California’s road to climate progress, Part 3

Introduction

For the last two decades, California’s lawmakers have demonstrated a deep understanding of how to reduce greenhouse gas (GHG) emissions from the transportation sector. They enacted fuel economy policies that are successfully incentivizing electric vehicle adoption through a mix of emissions standards and consumer credits. But those lawmakers also know that if California wants to hit its emissions targets, it has to reduce total vehicle miles traveled (VMT).

To that end, the state has passed multiple laws that aim to shift where people live, work, and play. Promoting infill development in established neighborhoods is a durable way to shorten trip distances and reduce VMT, both of which can lead to emission reductions. Even better for residents, this kind of development can reduce household transportation costs and keep families away from wildfire-prone locations.

But if California’s lawmakers are serious about reducing VMT through infill development, then one thing is certain: The state must get its relationship with its local and regional governments right. Local and regional governments plan for transportation, zone for all forms of land use, and permit real estate and transportation projects. In terms of asset ownership, local and regional governments own most roadway miles and every transit system. Without partners who are able and willing to implement state laws intended to reduce VMT, the impact of California’s climate legislation will always be muted.

But the relationship between the state and its local and regional governments isn’t working as intended. The state asks much of its local and regional counterparts, including the significant time required to draft sustainable communities strategies (SCS), model VMT impacts from new developments, plan for housing at the local and regional level, and then report data back up to state counterparts (outlined below in Problems 1.1, 1.2, and 1.3). Yet for all those planning requirements, there are few consequences for places that don’t actually deliver projects to reduce VMT (Problems 2.1, 2.2, and 2.3), nor are there many financial incentives for those that want to (Problems 2.4 and 2.5).

These local and regional problems aren’t unique, either. They often mirror or compound similar issues state officials face, which we detailed in a companion piece. Combined, the inability of state laws to deliver meaningful change in where Californians choose to live and how they choose to travel should inspire state lawmakers, their partners in local and regional government, and other external stakeholders to revisit the state’s legal approach.

This report details the perspective of local and regional professionals to better understand how the state’s maze of climate laws impacts their work in specific places. This research relies on a review of literature by California researchers, expert interviews with local decisionmakers, and a first-of-its-kind flowchart of state-mandated plans and processes. We find three high-level problems that must be addressed for California to bridge its climate ambitions and its current performance.

Problem 1: California’s laws have overburdened regions and localities

Since 2006, California’s legislators have passed an array of land use laws that require significant compliance from their local and regional partners. Those officials must draft an SCS, execute their role in the RHNA process, demonstrate VMT compliance for all development, and more. That burden is significant and rarely accompanied by state fiscal support to cover labor costs.

One effect of this burdensome regime at the local level is the widespread contracting of consultants by local governments. Some municipalities are so cash-strapped and short-staffed that they hire consultants to decipher new state laws and rules.¹ It’s even more common for municipalities to hire consultants to support implementation activities such as conducting public engagement, performing analysis, and drafting plans.² It’s easy to feel like California has it backwards—subpar results on the ground but a vibrant industry for consultants. It’s a model that may meet short-term needs, but ample evidence suggests it hurts the capacity of crucial public sector staff.

• Problem 1.1: Local capacities are strained by RHNA planning requirements and new land use laws. After the state determines each COG’s housing needs and the COG allocates its portion to member governments, the amount of paperwork the RHNA requires of localities comes into focus. Local governments must update the housing element of their General Plan and rezone enough of their land to accommodate their allotted growth. Then, those same localities must annually report intricate data to the California Department of Housing and Community Development about the homes built in their jurisdiction that year. On top of that, the state has passed several bills creating statewide exemptions to local land use in quick succession. Localities must find resources and create procedures to implement, including updating municipal code, developing new application forms, training staff, and more.³ According to several officials, some developers have tried to leverage new state exemptions the municipality hadn’t yet added to their General Plan or city code.⁴ All this amounts to an enormous compliance burden for even well-resourced jurisdictions, especially since multiple experts noted that state guidance can be unclear or conflict between agencies.⁵ Some municipalities, for example, struggle to balance compliance with both the RHNA and California Coastal Commission mandates. Time isn’t the only issue—some local officials said they worried about the threat of legal action for failing to comply with vague or conflicting guidance.⁶
• Problem 1.2: Preparing a Sustainable Communities Strategy imposes a significant burden on MPO staff and is accompanied by little support. The SCS is well intended, but each major step demands significant time and effort from MPOs. First, each MPO must liaise with the California Air Resources Board (CARB) to set their GHG reduction target. Then, the MPO designs a unique methodology to quantify GHG emissions, including extensive modeling tweaks such as costs to operate a car or the average fuel economy 20 years from now. Finally, once CARB approves their methodology, the MPO then undertakes the long process of drafting and publishing the SCS, which includes several rounds of public review. The net result is that MPO management must dedicate significant staff hours and budget resources to SCS activities, all without state funding to offset costs. That’s burdensome for any MPO, but especially smaller MPOs that are more likely to farm out the work to consultants, which limits opportunities to build in-house knowledge.⁷
• Problem 1.3: For all levels of government, California Environmental Quality Act review and subsequent mitigation efforts exhaust resources. Since 1970, the California Environmental Quality Act (CEQA) has required new projects to analyze, disclose, and often mitigate potential environmental impacts. (For a more thorough description of the CEQA process and recent updates, see Appendix 1.) Barring some notable exemptions, CEQA requires lead agencies to prepare massive environmental review documents that detail an array of possible environmental consequences. The time and effort required to comply with CEQA all but guarantees that consultants perform the work in place of government staff.⁸ Once all documents are produced, local and regional governments face the threat of litigation—going to court isn’t cheap, and settling can shorten timelines but stress fiscal reserves. Then, beyond government, private developers shoulder the fiscal burden and uncertainty of mitigation if CEQA review finds their project might induce VMT. Recent state reforms to streamline environmental reviews for many infill-supportive and related projects could address this challenge while maintaining the environmental protections the law was originally intended to deliver.

