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Five years ago, the planning and development world in California was flush with money. With 20% of the nation's planners and at least that percentage of real estate developers, the state was awash in plans. Big general plans were paid for by flush general funds. Redevelopment agencies had plenty of money to update their redevelopment plans and then subsidize the resulting projects. Ambitious specific plans to accommodate flashy new projects – both infill and greenfield – were paid for by developers itching to build. That world feels like a lifetime ago for most planners and developers in California today. Although the state's real estate prices are inching upward and construction has clawed its way upward from an astounding low in 2009, business is still slow. The planning and development apparatus has shrunk significantly – maybe permanently – since the heady days of the ‘00s. Indeed, the whole development industry in California has shrunk so much that the Construction Industry Research Board – always the most reliable source of information for new housing starts in the state – has basically gone out of business.  And even more worrisome is the fact that most of the funding sources that have covered the planning gap since 2008 are on their way out. The $6-billion redevelopment machine is already gone. Proposition 84's $60 million or so in planning grants will be depleted after one more round of funding. Developers themselves aren't interested in funding big planning efforts these days. And the federal Sustainable Communities planning grant program was zeroed out in the current fiscal year after being funded at $150 million previously. It may come back at a lower level – maybe $50 million nationwide – but it will probably provide funding for, at most, a few projects in California over the next couple of years. Not for decades have local planning departments been so thinly staffed; and never have there been so many unemployed planners in California. Yet California's development context is changing dramatically and odds are that local governments around the state are going to have to revise and update a lot of plans in the next few years. For one thing, the whole climate-change thing has altered the regulatory context. Greenhouse-gas reduction strategies are now more or less mandatory, and as a result "climate action plans" are becoming common. Also, the real estate bust has resulted in a fundamental change in what developers want to build – or, at least, what they can get financed. The rush both single-family suburban tracts and mixed-use infill projects has more or less stopped, and developers are now pushing rental apartment projects – often much more dense than the mixed-use projects envisioned by old plans -- because that's what banks will lend on. And finally, all those plans done during the real estate boom – eight, 10, 12 years ago – are getting old. That means, at least in theory, that they are legally vulnerable. To be sure, some local governments are squeezing their own funds to pay for plans they have to do. Most cities are taking housing elements seriously, though the going rate for them is headed downward. More and more cities are also doing climate action plans – largely because doing such a plan up-front and devising citywide strategies for greenhouse gas emissions reduction is actually less expensive than going project-by-project. (In the case of both housing elements and CAPs, fear of getting sued is a big factor.) And a surprising number of cities are still doing general plan updates with money they've squirreled away, though these efforts tend to be more focused and less wide-ranging than they used to be. Overall, though, there's not much planning going on. So how will it get done over the next few years? There are three answers: transportation money, developers, and (horror or horrors) efficiency. And there's a wild card: The state's cap-and-trade money. Transportation Money The conventional wisdom is that there isn't enough transportation money around. State and federal gas tax rates haven't gone up in 20 years, while people are driving less in cars that get better mileage. The federal Highway Trust Fund is bankrupt – propped up by loans from the federal general fund – and the state's accounts aren't much better off. But many transportation agencies are doing pretty well, thanks largely to countywide transportation sales taxes, and increasingly these agencies are shifting funds to planning on the theory that better land use planning affects travel demand – and also makes it easier to implement SB 375. L.A. Metro, for example, is about to dole out $10 million to localities in Los Angeles County for a program commonly known as "TOD III" – the third round of funding for transit-oriented development planning efforts. It's important to note, however, that this money will go only in one direction – away from greenfield development and toward infill, mixed-use stuff. Developers OK, developers have no money at the moment. But they do have chutzpah, entrepreneurial skill, and access to people with capital. And especially on the urban/infill side, they recognize that the end of redevelopment left a big hole. They can't easily drop their infill projects into urban locations unless there's a plan in place that makes it easy for them to do so, as well as public (or public-private) efforts to assemble land and build infrastructure. So look for savvy developers to figure out how to construct a public-private or non-profit alternative to redevelopment, which can engage in large-scale plans and find new ways to finance infrastructure coordinated with private development. Civic San Diego – the transmogrified Centre City Development Corp. – is the closest thing so far, though it's still basically a city entity. Efficiency Oftentimes, nobody involved in the planning process has much incentive to increase productivity and efficiency in planning processes. Government agencies begin with either a set pot of money (for their own plans) or money from developers (especially for environmental review); and often they don't track their own staff time against planning projects very well. Consultants are in the business of spending the money the government has. And, frankly, a lot of the most expensive parts of the planning process, especially public meetings, are labor-intensive and therefore expensive. Nevertheless, look for developers, government agencies, and consultants alike to come up with more efficiencies to stretch the dollars farther. There have been a variety of attempts over the years to figure this out, ranging from computerized, do-it-yourself planning templates to – among large firms – outsourcing work to offices in Asia, where labor is cheaper. But nobody has ever really cracked this question. There'll be a lot of pressure in the next couple of years to do so. Wild Card: Cap-and-Trade Funds The state just held its first, apparently successful, cap-and-trade auction, generating money from greenhouse-gas emitters. There'll be a huge scramble in Sacramento over what to do with this money, but it's likely that at least some of it will flow toward planning – especially if the planning is designed to reduce greenhouse gas emissions. It's up to the Office of Planning & Research and the Strategic Growth Council to lean on the Air Resources Board to make this happen, but the most likely outcome is that some money will be used to replace the dwindling Prop. 84 planning resources.

