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IN THIS ISSUE – “Not the Worst Job I Ever Had…I Worked For A Meat Packer, Picking Up Dead Cows” – California’s Top Utility Regulator Retires
LAWMAKING & RETAIL POLITICS
- CA Dems Gather to Hear 14 Presidential Candidates!
THE BASICS – ENERGY, HOUSING, WATER
- Top Utility Regulator Retires
- China May Restrict Rare Earth Minerals…
- …Proposed Mojave Desert Lithium Mine Raises Moral Dilemma
- Going Up…LA OKs More High Density Housing
- Drought Ends, But Silicon Valley Searches for More Water
- Not Another Fish Story – Major Dam Removal Going Well
Capital News & Notes (CN&N) harvests California legislative and regulatory insights from dozens of media and official sources for the past week, tailored to your business and advocacy interests. Please feel free to forward.
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FOR THE WEEK ENDING MAY 31, 2019
Fair warning: By reading this you will be plunging into the Legislature’s almost impenetrably arcane thicket of internal procedures, as we enter the final days of intense closed-door state budget negotiations.
To begin at the beginning, for decades the state budget was written in secret by the chairmen of the Legislature’s two fiscal committees, Assembly Ways and Means and Senate Finance.
This clandestine process exploded in the 1970s during a larger battle over control of the state Senate and for more than a decade the state budget was fashioned more or less in public.
Eventually, however, the big decisions again moved behind closed doors and into private negotiations among what came to be known as the “Big 5” – the governor and the partisan leaders of both houses. More recently, Republican leaders have been excluded because the vote margin for budgets dropped from two-thirds to simple majorities and the GOP now has only a quarter of the Legislature’s seats. So now a “Big 3” makes the multi-billion-dollar decisions.
When the budget was handled largely by the Legislature’s two fiscal committees, they delayed action on legislation that would add money to the current budget, placing those bills in a “suspense file” until the financial parameters of the upcoming budget were settled – which made perfect sense.
By and by, however, legislative leaders divided the process, creating “budget committees” in both houses to work on the overall spending plan and “appropriations committees” whose sole function was to handle non-budget legislation with financial impacts, however slight.
However, it quickly morphed into a new way of conducting the public’s business in private. The appropriations committees became vehicles for deciding, without leaving fingerprints, which bills would advance to legislative floors and which would be buried.
Those chairing the appropriations committees would simply read the numbers of bills to be held or released for floor votes without explanation and it’s been obvious that the secret decisions had little or nothing to do with fiscal impacts and everything to do with political considerations of some kind.
This month’s version involved 721 Assembly bills and 355 in the Senate. Overall, nearly 70 percent were given the green light and the others simply died without explanation.
Not surprisingly, bills by the dominant Democrats generally fared better than those by the powerless Republicans and those being carried by the chairs of the two appropriations committees were especially blessed.
Lorena Gonzalez, a San Diego Democrat who heads the Assembly Appropriations Committee, released 15 of her own 16 bills to the floor – the most of any member, according to calculations by lobbyist Chris Micheli, who charts legislative data as a hobby.
The demise of one bill in Senate Appropriations was especially noteworthy – and inexplicable.
Its chairman, Anthony Portantino, axed Senate Bill 50, one of the year’s most important measures. It would set aside local zoning laws to allow high-density housing in “jobs-rich” and “transit-rich” communities, aimed at overcoming “not-in-my-backyard” opposition to housing projects, especially in affluent, cloistered cities.
Democrat Portantino happens to represent one of those cities, La Canada Flintridge, and to deepen the mystery, Senate President Pro Term Toni Atkins, a San Diego Democrat, said afterwards that she had nothing to do with the action and would have voted for SB 50, carried by Sen. Scott Wiener, a San Francisco Democrat.
So now we have a made-in-secret budget and secretive decisions on important legislation outside the budget, making it virtually impossible to hold anyone accountable for what does and does not happen. It’s just like the bad old days.
CA Dems Gather to Hear 14 Presidential Candidates
Wall Street Journal excerpt
After years of deferring to smaller states, the biggest and most complicated prize on the presidential primary calendar is poised to get a lot more attention from Democratic presidential contenders.
Fourteen presidential candidates will trek to the California Democratic Party convention in San Francisco this weekend to lay the groundwork for their campaigns in the Golden State, which is worth more than three times as many delegates as New Hampshire, Iowa and South Carolina combined.
With California’s 2020 primary slated for March 3—more than two months earlier than it was in 2016—candidates are traveling west not only to raise money but also to lock in support with the state’s more than 400 delegates, who will be allocated proportionally based on the primary results statewide and in individual congressional districts. Given the sheer number of voters and party luminaries in the state, many candidates want to put markers down now that can help build momentum down the line.
“It’s the first moment these candidates are making introductions for themselves” in California, said Kyle Layman, a California operative who recently served as western states political director for the Democratic Congressional Campaign Committee. “A lot of it is demonstrating you do speak California.”
