Like the rest of our region, Redwood City grapples with an affordability crisis decades in the making. As job growth continues to outpace new housing construction, more people pay at least a third of their incomes in rent while half of the town’s low-income residents live on the brink of getting priced out by gentrification, according to the University of California, Berkeley, Urban Displacement Project.
So city officials welcomed the 125 mixed-use units proposed for a 1.8-acre downtown plot at 335 Main St., land that had been purchased 15 years ago by five local professionals. The seven-story project with 19 below-market-rate units, bike racks and a public creekside trail with a vista point won a permit, density bonus and height concession.
Redwood City fast-tracked the proposal by exempting it from the California Environmental Quality Act (CEQA), a groundbreaking 1970 law that requires local governments to identify and address a project’s effects. CEQA is best known for what’s become known as an environmental impact report, or EIR, that must be prepared before undertaking certain types of development.
Just as the 335 Main St. housing project was about to set a date to break ground, however, an obscure Southern California entity called Better Neighborhoods Inc. filed a last-minute challenge. The legal maneuver is one of three unearthed by San Jose Inside, and all of them appear to have succeeded in extracting cash from companies who needed to keep high-stakes projects on track.
The challenge cited “unusual circumstances of the land” that would forced contractors to unearth 6,250 truckloads of contaminated soil, along with a shallow water table that would harm a nearby creek. Redwood City property manager Brian Campisi, who represents the 335 Main St. ownership group, says “the appeal was based on very outdated information” since the plans had been revised twice. The challenger was advised that the developer had eliminated the underground parking that would have required soil removal and impacted the waterway.
“Rather than go away, he came back with another set of issues,” Campisi says. “He presented his revised appeal. Everybody realized what his motives were, that it was a scam. It looks like this guy wants a payoff. We agreed to contribute $50,000 towards the settlement agreement.”
The deal didn’t sit well with Campisi.
“It’s my opinion,” he prefaces before posing the question, “What else can it be other than extortion? Time is of the essence for all the parties and at a critical point, he inserts himself. ... The fact that he dropped any claims after us agreeing to dollars. The project didn’t change, the plans didn’t change. So why did he go away? Other than money? Fundamentally it’s just wrong. It’s taking advantage of a regulation for no other reason than personal gain. … just trying to take advantage of people in circumstances.”
Redwood City housing and social justice activist Isabella Chu echoed that sentiment in an interview with the San Mateo Daily Journal last month.
“Literally anyone can wander into town, declare their objection to housing for Redwood City residents, which I find bewildering,” she lamented. “We’ve had a deepening housing crisis for the last 40 years, and it’s actions like this baseless appeal that contribute to it.”
Like 80 percent of CEQA challenges statewide, according to a three-year study by Holland & Knight law firm, the one in Redwood City targeted infill instead of sprawl or greenfield development. And like roughly half of such challenges, it was filed by an entity with a vaguely altruistic mission incorporated shortly before the appeal.
Records show that Better Neighborhoods Inc. was incorporated in December 2017 by J. Michael Goolsby, an Irvine resident barred from practicing law in California after being accused of fleecing clients trying to save their homes from foreclosure in the wake of the Great Recession. His penchant for get-rich-quick schemes suggests he’s more of an opportunist than a tree-hugger. His ownership of all 1,000 shares of Better Neighborhoods, according to organization documents on file with the California Secretary of State, confirms that BNI’s “responsible development” push is little more than a one-man show, not a non-profit association.
Within 90 days of incorporating Better Neighborhoods, Goolsby filed a last-minute CEQA challenge to a Hampton Inn hotel in Santa Ana. He delivered a letter of opposition—stamped with the butterfly-adorned Better Neighborhoods logo—on the morning of the City Council’s February 20 final hearing to green-light the project, and on March 21 he filed suit in Orange County Superior Court. Goolsby contended that the hotel’s requested variances weren’t justified and would compromise the historical integrity of an existing building included in the project.
