Author: Sunny Tsou
The Regional Water Quality Control Board for the San Francisco Bay Region (the “Board”) recently eliminated a credit that many transit-oriented development projects have relied on to meet stormwater runoff requirements. The Municipal Regional Stormwater NPDES Permit for the San Francisco Bay Region, reissued on May 11, 2022 as Order No. R2-2022-0018 (the “Stormwater Permit”)[1] will instead limit the credit to certain affordable housing projects, which may create additional obstacles for transit-oriented developments that do not meet the permit’s ambitious affordable housing targets.
Background
The Stormwater Permit is a comprehensive permit that regulates municipal stormwater systems and includes provisions for water quality monitoring, controls for specific materials, discharge thresholds, and stormwater management for development projects. It applies to the counties of Alameda, Contra Costa, Santa Clara, San Mateo; to most cities and flood control districts within these counties; and to certain jurisdictions in Solano County (the “Permittees”). These Permittees are responsible for adhering to and implementing the Stormwater Permit within their jurisdictions, including through regulation of private development projects.
Under Provision C.3 of the Stormwater Permit, development projects are required to include appropriate measures to minimize discharges of polluted stormwater and to prevent increases in stormwater runoff. The favored (and required) approach under Provision C.3 is for development projects to filter and manage stormwater through Low Impact Development (“LID”). The goal of LID is to reduce stormwater runoff by mimicking a site’s predevelopment hydrology and minimizing disturbed areas and impervious cover.
Because LID typically requires substantial amounts of space for either recreating or preserving natural landscaping, high density development projects are often unable to comply with Provision C.3 through LID measures alone. Accordingly, Provision C.3 includes alternative compliance methods for such projects that meet certain requirements. Until the recent re-issuance of the Stormwater Permit, one of those alternative methods was Category C Special Project Criteria (Transit-Oriented Development; Provision C.3.e.ii.5). It allowed high density commercial, residential, and mixed use projects located near transit to reduce their LID obligations through a credit, with the amount of credit dependent on a project’s proximity to an existing or planned transit hub, whether the project was located within a Priority Development Area identified in a Sustainable Communities Strategy, the project’s density, and whether the project minimized the amount of surface parking.
Modification of Category C Special Project Criteria, from Transited-Oriented Development to Affordable Housing
The revised Stormwater Permit replaces the Transit-Oriented Development credit with an Affordable Housing credit. It is no longer sufficient for a project to be high density or near transit to use the Category C credit, and commercial and mixed use projects no longer qualify. Instead, this Category C credit now only applies to residential development projects with a density of at least 40 dwelling units/acre that provide a specified amount of affordable housing. The amount of LID credit available depends on how much affordable housing is provided—a minimum of either:
- 50% of dwelling units restricted to moderate income households
- 25% of units restricted to low income households
- 15% of units restricted to very low income households, or
- 5% of units for extremely low income households.
Notably, these affordability levels exceed the criteria set by the state’s Density Bonus Law and most local inclusionary requirements.
The Board provided multiple justifications for replacing the Transit-Oriented Development credit with this Affordable Housing credit, including that affordable housing projects typically have high densities and are located near public transit and so would produce less automobile traffic, which contributes to polluted stormwater runoff. The Board also stated that the affordable housing projects receiving credit under this Affordable Housing credit will reduce pollutant discharges from encampments by moving under-housed people into affordable housing.
The Board’s decision also is driven in part by its determination that the Transit-Oriented Development credit resulted, over the years, in approximately 324 acres of impervious surfaces receiving this credit where the Permittees did not clearly demonstrate that it was infeasible to incorporate LID measures onsite or contribute to LID measures offsite. The Board determined that LID treatment in an offsite location and the payment of in-lieu fees are reasonable options that could replace the Transit-Oriented Development credit.
Practical Implications
The removal of the Transit-Oriented Development credit is certain to impact infill development throughout the Bay Area and the impacts could be significant. One comment letter submitted to the Board by an East Bay affordable housing organization noted that a number of recent housing projects in Oakland would not have qualified for the new credit, which would have jeopardized those projects. Other commenters, including the Building Industry Association of the Bay Area, were critical of the affordable housing thresholds because projects would need to exceed the amount of affordable housing under a local inclusionary housing ordinance to obtain LID credits, which may affect feasibility.
Additionally, alternative methods of LID compliance may not be readily available or as viable. For instance, the in-lieu fee option (Provision C.3.e.i.2) requires the fee to be used to treat stormwater runoff with LID at an offsite facility. Commenters pointed out that there are currently no programs in the Bay Area offering in-lieu fees with offsite LID treatment and that it would take several years to get such programs up and running. The other special project categories (Categories A and B, Provision C.3.e.ii.3 and 4) are intended for infill projects but appear to have limited applicability due to project size limitations and zoning restrictions. Projects that cannot rely on an alternative method of compliance would likely need to reduce their development footprints to accommodate LID measures, which in turn could affect their feasibility.
The Board originally intended for the Affordable Housing credit to go into effect on July 1, 2022 but decided to delay its implementation until July 1, 2023. As such, projects seeking to utilize the Transit-Oriented Development credit must obtain final discretionary approvals by June 30, 2023. As part of its approval of the Stormwater Permit, the Board directed Board staff to further study the impact of these changes and to report back to the Board by August 2023.
[1] The Stormwater Permit and related materials are available at https://www.waterboards.ca.gov/sanfranciscobay/water_issues/programs/stormwater/.
