BILL ANALYSIS                                                                                                                                                                                                    ”



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          SENATE THIRD READING


          SB  
          734 (Galgiani)


          As Amended  June 21, 2016


          2/3 vote.  Urgency


          SENATE VOTE:  37-0


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Natural         |9-0  |Williams, Dahle,      |                    |
          |Resources       |     |                      |                    |
          |                |     |                      |                    |
          |                |     |Cristina Garcia,      |                    |
          |                |     |Hadley, Harper,       |                    |
          |                |     |McCarty, Rendon, Mark |                    |
          |                |     |Stone, Wood           |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Appropriations  |17-0 |Gomez, Bigelow,       |                    |
          |                |     |Bloom, Bonta,         |                    |
          |                |     |Calderon, Chang,      |                    |
          |                |     |Gordon, Eggman,       |                    |
          |                |     |Gallagher, Eduardo    |                    |
          |                |     |Garcia, Holden,       |                    |
          |                |     |Jones, Quirk, Rendon, |                    |
          |                |     |Wagner, Weber, Wood   |                    |








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          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Natural         |5-3  |Williams, Cristina    |Jones, Harper, Mark |
          |Resources       |     |Garcia, Gomez,        |Stone               |
          |                |     |McCarty, Wood         |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Appropriations  |14-5 |Gonzalez, Bloom,      |Bigelow, Gallagher, |
          |                |     |Bonilla, Bonta,       |Jones, Obernolte,   |
          |                |     |Calderon, Daly,       |Wagner              |
          |                |     |Eggman, Eduardo       |                    |
          |                |     |Garcia, Roger         |                    |
          |                |     |HernŠndez, Holden,    |                    |
          |                |     |Quirk, Santiago,      |                    |
          |                |     |Weber, Wood           |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
           ------------------------------------------------------------------ 


          SUMMARY:  Extends for two years the expedited California  
          Environmental Quality Act (CEQA) judicial review procedures  
          established by the Jobs and Economic Improvement Through  
          Environmental Leadership Act (AB 900 (Buchanan), Chapter 354,  
          Statutes of 2011).  Specifically, this bill:


          1)Extends the operation of AB 900 by two years, so that the  
            Governor must certify a project prior to January 1, 2018, the  
            project must be approved prior to January 1, 2019, and AB 900  
            sunsets January 1, 2019.


          2)Adds the following prevailing wage conditions and enforcement  
            provisions:


             a)   Requires contractors and subcontractors to pay to all  
               construction workers employed in the execution of the  








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               project at least the general prevailing rate of per diem  
               wages.


             b)   Provides that this obligation may be enforced by the  
               Labor Commissioner through the issuance of a civil wage and  
               penalty assessment pursuant to relevant provisions of the  
               Labor Code, unless all contractors and subcontractors  
               performing work on the project are subject to a project  
               labor agreement that requires the payment of prevailing  
               wages and provides for enforcement through an arbitration  
               procedure.


          3)Requires a multifamily residential project certified under AB  
            900 to provide unbundled parking, such that private vehicle  
            parking spaces are priced and rented or purchased separately  
            from dwelling units, except for units subject to affordability  
            restrictions in law that prescribe rent or sale prices, where  
            the cost of parking spaces cannot be unbundled from the cost  
            of dwelling units.


          EXISTING LAW:   


          1)Pursuant to CEQA, requires a lead agency with the principal  
            responsibility for carrying out or approving a proposed  
            discretionary project to evaluate the environmental effects of  
            its action and prepare a negative declaration, mitigated  
            negative declaration, or environmental impact report (EIR).   
            If an initial study shows that the project may have a  
            significant effect on the environment, the lead agency must  
            prepare an EIR.  CEQA authorizes judicial review of the  
            agency's decision to carry out or approve the project.   
            Challenges alleging improper determination that a project may  
            have a significant effect on the environment, or alleging an  
            EIR doesn't comply with CEQA, must be filed in the Superior  
            Court within 30 days of filing of the notice of approval.  The  








