The housing market is enjoying some good tailwinds, which typically mean positive things for residential construction.
The Big Squeeze
New laws complicate California’s already tough entitlement situation.
|With a water contract in place, Ahmanson Ranch will likely proceed on its development path. Other projects might not fare as well.|
The complexity of entitlements in California is notorious. Long time lines for project approvals are a leading factor in the state’s crisis-level lack of affordable housing. Unfortunately, two new laws will make the job of winning approvals even tougher.
Enacted Oct. 9, the first new law links water supply with land use for the first time. It requires all new communities with 500 units or more to be approved by local water supply officials before project proposals can be presented to local planners. The law’s full impact likely won’t be felt for many years. The second law, signed Oct. 11, is potentially more troublesome to builders and developers in the near term, says David Smith, an attorney with the Home Builders Legal Defense Fund, an extension of the Building Industry Association of Southern California.
According to Smith, the law takes all lot-line changes out of the hands of low-level functionaries and puts them in the hands of planners. The statute stems from the efforts of opponents to proposed development of the Hearst estate in San Simeon, where existing lot lines make most home building uneconomic.
"Lot-line adjustments in California are presently just a very routine ministerial task," Smith says. "I know of a case where a builder had 1,400 lot-line adjustments on one project, because as you lay things out, surveys are a little off. Now it is subject to full-blown discretionary approval."
Land and Water
Planned and existing projects that could be affected by California’s water supply law:
The water supply law will not affect a number of projects. Near Los Angeles, for example, 5,000-acre Ahmanson Ranch in Ventura County is virtually unaffected. In the Bay area, Cattelus’ Mission Bay development has grandfathered water rights. But other large developments could be affected.
James Previti of Rancho Cucamonga-based Forecast Homes, chairman of the California Building Industry Association’s political action committee, met with Gov. Gray Davis on the issue. Previti says the CBIA helped raise the law’s threshold from 200 units to 500. In response, the CBIA dropped its opposition.
Previti says the law does not preclude a builder/developer from building a 450-unit subdivision on one parcel and later seeking approval on a second, 300-unit community on adjacent property.
Water agencies opposed the law. They fear lawsuits over disallowed proposals.