Consensus may be rare in Sacramento, but nearly everyone agrees on one thing this year: proposals that cost money are doomed. The state budget deficit appears to get larger every day, so the issue is going to be where to reduce spending, not where to add money. One way around the budget constraints is to get bond funds earmarked for favored programs, which is precisely what is happening with the housing and school construction bonds proposed for the November state ballot. Despite the lack of money — or maybe because there is no money — lawmakers could still pass a number of policy bills related to planning. In fact, one of the 2001-02 session's more important bills passed in late January and was signed by Gov. Davis in February. The measure, SB 107 (Sher), overhauls the natural communities conservation planning (NCCP) process in a compromise fashion that satisfies most builders and environmentalists. However, Sacramento Assemblyman Darrell Steinberg's AB 680, which would establish a sales tax sharing program in the six-county Sacramento region, has attracted the most attention this year (see William Fulton's Insight column in this month's edition). The Assembly approved the bill in January, but as of late February it had not been set for a Senate committee hearing. Steinberg argues that the bill provides a "smart growth" approach because it reduces local government's incentive to chase retail development, and it rewards jurisdictions that pursue affordable housing, infill development and open space preservation. But Dwight Stenbakken, legislative director for the League of California Cities, said the state has no business dictating how the local portion of sales tax gets allocated. "If you tinker with it in one region, then you tinker with it everywhere," warned Stenbakken, who said the bill would set a bad precedent. A number of cities from outside the Sacramento region are lobbying against AB 680. On another subject, many lobbyists, observers and Capitol insiders expect Sen. Joe Dunn's housing element crackdown bill to pass in some form. The bill, SB 910, drew intense opposition from local government last year because it would withhold road funds from cities and counties whose housing elements are rejected by the Department of Housing and Community Development. Talks continue regarding the legislation's language, but both Dunn and Assembly Housing and Community Development Committee Chairman Alan Lowenthal (D-Long Beach) say they are committed to the concept. There is talk of a bill that would change the regional housing needs assessment process. A housing element working group at the Capitol has been "talking about a million different things," said one participant, who expressed concern that nothing solid had emerged from the group yet. The notion of a California Environmental Quality Act exemption for small infill developments has gained favor, although some environmentalists and environmental justice advocates refuse to budge on the issue. And a bill that would require local governments to adopt urban growth boundaries could resurface in 2002. "I think the Legislature is more and more interested in having smart growth principles in general plan law," said Bill Allayaud, state legislative director for the Sierra Club. As of late February, some bills were simply "spot bills," which are placeholders until bill authors and sponsors can decide on what should go into the legislation. Endangered species reform Sen. Byron Sher's SB 107 could turn out to be one of the most important pieces of environmental legislation this year. The bill overhauls the state NCCP law, which is California's version of habitat conservation plans that were so popular with the Clinton administration. Under HCPs and NCCPs, developers set aside land as habitat for endangered species in exchange for "incidental take" permits that allow development on other lands that could support endangered species. Sher's legislation reauthorizes the Department of Fish and Game (DFG) to sign agreements with landowners or public agencies, but requires the agreements to have specific conservation objectives. The new law also requires rough proportionality between the level of mitigation and development's impact on endangered species habitat. The law also establishes a public participation process, including a 60-day review of draft documents. Defenders of Wildlife, the California Native Plant Society and the Nature Conservancy supported SB 107 because for the first time it calls for definitive, scientific standards as the bases for habitat plans. Environmentalists have long charged that habitat plans are based more on politics than science (see CP&DR, June 2001, Environment Watch, January 2001). The groups also endorsed new bill provisions relating to implementation, monitoring and adaptive management, all of which the environmentalists said would make habitat plans more effective. Still, the Sierra Club held out. Allayaud complained that the measure gives builders an air-tight assurance that there will be "no surprises" regarding future restrictions if they participate in implementation of a habitat plan — but the environment received no such guarantees. Also, the bill was silent on the issue of the government using eminent domain to acquire important habitat, Allayaud said. While SB 107 had fairly widespread support — or at least lacked major opposition — SB 985 (Florez and Hollingsworth) appears to be pitting developers and farmers against environmentalists in the traditional way. The bill addresses "fully protected" species — 37 animal species designated in state law as untouchable. The bill would abolish the fully protected species statutes and require the Fish and Game Commission to maintain a list of such species following a review of each one. The Commission's decisions would be exempt from CEQA review. After that agency completes its review, permits for "incidental take" of the species could be granted for a variety of reasons. The fully protected species statutes predate the California Endangered Species Act and some of the animals covered are not rare, according to a legislative analysis. Environmentalists see the statutes as especially important, but many stakeholders recognize the need to reform the law because it conflicts with modern wildlife management. The bill specifically addresses the Colorado River and the Salton Sea. A new agreement among Western states requires California to reduce its importation of Colorado River water by 15%, which means less water for agriculture in Imperial County and, thus, less runoff flowing into the increasingly saline Salton Sea (see CP&DR Environment Watch, February 2000). The brown pelican is a fully protected species that subsists on fish living in the Salton Sea, so a project that harms the pelican's habitat could violate the fully protected species statutes. SB 985 does not require mitigation for the take of brown pelicans or other