Often described in the press as a bold, new planning innovation to reduce greenhouse gases, California’s Senate Bill 375 (SB 375) is the basis for the recently passed Plan Bay Area. This legislation, however, does little to change the fundamentals of land use and transportation planning in our region and does nothing directly to disincentivize the dumping of carbon into the atmosphere. It creates an impression of environmental progress while avoiding more effective but less politically palatable approaches to greenhouse gas reduction. More aptly described as housing bill, its chief impact is to promote subsidized housing, to further entrench the Regional Housing Needs Allocation (RHNA) process of state-issued housing mandates, and to make regional planning more complex, confusing and contentious.
A New Call to Keep Doing the Same Things
SB 375 requires the state’s 18 Metropolitan Planning Organizations to produce “Sustainable Communities Strategies” (ours is called Plan Bay Area) by producing regional transportation, land use and housing plans. These plans are nothing new. Regional Transportation Plans (RTPs), which are a requirement of federal transportation policy, have been produced since the 1970’s. The controversial RHNA process, in which the state sets periodic housing quotas for local jurisdictions, has also been ongoing since 1980. Additionally, regional planning for population and job growth by ABAG down to the neighborhood level, sometimes known as “blueprint planning”, also predate SB 375. Since 2004, the Bay Area’s regional agencies (MTC and ABAG) have considered the location of future growth and development concurrently with the Regional Transportation Plan.
The Broader Purpose of Regional Planning
A chief innovation of SB 375 was to require the setting of greenhouse gas reduction targets in all regions of the state and to call upon regional plans to meet these targets. Consequently, the legislation creates an impression that the main purpose of plans like Plan Bay Area is to address climate change. In reality, existing regional planning activities have their origins in other federal and state statutes and have very specific purposes beyond just greenhouse gas reduction. They are a method by which the region prioritizes transportation investments and considers where growth and development should occur. As such, these plans have serious implications for mobility, the economy and overall quality of life.
The Severe Limitations of an Indirect Approach
There is an argument that a certain combined set of transportation and land use choices could lead to behavioral changes that will, in turn, lead to a reduction in greenhouses gas emissions. However, the models used to quantify such impacts are exceedingly complex and embedded with a number of controversial assumptions (a big subject worthy of another post).
Additionally, to the extent that planning can have an effect on CO2 emissions, it is often dependent on fine-grain, urban design details that extend down to the individual project level and cannot be easily addressed through mandates at the state and regional scale. For example, the “walkability” of a neighborhood is a complex condition not achieved merely through processes like the gross allocation of housing quotas to local jurisdictions.
Given these challenges and the slow pace at which the built environment evolves, regional development planning is a remarkably indirect and blunt instrument for dealing with greenhouse gas emissions.
Moreover, the goal of greenhouse gas reduction itself must necessarily be balanced against the other competing objectives of regional plans. Some observers noted that the transportation investments that were included in Plan Bay Area are probably the same investments that would have been included in the Regional Transportation Plan if SB 375 had never been passed. We shouldn’t really expect otherwise, since the RTP isn’t just a greenhouse gas minimizing exercise.
If the California legislature were truly serious about global warming, a better approach would be to deal with the problem directly, using the most effective and efficient policy solutions.
New state emissions requirements for cars and light trucks (known commonly as the Pavley standards) attempted to deal more directly with the issue of CO2 emissions. However, a 2009 study of Pavley funded by Stanford’s Prescott Center found that 80% of the benefit estimated by the California Air Resources Board (ARB) would likely never materialize. Approximately 2/3rd of the benefit would be lost due to “technology leakage”: the incentive for auto retailers to increase sales of inefficient car models in states that do not have standards greater than federal CAFE standards. A recently proposed increase in federal CAFE standards should help to resolve that problem. However, this issue underscores how little is achieved when California creates fleet efficiency standards that differ from those at the federal level.
Other problems, however, remain with this approach. The Stanford study found that 25% of the expected benefit of Pavley would be lost due to the regulation’s pushing up of car prices and the consequent incentive for people to retain older, less fuel-efficient cars. This problem will affect federal CAFE standards as well.
There is also the problem of the “rebound effects” that is common to product efficiency mandates. Making cars more fuel efficient makes them less expensive to drive which creates incentives for individuals to increase vehicle miles travelled (VMT). Over the last few decades, CAFE standards have risen dramatically, but per-capita vehicle miles travelled have increased nearly proportionally, undoing most of the expected air quality benefits.
Better than CAFE
The Cato Institute's William A. Niskanen and Peter Van Doren note that, “In contrast to a tax on gasoline, CAFE standards are an imperfect and inefficient method of signaling drivers about the true costs of the gasoline that they consume”
Additionally, the progressive Center for Policy and Budget Priorities argues that “Cap and trade and its close cousin a carbon tax are the approaches that most economists favor for reducing greenhouse gas emissions. These market-based approaches work by creating incentives for businesses and households to conserve energy, improve energy efficiency, and adopt clean-energy technologies — without prescribing the precise actions they should take”.
A carbon tax or related tool could apply to broad sources of greenhouse gases, not just those from autos and light trucks. It does not suffer from the technology leakage issue described in the Stanford study, nor from the rebound effect. Individuals can either do nothing or respond in a nearly infinite number of ways from buying more fuel efficient vehicles to living closer to their jobs, to walking and biking more.
Very likely, an approach like this would achieve some of the goals intended by SB 375, but in ways and proportions not easily predicted. By allowing individual choice, it is also more economically efficient. So as to reduce suspicions about the use of new revenues, a carbon tax could be made revenue-neutral, offset by other state tax cuts with revenues going to the general fund and not a special-purpose slush fund.
