Testimony in Support of Assembly Bill 609: “California Environmental Quality Act: exemption: housing development projects.”

Testimony from:
Steven Greenhut, Western Region Director, R Street Institute

In SUPPORT of Assembly Bill 609: “California Environmental Quality Act: exemption: housing development projects.”

April 28, 2024

Assembly Committee on Housing and Community Development

Chairman Haney and members of the committee,

My name is Steven Greenhut, and I am the Western region director at the R Street Institute. The R Street Institute (RSI) is a nonprofit, nonpartisan public policy organization. Our mission is to engage in research and outreach to promote free markets and limited, effective government in a variety of policy areas, including housing. This is why we have a strong interest in AB 609.

California’s housing crisis has continued largely unabated, with median home prices statewide topping $825,000 and well above $1 million in the state’s coastal communities. This is a widely recognized problem with a relatively simple solution. The state needs to reduce the regulations that impede the construction of new housing. The chronic underbuilding is creating hardships for Californians—and is a key reason cited by people who leave our state.

In its latest report on housing, the Legislative Analyst’s Office found that, “Payments for a mid-tier home were nearly $5,900 a month in March 2024—a 82 percent increase since January 2020. Payments for a bottom-tier home were over $3,500 per month—an 87 percent increase since January 2020.”[1] That means that lower and middle-income homeowners here are paying $42,000 to $70,000 a year on housing costs alone in a state where the median annual household income is around $96,000. No wonder California has such a high percentage of cost-burdened families.[2]

Lawmakers have over the past several years passed several landmark laws that streamline the production of housing. These efforts have recognized that the state’s housing regulations—most specifically the California Environmental Quality Act (CEQA)—have slowed and stopped myriad housing-construction projects. At R Street, we’ve supported many of these efforts, even as we’ve noted that they don’t go far enough.

As a result, these legislative efforts—admirable as they may be—haven’t actually done that much to increase housing construction. A CalMatters report from February found that “this spate of recent California laws and others like it intended to supercharge the construction of desperately needed housing, have had ‘limited to no impact on the state’s housing supply.’”[3] It’s not that this approach is wrong, but it’s been far too limited. It needs to expand to larger-scale projects and in many more situations.[4]

Fortunately, AB 609 provides broader CEQA exemptions, applying them to “housing projects on sites up to 20 acres, which are on or adjoining current or former urban uses, and within an incorporated city or town of any population, or an unincorporated community with at least 5,000 residents or 2,000 housing units.” By passing this measure, the Legislature would show its seriousness about jump-starting much-larger projects—and in making a bigger dent in the state’s housing shortage.

As I explained in a recent column, a new study from the George W. Bush Institute puts the issue in a national perspective: “If all of America’s 250 largest metros had policies similar to those of the 25 Sun Belt-Mountain state metros, the 250 largest metros would have added about 5.6 million more homes from 2010 to 2023 than they actually did. … Average home prices would be $115,000 lower than they are today, we estimate. Monthly rents would be $450 lower.”[5] These areas have made it far easier to build housing than California and the results are lower prices and fewer cost-burdened families.

CEQA, of course, isn’t California’s only regulatory impediment, but it is the prime villain. “CEQA lawsuits targeting new housing production … continue to expand—with 47,999 housing units targeted in the CEQA lawsuits filed just in 2020. Thousands more housing units were challenged in CEQA lawsuits targeting up-zoning of existing neighborhoods, especially near transit,” according to a 2022 report by the Center for Jobs and the Economy.[6] Clearly, the state needs more CEQA streamlining considering CEQA’s ever-present impediment to building. Nearly half of CEQA lawsuits are filed against projects that promote the state’s environmental goals, including infill housing.[7] This bill applies to environmentally friendly higher-density projects.

As the bill analysis from the Committee on Natural Resources explains, AB 609 is “entering new territory” as it “eclipses these existing exemptions with an exemption that applies to larger projects, in less-populated areas, with fewer and less-stringent conditions.”[8] That’s music to our ears. If California is serious about addressing its housing crisis it needs to enter the new territory of making it far easier to build housing on a wider scale. As such, we urge a yes vote on AB 609.

Thank you,

Steven Greenhut
Western Region Director
R Street Institute
sgreenhut@rstreet.org

[1] Alan Bentz, “California Housing Affordability Tracker (1st Quarter 2025),” Legislative Analyst’s Office, April 21, 2025, lao.ca.gov/LAOEconTax/Article/Detail/793

[2] Californians and the Housing Crisis, Public Policy Institute of California, Accessed April 28, 2025, www.ppic.org/interactive/californians-and-the-housing-crisis/

[3] Ben Christopher, ‘Limited to no impact’: Why a pro-housing group says California’s pro-housing laws aren’t producing more,” CalMatters, Feb. 24, 2025, calmatters.org/housing/2025/02/california-yimby-laws-assessment-report/

[4] Dean Bonner, “Desire for Action on Housing Contrasts with How Californians Want to Live,” Public Policy Institute of California, Accessed April 28, 2025, www.ppic.org/blog/desire-for-action-on-housing-contrasts-with-how-californians-want-to-live/

[5] Dr. J.H. Cullum Clark, “Build Homes, Expand Opportunity: Lessons from America’s Fastest-Growing Cities,” The George W. Bush Institute-SMU Economic Growth Initiative,” April 2025, gwbushcenter.imgix.net/wp-content/uploads/Build-Housing-Expand-Opportunity_FINAL_4.4.2025.pdf

[6] Jennifer Hernandez, “Anti-Housing CEQA Lawsuits Filed in 2020 Challenge Nearly 50% of California’s Annual Housing Production,” Center for Jobs & the Economy, August 2022, www.hklaw.com/-/media/files/insights/publications/2022/08/082222fullceqaguestreport.pdf?la=en

[7] Ibid.

[8] Bill Analysis, Assembly Natural Resources Committee, April 21, 2025, leginfo.legislature.ca.gov/faces/billAnalysisClient.xhtml?bill_id=202520260AB609