Neighborhood opposition to new housing projects is likely viewed by the general public as a natural right of existing property owners to organize objections to a change to their living environment. After all, why shouldn’t longtime residents have a say in what goes on or might go on in their neighborhoods?   Why can’t they say who should stay and who should go?

Well, for starters, unless they have a covenant running with the real estate they own, there likely isn’t something in the associated contract which gives existing property owners that determinative power. In other words, they don’t have an inherent right to block new development.

In addition, the state is still growing in population and the new people have to go somewhere. Unfortunately, with environmental policies more and more driving land-use decision-making – creating an imperative for higher-density, urban-centric housing – normal market forces aren’t allowed to work and housing choices are consequently greatly diminished.

Also, as the subsequent analysis shows, for developers, this organized opposition isn’t just another cost of doing business.

Finally, local elected officials have all the authority when it comes to land-use decision-making, so they make the final call. But, as most people know – and certainly the organized NIMBY (Not in My Backyard) [1] groups do – citizens can vote those members of the city council or county board of supervisors in and out of office. Even more importantly, one legal tool available to the NIMBYs is the California Environmental Quality Act (CEQA) and CEQA has become the most effective means of forestalling a decision on a housing project.

I’m not advocating market principals be tossed aside for the politically correct temptation of building affordable housing anywhere. Far from it. Housing for poor people belongs on the other side of the tracks where land is cheaper. But, CEQA has become so ubiquitous, that development-opposing neighborhood groups are forming everywhere and all housing suffers.

Back in the early ‘90’s, when I was asked by newly elected Governor Pete Wilson to run his housing programs, funding for affordable housing was the focus of debate in the country. California was actually on the heels of a period of over-production, especially apartment buildings. Attributed to a national run-up to the elimination in the federal tax code of housing preferences, California actually produced more housing than it needed and the debate became less about supply and more about who had been left out of the building binge. And, the conversation quickly turned environmental.

Indeed, overnight CEQA became the dominant factor in local land-use decisions. Tired of new development but not fairing that well at the ballot box where growth control initiatives appeared frequently, NIMBY groups began utilizing CEQA as their weapon of choice.

And, why not? For a mere $150 in most California communities, a person or persons can ask a judge to bring a major housing project to a grinding halt. More often than not the judge, due to the circumstances and the law, is forced to comply. Consequently, the project is most-assuredly delayed – running up all sorts of costs and other hardships – and NIMBY groups become evermore empowered to fight another day.

This is a common, systematic occurrence and CEQA alone is the culprit.

It’s estimated that NIMBYs cost millions. A typical project – like a recently approved one composed of high-density townhomes in Sacramento – spent well over $2 million on environmental studies and was still sued by a NIMBY group. Ultimately, the long-delayed project (this one was over two years late) underwent three major design changes before finally approved and, of course, had its overall size significantly reduced.

What happens when housing projects are arbitrarily shrunk? Costs must be covered now by fewer units and naturally prices will rise. Add in the delays and other incidental environmental costs and those rising prices soar. Worse, delays can go on for so long that the developer misses the market and the entire project must be reconfigured or abandoned.

These are now the housing politics that prevail in California. And, what about the affordable housing debate? Poor people don’t have a chance. What little housing gets built for them is so expensive that a recently approved $4 bill bond will barely cover a year’s worth of new stock – and the state currently has about a 10-year need.

If funding was the only issue, we’d have this housing problem fixed in no time. Sadly, however, fueled by CEQA the NIMBYs are winning – and housing in California is just getting more expensive.


[1] NIMBYs are also known as NIMTOOs (Not in My Term of Office), BANANAs (Build Anything Nowhere and Nothing Anywhere) and NOPEs (Not on Planet Earth).