Developers See Opportunity at Gov.’s Table

In his State of the State address in January, Gov. Arnold Schwarzenegger signaled that he would revise California’s signature environmental protection law, which builders have long complained is cumbersome and restrictive.

In the run-up to that speech and in the months since, developers and other businesses that have chafed under the California Environmental Quality Act’s regulations have donated millions of dollars to support the governor’s political agenda.

In the last two weeks alone, committees supporting Schwarzenegger’s political causes took in a total of $225,000 from three business groups that want to see CEQA changed: the California Building Industry Assn., the California Business Properties Assn., and a political action committee sponsored by the California Chamber of Commerce.

All three co-signed a letter to Schwarzenegger on April 28, recommending “modifications” in the environmental law and casting it as a hindrance to economic development and home ownership.

Development interests have long supported the governor’s agenda. But as the Schwarzenegger administration is -- according to one official -- “smack in the middle” of discussions about reworking the environmental law, the giving has raised new questions.

Last fall, while considering revisions to workers’ compensation laws and energy policy, Schwarzenegger set new limits on himself. He said he would turn away donations from insurers and power companies -- industries that stand to gain or lose from his decisions.

“The policy on campaign contributions varies depending on what issues are considered timely by the governor’s office,” said Martin Wilson, an outside political aide who oversees the governor’s fundraising.

Officials with the California Resources Agency are meeting regularly with business leaders and environmentalists and holding public hearings across the state as they consider retooling CEQA.

Karen Scarborough, the agency’s undersecretary, said in an interview that the administration wants to see “what opportunities are there for us to move in and improve it.”

Among those pressing for change is a business lobby made up of some of the governor’s closest allies.

Allan Zaremberg, president of the Chamber of Commerce, doubles as co-chair of Citizens to Save California, a committee that is raising millions of dollars to support Schwarzenegger’s political agenda.

That committee had scheduled a $25,000-per-person fundraising dinner for Monday, the host of which was to be Harry C. Elliott III, president of a company that builds homes in California and Arizona.

Other home builders and business people were to have attended, according to Elliott.

But Schwarzenegger abruptly canceled the dinner Friday night after hearing from the Los Angeles Times that Elliott said he planned to discuss with the governor what he sees as flaws in CEQA.

Before the fundraiser was canceled, The Times asked Elliott if he would broach the issue with the governor. “Oh, yeah,” he said. “It’s part of our agenda and his. We just want to tell him we’re supportive of it.”

“Gov. Schwarzenegger has a long-standing policy of not mixing campaign fundraising with the discussion of policy matters,” Wilson wrote in a prepared statement.

Environmentalists said they are wary of any effort to weaken the law. They also objected to Schwarzenegger collecting campaign money from the same business interests that are negotiating with his government.

“Instead of saying, ‘I’m the people’s governor,’ he’s a politician taking big money from big special interests,” said Bill Allayaud, state director of Sierra Club California. “And there’s no way to mask that. Whether that will carry the day with CEQA remains to be seen. We don’t think so. We think there’s extremely strong support for the environment among California’s population.”

Enacted 35 years ago, the law mandates environmental review before projects are issued building permits. It requires cities, counties and the state to determine if a project alters the environment and to consider those changes before approving permits. It also mandates that feasible alternatives be explored to protect the environment.

CEQA has been a focus of debate virtually from the day it was passed.

Environmentalists contend it has proved an invaluable tool, allowing them to defeat plans for toxic waste incinerators near residential areas. It has also reduced emissions of hazardous diesel exhaust and given people a say in what is built in their neighborhoods, according to environmental advocates.

“It’s one of the most important environmental laws and good-government laws in the state,” said Karen Douglas, acting executive director of the Planning and Conservation League. “Ordinary people get information about projects that are proposed, a chance to comment and a voice in their future.”

Business groups counter that the law can be a hindrance to economic growth. Many developers complain that it creates unnecessary delays for construction projects and drives up housing costs.

They want changes that would streamline the permit process and cut costs associated with lawsuits arising from CEQA. They also want to find ways of preventing anti-development and NIMBY interests from having undue influence over the fate of construction projects.

“It costs you $50 to file a CEQA suit and hold up a multimillion-dollar project,” Elliott said. “That’s not fair.”