All of the front-running Democratic candidates are attending the convention except for former Vice President Joe Biden, and it projects to be the biggest single gathering of contenders so far in the 2020 election cycle. Candidates will each have seven minutes to make their cases during the three-day party convention. They are expected to focus on why they can beat President Trump while touching on issues important to delegates and active Democratic attendees, including health care, immigration and climate change.
Campaigning in California has always been daunting, given its size and diversity. The state stretches about the distance from northern Maine to southern Virginia. Some California delegates compared it to campaigning in three or four different states with the mix of large metropolitan cities, rural farmland and wealthy suburbs—along with several expensive media markets for advertising.
Democratic candidates are likely to focus on Latinos, which make up nearly 40% of the state’s population, as well as Asian-Americans and Pacific Islanders, which make up about 15%, according to U.S. Census Bureau data.
California Sen. Kamala Harris has made winning her home state a key part of her strategy, and by some measures she has been the most-active candidate there. She has the largest percentage of total Facebook ad allocation that targets users in California year to date, at 19.1%, according to available Facebook data compiled by Acronym, a progressive nonprofit that tracks digital spending. That is followed by Vermont Sen. Bernie Sanders at 13.8%, while Mr. Trump has about 5.8% of Facebook ad spending targeting users in California.
Ms. Harris, one of two California-based presidential hopefuls, is the only candidate with a California state director who has been talking with local elected officials, community organizers and union leaders for months, people familiar with the conversations said. The other California Democrat running is Rep. Eric Swalwell.
Some of these talks have been conducted to garner endorsements. Ms. Harris has more than 50 in the state, including California Gov. Gavin Newsom, the campaign said. Ms. Harris’s advisers include Sean Clegg and Averell “Ace” Smith, who have worked with Mr. Newsom; and Laphonza Butler, former president of one of California’s largest labor unions.
Still, other candidates have shored up support in the state through campaign appointments. New Jersey Sen. Cory Booker, who is attending the convention, hired Mr. Newsom’s gubernatorial campaign manager, Addisu Demissie, to run his national campaign. Mr. Sanders campaigned in California in 2016, drawing the support of dozens of California delegates, and California Rep. Ro Khanna is one of his national co-chairs.
Messrs. Biden and Sanders, along with Massachusetts Sen. Elizabeth Warren, South Bend, Ind., Mayor Pete Buttigieg and former Texas Rep. Beto O’Rourke have all talked to campaign staffers in California about a possible statewide role, people familiar with the conversations said. A number of Democratic candidates have fundraising staffers based in the state.
Several candidates have announced plans to hold California rallies before or after the convention. There are also more than a dozen fundraisers slated, with several each for Ms. Harris and Mr. Buttigieg, according to invitations reviewed by The Wall Street Journal. Political consultants estimate it costs a minimum of $5 million to compete in California given the price of television, digital and direct-mail advertising.
California will be one of more than a dozen states holding primaries on March 3—also known as Super Tuesday—the first day allowed for a state that isn’t in the traditional early lineup. With California’s early-voting system, voters will receive ballots starting a month before the primary, which coincides with the Iowa caucuses.
Even with California’s enhanced role, much of the candidates’ focus remains on the initial four contests: Iowa, New Hampshire, Nevada and South Carolina.
“The way to win California is to perform well in the early states,” one campaign staffer said. “We need to do well before we can look ahead to California.”
Rose Kapolczynski, a Los Angeles-based political consultant who managed former California Sen. Barbara Boxer’s campaigns, agreed. “California will matter only to the handful who win or beat expectations in the first four,” she said. “For many, the first four will be the final four.”
Michael Picker, California’s top utility regulator, said Thursday he plans to step down later this year, opening up a crucial leadership role in the state’s efforts to quell wildfires and combat climate change.
Picker, the president of the California Public Utilities Commission, made the announcement at a commission meeting in San Francisco. He said he could leave as soon as July but indicated it will probably be later, in order to give Gov. Gavin Newsom’s office sufficient time to fill his seat on the five-member body that regulates the state’s investor-owned utilities.
Picker, 67, was appointed to the commission in January 2014 by then-Gov. Jerry Brown, who named him president of the agency in December of that year. He worked in the governor’s office as senior adviser for renewable energy before joining the commission.
As president, Picker succeeded Michael Peevey, under whose leadership the agency was criticized for being too close to Pacific Gas and Electric Co. prior to the 2010 San Bruno pipeline explosion.
Picker told The Chronicle he has not liked being commission president.
“It’s the most frustrating job I’ve ever had,” he said. “Not the worst — I worked for a meat packer picking up dead cows once.”
While the commission’s exhaustive regulatory process makes sense for setting utility rates, Picker said, he found it lacking in its ability to keep up with “the rate of innovation we’re seeing” in the energy sector.
Still, Picker felt that, under his leadership, the commission became less divided, pushed for more regulatory focus on safety at PG&E and helped the state make progress on making the electric grid less centralized.
“I think I’ve accomplished not everything I’d like to do, but as much as I’m likely to get done,” he said.