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            courts are required to give CEQA actions preference over all  
            other civil actions.  
          2)Pursuant to AB 900, establishes procedures for expedited  
            judicial review (i.e., requiring the courts to resolve  
            lawsuits within 270 days) for "environmental leadership"  
            projects certified by the Governor and meeting specified  
            conditions, including Leadership in Energy and Environmental  
            Design (LEED) silver-certified infill site projects, clean  
            renewable energy projects, and clean energy manufacturing  
            projects.


             a)   Defines "environmental leadership" project as a CEQA  
               project that is one of the following:
               i)     A residential, retail, commercial, sports, cultural,  
                 entertainment, or recreational use project that is  
                 certified as LEED silver or better by the United States  
                 Green Building Council and, where applicable, that  
                 achieves a 10% greater standard for transportation  
                 efficiency than for comparable projects. 
                  (1)       Requires that these projects be located on an  
                    infill site. 
                  (2)       Requires a project that is within a  
                    metropolitan planning organization for which a  
                    sustainable communities strategy (SCS) or alternative  
                    planning strategy (APS) is in effect, to be consistent  
                    with specified policies in either the SCS or APS,  
                    which, if implemented, would achieve greenhouse gas  
                    emission (GHG) reduction targets.


               ii)    A clean renewable energy project that generates  
                 electricity exclusively through wind or solar, but not  
                 including waste incineration or conversion.
               iii)   A clean energy manufacturing project that  
                 manufactures products, equipment, or components used for  
                 renewable energy generation, energy efficiency, or for  
                 the production of clean alternative fuel vehicles.









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             b)   Allows a person proposing to construct a leadership  
               project to apply to the Governor for certification that the  
               leadership project is eligible for streamlining.  Requires  
               the person to supply evidence and materials that the  
               Governor deems necessary to make a decision on the  
               application.  Requires any evidence or materials be made  
               available to the public at least 15 days before the  
               Governor certifies a project pursuant to AB 900.
             c)   Authorizes the Governor to certify a leadership project  
               if the Governor finds the project meets all of the  
               following conditions:


               i)     The project will result in a minimum investment of  
                 $100 million in California upon completion of  
                 construction.
               ii)    The project creates high-wage, highly skilled jobs  
                 that pay prevailing wages and living wages, provides  
                 construction jobs and permanent jobs for Californians,  
                 and helps reduce unemployment.


               iii)   The project does not result in any net additional  
                 GHG emissions, including emissions from employee  
                 transportation, as determined by the Air Resources Board  
                 pursuant to the California Global Warming Solutions Act  
                 of 2006.


               iv)    The project applicant has entered into a binding and  
                 enforceable agreement that all mitigation measures  
                 required under CEQA shall be conditions of approval of  
                 the project, and those conditions will be fully  
                 enforceable by the lead agency or another agency  
                 designated by the lead agency.  In the case of  
                 environmental mitigation measures, the applicant agrees,  
                 as an ongoing obligation, that those measures will be  
                 monitored and enforced by the lead agency for the life of  








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                 the obligation.


               v)     The project applicant agrees to pay the costs of the  
                 Court of Appeal in hearing and deciding any case,  
                 including payment of the costs for the appointment of a  
                 special master if deemed appropriate by the court, in a  
                 form and manner specified by the Judicial Council.


               vi)    The project applicant agrees to pay the costs of  
                 preparing the administrative record for the project  
                 concurrent with review and consideration of the project  
                 pursuant to CEQA, in a form and manner specified by the  
                 lead agency for the project.


             d)   Requires the Governor, prior to certifying a project, to  
               make a determination that each of the conditions specified  
               above has been met.  These findings are not subject to  
               judicial review.
             e)   If the Governor determines that a leadership project is  
               eligible for streamlining, requires the Governor to submit  
               that determination, and any supporting information, to the  
               Joint Legislative Budget Committee (JLBC) for review and  
               concurrence or non-concurrence.


             f)   Requires the JLBC to concur or non-concur in writing  
               within 30 days of receiving the Governor's determination.


             g)   Deems the leadership project certified if the JLBC fails  
               to concur or non-concur on a determination by the Governor  
               within 30 days of the submittal.