On June 8, City of Santa Ana and Net Development Company each coughed up $25,000 and signed a settlement agreement with Goolsby’s firm. The only project change required the city to “use reasonable efforts to install wayfinding signage for the purpose of directing automobile drivers to public parking.”
On May 18, Goolsby filed a challenge to San Francisco developer JDA West’s 231-unit apartment complex in coastal Ventura, south of Santa Barbara, citing a smorgasbord of technical issues such as soil compaction, noise from food and coffee trucks and reflected sunlight from freeway-facing glass windows. Three weeks later, Better Neighborhoods reversed course and wrote the city to endorse the project.
“They talked with JDA. After talking with them they dropped their objections and withdrew the challenge,” Ventura city planner Jared Rosengren explains.
The city wasn’t a party to any agreements or apprised of any terms, but when informed that Better Neighborhoods had withdrawn challenges in two other cities after receiving cash payments, Rosengren says, “I figured something like that happened.”
Neither Goolsby nor his attorney—2016 La Verne College of Law graduate Gurjit Singh—returned San Jose Inside’s requests for comment.
CEQA, a landmark law signed by then-Gov. Ronald Reagan in 1970, was intended as a shield against construction that imperiled the environment. But in a case of unintended consequences, critics charge that the powerful law has been wielded as a sword by labor and neighborhood groups—and in the case of the Redwood City project, a defrocked attorney who seems to be masquerading as a civic-minded activist—to defeat proposed developments that would actually help the state meet its environmental goals.
CEQA allows anyone to sue—even anonymously—as long as they claim they’re acting in the public interest. The result of these kinds of challenges, critics argue, is that a well-intentioned law has driven up costs, killed projects and decreased the supply of affordable housing in the Bay Area and California at large at a time when 9 million people statewide live in poverty.
In a way, this is a tale of two competing viewpoints on CEQA. In one corner, CEQA critics decry the law as a leading impediment to building transit-oriented and infill housing in the state—and especially in urban regions such as Los Angeles and the greater South Bay. That's the gist of the recent legal study by San Francisco law firm Holland & Knight, which published its analysis in the Hastings Environmental Law Journal.
In the other corner are supporters of CEQA who say those claims are overstated, and perhaps wildly so, and that the real driver behind the region's struggles to deal with its affordable housing crisis, or any housing for that matter, are the local agencies (zoning boards, planning commissions) that also must sign off on any proposed development.
That’s an argument advanced in another recent report published by UC Berkeley School of Law, called “Getting It Right,” which serves as a handy counterpoint to the Holland & Knight report. This is more than an academic debate. The discussion comes at a key moment in the Bay Area, which is still reeling from last year's devastating wildfires that destroyed more than 5,000 homes in Sonoma and Napa counties and a flood in San Jose that displaced hundreds of people, making an acute housing crisis even worse.
AB 2267, co-sponsored by Assemblyman Jim Wood (D-Healdsburg), "would exempt from the requirements of CEQA-specified actions and approvals” from Jan.1, 2019, to Jan. 1, 2024—at least for parts of the North Bay. According to a legislative analysis, the bill sets out to determine whether Santa Rosa and Sonoma counties would need additional legislative support from Sacramento to ensure the rebuilding process isn't slowed by red tape. Santa Rosa has already passed an ordinance, its Resilient City Development Measure, that set the stage for the broader CEQA exemptions for the broader region now under contemplation in Sacramento.
Baked into Wood's bill is an assertion that generally jibes with the Berkeley study: CEQA-related lawsuits are actually not that common, and exempting Sonoma and Santa Rosa counties from CEQA won't lead to a rash of lawsuits. “Although certain interests believe CEQA litigation to be a swathing impediment to some projects, the numbers ... indicate otherwise,” says a Senate Environmental Quality Committee report on the Wood bill from June 11, which further notes that “the volume of CEQA litigation is low considering the thousands of projects subject to CEQA review.”