State Sen. Jerry Hill, D-San Mateo, who has been a vocal critic of PG&E and supporter of reform at the commission since the San Bruno blast in his district, praised Picker for improving a “corrupt environment” at the commission during his tenure.
“Utilities had the run of the place,” Hill said. “He has brought great integrity to the system.”
Mark Toney, president of The Utility Reform Network consumer group, echoed that point.
“President Picker made great strides to restoring public confidence in the PUC after the scandal-ridden corruption of Michael Peevey,” Toney said. “He was independent, clearly not in the pocket of any of the big utilities.”
At the meeting where Picker announced his plans to retire, the commission approved the first state-mandated wildfire prevention plans for investor-owned utilities, including the embattled PG&E. Commissioners also signed off on new statewide standards for how utilities intentionally turn off power lines to prevent them from starting fires during extreme weather.
The commission is the primary regulator for PG&E and its Southern California counterparts, along with other small utilities, approving their rates and ensuring their compliance with numerous state laws, including clean-energy requirements. As such, it plays a vital function in trying to stop the worsening wildfire problems faced by electric companies and advance some of the state’s climate change goals.
Commissioners oversee telecommunications and ride-hailing companies, among other duties.
All five commissioners are appointed by the governor, who also selects a president from their ranks.
The state Senate confirms new commissioners. They serve for staggered six-year terms.
Toney said the commission president is “one of the most impactful public officials in the state,” perhaps surpassed only by the governor.
Whoever fills the role has an outsize ability to shape consequences utilities face for their shortfalls, how much money customers pay, how strongly those companies commit to reducing carbon emissions and how safe residents are from disasters caused by power lines and gas pipelines, Toney said.
“This is an absolutely enormous role that has a tremendous impact on the daily lives of every resident of California, one way or another,” he said.
Assemblyman Chris Holden, D-Pasadena, also spoke favorably of Picker, whom he called a “brilliant individual.” Holden, who chairs the Assembly’s Utilities and Energy Committee, compared Picker’s job to that of “managing a lion” and said he managed the commission effectively.
Holden said he hopes Picker’s successor is someone with “some ideas and some vision” to make the agency more efficient.
“I think the industry is looking for — and the customers — someone who can also think outside the box and has a way of ensuring that safety measures are adhered to, and that there are clear penalties in place if they are not,” he said.
Once he leaves the commission, Picker said he plans to retire with his wife to a home they bought in El Dorado County.
Beijing is gearing up to use its dominance of rare earths to hit back in its deepening trade war with Washington.
A flurry of Chinese media reports on Wednesday, including an editorial in the flagship newspaper of the Communist Party, raised the prospect of Beijing cutting exports of the commodities that are critical in defense, energy, electronics and automobile sectors. The world’s biggest producer, China supplies about 80% of U.S. imports of rare earths, which are used in a host of applications from smartphones to electric vehicles and wind turbines.
The threat to weaponize strategic materials ratchets up the tension between the world’s two biggest economies before an expected meeting between Presidents Xi Jinping and Donald Trump at the G-20 meeting next month. It shows how China is weighing its options after the U.S. blacklisted Huawei Technologies Co., cutting off the supply of American components it needs to make its smartphones and networking gear.
“China, as the dominant producer of rare earths, has shown in the past that it can use rare earths as a bargaining chip when it comes to multilateral negotiations,” said George Bauk, Chief Executive Officer of Northern Minerals Ltd., which is producing rare earth carbonate from a pilot-scale project in Western Australia.
The U.S. shouldn’t underestimate China’s ability to fight the trade war, the People’s Daily said in an editorial Wednesday that used some historically significant language on the weight of China’s intent.
The newspaper’s commentary included a rare Chinese phrase that means “don’t say I didn’t warn you.” The specific wording was used by the paper in 1962 before China went to war with India, and “those familiar with Chinese diplomatic language know the weight of this phrase,” the Global Times, a newspaper affiliated with the Communist Party, said in an article last April. It was also used before conflict broke out between China and Vietnam in 1979.
On rare earths specifically, the People’s Daily said it isn’t hard to answer the question whether China will use the elements as retaliation in the trade war.
China is “seriously” considering restricting rare earth exports to the U.S. and may also implement other countermeasures, the editor-in-chief of the Global Times, said in a tweet. An official at the National Development & Reform Commission told CCTV that people in the country won’t be happy to see products made with exported rare earths being used to suppress China’s development.
Editorials in the Global Times and Shanghai Securities News took similar tacks in their Wednesday editions.
The nation’s producers have rallied hard in recent weeks on the view that rare earths could be an ace in the trade war. President Xi Jinping visited a plant earlier this month, accompanied by his chief trade negotiator with the U.S., fueling speculation that the strategic materials could be weaponized in China’s tit-for-tat with the U.S.
Rare earths have already featured in the trade dispute. The Asian country raised tariffs to 25% from 10% on imports from America’s sole producer, while the U.S. excluded the elements from its own list of prospective tariffs on roughly $300 billion worth of Chinese goods to be targeted in its next wave of measures.