A couple of months ago, we reported on four post-redevelopment models emerging in California, based on a presentation by Paul Silvern of HR&A: Alhambra, Oakland, San Diego, and Los Angeles. Now Silvern and his colleagues at HR&A -- along with ICF and Renata Zimril -- have proposed a whole new post-redevelopment economic development structure for Los Angeles. Unsurprisingly, the recently released HR&A report -- commissioned by L.A.'s chief administrative officer and chief legislative analyst -- calls for the creation of a consolidated Economic Development Department. But if the proposal is adopted by the city, it would represent revolutionary change for a city that has long been characterized by a large, sluggish bureaucracy that has difficulty being nimble enough to compete on economic development. Perhaps most interesting is how HR&A proposes to fund the new operation: With the money the city now receives in its general fund because redevelopment was killed. One oft-overlooked point about the end of redevelopment is that it created a "windfall," if one might call it that, for city general funds. Redevelopment agencies typically received somewhere between 60% and 100% of property tax increment from inside redevelopment project areas. Now that the money is distributed to taxing agencies just like all other property tax money, cities are getting about 15% of it into their general funds. For the City of Los Angeles, that's about $20 million a year. Most cities will no doubt vacuum up this new revenue and use it to keep the police department whole or pave more streets. But a few cities -- and apparently Los Angeles is among them -- are viewing these funds as possible seed money for a new, post-redevelopment economic development effort. HR&A's report also calls on the city to: -- Reposition economic development as a high-priority citywide effort that isn't so bogged down in the politics of city council offices or the regulatory churning of the city bureaucracy. -- Create the position of deputy mayor for economic development. -- Spin off a citywide economic development nonprofit that will have more flexibility to do deals than the city government. -- Manage the city's real estate assets more strategically, either to generate revenue or maximize their value in creating new economic activity. HR&A looked at lessons learned from eight recognized leaders in economic development, including two in California -- San Diego and San Francisco. No other city in California is Los Angeles, of course. But the HR&A report provides some interesting fodder for the ongoing discussion in local circles around the state about how to maintain a viable economic development effort in the post-redevelopment era.

So, in the battle between the California Environmental Quality Act and the Housing Accountability Act, which law wins?

Here's a deal for you:  Enviros agree to a variety of reforms to the California Environmental Quality Act -- especially constraints on the ability to sue, including possibly limiting standing and prohibiting lawsuits if the umbrella state or federal environmental law has been complied with. In return, developers agree to ditch the conclusion of Ballona Wetlands Land Trust v. City of Los Angeles , in which the California Supreme Court ruled that natural environmental conditions such as sea-level rise are not subject to CEQA analysis -- for example, in examination of a beachfront project that could be affected by rising waters. Crazy? Maybe. But it's a deal that prominent CEQA lawyer Michael Zischke of Cox, Castle & Nicholson says could be on the table in Sacramento.  Ballona Wetlands is driving environmentalists crazy because it means they can't use CEQA to deal with sea-level rise. Speaking at Friday's UCLA Land Use Law and Planning Conference in Los Angeles, Zischke said it's a deal that developers might actually take -- largely because, he says, they won't be giving up much. "My view is that Ballona is not that helpful because you probably want to look at sea-level rise anyway and put it on the record" in order to reduce the risk of litigation and loss in the courtroom, he said. Meanwhile, even though the California legislature is more Democratic than ever as a result of last fall's election, that doesn't mean CEQA is sacrosanct. On another panel, lobbyist Tony Rice, who represents many local governments, noted that Sen. Michael Rubio, D-Shafter, has now been installed as chair of the Senate Committee on Environmental Quality. Rubio  made a last-ditch effort for CEQA reform in August , only to back off when Senate leader Darrell Steinberg took him to the woodshed.  Rice also mentioned that Rubio's arrival at CEQ coincided with staff changes on the committee. Although he didn't mention any names, longtime CEQ staffer Randy Pestor -- viewed as the legislative staff's leading defender of CEQA -- recently retired.

