The Effects of California Water Regulations on Developers

Extensive restrictions instituted by California’s State Water Resources Control Board to reduce overall water use by 25 percent has affected a wide range of businesses in the state. Among those experiencing the impact of these regulations are real estate owners and developers. Below is a summary of some of the consequences of drought conditions and its accompanying legislation for real estate industry participants.

Rise of Litigation Preempting Development. SB 610 and SB 221 provide that large multifamily developments have adequate water supply sources. Governments must analyze water supply conditions before consenting to development projects with 500 or more units. Groups that oppose these projects are likely to use this legislation to block new developments in light of the inadequate water supply across most of the state. Those opposing development may also rely on the California Environmental Quality Act (CEQA) to initiate litigation against proposed projects based on water use issues arising from the drought.

Delays in Real Estate Projects. Water use restrictions have resulted in new residential projects encountering longer delays, particularly in communities where water use cutbacks are as high as 36 percent. In addition, large apartment complexes that have significant areas of grassland or have been designed to include water elements have been facing hurdles or have been substantially revamped. This is particularly relevant in areas such as Orange County, where state officials have called on construction companies to build houses in response to a housing shortage while anti-development activists have called for halting development due to the severe water scarcity.

Finding Innovative Ways to Use Water Indoors. While exterior water projects need to be overhauled under existing restrictions, developers may also start considering how interior water systems should be configured to comply with regulations. This may lead to installations of water systems that recycle and reuse water in much greater numbers in the future.

Contact Shane Coons at 949-333-0900 or visit his website at www.ShaneCoonsLaw.com to find out more about his practice.

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The Effects of California Water Regulations on Developers

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