Rare earths aren’t particularly rare. Cerium, the most abundant, is more common in the Earth’s crust than copper. All other rare-earth elements, besides promethium, can be found more widely than silver, gold, or platinum, according to the U.S. Geological Survey. However, concentrated and economic deposits are scarce, and production is dominated by a handful of countries. China is the biggest by far, accounting for almost 70% of global production and 40% of the world’s reserves, USGS data show.
China’s rare earth market is dominated by a handful of producers including China Northern Rare Earth Group, Minmetals Rare Earth Co., Xiamen Tungsten Co. and Chinalco Rare Earth & Metals Co. The nation has form in using the elements to make a political point. It blocked exports to Japan after a maritime dispute in 2010, although the consequent spike in prices saw a flurry of activity to secure supplies elsewhere, which would be the risk again if Beijing follows through with its threat of retaliation.
A small Cessna soared high above the Mojave Desert recently, its engine growling in the choppy morning air. As the aircraft skirted the mountains on the edge of Death Valley National Park, a clutch of passengers and environmentalists peered intently at a broiling salt flat thousands of feet below.
The desolate beauty of the Panamint Valley has long drawn all manner of naturalists, adventurers and social outcasts — including Charles Manson — off-road vehicle riders and top gun fighter pilots who blast overhead in simulated dogfights.
Now this prehistoric lake bed is shaping up to be an unlikely battleground between environmentalists and battery technologists who believe the area might hold the key to a carbon-free future.
Recently, the Australia-based firm Battery Mineral Resources Ltd. asked the federal government for permission to drill four exploratory wells to see if the hot, salty brine beneath the valley floor contains economically viable concentrations of lithium. The soft, silvery-white metal is a key component of rechargeable lithium-ion batteries and is crucial to the production of electric and hybrid vehicles.
The drilling request has generated strong opposition from the Center for Biological Diversity, the Sierra Club and the Defenders of Wildlife, who say the drilling project would be an initial step toward the creation of a full-scale lithium mining operation. They say lithium extraction would bring industrial sprawl, large and unsightly drying ponds and threaten a fragile ecosystem that supports Nelson’s bighorn sheep, desert tortoises and the Panamint alligator lizard, among other species.
“It’s a tricky question,” said Lisa Belenky, senior attorney at the Center for Biological Diversity. “We shouldn’t export the sacrifices to Bolivia and Argentina, for example, which have massive lithium mines … We also think that Panamint Valley is not the right place for it.”
“A lithium mine would destroy these spectacular panoramas,” drilling opponent Tom Budlong said recently as he and fellow activists buzzed over the Panamint Valley in a chartered Ecoflight aircraft.
The battle could be a fierce one. Lithium is expected to play an increasingly important role in reducing greenhouse gas emissions from cars and trucks, and has been designated by the Trump administration as a mineral essential to the economic and national security of the United States. In addition to powering countless laptops and cellphones, lithium-ion batteries may also play a role in guarding against power line wildfire ignitions.
The only functioning lithium mine in North America is about 150 miles away in Clayton Valley, Nev. Most of the lithium used for batteries now comes from the so-called Lithium Triangle of South America — a region that includes the world’s largest salt flats.
For dyed-in-the-wool environmentalists, the brewing war over lithium mining poses a moral dilemma as it seemingly pits them against efforts to reduce greenhouse gas emissions.
Constructed with the world’s lightest metal, rechargeable lithium-ion batteries allow vehicles to run on power generated by wind turbines, solar panels, hydroelectric dams and other clean-energy sources. In California alone, officials hope to see as many as 5 million such zero-emission vehicles on state highways by 2030.
Drilling opponents also acknowledge that the burden of producing lithium should not just fall on nations with less restrictive health and safety regulations and environmental safeguards.
The Inyo County drilling sites are overseen by the U.S. Bureau of Land Management, which, under federal law, is obligated to not only preserve public lands, but make them productive as well. The BLM must set aside some lands for mining and wilderness, for wildlife and off-road vehicle riders alike.
But environmentalists say the agency is tilting too far toward the needs of commercial interests and away from the long-term health of the public’s natural resources. They worry approval of the plan could trigger a “white gold rush” across the deserts of Southern California. Already, nearly 2,000 lithium claims have been staked across 30,000 acres of public land administered by the BLM in California.
In a formal response to the drilling proposal, a dozen environmental organizations expressed concerns about the effects on ground and surface water if exploration leads to an industrial-scale mine.
The environmental assessment “does not include mapping of floodplain boundaries, nor any hydrologic modeling or analysis,” the response read. “There is no discussion of the risks to cross contamination from the deep brines to the freshwater aquifer, and the drill site reclamation practices do not appear to have taken this risk into account.”
Among those who have spoken against the plan are officials at Death Valley National Park.
A large mining operation would have “significant water requirements,” Death Valley National Park Supt. Mike Reynolds wrote in comments filed with the BLM. Reynolds said water in the area flows downhill from the park to the mine sites on the valley floor. “This water would normally help support wildlife within the local ecosystem,” he wrote.
The U.S. Bureau of Land Management is expected to make a final decision on Battery Mineral Resources’ request later this year.