As this blog has reported , the standard conservative critique of smart growth and "good" planning sometimes doesn't seem very logical. Sometimes these critiques were based on the assumption that any government intrusion into land markets is bad – whether it creates higher density or lower density – and sometimes they're based on the assumption that smart growth inevitably promotes higher-density development when what the market really wants is low-density development. Indeed, my good friend Wendell Cox sometimes espouses both these views at the same time. Which is why the conservatives who came to the defense of smart growth the other day at the New Partners for Smart Growth conference in Kansas City were so refreshing. They didn't agree with everything smart growthers advocate – indeed, they were assiduous in shooting down anything that smelled like big government – but they did a good job of identifying the situations in which conservatives should support smart growth. Virginia blogger Jim Bacon and Long Island law professor Michael Lewyn both landed in more or less the same place: Traditional suburban zoning represents heavy-handed government regulation that robs people of their liberty and property rights. "What kind of society outlaws granny flats?" asked Bacon, who runs a blog called Bacon's Rebellion . Lewyn, a professor at Tauro Law School , went further and articulated a heavy conservative critique of minimum parking requirements, saying not only that they rob people of their property rights but also that they hinder real estate development by taking property out of play. "If the spaces are above ground, these requirements are taking money from your hands," Lewyn said. "If they're underground, you pay have to pay money to build the parking units." In addition, Bacon hit hard on the fiscal effects of smart growth and sprawl. He said conservatives should be opposed to the practice – especially common in red states – of having the government pay for all the infrastructure costs associated with new development. "That's crony capitalism," he said. This is a mighty different critique than we typically see from Cox, his buddy Joel Kotkin , and academics like my USC Price School colleague Peter Gordon . They typically begin with the assumption that low-density development is the natural order of things and therefore any move toward higher density must be the result of government regulation. Indeed, as I have previously reported, not long ago on Larry Mantle's Los Angeles radio show , Wendell and I agreed that regulations should be lightened so that developers can be more responsive to the marketplace – but he then railed about SB 375, saying that it would cause (I am paraphrasing here from memory) "30 units an acre in neighborhoods that have five 5 units an acre for decades and decades." The idea that the market might want higher density and property owners ought to have the right to cash in on this changing market didn't seem to occur to him. In that sense Cox represents trods a well-worn path in conservative suburbia – the desire to retain one's own property rights while making sure nobody else is able to cash in on theirs. Bacon, in particular, called his fellow conservatives out on this paradox and went on to say that conservative Republican politicians are more than happy to exploit it. "In Virginia," he said, "Republicans see their constituents as their red spots on the electoral map. They've written off the urban areas. They are focused on the areas that consume a lot of gasoline and are committed to existing form of development." There was one area where both Bacon and Lewyn appeared to strongly part company with the smart growthers: Both strongly opposed government-funded public transit. Transit is, of course, a core part of the smart growth agenda and virtually all major transit systems in the United States – and in the world, for that matter – are run by public agencies that make up for farebox deficits with tax revenue. To both Bacon and Lewyn, this appears to be top-down government intrusion at its worst. "The traditional municipal-transit model is broken," Bacon said. "None make a profit, all are undercapitalized and starved for resources. Why would that be? Gee, maybe because they are government monopolies dealing with labor unions."