Problem 2: The state’s transportation and land use regimes lack incentives and consequences

Despite the burdens placed on local and regional governments, state laws have had a limited impact on what those governments actually fund and build. That’s because the state’s current system is mostly set up to ensure that local and regional governments create good plans, but does far less to encourage them to undertake projects that reduce GHG emissions. The lack of incentives and enforcement mechanisms ends up allowing VMT-inducing transportation (Problems 2.1, 2.2, and 2.3) and development projects (Problems 2.4 and 2.5) to move forward, even if local and regional plans appear to curtail such projects.

• Problem 2.1: State law does not require localities’ General Plans to align with their MPO’s Sustainable Communities Strategy. SB 375 explicitly omitted a requirement that cities and counties implement their regional SCS targets. What that means in practice is that municipalities can simply ignore the modeling and project lists in their MPO’s SCS.⁹ Some local experts said even the most earnest localities struggle to align their General Plans with their MPO’s SCS, given the complexity of the SCS and the time and effort required to update the General Plan.¹⁰ Regional RHNAs might indirectly bring greater alignment between a General Plan and an MPO’s SCS, since the regional RHNA must be consistent with an MPO’s SCS, and every General Plan’s housing elements must comply with targets set in the regional RHNA. That opportunity is somewhat limited, though, since the RHNA does not consider other land uses—the location of housing alone cannot guarantee VMT reduction in absence of proximate mixed-use development and alternatives to driving.
• Problem 2.2: State law allows MPOs to approve projects that do not support their GHG reduction targets. Each MPO drafts a long-range Regional Transportation Plan (RTP), which includes a fiscally constrained list of projects it expects to pursue over the next 20 years. Then, they prepare a Regional Transportation Improvement Program (RTIP), which lists in greater detail and granularity the projects they will undertake in the short term, usually over four years. The regional SCS only applies to the RTP, meaning only the long-range project list is evaluated on whether it will achieve required GHG reductions. This allows MPOs to game the process by preparing a SCS-compliant long-range project list and then selecting projects most likely to induce VMT when preparing the short-range RTIP. This is especially true for projects funded through local option sales tax (LOST) measures, whose guaranteed funding means they are prioritized for delivery in the RTIP. MPOs know they face little consequence for this; the loophole allows any MPO to draft an RTP/SCS that’s essentially a wolf in sheep’s clothing.
• Problem 2.3: Even when consequences for noncompliant SCSs exist in state law, they are not taken seriously by local and regional stakeholders. CARB reviews the SCS every MPO produces. But if emissions don’t decline to target levels, CARB cannot administer consequences. Case in point: The Los Angeles region’s MPO, the Southern California Association of Governments, could become the first MPO to undertake an Alternative Planning Strategy, which is essentially an acknowledgement that their SCS would not meet their targets.¹¹ Though the law says that would make the MPO ineligible to receive certain state funds, multiple experts expressed deep skepticism that the state would meaningfully limit funding.¹²
• Problem 2.4: The state provides limited funding for VMT mitigation. Cap-and-trade dollars flow via the state’s Greenhouse Gas Reduction Fund to several climate-supporting funding programs, and the state has at least one competitive program that exclusively funds projects off roadways.¹³ For local governments seeking funding for VMT mitigation under CEQA, however, competitive programs are no guarantee, and technical unknowns surround the implementation and expected revenue generation of the statewide mitigation bank.¹⁴ For now, the majority of Caltrans’ budget is unavailable to those undertaking VMT mitigation under CEQA.¹⁵
• Problem 2.5: There are limited state incentives for developers to help pay for supportive infrastructure. When developers build new homes in infill areas, they’re often on the hook to build infrastructure to support incoming residents. That infrastructure can include green space, sidewalks, and water capacity—all of which come with relatively high upfront construction costs. Historically, redevelopment authorities helped developers make costs pencil out, at least within their designated geographic areas. When the state dissolved those authorities in 2012, developers were left searching for commensurate funding. There are alternatives: Voters can adopt Mello-Roos districts to create public revenue flows, and VMT mitigation under SB 743 could help fill that gap. Enhanced Infrastructure Financing Districts can fund infrastructure using tax increment financing, but their creation and operation are complex. Yet in general, public and private experts noted the current lack of available funds for supportive infrastructure creates net financing gaps for projects.¹⁶