             h)   Authorizes the Governor to issue guidelines regarding  
               application and certification of projects pursuant to AB  








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               900.  These guidelines are not subject to the rulemaking  
               provisions of the Administrative Procedure Act.


             i)   Requires the Judicial Council to adopt a rule of court  
               to establish procedures that require resolution within 270  
               days, including any appeals, of a lawsuit challenging the  
               certification of the EIR or any project approvals for a  
               certified environmental leadership project.


             j)   Prohibits AB 900 from applying to a leadership project  
               if the applicant fails to notify a lead agency prior to the  
               release of the draft EIR for public comment.  


             aa)  Sets requirements for preparation and certification of  
               the administrative record for a leadership project  
               certified by the Governor.


             bb)  Requires the draft and final EIR to include a specified  
               notice in no less than 12-point type regarding the draft  
               and final EIR being subject to AB 900.  


             cc)  Provides that provisions of AB 900 are severable.  


             dd)  Provides that nothing in AB 900 affects the duty of any  
               party to comply with CEQA, except as otherwise provided in  
               AB 900.


             ee)  Prohibits AB 900 from applying to a leadership project  
               if the Governor does not certify the project prior to  
               January 1, 2016.  










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             ff)  Provides that certification of the leadership project  
               expires and is no longer valid if the lead agency fails to  
               approve the project prior to January 1, 2017.  


             gg)  Requires the Judicial Council to report to the  
               Legislature on or before January 1, 2017, on the effects of  
               AB 900 on the administration of justice.


             hh)  Sunsets January 1, 2017.


          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee, absorbable state costs.


          COMMENTS:  CEQA provides a process for evaluating the  
          environmental effects of applicable projects undertaken or  
          approved by public agencies.  If a project is not exempt from  
          CEQA, an initial study is prepared to determine whether the  
          project may have a significant effect on the environment.  If  
          the initial study shows that there would not be a significant  
          effect on the environment, the lead agency must prepare a  
          negative declaration.  If the initial study shows that the  
          project may have a significant effect on the environment, the  
          lead agency must prepare an EIR.


          Generally, an EIR must accurately describe the proposed project,  
          identify and analyze each significant environmental impact  
          expected to result from the proposed project, identify  
          mitigation measures to reduce those impacts to the extent  
          feasible, and evaluate a range of reasonable alternatives to the  
          proposed project.  If mitigation measures are required or  
          incorporated into a project, the agency must adopt a reporting  
          or monitoring program to ensure compliance with those measures.










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          CEQA actions taken by public agencies can be challenged in  
          Superior Court once the agency approves or determines to carry  
          out the project.  CEQA appeals are subject to unusually short  
          statutes of limitations.  Under current law, court challenges of  
          CEQA decisions generally must be filed within 30 to 35 days,  
          depending on the type of decision.  The courts are required to  
          give CEQA actions preference over all other civil actions.  The  
          petitioner must request a hearing within 90 days of filing the  
          petition and, generally, briefing must be completed within 90  
          days of the request for hearing.  There is no deadline specified  
          for the court to render a decision.


          In 2011, AB 900 and SB 292 (Padilla), Chapter 353, Statutes of  
          2011, established expedited CEQA judicial review procedures for  
          a limited number of projects.  For AB 900, it was large-scale  
          projects meeting extraordinary environmental standards and  
          providing significant jobs and investment.  For SB 292, it was a  
          proposed downtown Los Angeles football stadium and convention  
          center project achieving specified traffic and air quality  
          mitigations.  For these eligible projects, the bills provided  
          for original jurisdiction by the Court of Appeal and a  
          compressed schedule requiring the court to render a decision on  
          any lawsuit within 175 days.  This promised to reduce the  
          existing judicial review timeline by 100 days or more, while  
          creating new burdens for the courts and litigants to meet the  
          compressed schedule.  AB 900's provision granting original  
          jurisdiction to the Court of Appeal was invalidated in 2013 by a  
          decision in Alameda Superior Court in Planning and Conservation  
          League v. State of California.  The stadium project subject to  
          SB 292 has not proceeded.  In 2013, SB 743 (Steinberg), Chapter  
          386, Statutes of 2013, established special CEQA procedures  
          modeled on SB 292 for the Sacramento Kings arena project.  Like  
          SB 292, SB 743 applied to a single project and included  
          specified traffic and air quality mitigations.  CEQA lawsuits  
          were filed against the Kings arena, and the lawsuits, including  
          appeals, were resolved 267 days after certification of the  
          record.