Streetcars are the hottest thing in the downtown revitalization business these days. They're in operation in Portland and Seattle and in planning and construction stage in places like Washington, D.C., Oklahoma City, Cincinnati, Fort Lauderdale and Kansas City. And don't worry – California will get its share of streetcars as well, especially Southern California. The Downtown Los Angeles streetcar appears all but certain to be open by around 2016, and three Orange County cities – Anaheim, Santa Ana, and Fullerton – are exploring the idea. At last week's New Partners for Smart Growth conference in Kansas City, one of L.A.'s leading streetcar advocates – Shiraz Tangri, a lawyer for Alston & Bird and the general counsel for LA Streetcar Inc. – laid out the game plan for how the downtown streetcar will be built. A critical piece of the puzzle was put into place last fall, when downtown voters approved a Mello-Roos District to help finance the streetcar. It's one of the few cases in California history that a Mello has been successfully adopted in an urban location – which, all by itself, may be a harbinger of things to come. At first glance, streetcars would not seem to have much of a place in the 21st Century. These self-propelled single-car vehicles are much slower even than light-rail trains and they typically run in the street with regular traffic. Yet they're catching on all over the country as a more efficient downtown circulator than the typical bus or shuttle – and one that will generate new real estate development along the way. That's clearly what's happened in Portland, where the streetcar connects downtown with the hopping Pearl District and with the South Waterfront, where it connects to an aerial tram to Oregon Health Sciences University, which is located atop a nearby hill. Other cities are trying to replicate the Portland story. Virtually all streetcar projects seek to connect disparate destinations in or near downtowns. They're all starting with only a few miles of service and compared to other rail transit investments they're cheap -- $100 million or so on average. But, as Tangri pointed out in his presentation in Kansas City, no city in the country is better poised to use the streetcar well than L.A. "It's a history project and an identity project," he said of the L.A. streetcar. "We should be the most pedestrian-friendly city in the world. We have a great climate. It is incredibly dense." Downtown Los Angeles is already experiencing an amazing renaissance. The opening of the Staples Center in 1999 and the city's pathbreaking adaptive reuse ordinance shortly thereafter kickstarted a rejuvenation that has increased downtown's population from 10,000 to 50,000. Downtown is the hub of a burgeoning regional transit system that is likely to double in size over the next decade, thanks largely to Measure R.  Even so, as Tangri pointed out in his Kansas City talk, Downtown L.A. is big – it's a long way from Staples to the hip lofts east of City Hall – and it can be tough to get around. Furthermore, some parts of Downtown have not shared in the rebirth. For example, along Broadway – once Downtown's premiere shopping street – the upper floors of 12-story buildings remain mostly empty even as neighborhoods all around have new life. (Tangri says there is 1 million square feet of vacant space on Broadway.) Indeed, Broadway is the focal point of the streetcar project; Councilmember Jose Huizar has assigned the same staff member to be the point person for both the streetcar and Broadway. Like so many other streetcar projects around the country, the L.A. project is being put together entirely outside the traditional public transit structure. (L.A. Metro is supportive but has nothing to do with the project.) And as Tangri and others often point out, when business leaders promote – and pay for – a transit project, it's going to have different a completely different goal: economic development rather than mobility. "We talk a lot about transit-oriented development," he said, "But this is development-oriented transit." Though some cities around the country are relying on state and federal funds to help pay for their projects, L.A. – like other cities, including Kansas City – is relying almost entirely on what amounts to a parcel tax.  Among other things, the Mello is levied as a gradient – those close to the line pay more. And, as Tangri and other streetcar experts frequently say, you've got to link those places that are hot in the real estate market with those that aren't. It's a way of extending the hot market to new locations. The Mello-Roos victory last November is an especially interesting and important aspect of the L.A. streetcar effort. Originally a Proposition 13 workaround, Mellos have traditionally been used only in greenfield locations because they require two-thirds voter approval. In areas with few voters, the vote is among property owners only, which means developers and local governments have typically negotiated an infrastructure finance deal and than the developer (often the sole landowner) votes the Mello district into existence. Cities have usually stayed away from urban Mellos because they fear voters won't go for the extra tax. In Downtown L.A., though, all those new hipsters helped the cause. Whereas many property owners may have been reluctant to tax themselves for the streetcar, the new downtown residents – the voters – were more than willing deliver the two-thirds vote for the additional tax, which of course falls in the property owners and not – at least not directly – on those residents who are renters. The streetcar vote could flip traditional California thinking about urban Mellos on its head. Tangri said the streetcar should begin construction next year and open in 2016. This is a similar timetable for many other streetcar projects around the country.

The CEQA reform landscape – which looked pretty robust all winter – was turned upside down on Friday. First, state Sen. Michael Rubio – chair of the Senate Committee on Environmental Quality and the leading advocate for strong CEQA reform in the legislature – abruptly resigned to take a government relations job with Chevron. Then, a few hours later, Senate leader Darrell Steinberg introduced a placeholder CEQA reform bill that hinted at less-than-sweeping reform. However, the bill does call for statewide significance thresholds for land use impacts – a potentially significant shift. Without a CEQA champion in the Legislature, it seems likely that some CEQA reform will be passed this year. Instead, it is likely to nibble around the edges of CEQA processes – an approach that critics sometimes say creates a more complicated law, not a simpler one. Gov. Jerry Brown said Saturday he was counting on Rubio to carry the ball on CEQA reform this year and was disappointed that he was resigning. The bill, SB 731 ,  does contain language that supports an annual $30 million in funding to the Strategic Growth Council in order to continue the local planning grant program currently funded by Proposition 84 funds.  Steinberg acknowledged that SB 731 is a placeholder. Currently, the bill is barely one page long and contains very general "intent" language. The bill currently calls for statewide significance thresholds on noise, aesthetics, parking, and traffic levels of service as well as land use impacts. The bill also calls for a variety of procedural changes, including limiting "late hits" and "document dumps," defining "new information" more specifically, and directing trial judges to focus only on inadequate portions of environmental documents rather than remanding the entire document for review. Considered an up-and-coming star among conservative Democrats, the 35-year-old Rubio served on the Kern County Board of Supervisors before he was elected to the Senate in 2010. Last August, he made headlines by proposing major CEQA reforms late in the legislative session. . Within 24 hours he held a press conference with Steinberg backing off the reforms and promising to reintroduce legislation in 2013. He was expected to lead the charge for CEQA reforms this year. He said he resigned because the legislative position leaves him with little time to spend with his young family. The Chevron job certainly pays many times his $95,000-a-year legislative salary. It is unclear whether his ability -- or lack thereof -- to move CEQA and other reforms through the legislature was also a factor.

