Last week, the state of California updated its Environmental Quality Act, known as CEQA, to facilitate urban housing projects under 20 acres by exempting them from environmental review. These changes aim to reduce red tape and promote home construction in areas like San Diego.
While business leaders believe the reforms could result in a modest increase in home-building, they have raised concerns about a new fee related to vehicle miles traveled (VMT). Leaders from the Building Industry Association of San Diego and the San Diego Regional Chamber of Commerce argue that this additional fee negates the intended benefits of CEQA reforms designed to improve housing affordability and accessibility.
Vehicle miles traveled is a metric used to assess the average driving habits of residents in specific areas. It encompasses various trips, including those to work, school, grocery stores, and medical appointments. Urban planners utilize VMT calculations to estimate how new housing projects will impact air quality, climate change, and traffic congestion.
The new CEQA reform law establishes a state bank specifically for VMT funds, which will be used to mitigate transportation impacts associated with future housing projects. The collected fees may either contribute to transportation infrastructure or fund affordable housing initiatives.
However, business factions view the VMT provision as a potential setback, describing it as a hidden additional fee within a law meant to ease home construction costs. Columnist Dan Walters from CalMatters articulated this dilemma, suggesting that while California aims to simplify housing development, the new law might inadvertently lead to increased costs.
The VMT fees program was not subjected to public debate prior to its approval as part of the state budget, leaving many stakeholders caught off guard by what they interpret as a new tax. A coalition of business and community organizations has launched a campaign against the provision, referring to it as a “fee” that effectively operates like a tax on newly constructed homes and apartments.
Unlike traditional taxes that fund general governmental functions, fees typically support specific services—like road construction or street lighting. The VMT fees included in the new legislation blur the lines between the two categories.
According to Lori Pfeiler, the president and CEO of the Building Industry Association of San Diego, the calculation methods for the VMT housing charges may seem arbitrary and are often subject to the discretion of local governments, many of which may be opposed to new housing developments.
She noted the risk involved in such a setup; local authorities have virtually unchecked power to impose these charges that may not accurately reflect the actual costs of mitigating vehicle travel resulting from new housing. Pfeiler claims that these VMT charges resemble a tax on housing production since the funds would be deposited into a general statewide account for affordable housing, offering no assurance that the funds would return to the communities where they were collected.
Opponents of the VMT fees have estimated that the costs could soar to as much as $16,200 annually, translating to $324,000 over 20 years for each new housing unit. This estimate is based on analogous figures sourced from a similar program in Los Angeles, which lists this number merely as a point of reference.
Currently, the precise costs associated with the VMT program remain uncertain. The CEQA reform law does not provide any specific figures for the fees; instead, it mandates that the Office of Land Use and Climate Innovation collaborate with various state agencies to finalize the fee structure and program specifics by July 2026.
Leaders in San Diego have voiced concerns over the lack of clarity regarding the fee structure. Without a definitive formula or cost expectation, developers remain uncertain about potential VMT payments, which could ultimately be passed on to home-buyers and renters.
Furthermore, the legislation allows local governments to impose additional VMT fees on top of the state’s charges, compounding the financial burden on developers. San Diego City and County already have existing VMT programs in place, but the county opted to downscale its requirements last year, stating that projects in compliance with the county’s general plan would be exempt from these fees.
In an op-ed published in Voice of San Diego last year, Pfeiler expressed approval for the county’s decision to revise its VMT program, pointing out that stringent housing regulations have pushed residents out of San Diego, increased difficulty in purchasing homes, and exacerbated issues such as homelessness and socio-economic segregation.
Pfeiler and other local industry leaders are advocating for amendments to the CEQA reform law in order to remove or clarify the VMT fee components. As of Friday, there have been no updates on their efforts.
In addition to housing concerns, Assemblymember David Alvarez has introduced a bill aimed at alleviating gas prices for consumers. If signed into law by Governor Gavin Newsom, Alvarez’s bill could permit California to utilize E15, a “cleaner, cheaper fuel blend,” which would increase the ethanol content in gasoline from 10% to 15% and potentially lower fuel prices by 20 cents per gallon.
The proposed ethanol blend, made from corn starch or sugar, has been federally approved for use across other states. The bill awaits Governor Newsom’s signature, who has a 30-day deadline to act on it.
Alvarez also co-chaired a hearing focusing on the implications of California’s low-carbon fuel standard, addressing the costs and benefits of implementing state programs aimed at reducing the carbon footprint of vehicle fuels.
“Californians want to ensure we transition to a cleaner environment that addresses climate change impacts, but it’s crucial we do so without imposing heavy burdens on their cost of living,” Alvarez stated during last week’s hearing.
Meanwhile, responding to federal health policies under President Donald Trump, California is collaborating with neighboring states to form a West Coast Health Alliance. Governor Newsom announced this initiative this week as a response to staffing changes at the Center for Disease Control and Prevention along with proposed restrictions on vaccine availability by U.S. Health and Human Services Secretary Robert F. Kennedy Jr.
Through this coalition, California, Oregon, and Washington aim to synchronize health guidelines, ensuring that immunization recommendations are informed by credible national medical organizations. Hawaii has also joined this evolving partnership.
This new alliance would provide residents with consistent, science-driven health recommendations, regardless of overarching federal policies.
image source from：voiceofsandiego
