Commercial Investment Real Estate Spring 2020

BRIEFINGS By Michael Lazerwitz and Linda Sobczynski CHANGING CLIMATE, CHANGING LAWS Legislation is responding to new wildfire risk requirements faced in commercial real estate development. W ith the increasingly common occur- rence of wildfires throughout Cali- fornia, it’s clear that these destruc- tive forces pose a serious threat to the public and the environment. But in addition to these risks, wildfires also impact commercial real estate development, which is dependent on clear and consistent regulations and guide- lines to shepherd projects to completion. New laws and regulations are starting to respond to these threats, including the California Governor’s Office of Planning and Research (OPR) amendment of Appendix G of California Environmental Quality Act’s (CEQA) regulations, designed to help public agencies identify and evaluate wildfire risks. These amendments, along with a host of other updates, became effective at the end of 2018 and are increasingly impacting CRE projects in the Golden State. Assuming the project is not exempt from CEQA, its environmental impacts must be evaluated before the lead agency can issue a permit. The types of significant impacts that should be discussed in an en- vironmental impact report include “any 16 COMMERCIAL INVESTMENT REAL ESTATE MAGAZINE potentially significant direct, indirect, or cumulative environmental impacts of lo- cating the development in areas susceptible to hazardous conditions (e.g., flood plains, coastlines, wildfire risk areas).” These new amendments now guide California state agencies in how to evaluate wildfire risks as they begin preparing envi- ronmental review documents, a significant change from how agencies dealt with this issue before. Prior to these amendments, no specific wildfire-related questions prompted agencies to think about how new projects — including commercial real estate — would create or exacerbate wildfire risks. Now the Environmental Checklist Form includes new questions asking whether the relevant project is “located in or near state responsibility ar- eas or lands classified as very high fire hazard severity zones.” State responsibility areas are where the state has a financial responsibility to prevent and suppress fires. Although the map on pg. 17 helps assess whether a project is located with- in these areas, it is not always clear when a project is located near one. For those decisions, OPR stated in its “Final Statement of Reasons” that public agencies “will be best placed to determine precisely where such analysis is needed outside of the specified zone.” In other words, the agency will use its judgment to decide if the project is near these areas. What if the project is located in or near these areas? In that case, the agency may rely on the checklist’s wildfire-related questions to assess whether the project will exacerbate wildfire conditions. For example, will the project have transmission lines that can spark in high winds? If yes, the project could make existing conditions worse, and the agency will need to thoroughly analyze this issue. What about the project’s location? Can it be built in a way to avoid a steep slope or prevailing wind patterns, which can in- tensify wildfire impacts? If the project could worsen environ- mental conditions, are there mitigation mea- sures that can be adopted to reduce wildfire impacts by maintaining or improving infra- structure, fuel breaks, and emergency water sources? What do these mitigation measures SPRING 2020

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