by local governments. The law put some limits on the ability of localities to route around this streamlining requirement. State officials threatened legal action against the more cynical local attempts to effectively nullify the law.

Nevertheless, the law still left a lot of wiggle room for cities and counties to prevent the production of new duplexes.

"While SB 9 does state that local requirements may not 'physically preclude' the development of a duplex, in practice, localities could pass objective design standards, affordability requirements, or use of land requirements that would result in projects which are technically eligible under the law but are rendered economically infeasible by the requirements," wrote researchers at the University of California, Berkeley's Terner Center for Housing Innovation in June 2022.

A follow-up Terner Center report published in January 2023 found that S.B. 9 had underperformed even the modest hopes for the law. It had produced only a trickle of new permit applications for duplexes and lot splits, even in pricey Bay Area communities where it was assumed S.B. 9 would be the most impactful.

A.B. 68's proponents argue it's not just good policy but good politics by forging an alliance between the environmental and housing supply movements in support of major legislation.

"Historically we have worked separately or have even been at odds," write Melissa Breach of California YIMBY and Liz O'Donoghue of the Nature Conservancy in a Los Angeles Times op-ed. "Now our issues are colliding. The housing affordability crisis has become a significant contributor to loss of habitat as well as climate pollution, so we're breaking our silos and working on a shared vision. These problems are inextricable from each other."

Mirante is worried that trading the support of builders for a few environmentalist groups is bad politics.

To date, most of the zoning reforms passed at the state level have required the support of Republican legislators and often Republican-aligned builders and business groups.

"If these bigger organizations that largely do suburban sprawl, if they start seeing infill legislation as a threat, or start retaliating against infill legislation as a result of [A.B. 68], the infill coalition in California could utterly collapse. That would be truly devastating for millions of Californians in need of housing," he says.

Mirante tells Reason he doesn't anticipate A.B. 68 even making it out of a committee hearing this year. Lewis says he anticipates the bill to change a lot over the summer, which would well win over current opponents.

"To the extent that we can take another step toward building more homes that reduce climate pollution and climate risk, that's what we're after," says Lewis.