fully protected species that would be harmed by the Colorado River Water Use Plan. Proponents of the bill — including the California Building Industry Association, the California Farm Bureau Federation, the California Forestry Association and Tejon Ranch Company — say that while the measure would allow "incidental take" of species, it would also expand a pilot recovery program and still allow for fully protected status for the rarest species. Opponents — such as Defenders of Wildlife, the Center for Biological Diversity, the National Wildlife Federation and the Planning and Conservation League — complain that the bill allows "take" without also offering meaningful species recovery provisions. Housing, housing, housing Recession or no, the lack of affordable housing remains one of the hottest land use issues in the state. A proposed $2.1 billion housing bond (SB 1227) being carried by Senate President Pro Tem John Burton (D-San Francisco) has become a focus of lobbying, as it has become a "Christmas tree" on which lawmakers and interest groups are hanging their favored programs. "I think the back of the line for Burton's office is in Fresno," joked Marc Brown, co-director of the California Housing Law Project. He said the bill is very fluid and tracking it has been a full-time job. Gov. Davis has spoken favorably about a housing bond, and the administration has apparently budgeted under the assumption that the bond will pay for ongoing programs. Lawmakers early this year approved Davis's request to slash $100 million from housing programs this fiscal year. The governor's proposed housing budget for 2002-03 contains further reductions and provides no money at all for multifamily housing construction and rehabilitation. Most people expect SB 1227 to get the needed two-thirds vote to qualify for the November ballot. However, one source at the Capitol said he was concerned that not all the necessary votes are lined up in the Assembly, so a handful of Republicans (at least four GOP votes are needed) could force concessions favored by their allies in the building and real estate industries. It appears certain that about 40% of the bond would fund various multifamily housing programs. Other projects likely to get a piece of the pie are a downpayment assistance program, farmworker housing grants, homeless assistance, supportive housing, CalHome, and the recently de-funded Jobs-Housing Balance Program. Of course, nobody gets any money unless voters approve the housing bond. Housing advocates, including Brown, have also gotten behind a bill introduced by Assemblyman Rod Wright (D-Los Angeles) that would make the second units and density bonuses "by right" projects that do not require discretionary approval of cities and counties. The bill, AB 1866, also prohibits cities and counties from imposing policies — such as lot coverage and setback standards — that prevent projects that qualify for density bonuses from being developed at maximum permitted densities. On another front, proposed CEQA exemptions for infill projects could become a more active battlefield this year. Assemblyman Joseph Canciamilla (D-Pittsburg) has introduced AB 1882. It would codify an existing exemption in the CEQA Guidelines for projects within city limits on no more than five acres, that is consistent with the general plan, surrounded by urban uses, has no habitat value, and would not result in significant impacts to traffic, air quality, water quality or noise levels. A bill left over from last year, AB 1086 (Calderon), would streamline environmental review of certain infill development projects. Builders, real estate interests and housing advocates backed the bill, but the Association of Environmental Professionals and numerous historic preservation organizations opposed it, saying that some projects would receive no environmental review at all under the measure. The bill never got out of Sen. Sher's Committee on Environmental Quality, but it could get retooled this year. Infill exemptions are a sticky issue for the environmental community, which often rails against greenfield development. The Sierra Club's Allayaud said promoting infill is a key part of the organization's growth strategy, and the club is willing to consider CEQA exemptions. "All of the environmental organizations zealously guard CEQA," said Allayaud. "There have been degrees of attacks on it for years. … So it's the proverbial camel's nose under the tent. Once you get started, pretty soon you have exemption on exemption." But Brown said it is time for environmentalists for line up on the issue. "I've been telling the environmentalists for years that if we don't make it easier to do infill, we'll continue to sprawl out onto farmland and greenfields," Brown said. A bill by Sen. Tom Torlakson (D-Antioch) takes a different approach to infill. His SB 1262 would set aside 10% of a county's State Transportation Improvement Program (STIP) money as incentive grants for local governments that approve infill housing projects close to shops, schools, and transit. The bill is modeled on programs in San Mateo and Monterey counties and one run by the Metropolitan Transportation Commission, according to an analysis by the California Chapter of the American Planning Association. School bonds A conference committee has met regularly for several months regarding a proposed school bond. As of mid-February, the committee appeared to have settled on two bonds of about $13 billion apiece for the November ballot and the 2004 ballot. Those would be the largest bonds in state history. About $2 billion from each bond would be designated for "critically overcrowded schools," which includes schools on any sort of multi-track schedule and poorly performing schools. This money is aimed primarily at Los Angeles Unified School District, which has always fared badly in the traditional first-come, first-served method of allocating state school bond money (see CP&DR Public Development, June 2001). A key part of the bond package is suspension of "level III" fees on development. When state bond money runs out — as is expected to happen this summer when the state awards the last of the $9.2 billion bond approved in 1998 — school districts can assess developers for the full cost of building new schools. These level III fees would be several times the amount most school districts now assess developers. School bond proponents have offered to suspend authorization for level III fees in exchange for the building industry's support for the proposed bond. Lawmakers and interest groups cut a similar deal in 1998. Contacts: Dwight Stenbakken, League of California Cities, (916) 658-8200. Marc Brown, California Housing Law Project, (916) 739-6293. Bill Allayaud, Sierra Club, (916) 557-1100. California Chapter of the American Planning Association website: http://www.calapa.org/ Planning and Conservation League legislation website: http://www.pcl.org/leg/leg.html