Not long ago, the Census Bureau released some new analyses of commuting, focused especially on "mega-commuting" – that is, commuters who drive more than 50 miles and 90 minutes one way. The numbers are predictably frightening – these folks travel extremely long distances, using up a lot of time, gas, and road capacity on the process. But mega-commuters only make up about 2% of all commuters. The bigger message from the Census data is a much more prosaic – and discouraging – message about ordinary, day-to-day commuting. Planners in California and elsewhere often believe that by changing land use patterns, we can change commuting patterns. But commuting patterns are stubbornly persistent. Once they are established, they never change. They're basically fixed. It's so common that most of the time we don't even notice. In Southern California, for example, we talk constantly about the problem of commuters from Riverside County to Orange and San Diego counties. And these numbers are indeed big – 67,000 to Orange and 36,000 to San Diego. But they are dwarfed by some of the more mature county-to-county commuting relationships. The strongest commuting relationship in the state is between Los Angeles and Orange County, and the cross-commute is almost exactly even – with 181,000 commuters traveling from L.A. to Orange and 178,000 the other way. As Figure 1 show, the commuting relationships between Santa Clara County and Alameda and San Mateo counties—though much smaller and tilted somewhat toward Santa Clara – are similar.  Indeed, even the cross-commutes between San Bernardino and Riverside counties – two counties generally considered bedroom suburbs – dwarf Riverside's connection to Orange and San Diego. Almost 90,000 people commute each day from Riverside to San Bernardino, while 65,000 people go on the other direction. And who would believe that there are just as many Ventura-LA commuters as there are Riverside-Orange commuters? (As more jobs have been created in Ventura County, the Ventura-LA number hasn't declined; instead, the LA-Ventura number has gone up.) So, the moral of the story isn't that better land use and transportation planning will change hardened commuting patterns. Those will probably stay. All California planners can hope for is to create new patterns that new commuters will follow.  Chart headline: Strongest Cross-County Commuting Relationships Source: U.S. Census

After a variety of setbacks, Senate leader Darrell Steinberg, D-Sacramento, is doggedly moving forward with bills to reform the California Environmental Quality Act and revive redevelopment. Both bills – SB 731 for CEQA and SB 1 for redevelopment – have cleared the Senate and are now pending in the Senate. The CEQA bill is more likely to be enacted into law. Steinberg deliberately created a consensus bill with little opposition  and it passed the Senate 39-0. The redevelopment bill – a rerun of last year's SB 1156, which passed the Legislature but was vetoed by Gov. Jerry Brown – passed the Senate 27-11 on a party-line vote and Brown may well veto it again. Perhaps the biggest CEQA change called for in SB 731 is the creation of state significance thresholds for parking, transportation, and noise. The bill would allow local governments to create stricter standards – but one can imagine quick a battle at the Natural Resources Agency and the Office of Planning & Research over whether the state thresholds should be strong or weak. In addition, the bill would ditch aesthetics as a CEQA issue.  Steinberg's bill originally called for an appropriation of $30 million per year to fund planning grants through the Strategic Growth Council, but the language was watered down simply to say that this is the Legislature's intent. With such broad support, it seems likely that Brown will sign the bill. An excellent rundown of the bill was prepared by the Manatt law firm. The redevelopment bill, SB 1, continues to mirror last year's bill, permitting the creation of a "sustainable communities investment authority" with limited access to tax-increment financing if both the city and the county agree to it. The redevelopment areas to be created would be limited to transit-rich locations, "small walkable areas," and clean energy manufacturing sites. Although the bill appears likely to pass the Legislature for the second year in a row, there is no reason to believe Brown has changed his mind on vetoing it.