Battery Mineral Resources failed to respond to repeated requests for comment on the proposal. However, an environmental assessment of its exploratory project concluded it would be safe, prevent significant environmental harm and abide by state and federal regulations.
As of April, the company reported anticipated costs of more than $7 million for exploration, claim maintenance fees and payments to a geology consultant in Arroyo Grande.
The Panamint Valley shares many of the geological features seen in profitable lithium-brine deposits in Chile, Argentina, Bolivia and Nevada: arid climate, an active fault, a basin encircled by rock mountains, and underground brine pools heated by geothermal activity.
Lithium brine deposits account for the majority of world’s lithium production. The process involves pumping water from aquifers and placing it in a succession of large evaporation pools. Over time, the lithium becomes more and more concentrated and can be separated from the water and processed.
In addition to Panamint Valley, lithium mining claims have been staked in portions of the Amargosa Basin near Beatty, Nev., which includes stretches of the Amargosa River, which was listed earlier this year as a National Wild and Scenic River.
Although environmentalists fear a run on lithium, one expert said it was no simple task to open a mining operation. A years-long effort to establish one at Imperial County’s Salton Sea has yet to bear fruit.
“On the face of it, extracting lithium from brine seems simple – pump it out of the ground, and then divert it into evaporation ponds that leave behind heaps of dried product ready for shipping,” said Brian Jaskula, a U.S. Geological Survey expert on mining.
While lithium-ion batteries currently dominate the electric vehicle market, they face competition from an array of new, more affordable and environmentally safe technologies in development, said Parans Paranthaman, group leader of the chemical sciences division at Oak Ridge National Laboratory in Oak Ridge, Tenn.
“Lithium-ion batteries, which were developed in 1991, are the most viable in the near term,” he said. “But beyond lithium, there will soon be zinc, sodium, magnesium and potassium batteries, among others.”
On a recent spring day, bulldozers leveled the low-slung Holiday Auto Plaza in Palms, home to several repair shops. Just another unremarkable commercial building being swept away — except for the intriguing turn that its replacement might mark for L.A.’s housing crisis.
The Venice Boulevard site is currently zoned for 46 residential units. But because the plot is near a major bus stop, its developer can now plan much bigger: an eight-story building with 79 units, eight of them reserved for extremely low-income households.
A half-mile away on Overland Avenue, another developer is leveling an auto repair shop and 17 existing homes on land zoned for 110 units. He’s building 168 market-rate homes and 19 extremely low-income units. Walk across the street and down two blocks, there’s another similar project.
Across Los Angeles, developers are flooding the city with such proposals, taking advantage of a new city program that allows for larger projects near transit if developers keep some units affordable for people with lower incomes.
Since the Transit Oriented Communities, or TOC, program launched in September 2017, developers have proposed more than 12,000 units, including at least 2,300 homes kept affordable for lower-income households, according to city data through the end of 2018.
“It’s busy,” said Laurie Lustig-Bower, a commercial real estate broker with CBRE. “A significant amount of my business” has been these density-boosting projects.
Given the newness of the program, most of the resulting projects haven’t broken ground and none have yet opened, according to the city. And the number of new units pales in comparison with the 500,000 additional below-market homes Los Angeles County needs, according to the California Housing Partnership.
But affordable housing advocates praise the program for making a dent and reserving many of the coming below-market homes for the very poorest. And as projects rise, Los Angeles is making further progress toward its goal of putting housing in central locations near bus and rail lines.
“The two biggest problems we have is our housing crisis and our traffic woes,” Los Angeles Mayor Eric Garcetti said in an interview. “TOC is an incredible weapon to help us address both.”
Protecting the displaced
Not everyone is a fan. Some homeowner groups criticize the streamlined process for increased-density projects. And some low-income advocates, though supportive in general, have raised concerns that to build new projects some developers are demolishing older rent-controlled buildings that can be a haven of lower-cost housing.
Garcetti’s office said that although more study is needed to determine the path forward, the mayor supports establishing a right of return for tenants, particularly those with low incomes, when rent-controlled or income-restricted homes make way for new projects, regardless of whether they’re TOC.
“We need to ensure the lives of the people who are being displaced are not sacrificed and traded for affordable housing for other tenants in need,” said Larry Gross, executive director of the Coalition for Economic Survival. “These people’s lives are going to be thrown into a tailspin.”
Under TOC, developers are allowed to build with fewer parking spots and can increase housing units by 35% to 80%, depending on how close a project is to a major transit stop. As the number of allowed units rises, so does the requirement for some to have below-market rents or mortgages. Developers can receive additional breaks on things such as project height and how close they can build to the property line.
No public hearings are required, and the city has little discretion to deny a project if it follows TOC guidelines.
“It’s created a more predictable process,” said Jessica Lall, chief executive of the Central City Assn., a downtown business group. She credited the planning department with going “bold” in crafting the program. “It’s delivered units faster, at a time we are facing a huge housing shortage.”
The zoning relaxation grew out of Measure JJJ, a 2016 ballot proposal that labor and low-income advocates said would create more affordable housing — and well-paying home-building jobs.
