Construction industry could feel impact of California building legislation

A number of bills currently being reviewed by Gov. Jerry Brown could impact how local governments and developers do business.

AB 900, or the “Jobs and Economic Improvement Through Environmental Leadership Act of 2011,” is expected to change the course of major projects throughout the state for large urban housing developments and sport stadiums. SB 469, also known as the “Small & Neighborhood Business Protection Act,” would require cities and counties to conduct economic impact reports before allowing “superstores” to be built,

Gov. Brown signed AB 900 on Sept. 27. The legislation could speed up the environmental review process for $100 million-plus projects with the goal of shaving as much as two to three
years off the normal project timeframe. The bill waives environmental regulations that could hold up construction.

Sen. Joe Simitian (D-Palo Alto) authored the bill, which is aimed at projects that would create jobs and cause relatively few environmental impacts per the California Environmental Quality Act, or CEQA. The law will go into effect on or before Jan. 1, 2012, according to the text of the bill.

Joe Horwedel, planning director for the city of San Jose, questions whether the legislation will truly streamline the approval. The premise behind the bill “started as a good idea but got really complicated,” he said.

The bill requires that the lead agency prepare an administrative record as the project is being processed and that the agency post record documents online within days of receiving or creating them. Projects must meet specific criteria, which includes being located on infill sites, earning LEED Silver certification or better, and producing zero net greenhouse gas emissions.

“The bill may work in one or two cases, but it’s not something most cities will take advantage of because of all the requirements put on to it,” Horwedel said.

But while San Jose is uncertain about AB 900, the city of Santa Clara won’t be impacted as it moves closer toward the construction of the 49ers football stadium. According to Dan Beerman, city spokeman, the stadium has already gone through the EIR process and won’t be affected.

More superstore hurdles

One bill still awaiting Brown’s signature is SB 469, which he must consider by Oct. 9, the deadline to sign or veto legislation. SB 469 would require developers of superstores to obtain new and additional impact reports above what is required by CEQA before receiving a permit. Superstores are defined as establishments with 90,000 square feet or more in which at least 10 percent of the space is devoted to groceries.

Sen. Juan Vargas (D-San Diego) authored the bill and believes that these supercenters “cause business districts to suffer and significantly decrease the net number of jobs.”

Developers and local governments are concerned about the proposed bill.

In a letter to Gov. Brown dated Sept. 8, Santa Clara City Manager Jennifer Sparacino requested a veto of the bill, which she said “requires that a costly and time-consuming analysis be performed only by the narrow set of applicants which meet the bill’s ‘superstore’ criteria.”

She added that the bill undermines cities’ local land use authority and discriminates against superstores by excluding discount stores, department stores, malls and other large projects.

There has been an onslaught of large retailers entering the Bay Area market, including Walmart Express and the newly expanded grocery sections at Target stores. Smaller, family-owned Silicon Valley grocers such as PW Markets and Cosentino’s closed their doors last year as competition grew.

Alex Byer of Paja Investments LLC said he has not examined SB 469 closely but generally believes that superstore developments benefit not only the property owner, but the city. Byer is involved in the proposed redevelopment of former Mervyns Plaza on El Camino Real in Santa Clara. That project could include a 140,000-square-foot Target store with a grocery component. The developer is still negotiating leases with potential tenants, which could also include another grocer, he said.

“Any fear of taking over the small grocer is not necessarily the case,” Byer said. “I understand what they are trying to achieve, but a hasty decision is not always the answer.”

Ed Storm, chairman of Cupertino-based Hunter/Storm LLC, called the legislation an “obstacle” to job creation. Storm and his partner Deke Hunter have completed a massive mixeduse project in North San Jose known as @First. The development is home to a 145,000-square-foot Target store.

Said Storm: “In an environment where everyone wants more jobs, anything that creates obstacles to creating jobs is not timely considering the economic conditions we’re in.”

Mary Ann Azevedo can be reached at 408.299.1820 or at

Mary Ann Azevedo covers real estate for the Business Journal. Her phone number is 408.299.1820.