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          To date, six projects have been certified under AB 900.  Only  
          one, the proposed Golden State Warriors arena and related  
          development at Mission Bay in San Francisco, has been challenged  
          under CEQA.  The case, Mission Bay Alliance et al. v Office of  
          Community Investment and Infrastructure, was filed March 11,  
          2016.  A hearing is scheduled June 17 in San Francisco Superior  
          Court.


          The deadline for AB 900 certification under current law has  
          passed (it was January 1, 2016).  The following six projects  
          were certified prior to AB 900's expiration:


          1)McCoy Solar Energy Project in Riverside County.


          2)Apple Campus 2 in Cupertino.


          3)Soitec Solar Energy Project in San Diego County.


          4)8150 Sunset Boulevard, a mixed-use commercial and residential  
            project in Hollywood.


          5)Event Center and Mixed-Use Development at Mission Bay Blocks  
            (i.e., Warriors Arena) in San Francisco.


          6)Qualcomm Stadium Reconstruction Project in San Diego.


          To date, it appears that only the Apple Campus 2 has received  
          final approval and proceeded to construction as proposed.










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          Although this bill provides a blanket extension of AB 900 and is  
          not specific to any particular projects, proponents have  
          identified four projects that would apply for AB 900  
          certification if the bill is enacted:


          1)6701 Sunset/Crossroads in Hollywood - Nine new mixed-use  
            buildings, including residential, hotel, commercial office,  
            retail, and restaurant uses, including up to 308 hotel rooms  
            and 950 residential units, 84 of which will be affordable to  
            low-income households (to replace 84 rent-controlled units the  
            project will demolish).


          2)Yucca-Argyle Project in Hollywood - Mixed-use project with  
            hotel, residential, and commercial uses, including 260 hotel  
            rooms and 191 residential units, 39 of which will be  
            affordable to low-income households.


          3)Barlow Hospital Project in Echo Park - Hospital replacement  
            and residential development on a 25-acre site near Dodgers  
            Stadium, including 400 new single-family homes, with no  
            commitments to affordable housing to date.


          4)Hollywood Central Park - A 38-acre regional street level park  
            created by capping US 101 between Hollywood and Santa Monica  
            Boulevards.


          It's an open question whether the idea of limiting the scope and  
          time of judicial review of favored projects was ever good  
          policy, even for one project.  The practical benefit of this  
          approach to developers is debatable, and it's unclear whether  
          that benefit outweighs the potential sacrifice to effective  
          environmental review and the increased burden on the courts.   
          The only project that seems to have used and possibly benefited  
          from the judicial review procedures enacted since 2011 is the  








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          Sacramento Kings arena project.  It should be noted that SB 743  
          required the Kings arena to be certified LEED Gold, as well as  
          minimize traffic and air quality impacts through project design  
          or mitigation measures, including reducing to at least zero the  
          net GHG emissions from private automobile trips to the arena,  
          achieve reductions in GHG emissions from automobiles and light  
          trucks that will exceed the GHG emission reduction targets for  
          2020 and 2035 adopted for the Sacramento region pursuant to SB  
          375 (Steinberg), Chapter 728, Statutes of 2008 and achieve a 15%  
          reduction in vehicle-miles traveled (VMT) per attendee.  In  
          contrast, AB 900 requires the lower LEED Silver certification, a  
          10% improvement in transportation efficiency over comparable  
          projects, and zero net GHG emissions, with no requirement that  
          the GHG emission reductions be from local sources.




          Analysis Prepared by:                                             
                          Lawrence Lingbloom / NAT. RES. / (916) 319-2092   
                                                                      FN:  
          0003525