Our Coalition’s Fight Against AB 98’s Warehouse Regulations

After contentious debate in both houses, Assembly Bill 98 narrowly passed the legislature and was signed into law by Governor Newsom.    

California's AB 98 could significantly change how warehouses and distribution centers are built and operated. 

This last-minute, closed-door deal was pushed through with little input from key stakeholders, leaving many in the real estate industry and local communities concerned. 

The bill aims to protect the environment, but it could lead to higher costs, fewer jobs, and slower development in our state. 

AB 98: Breaking Down the Bill 

New Rules for Large Warehouses 

AB 98 targets warehouses that are 250,000 square feet or larger. The bill sets strict rules for buildings near homes, schools, and parks. These buildings must include energy-saving features like solar panels, cool roofs, and electric vehicle charging stations. By 2030, all forklifts and specific equipment must be zero-emission. 

More Rigid Zoning and Location Rules 

The bill also changes where new warehouses can be built. Truck loading bays must be 300 to 500 feet from homes and schools. New warehouses will need separate entrances for trucks that connect directly to main roads. These rules could make it harder to find suitable sites for new warehouses. 

Higher Costs for Developers 

Under AB 98, developers will face higher costs. The bill requires detailed truck routing plans to keep trucks away from neighborhoods. Developers must also replace demolished housing with two affordable units for each removed. These new rules will likely make projects more expensive and take longer. 

Exemptions for Existing Projects 

Some protections exist for existing warehouses and projects already in progress. Warehouses running by September 30, 2024, might not have to follow all the new rules, especially if new homes or schools are built nearby after that date. Projects already in the approval process by September 30, 2024, are also exempt from some of the stricter rules. 

How AB 98 Could Impact Our Industry and Communities

Impact on the Real Estate Industry 

AB 98 adds new rules that could raise costs and make development harder. Smaller developers might struggle to meet these new standards, which could mean fewer choices and higher prices. The new zoning rules could also affect property values, especially in areas that don't meet the new criteria. 

Impact on Local Communities 

AB 98 aims to protect communities from pollution and noise, but it could have other effects, too. The higher costs for developers could lead to higher prices for everyday goods. Fewer new warehouses might mean fewer job opportunities in areas that rely on this industry. However, the bill's focus on affordable housing and protecting the environment could help address some community issues. 

Our Coalition’s Fight Against AB 98’s Warehouse Regulations

A lot of effort went into opposing this bill. While we didn’t get the outcome we hoped for, we took part in a highly effective lobbying and advocacy campaign with an impressive coalition of over 20 organizations and 100 companies calling for a veto. 

This coalition acted quickly and communicated effectively, nearly succeeding but ultimately falling short by just one vote. This close outcome surprised both legislative staff and proponents, who didn’t expect such organized opposition on short notice.  

Looking Ahead

The California Business Properties Association (CBPA) have hosted several webinars in partnership with allied groups to provide legal analysis on the implications of AB 98. 

Their next steps involve sharing key points with industry partners to ensure alignment and coordinating with local government for potential clarifications.  

They’ve developed a legal redline of this law including clarifying effective dates, addressing infill impacts, expansion thresholds, truck route requirements, exemptions, buffers, and housing replacement issues.  

The objective is to focus on technical corrections, gather suggested amendments from experts, and build consensus among stakeholders to improve the law's clarity and application. 

Follow us on BOMA on the Frontline for updates on this development and AB98’s implications.