Most of the debate leading up to the vote focused on ballot language that required developers to pay union-level wages and build some below-market units if they received zoning changes or general-plan amendments. As opponents predicted, requests for those changes dropped sharply.
But the measure also instructed the planning department to craft a program to boost affordable housing within one-half mile of major transit stops. It was to be modeled after an existing state law that lets developers build up to 35% more units regardless of proximity to transit. Beyond setting that minimum density bonus, it left many of the specifics to the department.
The idea was to use the zoning code to make it profitable for companies to provide low-cost homes without public funding, which has been on the decline.
Beyond an increase in density, developers say TOC is profitable for them because, unlike zone changes and general plan amendments, JJJ kept union-level wages optional. Instead, it instructed the planning department to provide additional incentives if developers compensated workers at that level and, according to the planning department, only one TOC developer has taken advantage of those incentives.
It’s impossible to know whether construction would be greater if JJJ failed and TOC never was created, in part because developers, trying to get ahead of the restrictions on zoning changes and amendments, flooded the city with proposals before the vote.
The city’s lack of historical data tracking also makes it difficult to judge TOC’s full effect. But the bottom line for now is TOC last year helped lead to more market-rate and affordable units proposed through the planning department than in 2017 — and developers are setting aside homes for the poorest Angelenos in a way they weren’t before.
A rise in low-income proposals
City data show the largest category of affordable-housing proposals — at least 947 homes — is for extremely low-income households, or those with incomes of $20,350 or less for an individual or $29,050 for a family of four. Prior to JJJ, that’s a category the city didn’t even incentivize through zoning.
“It becomes an important homeless prevention strategy,” said Laura Raymond, director of the Alliance for Community Transit-Los Angeles, a coalition of low-income community groups behind JJJ.
The city has also partnered with the nonprofit People Assisting the Homeless, known as PATH, so it can contact developers and encourage them to rent below-market units to people already on the streets.
Local political officials cited the flood of projects as one reason to oppose the controversial Senate Bill 50, which failed earlier this month. That bill would have allowed four units on land now zoned for only single-family homes, and in some cases much larger projects.
TOC, on the other hand, can be used only on land where at least five units are currently allowed. Qualifying developments are scattered throughout Los Angeles. But the neighborhoods with the most units proposed are Koreatown, Westlake, Palms and Sawtelle — all areas with access to light rail or the subway.
Ken Kahan, president of California Landmark Group, is building on the Venice Boulevard site where an auto repair building previously stood. He said the reason for using TOC is simple: more money. In one instance, he even rejiggered a project already under construction in Sawtelle to add more units.
“If TOC was not economically more profitable, developers would not do it,” Kahan said. “The city has come up with a procedure to provide more housing — and more affordable housing without using city coffers.”
Some of the popularity of TOC projects probably is from developers who shifted already-planned projects from one program category to another. But TOC last year did help boost the total number of units proposed that need sign-off by the planning department.
In 2018, the number of market-rate units proposed through any sort of entitlement application rose 20% from 2017, when TOC largely did not exist, while the number of below-market units increased 2%.
Those increases may understate the scale of TOC’s effect on overall proposals; the data don’t include TOC projects that only asked for density and parking breaks and didn’t need planning approval.
A crisis of affordability
The lack of affordable housing in Los Angeles, and elsewhere across the state, has grown into a full-blown crisis. More than half of California tenants pay rent that experts deem unaffordable. Home prices, meanwhile, have surged 80% since 2012, according to Zillow.
Economists generally agree the root cause for both is that for decades too few homes were built relative to population and job growth. Opposition from existing residents is cited as a major factor.
Research indicates that any increase in supply helps hold down costs on a regional level, while UC Berkeley researchers found below-market homes are most effective at limiting displacement of low-income families. Some building proponents argue that even adding a luxury development helps bring down costs in a neighborhood, because well-off households will move there and free up older units.
Not everyone agrees that’s the case. The L.A. Tenants Union, which opposed JJJ, worries that the increase in mostly market-rate apartments will convince nearby landlords that they, too, can charge top dollar.
Tracy Jeanne Rosenthal, a co-founder of the L.A. Tenants Union, called TOC a “scam” for allowing the demolition of old rent-controlled apartments in exchange for income-restricted units that revert to market rents in 55 years. She said what’s needed is political will for an investment in public housing, rather than “tinkering around the edges.”
The largest water agency in Silicon Valley has been secretly negotiating to purchase a sprawling cattle ranch in Merced County that sits atop billions of gallons of groundwater, a move that could create a promising new water source — or spark a political battle between the Bay Area and Central Valley farmers.
The Santa Clara Valley Water District, based in San Jose, is in talks with the owners of the 4-S Ranch, a 5,257-acre property located about 15 miles northeast of Los Banos, for what would be a multi-million-dollar deal to create a huge underground water reserve.
The plan, however, is likely stir anxieties and controversy from farmers, who for generations in California have been wary of selling or transferring water out of their local areas for fear it could mean the decline of farming, especially if they had to compete with wealthy, more populated urban areas.