Among other supporters, the Wood bill is favored by the city of Santa Rosa. The Sierra Club has opposed it, and the local Greenbelt Alliance has not taken a stand on it. Gov. Jerry Brown has been on the side making the “swathing impediment” argument when it comes to CEQA’s intersection with organized labor. In past comments, Brown put the blame for any CEQA abuse squarely on the state’s powerful Building Trades Council, as highlighted in the Holland & Knight report. Brown told the UCLA magazine Blueprint in 2016 that CEQA reform is impossible in California, since “the unions won’t let you because they use it as a hammer to get project labor agreements.” Project labor agreements—known as PLAs—guarantee a development project will use union labor.
Unsurprisingly, local labor leaders do not share the viewpoint that PLAs are contributing to the Bay Area housing crisis. When the San Jose City Council last August approved such an agreement for the 25-story mixed-use Museum Place project, local unions applauded the move as a boon for both developers who still stand to make a tidy profit and the local workers who build the tower and will earn enough to remain in the South Bay.
Jack Buckhorn, executive director of the North Bay Labor Council, AFL-CIO, says he doesn’t support weakening CEQA because there is nothing to reform when it comes to PLAs and organized labor.
“It’s an easy target to say labor is the problem, but all the research we’ve done—it doesn't prevent projects from going forward,” he says. “They are making this stuff up to try and jack labor.”
Buckhorn says he's unaware of Brown's comment to the UCLA paper, but says, “We don’t buy into these arguments. I reject the argument that projects are abandoned or not built because of abuse of CEQA.”
Union members in San Jose echoed Buckhorn’s sentiment after the council approved the labor agreement to hire locally for the Museum Place development. “We commend Insight Realty for demonstrating to the Project Labor Agreement ‘naysayers’ that a developer proposing a private sector project can work collaboratively with unions to employ local workers and pay them a family sustainable wage and still make a tidy profit,” says Stan Smith, a business agent for UA Local 483, which represents sprinkler fitters in Silicon Valley.
In its report, Holland & Knight tees off on what it perceives as Brown’s lack of action on the CEQA front. The law firm has represented numerous developers. Its years-long study of CEQA litigation and its impact on development focuses on post-approval, sometimes “frivolous” lawsuits which the author claims slow down projects up and down the state.
For developers without unlimited budgets to fight legal challenges to their plans, the historical “frivolous lawsuit” argument is that the late-game lawsuits can delay a process that’s just been completed and approved by local or state agencies—and send the developer back to the drawing board to deal with challenges filed to its environmental impact review. The process serves to drive up the cost of development.
Law of the Land
The CEQA process is a long and detailed road toward final approval, with multiple layers of public participation and agency review. While citizen-led CEQA lawsuits by themselves won’t necessarily put an end to a project, they can add costs, or cause a developer to miss a market opportunity or financing window. In the case of housing, they may pass on costs to the consumer by upping sale or rental prices.
Inasmuch as the multitiered permitting process at many South Bay city halls and supervisors' chambers has also served to slow or otherwise derail housing development, Holland & Knight argues that so, too, do CEQA-centric suits launched by organized labor, NIMBY neighbors or competing business interests.
But the Berkeley Law report notes that “what drives whether and how environmental review occurs for residential projects is local land use law.” Delays in a project’s approval, it argues, can typically be drawn back to local review and not a last-gasp, anonymous lawsuit. The Berkeley study looked at residential development projects in San Francisco, Oakland, San Jose, Redwood City and Palo Alto.
The Holland & Knight study, meanwhile, keys in on the Bay Area and Los Angeles, and identifies Marin County as one of the wealthiest counties in the state, with the oldest average population of any county. The study also indicates that the Bay Area is ripe with “NIMBY-ism” when it comes to residents swinging the sword of CEQA at development projects they don’t like. The firm identifies that two biggest sources of CEQA lawsuits in the state are in “transit-oriented development” projects and infill projects in established neighborhoods. Those projects are often interchangeable. That development emphasis also happen to be the most oft-cited “smart growth” strategy in the Bay Area by civic leaders, environmentalists and developers—and also from well-meaning residents who are otherwise committed to smart growth, but in someone else’s neighborhood.
