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Provisions of the 1970 California Environmental Quality Act (CEQA) have been called into question recently over whether it actually preserves nature or is a method of discouraging development.
In Hollywood, more than 6,000 jobs have been delayed or lost because of CEQA lawsuits that have developers tied up in costly litigation that in some instances have taken more than two-and-a-half years to resolve, according to the Hollywood Chamber of Commerce.
“There is a whole industry of filing CEQAs and collecting lawsuits that produces zero benefit for California environment,” said Mott Smith, board member of the California Infill Builders Association.
Although there is no regulatory board that enforces CEQA’s guidelines, anyone can file to request that a developer provide a detailed Environmental Impact Report to determine if a proposed project will have a significant impact on an area. Individuals can also file a lawsuit against developers if they allege projects violate CEQA guidelines.
As it stands, a CEQA lawsuit is supposed to go to trial within one year, but judges are allowed to grant extensions to the petitioner because the administrative summaries of projects sometimes contain thousands of pages, said Sheri Bonstelle, an attorney with Jeffer Mangels Butler and Mitchell LLP, which specializes in land use, zoning, environmental litigation and construction matters.
“And all of a sudden, what should have been one year is now longer, and that’s when financing issues begin, because [the developers] can’t see the end,” Bonstelle said.
There are many legitimate CEQA lawsuits filed each year, but some are used to kill projects, because the longer a lawsuit is kept alive, the developer is forced to incur higher costs in retaining legal representation, Bonstelle said. For the petitioners, however, typically their attorney’s fees will end up being awarded if they receive a judgment in their favor.
One such project that was “killed by delay”, as referred to by the Hollywood Chamber of Commerce, was the proposed Sunset-Gordon Project, which was set to create a 23-story development that would have included housing for middle-income residents. After nearly two-and-a-half years of litigation, the developer was unable to hold on to the property and the project has fallen through.
“There are specific attorneys, who are willing to bring cases on because they know as long as they prevail, their fees will be paid and there is not that much risk,” Bonstelle said.
In Hollywood, the Boulevard 6200 project has been continuously delayed because of CEQA lawsuits. The proposed $500 million mixed-use development will create more than 2,200 construction jobs during both phases of the development’s construction. Additionally, it could create more than 600 permanent jobs. Bonstelle said she first became involved in the project in 2005.
“It’s six years later and literally the construction could have commenced prior to or been completed, there is a real impact in a complete loss of construction jobs and permanent jobs.” Bonstelle said.
Another project that has been delayed by litigation involves Boston-based Emerson College, which plans to build a permanent campus for its 22-year old Los Angeles program near Sunset Boulevard and Gower Street. The project is expected to create more than 600 construction jobs and more than 60 permanent positions.
The Hollywood Chamber of Commerce also cites four other projects as having been delayed by litigation that would have created more than 2,905 jobs in the Hollywood area.
“We did a tally of projects that have been delayed or held up and the number of jobs lost is pretty significant when the building trades in L.A. have a fourty-one percent unemployment,” said Leron Gubler, president and CEO of the Hollywood Chamber of Commerce.
In response to the delays in development, the Hollywood Chamber of Commerce met with state Sen. Curren Price, (D-Los Angeles), to help draft legislation to improve the timeliness that cases are seen and heard by a judge.
“The solution is to come up with a system where concerns are heard, where concerns have to be raised by someone who has standing before the courts, and where the process they have is within a reasonable amount of time,” Gubler said.
The proposed legislation, SB 735, which was introduced by Price, will shorten timelines for judicial review of CEQA cases from one year to nine-months. Gubler said he believes this will keep development of projects on track. SB735 is one of more than 29 bills that have been proposed to alter CEQA.
The issue of CEQA and development is a major concern for the Hollywood Property Owners Alliance, said Kerry Morrison, the group’s executive director. The lack of development contributes to a blighted look for the area, Morrison added.
“When you look at the Old Spaghetti Factory property (site of the proposed Sunset-Gordon project) we have to constantly address it because of graffiti, trash and security,” Morrison said.
At the Hollywood Economic Development Summit 2011 on June 16, developers noted that the Hollywood area holds great potential, but there is a need for legislative support.
“Any reasonable person would assume this does make Hollywood look more challenging to a developer,” Morrison said.
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