CEQA Basics for California Real Estate Developers

If you are in the state of California and involved in private real estate development projects you have likely encountered CEQA. CEQA stands for the California Environmental Quality Act and was enacted into law in the State of California in 1970. (See Cal. Public Resources Code §§21000, et seq. and 14 C.C.R. §§15000, et seq.)

CEQA seeks to, among other things, maintain and provide a high-quality environment for all Californians by giving state and local agencies the power to consider the environmental impact of certain development projects as part of their evaluation process in approving or denying your development project. In a nutshell, a government lead agency (e.g. City Council, County Board of Supervisors, etc.) can withhold approval of your development project if you cannot pass a thorough environmental evaluation and review process. If there is any indication that your project will have a significant or negative effect on things such as wildlife, waters, noise, air quality, transportation, aesthetics, etc. your project could be denied.

CEQA applies to real estate development projects in California that have a potential for direct physical change to the environment or a reasonably foreseeable indirect physical change in the environment. This definition is very broad, which means that in most instances CEQA will apply to your project. However, there are several types of projects that are exempt from CEQA review. For instance, if the project requires only ministerial approval, such as a building permit or license, it is likely excluded from CEQA review. There are also other statutory and categorical exemptions that may exclude your project from CEQA review, for example, among other things, improvements or replacements to an existing structure or construction of a single family home in a residential zone or minor structures accessory to existing facilities. Whether or not CEQA review applies to your project can often be a difficult and complicated question to answer.

In the event CEQA does apply to your development project it will likely increase the time and development costs involved since you will be required to complete and submit environmental documentation to the subject agency, such as a negative declaration, a mitigated negative declaration or an environmental impact report (“EIR”). These documents can often be expensive and time consuming to prepare and the use of professional consultants is critical to show that the project will not have a significant or negative effect on the environment.   

If your project is approved following CEQA review that is great news and you are one step further to completing your development project.  However, in the event your project is denied following a CEQA review you may have to substantially revise your project, establish acceptable mitigation procedures or ultimately challenge the CEQA denial through the legal process, i.e. court. Developers have been successful at times in overturning CEQA denials through the courts in California.  

The CEQA process can be complicated, expensive and time consuming and it is important that you understand CEQA, the evaluation process, your legal rights and your ability to challenge a CEQA denial if necessary. Therefore, if you encounter CEQA questions regarding your development project it is important to check your local CEQA Guidelines and/or consult an attorney.