In the pantheon of developer complaints about the California Environmental Quality Act, perhaps the most common one is that it's too easy to use it to file crazy lawsuits purely for the purposes of gumming up the works. Which is maybe why the building industry and property rights advocates have spent so much time lately filing CEQA lawsuits apparently designed to gum up the works. It's hard to know exactly how seriously to take these lawsuits – especially in the context of endless and unsuccessful efforts at CEQA reform, which are stymied in large part by citizen activists and labor unions that often use CEQA as leverage over the developer or the retail business attending to construct a new project. Nevertheless, the building industry does appear to be trying to use CEQA, increasingly, to attack environmental protections. This appears to be especially popular in the Bay Area. Exhibit No. 1 is the recent lawsuit by the California Building Industry Association, using CEQA to attack the creation of significance thresholds, which any lead agency must create in order to comply with CEQA. The case challenged the creation of significance thresholds by the Bay Area Air Quality Management District, which CBIA said required a CEQA analysis. You can read the details of the case here , but the bottom line is that CBIA attempted to persuade the courts that CEQA should apply to CEQA. The First District Court of Appeal didn't buy the argument, saying the 7,000-page administrative record was probably sufficient. Exhibit No. 2 – also from the Bay Area – is the Pacific Legal Foundation's lawsuit against One Bay Area, the region's sustainable communities strategy prepared by the Metropolitan Transportation Commission and the Association of Bay Area Governments pursuant to SB 375. In that lawsuit, filed in July, PLF claimed that – hold on to your hats – MTC and ABAG should have included in the EIR an alternative proposed by PLF's client, Bay Area Citizens. The BIA's Bay Area affiliate filed a separate lawsuit with a variety of separate CEQA arguments. Not surprisingly, the PLF lawsuit has a more ideological, value-laden tone than the BIA lawsuit. It calls One Bay Area "wrongheaded" and repeatedly calls the approved scenario "low-performing," meaning that the proposed rail transportation projects will cost a lot of money without generating very many riders. Claiming that One Bay Area should have discounted emissions reductions from the Pavley bill and other state measures before crafting the land use scenario, the lawsuit claims: "The upshot of the Final Report's use of a higher-than-actual greenhouse gas baseline is to create the false impression that especially draconian land-use measures are needed to meet the region's SB 375 targets. Thus, the Final Report's approach is irreconcilable with CEQA' s requirement that the environmental baseline normally constitute existing physical conditions, not a hypothetical condition or legal fiction." The lawsuit's bottom line is that MTC and ABAG should have considered Bay Area Citizens' alternative, which included such action as "insist that local communities be informed of the public subsidy costs of affordable housing before the assignment of regional housing needs assessment allocations" and "insist that local communities be informed of the unfunded mandates involved with the obligation to provide affordable housing before that obligation is accepted."   To be honest, the lawsuit overall is pretty repetitious. But the bottom line is clear: ABAG and the MTC didn't use CEQA to do what the Pacific Legal Foundation wanted, so PLF sued. The BIA lawsuit against One Bay Area is more reasoned – not surprising considering the lead counsel is Mike Zischke of Cox, Castle & Nicholson, probably the state's most skilled CEQA lawyer on the development side. (Though it's true that Zischke was also the plaintiff's lawyer in the "CEQA-doesn't-apply-to-CEQA" case.) Zischke's lawsuit claims that MTC and ABAG basically didn't follow CEQA in adopting One Bay Area. The lawsuit claims that the agencies diligently followed CEQA up to a point and then – caving to environmentalist pressure to limit housing in the Bay Area – essentially adopted a plan before doing the environmental impact report. The adopted plan, BIA claims, will require the exporting of 100,000 units of housing out of the Bay Area to the Central Valley and other locations. This last lawsuit at least has some logic to it. CEQA practitioners often struggle about the project level versus the plan level. At the project level, obviously a development project in a particular location is going to have some impact on that location. But at the plan level, it should be possible to examine the relative impact of development at different locations. If Plan Bay Area doesn't plan for enough housing, that'll push the housing elsewhere, and that'll have an environmental impact.  That argument, of course, can lead to the eternal chicken-and-egg argument that seems to afflict CEQA: Does more housing supply respond to demand, or does suppressing supply suppress demand? These questions are almost impossible to answer, which is one of the reasons why CEQA analyses can be so frustrating. Which, of course, raises the bottom-line question: If the building industry and property rights advocates are so frustrated by CEQA's bottomless-pit structure, then why do they keep trying to use it so aggressively?  In a way, I suppose, it's kind of like campaign finance: If you're going to reform campaign finance, you have to win election and re-election to public office, and that means you have to raise a lot of money under the system you want to reform. Similarly, I guess, if you want to try push the building industry's agenda in the regulatory maze that is California planning, you have to use whatever tools are available to you – even if you are simultaneously trying to reform or kill those same tools over in Sacramento. Still, it doesn't seem to me that "kill CEQA before I use it again" is a strong lobbying argument.