The proposed sale appeared on the agenda of the water district’s closed session board meeting Tuesday evening, just before the board’s public meeting. But only the property’s parcel numbers, not the owners or the proposed use, were listed as an item, described as a discussion of “price and terms of payment for acquiring.”
Linda LeZotte, chairwoman of the board for the water district, a government agency that provides drinking water and flood control to 2 million residents in Santa Clara County, said Tuesday that she could not discuss specifics, but that the district is looking to buy the property as a possible location for a new groundwater bank.
Groundwater banks are like underground reservoirs. Water agencies put water into them during wet years, and draw water out through wells in dry years.
LeZotte said the district is working to create as many opportunities as it can to boost its water supply, particularly during droughts. She noted that the district was awarded a state grant last year to fund nearly half the cost of a proposed $1 billion new reservoir the district hopes to build near Pacheco Pass, and that it has ongoing projects to boost conservation, recycled water and other water sources.
“We have to look at everything to make sure we have water available in dry years,” LeZotte said.
Buying a Central Valley ranch for its water, however, risks turning into a political minefield. Environmentalists said Tuesday that secrecy is a major issue.
“I’m concerned that the water district, which is a public agency, is doing backroom deals related to water supply that have not been discussed with the public and don’t appear to fit in with anything else that they have said in the past they plan to do,” said Katja Irvin, Conservation Committee co-chair of the Sierra Club’s Loma Prieta Chapter, based in Palo Alto.
A groundwater banking project “might make sense,” Irvin said. “But there’s been no daylight. Nobody knows anything. This isn’t early steps. When you are going into purchase negotiations you are pretty far down the road.”
LeZotte said that a purchase agreement was not going to happen Tuesday. Although board members are discussing potential prices and other details — like how to move the water into Santa Clara County, she said — there will be a public hearing and opportunity for public input before any purchase is finalized, if talks even get that far.
The property already has seen controversy in the past over its water supply.
In 2014, during California’s historic five-year drought, Steve Sloan, the owner of the 4-S Ranch and Stephen Smith, the owner of SHS Ranch, an adjacent property, proposed to sell up to 92,000 acre feet of water — enough for nearly half a million people’s needs for a year — to other farmers for a price estimated at $46 million over a four-year period. Many of those growers were located in neighboring Stanislaus County.
That plan set off a firestorm of protest from other farmers and political leaders in Merced County. They worried that if too much water was pumped out from under the two ranches, it would lower the water table and cause the wells of neighboring farmers to go dry.
“Growers throughout Merced County are scrambling for water and we have to protect what we have here,” Bob Weimer, who grows sweet potatoes, peaches, walnuts and almonds in Merced County told the Merced Sun-Star in 2014.
In the end, a smaller sale for 26,000 acre feet of water over a two-year period — roughly the amount that the Lexington Reservoir near Los Gatos holds when full — went through.
But the incident caused the Merced County Board of Supervisors to pass a local ordinance that requires a county permit for most future transfers of groundwater outside the county. Sloan, the 4-S Ranch owner, could not be reached for comment Tuesday.
On Tuesday, farm leaders in Merced County said they were just becoming aware of a possible sale of the ranch and its implications for their water supply.
“We will remain watchful as the conversations on this particular purchase continues,” said Breanne Ramos, executive director of the Merced County Farm Bureau.
LeZotte said that she hopes an agreement can be worked out that all sides find acceptable. One option would be for the Santa Clara Valley Water District to agree to take out no more water than it puts into the groundwater aquifers, she said, so it doesn’t draw down the water table.
“I would not want to participate in something to the detriment of another region,” she said. “I wouldn’t be comfortable participating in that.”
Complicating matters, the Merced County groundwater basin is classified by the state Department of Water Resources as one of 21 “critically over-drafted” groundwater areas in California, and one of 48 basins considered “high priority” for recharging and restoring.
For generations, farmers all across California have been wary of selling their water outside their home areas, said Jay Lund, a professor of civil and environmental engineering at UC Davis. The concern dates back to the 1920s, when Los Angeles water officials formed fake cattle companies, bought up water land in the Owens Valley on the California-Nevada border, and shipped the water to Los Angeles.
“It’s one of those eternal things,” Lund said. “If you are one of the neighbors of the people selling the land, you are worried they are selling water you need for a drought. And if you are the county supervisors, you are probably worried that if they sell their water they might fallow land, and that means less tax revenue coming in, and less employment opportunity, especially in these rural counties.”
But, Lund said, a compromise potentially could be worked out in which the Santa Clara Valley Water District helps restore the groundwater in the area as part of a deal.
“Depending on how you do it,” he said, “you could cause a lot of trouble or you could cause a lot of good.”
Four years ago, construction crews with huge jackhammers tore apart a 10-story concrete dam in the wooded canyons of the Carmel River, between the Big Sur hills and the beach front town of Carmel.