Problem 3: Regions and localities often pursue projects that are out-of-step with the state’s climate goals

The state adopting laws in pursuit of a grand ambition—reduced GHG emissions and environmental risks—doesn’t mean every community shares the same goals. Yet it’s community officials who approve and deliver projects, many of whom are armed with significant revenues from LOST measures in self-help counties. It’s also their job to be responsive to household and business demands, including those who decry roadway closures and demand plentiful parking. Given their constituencies, it’s reasonable that many communities will pursue projects that increase total VMT and continue to promote automobile use. The problems arise when state laws fail to incentivize the alternative.

• Problem 3.1: The makeup and term lengths of MPO boards limit regional buy-in for state climate targets. MPOs are uniquely responsible for implementing state climate ambitions. But MPO boards are comprised of local officials who generally overrepresent suburban areas given that, traditionally, every jurisdiction within the MPO’s boundaries is entitled to one vote. What’s more, MPO members often serve terms of only one to two years—less time than it takes to even develop an SCS.¹⁷ For those serving on MPO boards, it’s often more intuitive to greenlight VMT-inducing projects in your jurisdiction—or support similar projects in other parts of the region as part of natural logrolling—than to take the extra time to follow the SCS-based recommendations of MPO staff.¹⁸ State law could do more to promote representative equity and procedural knowledge among MPO boards.
• Problem 3.2: Limitations on local governments’ abilities to raise revenue can incentivize greenfield development. In 1978, voters passed Proposition 13, which ceded control of property tax rates from localities to the state legislature. Then, in 1994, the U.S. Supreme Court established strict standards for when and how localities could charge developers impact fees, a principle known as Nollan-Dolan. With these two funding streams severely limited for decades, local officials have sought other ways to generate municipal revenue. For jurisdictions with greenfield areas, even the most sprawling new development can bring in coveted dollars in the form of property and sales taxes. These limitations create a scarcity that can incentivize municipalities to develop their greenfield areas.
• Problem 3.3: A string of much-needed state-imposed exemptions to local zoning ordinances can still be thwarted by citizen outcry. Though “YIMBYs” may have emerged as the clear victors of California’s 2025 legislative session, the political economy of land use at the local level is still messy. For many local officials, complying with new state exemptions such as mandatory upzoning near transit stops puts them at odds with the will of their constituents and the constraints on local infrastructure capacity. Passionate constituent opposition to upzoning and new development exists to this day, but new laws such as AB 130 and SB 79 could provide air cover for their representatives.
• Problem 3.4: Adequate parking supply remains a top concern among local officials. Though a recent state law eliminated local governments’ ability to impose minimum parking mandates, many constituents—and the local officials who represent them—remain protective of parking at new developments.¹⁹ That’s not just NIMBYism, either. Part of their concern is preserving parking for existing residents, especially those who still need to travel long distances across their region to get to work (and where transit trips would be excruciatingly long, if available at all), and those who live with multiple generations, all working, to afford housing. That dynamic creates a challenging intermediary period for local officials, in which state laws that could lead to car-optional neighborhoods have passed, but the on-the-ground reality hasn’t caught up. The state’s push for electric vehicles could further reduce GHG emissions in that interim period. The state could also work with communities to devise replicable practices around affordable pricing that maintain parking supply while still promoting infill development.²⁰

Conclusion

California’s legal regime can exhaust its best-prepared regions and highest-resourced cities. Its paperwork burden is onerous, testing the limits of the time county, city, and regional planners have to reach compliance for everything from one-off projects (Problem 1.1) to long-range plans (Problems 1.1 and 1.2). At the same time, that regime is essentially toothless. The state has little recourse for unmet climate targets (Problems 2.1, 2.2, and 2.3) and it does little to incentivize governments and developers to deliver on its cleaner and more resilient vision (Problems 2.4 and 2.5).

Yet even as compliance burdens weigh down local officials, those officials can pursue projects that work against state goals. They propose funding measures that try to solve unsolvable traffic problems and game the state’s systems to get their pet projects on the books (Problem 3.1). Even officials with earnest environmental motives can find themselves pushing for constituents’ desires rather than convincing them of the benefits of more sustainable and resilient development (Problems 3.3 and 3.4).

California needs statewide solutions and fiscal carrots that can organically bring local and regional governments onboard, all while decreasing the compliance burden staff of those governments bear. Counterintuitively, if California is serious about its goals, it should ask its partners to do less with more.

In the next piece in this research series, we will use the problems we’ve identified at the state and local levels to lay out the principles by which policymakers and stakeholders ought to see the current system and potential reforms. We will also provide domestic and international examples of governments that, facing similar problems, adopted reforms that got results.