So, what did Sen. Darrell Steinberg's last-minute switcheroo mean for CEQA reform? More than you might think. As you may have heard, during the last week of the Legislative session, Steinberg gave up on his bill to reform the California Environmental Quality Act – SB 731 – in order to focus on a bill providing CEQA breaks for a new arena in Sacramento, SB 743. He also gave up on his redevelopment revival bill, SB 1, even though that bill was just one slam-dunk Assembly floor vote from the governor's desk. The irony is that after fighting rear-guard actions all summer against both CEQA critics and CEQA defenders on SB 731, Steinberg actually got some significant reform at the last minute in the Sacramento arena bill. By moving quickly at the end of the session – something he prohibited former Sen. Michael Rubio from doing last year -- he also freed himself from the morass that 731 had gotten bogged down in. And since Steinberg reportedly pulled the switcheroo after meeting with Brown, it seems likely Brown will sign the bill. The two most important changes have to do with (1) parking and visual impacts of infill projects, and (2) the possibility of giving the Brown Administration a run at traffic level-of-service analysis in infill locations. The bill also eliminated a 2009 sunset date for the creation of "infill opportunity zones" under state law. The first issue  is likely to have an immediate impact on how infill projects are handled under CEQA. SB 743 says that parking and visual impacts shall not be considered significant impacts on infill projects. There's some wiggle room here for local design standards, but this is still a pretty big deal. Even the intent language is a big deal, because it is clearly designed – maybe for the first time in the history of CEQA – to put traffic in its place at least in infill locations: "It is the intent of the Legislature to balance the need for level of service standards for traffic with the need to build infill housing and mixed use commercial developments within walking distance of mass transit facilities, downtowns, and town centers and to provide greater flexibility to local governments to balance these sometimes competing needs." The free pass for parking and visual impacts only applies to infill parcels – that is, parcels that are surrounded on three sides by development – in transit priority areas, defined as areas within a half-mile of a major transit stop. A major transit stop in state law typically means any rail stop, or any bus stop with 15-minute headways. In practical terms, what this means is that parking and visual impacts wodn't trip an environmental impact report on an infill project and therefore the likelihood of prolonged litigation on infill projects is significantly reduced. The provision of SB 743 dealing with levels of service is potentially far more significant, though it might take a while to play out. The bill requires the Governor's Office of Planning & Research to prepare new significance thresholds for noise and transportation impacts in infill locations. This was undoubtedly part of the conversation with Brown, because OPR is eager to take a run at levels of service. The ‘90s-era congestion management act basically requires CEQA analysis to take traffic congestion into account. This has led to a situation where the traffic analysis consumes more time and attention than anything else in a CEQA analysis; and it has made approval of infill projects an uphill battle because, obviously, traffic congestion is more likely to be present in an infill location than a greenfield location. CEQA practitioners around the state are struggling to figure out how to either revise or jettison the level of service standard – often simply giving up and acknowledging that LOS "F" (the worst congestion) is simply inevitable and therefore acceptable. It's well-known that OPR wants to take a run at a new level of service standard – this was one of the many topics of OPR's proposed changes to SB 731 – and this provision will give the office a chance to come up with something. All this does not mean that the other proposed changes contained – or potentially contained – in SB 731 are dead. This year is the first year of a two-year legislative session, and so Steinberg simply carried 731 over to next year.  The same is true for SB 1. This bill would revive tax-increment financing on a limited basis with no impact to the state's general fund when a city, a county, and special districts agree on a strategy that conforms with the sustainable communities strategy. Brown vetoed the same bill last year but Steinberg vowed to bring it back – he introduced as SB 1 in order to make a point – and claimed he had a better shot this year at getting Brown to sign it.  If Steinberg had permitted the last Assembly floor vote to occur, however, SB 1 would have gone to Brown's desk; and if Brown vetoed it, Steinberg would have had to start over again next year. By holding it over, he can move quickly early next year and hope that Brown signs the bill – Steinberg's last year in the Senate before he is termed out.