“The litigation surrounding CEQA is huge, and we don’t believe that helps the environment very much at all,” said Paul Meyer, executive director of the Consulting Engineers and Land Surveyors of California, which in March donated $25,000 to Citizens to Save California.

In his January speech, Schwarzenegger pointed to hefty housing costs, saying he would propose legislation “that eliminates regulatory and legal hurdles that delay construction and increase the cost of new housing.”

After the speech, the Resources Agency began to circulate draft proposals of revisions to CEQA.

Business and environmental groups both have sought to influence developments since.

In their April 28 letter to Schwarzenegger, Zaremberg, the Building Industry Assn. and five other business groups included a description of CEQA “abuses.” They drew comparisons with other states, showing that it takes longer to bring California projects to completion. They even proposed “statutory language implementing our reforms.”

For their part, environmentalists are meeting with administration officials and working with allies in the Legislature to oppose what they see as possible damaging changes to the law.

Legislative Democrats have also moved forward with their own proposals. One bill, written by Senate Leader Don Perata (D-Oakland), is aimed at increasing housing in inner cities and reducing sprawl that can take over wetlands and farms.

Alicia Dlugosh, a spokeswoman for Perata, said the Schwarzenegger administration “has been flailing” at putting together a CEQA proposal. “To date, it’s been a disaster,” she said.

Since he first ran for governor, Schwarzenegger has collected more than $13 million from developers, real estate companies, mortgage lenders and construction firms -- entities that could all benefit from changes in the environmental law.

In contrast, donations from environmentalists have been minimal. Donation reports filed with the state showed no contributions from environmental political action committees.

Watchdog groups worry that the money brings a level of access that could make a difference in a clash over CEQA.

Said Ned Wigglesworth, an analyst who monitors Schwarzenegger’s fundraising for the nonprofit group TheRestofUs.org: “The governor can’t make time for everybody in California, but he does make time for people who give him $25,000 a pop. It certainly looks like he’s in their pockets.”

Schwarzenegger is planning a fundraising blitz in Florida, Illinois and Texas this month.

The governor is raising campaign money in anticipation of a possible special election in November. He has said that he would try to strike deals with the Legislature on changes he wants in California government, but that if he fails he would call an election and put his ideas before voters. His supporters have prepared possible ballot initiatives aimed at controlling state spending, redrawing voting districts and lengthening the time it takes for schoolteachers to receive tenure.

The out-of-state events next week will benefit the California Recovery Team, a Schwarzenegger-controlled committee created to pay for campaigns that support ballot measures and political events featuring the governor.

The Florida fundraiser will take place at the Orlando-area mansion of timeshare mogul David Siegel, president of Westgate Resorts. Co-host of the Florida fundraiser is Robert Earl, one of the founders of Planet Hollywood, the restaurant chain that Schwarzenegger promoted in the 1990s in exchange for a share of the company.

Earl and Siegel announced an agreement last month to develop at 52-story residence on the Las Vegas Strip next to the Planet Hollywood Resort & Casino.

Wilson, the governor’s fundraiser, said the three-state blitz is a recognition that Schwarzenegger “has a lot of support beyond California’s border, and people view him as a Republican superstar and understand that the reforms he is trying to pass here in California have national implications.”

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Home industry donations

Since announcing he was running for governor, Gov. Arnold Schwarzenegger has collected more than $13.5 million in campaign donations from mortgage lenders, home builders, real estate companies and construction-related firms. Some of the large donors:

* Roland & Dawn Arnall and Ameriquest: $1,296,400 (mortgage)

* Alex Spanos, family and employees: $1,094,700 (developer)

* William Lyon and family: $742,000 (developer)

* Larry Doyle and American Sterling Corp.: $671,200 (mortgage)

* Robin Arkely and Security National Servicing Corp.: $521,200 (mortgage)

* David Murdock/Castle & Cooke: $423,100 (developer)

* Hadi Makarechian and Capitol Pacific Holdings: $289,149 (developer)

* Eli Broad & KB Home: $280,387 (developer)

* Donald Bren, family and Irvine Co.: $207,400 (developer)

* Cendant Corp.: $171,100 (developer)

* California Building Industry Assn.: $150,000 (developer)

* John Moores and family: $137,300 (developer)

Source: California Secretary of State