Developers using environmental laws to fight the competition

November 14, 2011

To stop a competitor from building a project near a southern California university, a student housing firm used the state’s environmental quality laws as an effective cheap weapon of destruction. [LATimes]

Conquest Student Housing has 17 buildings rented to USC students. When the firm discovered Urban Partners planned to build a new student living complex, it sued under California’s environmental law.

The suit was withdrawn after Urban Partners filed a federal racketeering lawsuit, the LA Times said.

In San Luis Obispo County, CEQA suits have been successful in derailing or changing development plans by neighbors and groups who oppose projects.

For example, two proposed solar plants to be built in California Valley were given shortened lifespans as part of an agreement with several groups that sued using environmental impact laws to support litigation.

Currently, a draft environmental impact report for a proposal to drill for oil in Huasna Valley east of Arroyo Grande received more comments than expected which will cost the applicant, Excelaron, an extra $57,041.

Only three states, including California, require private projects to comply with state environmental laws. And while the state’s Environmental Quality Act is credited with preserving open space and view sheds, it has become a pawn for competitors and opponents of projects.

Legislators working to create more jobs are now questioning the 40-year-old law and the lawsuits it has spawned, the LA Times said.

“These are the laws that allow a solo bird-watcher to protect an endangered animal, but they’re being used by a sophisticated real estate entity to kneecap the competition,” said Dan Rosenfeld, the principal at Urban Partners who handled the University Gateway development to the LA Times.

The law requires developers to go through a CEQA process detailing a project’s environmental impacts and how they will be mitigated. After which, the findings can be challenged by almost anyone.

In order to make sure a football stadium proposed for downtown Los Angeles would not be derailed by CEQA challenges, Gov. Jerry Brown signed a law allowing the project to avoid CEQA litigation.

And while environmental groups argue the net effect of CEQA has been positive, Brown’s administration is drafting rules to allow some projects to skip the process, the Times said.