Two years ago, when Redevelopment 1.0 ended, it was widely viewed as the end of an era – but maybe not the end of redevelopment. Maybe it would no longer be possible to use tax-increment financing to solve all urban development and infrastructure problems. But surely a new set of techniques would emerge, either as a result of state law (after all, Gov. Jerry Brown promised a replacement) or because local officials and developers would get creative. Redevelopment 2.0 might not be as powerful, but something good would come along. We're still waiting. Gov. Jerry Brown is so down on a new redevelopment regime that Senate leader Darrell Steinberg didn't even both to put legislation on his desk this year, even though the new legislation won't affect the state's general fund and even though he could have gotten it passed in the Legislature. Meanwhile, most cities that had active redevelopment agencies are snarled in the redevelopment wind-down process. Interestingly, in most cases the hangup has not been the local oversight committee – the committee of local taxing entities that must approve or deny the continuation remaining redevelopment projects – but the state Department of Finance, which has the final word. And that has slowed down any local creativity about Redevelopment 2.0. As the end of redevelopment was pending in 2011, it was thought that the oversight committees would be a tough hurdle to get past, as representatives from counties and school districts would rein in any city's ambitious effort to extend redevelopment in order to protect their own share of the tax increment. As it turns out, however, it's not the oversight committees that are tough – it's the state Department of Finance's beancounters, which is charged with protecting the state general fund in the redevelopment wind-down and is doing so ferociously. So cities have had to devote most of their effort to dealing with DOF. Under the law, cities and DOFT must agree on the Recognized Obligation Payment Schedule (or ROPS) every six months during the wind-down, meaning cities are almost in negotiations with DOF on ROPS-related items. And cities are now moving forward to DOF with their long-term property management plans, also required under the law, which will lay out the ultimate disposition (sale, development, transfer to the city) of each piece of property formerly owned by a redevelopment agency.  And all that back-and-forth DOF means that cities haven't had time to figure out Redevelopment 2.0. They're still dealing with the detritus of Redevelopment 1.0, and understandably they can't see past that problem. Meanwhile, urban redevelopment in California remains a major challenge – and, not surprisingly, the fundamental problem is finding the money required to make urban projects and urban neighborhoods work. Developing individual projects and whole neighborhoods requires two basic things: First, money to cover the significant cost of infrastructure and community amenities required to support new development; and, second, a market strong enough to make individual development projects pencil out. In post-Prop. 13 California – at this point, the entire working life of most planners and developers in California – the trend has been toward loading the infrastructure onto private developers, because it was hard to get the infrastructure money out of the tax flow. That means a bias toward upscale projects, because only in upscale situations is the market strong enough to cover all infrastructure and amenity costs and still make projects pencil. And that's one of the reasons redevelopment was so popular. In an era where regular tax flows didn't cover the infrastructure and amenity cost and tax increases weren't popular, it was a way to cut the Gordian knot and make projects work in places that couldn't support extremely high-end development. Over the past decade, some urban neighborhoods have become so hot that private development projects pencil on their own. But that's still not true in lower-income neighborhoods; and in an urban, infill setting it's almost impossible for any private development project to cover the cost of infrastructure and amenities. So that's the problem California cities are left with: How to write down the cost of development in lower-income neighborhoods; and how to cover the cost of infrastructure and amenities in every urban neighborhood experiencing incremental infill development. Whatever Redevelopment 2.0 winds up being, that's what it has to do.  There's a big toolbox out there that cities are gradually discovering; and there are lots of ideas out there other than tax increment that could be added to the toolbox if state law can be revised.  Generally speaking, there are four categories all these tools fall into: Value Capture. This is essentially what tax-increment is – capturing the increase  in property values by appropriating a portion of the increased property tax flows. But there are other ways to capture value, such as assessment and Mello-Roos districts and the potential for a revised infrastructure finance district law that doesn't require a two-thirds vote.  Most of these, however, require increasing taxes on property owners and developers, rather than diverting the increased tax flow. Patient capital. Urban development is a slow and complicated process. So the idea of patient capital becomes far more important than it used to be. Patient capital can come in the form of underutilized land owned by public agencies or institutions; or in the form of investment funds from philanthropies or specialized institutions such as Enterprise or LISC. The catch here is that even patient capital investors want something – an eventual return, affordable housing, and so on. Tax credits. There are still some federal tax credits out there that pop, most importantly the Low Income Housing Tax Credit and the New Markets Tax Credit, which focuses on non-residential projects. But these are limited and must be allocated rigorously Increased density. Whatever problems it creates for neighborhoods, increased density can solve a lot of the problems urban development faces. In a strong market, it can generate development projects that can be used for infrastructure and amenities. In a weak market, it can help attract more below-market money, principally for affordable housing. But, of course, it is often a huge political battle to obtain. Yet even combining all these techniques, Redevelopment 2.0 is likely to be a lot harder than Redevelopment 1.0 was, for two reasons. First, a lot of the techniques above are best suited for a project rather than major district-level redevelopment – and that makes it more difficult to put together the major infrastructure and amenity packages without big tax increases. And second, as the list above suggests, the transaction cost of even a project is likely to go up. Redevelopment deals were complicated, but big projects could often be done in one fell swoop with tax increment. Now, redevelopment deals will look like affordable housing deals, with the many layers of financing and complicated structure. The bottom line is that there will be no magic bullet for Redevelopment 2.0. Yes, tax-increment may return in a limited form someday. Yes, all techniques above may be combined to do deals. But all of the above – and probably tax increases too – will have to be combined to turn around an ailing urban district.