High-density development along a transportation corridor like Highway 101 aids in the containment of sprawl, may help the state meet its greenhouse gas reduction goals and undercuts against the “trade parade” phenomenon of commuting workers, where people cannot afford to live where they work and must drive long distances. Jennifer Hernandez, author of the Holland & Knight study, notes the irony of climate-change-conscious Left Coast elders opposing public policies that are designed to beat back climate change.
“NIMBYs are often progressive, environmentally minded individuals who believe in climate action and recognize that sprawl is unsustainable,” she writes. “They just want to preserve the look and feel of the neighborhood they call home.”
The NIMBY phenomenon has been met by a pro-development and millennial-driven YIMBY culture in San Francisco that’s supportive of big new projects. But the issues in San Francisco are not the same as those in the South Bay or the Peninsula.
The YIMBY movement, recently detailed in an in-depth In These Times piece, sprouted in San Francisco along with the advent of Google buses ferrying a well-heeled tech sector to their Silicon Valley cubicles, and as such, the YIMBY push in the city is ultimately one that’s pro-development, if not pro-gentrification. Its adherents have supported large residential development projects in the Mission District and other San Francisco communities whose historical demographic has been poor, gay and/or Latino.
The San Francisco gentrification script is flipped in the South Bay, especially in cities such as Palo Alto and the southern swath of San Jose, where an older class of retirees works to keep its neighborhoods intact and free from high-density development—and historically free even of granny units, or accessory units, in existing homes. Last year, a group with YIMBY leanings called Catalyze Silicon Valley launched to combat that kind of resistance and has since been rallying activists to speak up at public hearings in favor of new housing projects. Meanwhile, a statewide group called California YIMBY recently teamed up with a local grassroots chapter called South Bay YIMBY.
Some CEQA suits have been brought against homeowners who want to add an accessory unit to an existing home. As Hernandez notes, those units don’t in any way expand the footprint of the home, since they typically transform existing space in a home into an apartment. “Even this most modest of changes to existing neighborhoods has prompted CEQA lawsuits against individual units,” she writes, “and against local zoning regulations that allow such units to be constructed.”
South Bay’s Charities Housing ran into a buzzsaw of opposition in San Jose in 2016 when it tried to build affordable units for homeless people off of Senter Road. Councilman Tam Nguyen, who verbally espoused his support for building more affordable housing units, wound up voting against the project amid pressure from constituents.
The nonprofit housing developer faced similarly fatal backlash years before in neighboring Santa Clara over a 162-unit affordable housing project proposed for a plot across close to Valley Fair mall. Charities Housing completed an environmental impact report and won approval from the Santa Clara City Council, which prompted a NIMBY referendum. After losing at the city level and at the ballot box, NIMBYs then litigated the project by claiming that the environmental review fell short of CEQA standards.
All the due diligence in the world was no match for NIMBY neighbors. Though their arguments were ultimately rejected by the courts, too, the delays added up to about a decade. By that point, heading into the latter end of 2012, funding for the project was in jeopardy because the costs of construction and labor had gone up.
Matthew Lewis, a spokesman for California YIMBY, says legislators working on reforming CEQA will have to strike a balance between protecting the landmark environmental law and closing loopholes to prevent bad actors from using it to subvert its intended purpose. When CEQA is used to challenge projects such as infill housing—widely recognized as one of the most effective tools to address climate change—or, ironically, bike lanes and public transit-centered development, then, he says, it’s clear that there’s a problem.
But Lewis cautions against swinging too far in the other direction, since there’s also a push from anti-regulatory interests to weaken environmental standards just to boost their bottom lines. “We don’t want to undermine CEQA because it’s a really important law,” he says. “But we hope that it won’t be used to block things that align with our biggest environmental priorities.”
Tom Gogola, news editor of San Jose Inside’s sister publications the Pacific Sun and North Bay Bohemian, also contributed to this report.