The Political Logic of Bad Policies
If this is the approach favored by policy wonks across the political spectrum, why would it be avoided by California lawmakers? The likely answer is that what makes sense from a policy standpoint often does not make sense from a political standpoint.
California passed a cap-and-trade regulation which is a potentially effective market-based approach to greenhouse gas reduction. However, it only applies to the biggest polluters such as large scale manufacturers and utilities. This constituency involves a very small number of voters. Likewise the Pavley regulations on automakers targeted a single industry.
A carbon tax, by contrast, would have a much broader impact meaning that just about every voter would experience a little pain; the more greenhouse gases emitted, the greater the pain. This makes sense given that greenhouse gas emissions are highly decentralized. Voters, however, are more content to see the problem as emanating from some “other”, rather than looking in the mirror. They demand action but may punish politicians who force them to take personal responsibility for using the atmosphere as a carbon dump.
Viewed through this lens, SB 375 is an exercise in political cowardice
Affordable Housing Provisions – Is this Still About Global Warming?
While the legislation does nothing new or direct to reduce greenhouse gas emissions, it makes a surprising number of key changes to state housing law.
SB 375 allows for a streamlining of CEQA for developers under certain conditions. Some local critics of Plan Bay Area have suggested that the easing of CEQA requirements is driven by a philosophical bias toward high-density, infill housing and transit-oriented development.
In reality, SB 375 offers little relief for urban-style housing projects that are chiefly market-rate. Residential and mixed-use developments that meet a range of criteria are eligible for CEQA streamlining but are only freed from reviewing a couple of subject areas (growth-inducing impacts and cumulative impacts related to climate change). This represents a cost savings of maybe a few thousands of dollars for projects that typically involve investments in the tens of millions. It’s a trivial benefit unlikely to make any meaningful difference.
The greater love in the bill is reserved for projects that involve affordable housing. Developments that meet an extensive list of criteria can potentially qualify for a full CEQA exemption, a more tangible benefit. This is only available, however, to developments that contain particular shares of below market-rate housing units (5% to 20%, depending upon income level targeted).
Finally, the greatest potential benefit to housing developers is only available for projects that are more than 49% affordable, which in practice are likely to be 100% subsidized. The “builders remedy” allows developers to force a change in zoning, if that new zoning had been proposed by the jurisdiction to comply with the Sustainable Communities Strategy. This is a significant change in California housing law.
The bill also changes the timing of the state’s RHNA process so that it will always coincide with regional transportation and land use planning processes. Interestingly, the 2010 guidelines distributed to MPO’s for creating regional plans state that “The Sustainable Communities Strategy development pattern shall not preclude an individual community from accommodating its existing or pending RHNA.” Translation? If there are transportation or land use strategies are expected to reduce greenhouse gases but conflict with RHNA, RHNA wins.
The law also punishes local jurisdictions that are late submitting their updated Housing Elements to the state by making them go through the RHNA process twice as often. It further requires local jurisdictions to produce reports showing their progress on achieving the state’s housing objectives in a public hearing every year.
The Implications of SB 375
Despite the rhetoric about this legislation being “anti-sprawl”, SB 375 doesn’t do anything new to prevent the outward expansion of development into greenfield areas or to make communities more compact and walkable.
By claiming that it’s doing something significant to reduce greenhouse gas emissions, SB 375 encourages political complacency, self-congratulation and avoidance of more effective climate change policies.
SB 375 is mainly aimed at strengthening the existing, ineffective system for promoting affordable housing in California which relies heavily on state bureaucracy, state mandates, counterproductive local inclusionary zoning ordinances, and taxpayer subsidies while ignoring potentially more effective market-based approaches to housing.
It helps to harness a very particular subsidized housing agenda to a set of smart growth principles for shaping the built environment (infill, mixed-use and transit-oriented developments) so that communities will find it increasingly difficult to have one without the other.
Local Plan Bay Area critic and low-density development advocate, Bob Silvestri, has argued that communities should be allowed to produce affordable housing without a heavy-handed state and regional bureaucracy, or the need to fit within the currently popular design philosophies of smart growth and neo-traditionalism (New Urbanism).
This criticism also works in reverse. Communities should be able to pursue smart growth, encourage walkability and compact design, and allow for some neo-traditional development through ordinary market processes without a heavy handed state and regional bureaucracy steering most new buildings or most new and unique products (like transit-oriented development or downtown living) toward subsidized housing.
The Risk of Excessive Complexity
SB 375 adds significant complexity to the already complicated regional planning process, which adds to the public cost of producing regional plans. It also creates public confusion about the purpose of regional planning. For example, some local participants in the Plan Bay Area process mistakenly believed that if greenhouse gases could be reduced through other means, that a “Sustainable Community Strategy” wouldn’t be needed. They did not understand that Regional Transportation Plans, which are now sub-sets of the Sustainable Communities Strategy, are not optional but required for the Bay Area to receive federal transportation funds. The growing lack of intelligibility of the regional planning process is a serious problem, exacerbated by SB 375, which even makes prescriptions about how the planning process should unfold, down to the interest groups that are encouraged to participate.
By aligning the unpopular-in-Marin RHNA process with the regional transportation and land use planning process, SB 375 ensures that affordable housing and contentious politics dominate the local public conversation. Blogger Dave Edmonson at The Greater Marin has noted that an indirect problem with RHNA is that it mixes poverty politics and development politics together.
In Marin County, the process roiled the political waters and put local elected officials in an awkward position. To oppose the passage of Plan Bay Area would have left the region without an RTP, a form of governing malpractice that would have put billions of dollars in federal transportation funds (that we’ve already paid in taxes) at risk. However, to support the Plan was to endorse a big basket of controversial propositions all at once.