The destruction of the San Clemente Dam, which had blocked the river since 1921, remains the largest dam removal project in California history. It’s still early, but one of the main goals of the project seems to be on track: The river is becoming wilder, and struggling fish populations are rebounding.
“We don’t want to do the touchdown dance yet, but so far things are looking good,” said Tommy Williams, a biologist with the National Oceanic and Atmospheric Administration, who has monitored the Carmel River’s recovery. “It’s just amazing how fast these systems come back. Everything is playing out like we thought.”
The 106 foot-tall dam had been located 18 miles up river from Monterey Bay. In 2016, the first year after it was removed, researchers found that no steelhead trout, an iconic type of rainbow trout listed as threatened under the Endangered Species Act, swam past its former site to a tagging location seven miles upriver. By 2017, seven steelhead had made the trip. Last year, the count was 29. So far this year, 123 steelhead have traveled upriver.
“We’re seeing progress. I’m surprised that it has been happening in such a short time,” said Aman Gonzalez, who managed the dam removal project for California-American Water, the company that owned it.
The more of the muscular, silvery fish make it upstream, the more the species can expand back into its traditional range, scientists say, increasing the number of places where the fish can spawn and produce more babies in the years ahead.
The broader lesson, scientists say, is one of hope. Despite declines in other species, some wildlife species – from the Great Plains bison to Pacific gray whales to bald eagles – have rebounded significantly, despite plummeting close to extinction, after humans recognized what was killing them and corrected it. For bison and whales, it was hunting. For bald eagles, it was the now-banned chemical DDT.
For steelhead trout, dams built across the West over the past century blocked their ability to swim to the ocean and return upriver to spawn, crashing their populations.
“They just need the right conditions, and they’ll come back,” said David Boughton, a research ecologist with NOAA in Santa Cruz. “They are a resilient, hardy species.”
When San Clemente Dam was built in 1921, the curved arch structure was a key source of water for growing Monterey Peninsula towns.
But its reservoir became silted up with sand and gravel that washed downriver over the years. By 2002, San Clemente’s reservoir was so silted up that it stopped supplying water.
Worse, state inspectors declared in 1991 that the aging dam, with its rusted pipes, railings and valves, was at risk of failure in an earthquake – a disaster that could wipe out hundreds of homes downstream. So Cal Am Water had two choices: Shore up a useless dam for $49 million, or tear it down and restore the river for $84 million.
At first, the water company leaned toward buttressing the dam because it was cheaper. But the National Marine Fisheries Service said it was not likely to issue permits because the dam blocked the migration of steelhead, protected by the Endangered Species Act.
The impasse was broken after Cal Am named a new president, and former U.S. Rep. Sam Farr pushed for removal. Under the deal they struck, Cal Am provided $49 million by raising water rates $2.94 a month on its 110,000 customers in Monterey County. Another $25 million came from the California Coastal Conservancy in Oakland, through state parks and water bonds. And the remaining $10 million came from federal grants and private donations.
Construction crews couldn’t simply dynamite the dam, however.
That would have released all of the sediment behind it – 2.5 million cubic yards, or enough to fill 250,000 dump trucks – and killed everything in the river. It also could have flooded 1,500 homes downstream.
“All that sediment, how do you move it?” said Gonzalez. “Where do you move it? It would have become a 10-year project. That’s why we decided to leave it in place.”
Instead, under the contract awarded to Granite Construction of Watsonville, workers rerouted the Carmel River for half a mile into an adjacent stream, San Clemente Creek. The giant sediment pile was shaped, compacted and blocked off.
Crews recycled the dam’s steel. They broke the concrete pieces ranging in size from softballs to boulders. They buried the debris in the sediment pile and covered it with willows, sycamores and other native plants. They built rocky step-pools, each one foot higher than the previous one so the fish could migrate upriver more easily.
They also tore out the Old Carmel River Dam, a 32-foot-high structure half a mile downstream that was built in the 1880s to provide water for Hotel Del Monte, the resort that was the precursor to Pebble Beach.
When the rains came in the wet winter of 2017, the river moved millions of tons of sand, gravel, broken trees and other debris downriver. It reclaimed its historic meandering path. The debris created pools and hiding places for young fish to avoid snakes, birds and other predators.
Scientists say they will need another decade to make sure the experiment is working.
“If we go into another big drought, we expect there to be an impact,” Williams said. “But we’re making more resilient populations of fish, so they should be able to withstand it.”
One more dam remains upriver from the San Clemente site. Los Padres Dam, built in 1946, is partially silted up and 148 feet high. Scientists are studying the feasibility of removing it. Cal Am draws its water now from wells alongside the river.
Other dam-removal projects, including four huge dams on the Klamath River at the Oregon-California border, along with the 165-foot Matilija Dam in Ventura County and others, are slated for removal. Many of the projects just need money.
At the Carmel River, though, other species, such as lampreys, an eel-like fish, are coming back, and tributaries are showing more wildlife.
“The river is recovering to its natural state,” said Tim Frahm, Central Coast Steelhead coordinator with Trout Unlimited, an environmental group. “We hope it will be as healthy in a few years as it was 100 years ago.”