Legal challenges for new developments could start declining in San Mateo County

CEQA mandates robust reviews on the environmental impact of a proposed development. The required reports can often cost hundreds of thousands, if not millions, of dollars and could take up to nearly two years, Jeremy Levine, policy manager at the Housing Leadership Council of San Mateo County, said.

Housing advocates have often pointed to CEQA lawsuits as a major tool used by those who oppose development in their areas. No matter the lawsuit’s outcome, the legal challenges further delay housing production and increase overall costs.

“This matters in cities like Menlo Park, where a group of residents are trying to block the city from pursuing housing in its downtown, and they’re looking at all legal avenues, and one of those legal avenues just closed,” Levine said.

Under the new policies, developments of up to 20 acres — among other criteria — could be exempt from the time-consuming CEQA process. Even if they were already exempt under the law, developers still needed to prepare robust reports.

“You’re still doing a bunch of reports and paying consultants to prepare documents just to show you’re exempt,” Petrilli said. “That’s a six- to nine-month process, as opposed to 18 to 24 months if you’re doing an [environmental impact report] from scratch. But it’s still a lot of work.”

Now, developers don’t have to undergo the arduous process to prove exemption, he added.

Prior to the new law, which passed and went into effect in June, exemptions for infill developments were also only valid for up to 5 acres, rather than 20. While that means larger multifamily and mixed-use projects can now take advantage of the exemption, developers of buildings with less than seven or eight stories will likely reap the most benefit. That’s because any project over 85 feet will have to pay prevailing wages, or a minimum hourly wage that is usually higher than the pay for workers on a privately funded development or nonunion labor. Petrilli said prevailing wages could cost developers 20% to 30% more.

Sung Kwon, deputy director of Community Development for the city of San Mateo, said it has received one formal request for the CEQA exemption, which is for a 10-unit project at 2015 Pioneer Court.

“Developers may have to think through the cost because it might be less expensive to just go through the normal process,” Kwon said. “It’s probably more attractive for smaller projects.”

San Mateo has seen some of the most development applications in the county so far this year — likely due to rezoning parts of the city to accommodate taller, denser buildings — and has also received several informal requests for the exemption since the law’s passage.

One Redwood City applicant has also indicated interest in the exemption.

Petrilli said it makes sense that developments that are already on the cusp of financial feasibility and are in cities with strong rental markets, like San Mateo, Redwood City and South San Francisco, would see the most traction with the new law.

He added that the new legislation will hopefully expedite the entitlement, or approval process, however, the complicated nature of the bills may lead to more clean-up legislation in the future.

“This is a really big deal because of how long the process takes and how expensive it is,” he said.