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\n A rendering of the Studio City Riverwalk project\n <\/p>\n
CEQA<\/a>\u00a0has gained notoriety for its use by opponents of developments to delay or derail projects across the state. Over the past six years alone, undesirable residential projects have run the gamut from\u00a0homeless housing<\/a>\u00a0to\u00a0affordable units<\/a>\u00a0to\u00a0high-end multifamily<\/a>. Appeals and lawsuits challenging projects on these grounds can add years or even a decade or more<\/a>\u00a0to project timelines.\u00a0<\/p>\n The state legislature has, over the years, sought to remedy this aspect of environmental law by instituting waves of reforms and exemptions.\u00a0<\/p>\n \u201cWe’re getting to a point where the legislature has done, with respect to multifamily housing in the infill context, almost as much as it can do,\u201d said\u00a0Dave Rand<\/a>, a land use attorney and partner at Rand Paster Nelson.\u00a0<\/p>\n AB 130 helped clear the way for an 814-unit residential and retail project in Studio City. Its size and scale are exactly the kind that might draw pushback from the community. Neighbors showed up to speak out against it at a Planning Commission meeting last week, and the project faced appeals from two local groups. But despite their concerns, the project moved through the commission with unanimous approval.<\/p>\n The credit goes to AB 130, said\u00a0Sheri Bonstelle, a land use attorney at Greenberg Glusker\u00a0who represented\u00a0the developers.<\/p>\n \u201cUltimately, the Planning Commission admitted that under [AB 130], the project didn’t have any environmental impacts, and that they were essentially required to approve the project,\u201d Bonstelle said.\u00a0<\/p>\n About nine months elapsed between the time the developer filed an application for the Studio City project and the date of the Planning Commission hearing, a time frame previously \u201cunheard of for a project of this scale,\u201d Bonstelle said.\u00a0<\/p>\n Developer\u00a0Leo Pustilnikov\u00a0has employed AB 130 on his nearly half dozen builder’s remedy projects<\/a>\u00a0in Beverly Hills and will use it on another project in West Hollywood, he said. Builder’s remedy\u00a0projects\u00a0use a loophole created by a city not having a\u00a0state-approved housing plan. In the period when the housing plan is out of compliance, developers can submit projects that aren\u2019t subject to the city’s usual requirements.\u00a0<\/p>\n Cities\u00a0including Beverly Hills<\/a>\u00a0and Santa Monica\u00a0wrestled with\u00a0how to handle<\/a>\u00a0these projects, which were lightning rods for resident pushback and litigation.\u00a0<\/p>\n Pustilnikov had five projects in Beverly Hills that utilized the builder’s remedy and was preparing for the CEQA review process for the projects. But then, AB 130 became law.\u00a0<\/p>\n \u201cWe were gearing up to the next fight, which would have been CEQA, which could have taken many years and cost even more than the planning process,\u201d Pustilnikov said. \u201cThis passed, and it made it much smoother and much more certain for everyone.\u201d<\/p>\n Even with the CEQA hurdle removed, that doesn’t pave the way entirely for multifamily projects, especially not in Los Angeles, said attorneys and developers who spoke to Bisnow.<\/p>\n The cost of construction remains the highest deterrent to development, Bonstelle said, citing several clients who have entitled projects they were eager to start building only to have to pump the brakes because their projects won\u2019t pencil. \u00a0<\/p>\n The price of construction materials is expected to rise 5.4% to 6.8% this year as a result of federal tariffs,\u00a0Bisnow previously reported<\/a>. That comes on top of year-over-year price increases. In the last five years, the producer price index for construction increased by about 40% overall.\u00a0<\/p>\n Bonstelle said she is aware of entitled projects that are stuck in limbo because high construction costs make them infeasible.\u00a0<\/p>\n \u201cThe developers can’t build it, solely due to the construction cost, and they can’t sell it, because nobody else can build it, solely due to the construction cost, so all these entitled lands are sitting empty,\u201d Bonstelle said.\u00a0<\/p>\n It is a reminder that while removing uncertainty around approvals is critical to facilitating housing construction, it is\u00a0far from the only piece<\/a>\u00a0of the puzzle.\u00a0<\/p>\n \u201cThe problem is interest rates and construction costs,\u201d Pustilnikov said. \u201cIf interest rates and construction costs were where they were in 2019, you would see cranes on every block.\u201d \u00a0<\/p>\n<\/p>\n