It is no coincidence that California’s housing prices began to diverge from the rest of the country in 1970 – the very year that the California Environmental Quality Act (“CEQA”) was enacted.
According to California’s nonpartisan Legislative Analyst, “Between 1970 and 1980, California home prices went from 30 percent above U.S. levels to more than 80 percent higher.” By 2015, the average California house cost around 250% of the average U.S. home.
Granted, California’s unaffordable housing crisis is not the result of any one cause. Instead, inflated real estate prices, high construction costs, substantial government fees, permitting delays, and zoning restrictions all contribute to California’s affordability problem. But one of the culprits behind California’s high cost of housing is CEQA because it not only adds significant costs but also causes significant delay, which, in turn, escalates the costs of construction.
CEQA requires an environmental impact report, known as an EIR, whenever a government agency proposes to approve a project (including housing projects) that may have a significant effect on the environment. Even organizations sympathetic to CEQA acknowledge that the costs of an EIR can range from $200,000 to millions of dollars, depending upon the project’s scope. And the obligation to assemble such a report also delays the approval of the project. California’s Legislative Analyst estimates that California’s ten largest cities averaged 2 ½ years to approve housing projects that required an EIR. Naturally, by the time a project is approved, the costs of construction have significantly increased.
