OPR Director Kate Gordon on Managing California’s Utilities, Wildfires, Housing & Transportation Planning

Kate Gordon: I have a background as a planner and a lawyer, but most of my work for the past 15 years has been at the intersection of clean energy and development, and more recently, around the economic and physical impacts of climate change on the U.S. economy.

For the last few years, I led the Risky Business Project—co-chaired by former U.S. Secretary of the Treasury Hank Paulson, Michael Bloomberg, and Tom Steyer—exploring in detail what it means from a business and operations perspective that climate impacts are being felt today. That work was part of an important move toward much better data on resilience that we can use in real planning.

OPR brings all this work together. It’s the place where we can do big systems thinking on planning for resilience and sustainability. Our goal is to work with practitioners in the built environment to lift up what has worked, foster better relationships with local, county, and regional folks, and learn bottom-up lessons about how to overcome barriers to better development.

Governor Jerry Brown and the state Legislature set an incredibly important framework for sustainability and climate change. The entire climate policy network—cap and trade, the renewable energy portfolio standard, the Low Carbon Fuel Standard, SB 100, the executive order on carbon neutrality by 2045—all these are really important goals. Governor Brown’s ambition is consistent with the global ambition that led to the Paris Agreement and an international framework for building for the future.

Governor Gavin Newsom is a brilliant implementation guy. He is all about taking those goals and figuring out how to get them done—putting the right systems in place to get traction. And he is particularly interested in tackling the hard things; he’s not as excited by the low-hanging fruit.

California is expected to reach 50 million people by 2050. At OPR, we are looking at this overarching question: What does sustainable growth in our state look like, given some very big challenges?

The climate crisis is a prime concern. We are seeing the effects of climate change—fires, floods, extreme heat, the slow march of sea-level rise—every day on our infrastructure, our people, and our systems. In California, we are leaders on climate in a lot of ways: Our emissions have gone down even though the state has grown a lot; we have done a good job of becoming more efficient with our resources; and our building stock, especially new buildings, has gotten much cleaner.

Where we are not leaders is in vehicle miles traveled. If you include oil and gas extraction and burning, our transportation system accounts for 51 percent of all emissions in the state. That is a crisis, not only in terms of climate, but also in terms of affordability.

People are driving hours to get to work. They’re burning enormous amounts of fuel, not only creating emissions, but also making transportation costs the second biggest thing in their budgets. It’s impacting people’s health, their quality of life, and their families. And it’s starting to make us lose our competitive advantage in terms of attracting people to the state. More companies are choosing to locate their second or third big buildings outside of California, people are not coming into the state for higher-level jobs, and it’s harder to recruit people for mid-level jobs.

The climate crisis and the affordability crisis are the driving forces in the state right now, and wildfires are a microcosm of both. The climate crisis is making wildfires more urgent, more extreme, and more frequent, and the most severe of them are caused by utility lines. At the same time, we’re seeing more people moving into high-risk fire zones because they are some of the only affordable areas left in the state. It’s $800 for a two-bedroom house in Paradise; that’s just not possible to find in the urban areas of the state.

There is a relationship between the affordability crisis and the fact that most of the people who died in the Paradise and Santa Rosa fires were over 65 years old. Fixed-income seniors, in particular, are moving into more affordable parts of the state that are geographically isolated, socially isolated, and hard to get in and out of. And we require our utilities to serve all those people, which means more power lines in areas with more fires. It’s a perfect storm.

There is nothing good about these fires—except that they have forced a conversation in the state about regional planning and brought the affordability crisis front and center. In Santa Rosa, farmland and orchards served as firebreaks and stopped the damage from becoming much more serious; now, people are starting to think about the role of conservation in resilience. We’re having a conversation about where we do infill versus where we do conservation, and how to deal with these fire areas on a much larger scale. The question of where it does or doesn’t make sense to build is coming into play on individual projects in a way that it hasn’t before.

Recently, the Governor’s Energy Strike Force released a plan that lays out the climate crisis, the issue of utilities and liability, and the threat that fires and climate impacts have on the goals Governor Brown put in place. For example, we’re supposed to be working toward 100 percent renewables; now, some of the power purchase agreements with the utilities to do that could be in jeopardy because the utilities’ ratings are going down. Climate resiliency is becoming part of climate mitigation in a real way. That is the framework of the state.

Housing and transportation are at the crux of our affordability crisis. Housing is the biggest part of most people’s bills in California. It has a big impact on quality of life, as well as on the economic growth of the state. The Governor’s budget makes a historic investment in housing: $500 million for new construction, $250 million for technical assistance, and incentive grants to provide additional money for cities that do it well. That’s the carrot side of the housing conversation.

The stick, of course, is the potential for Regional Housing Needs Assessment (RHNA) lawsuits. I think it is important that the Governor demonstrate that that is not just a theory, but a power that can be used. Many places have not implemented their Housing Elements. Huntington Beach was egregious, and flagrantly decided not to do so, so it was a good example to raise up—but it is not necessarily the only lawsuit that will be brought. The result of that lawsuit is some really good conversation: There were 50 jurisdictions in violation of their RHNA goals, and now there are about half that many. Cities have actually changed their plans. That’s incredibly important.

Los Angeles is a model for how to look at planning—through specific plans, general plans, and now a regional plan from the county. We look to LA for how to do that right, and we’re encouraged by the conversations happening here.

The Governor has made very clear that he wants to link housing and transportation policy. He has tasked OPR and the Department of Housing & Community Development, as well as new Transportation Secretary David Kim, with figuring out exactly what that link means and how to achieve it in a way that makes sense. For example, the state can use some of the influence we have over transportation dollars—which is a lot—to drive the conversation around smart development. The Transportation Department is a little late to the conversation because they have been laser-focused on SB 1 and Prop 6 for the past six years, but I have hope that this is changing.

The single biggest transportation investment in the Governor’s budget is high-speed rail (HSR). I want to be clear that the Governor did not back away from high-speed rail. This investment is a recommitment to high-speed rail as a way to spur smarter growth in the areas of the state that we expect to grow significantly between now and 2050. It is also a commitment to economic development in the Central Valley.

Thinking of the project as an economic development investment has energized a lot of communities in the Central Valley, and it’s now getting more support there than previously. The big question is how to make sure that high-speed rail stations become real nodes of development, and that we still maintain that infill/conservation balance in the Valley. That’s a big goal for the state.

We will have more money than expected in the cap-and-trade fund this year, which means that the Strategic Growth Council’s Affordable Housing and Sustainable Communities (AHSC) grant program will get a bump. The Governor is also committed to a big increase in Transformative Climate Communities (TCC) funds, though of course all of the Governor's budget priorities must go through the Legislature as well. In general, we see AHSC and TCC as models of grants for doing this work on the ground with stakeholder engagement and a thoughtful approach that brings together local government, planners, transportation agencies, and public health folks to build sustainability. The big TCC project in Watts is an incredible example.

Adaptation and resilience are front and center now. Somewhere in our state, California experiences every single impact of climate change you can think of. We are seeing those impacts come to bear, not only with the fires, but also with the impacts to roads from extreme conditions in the San Joaquin Valley and the Inland Empire. We’re seeing a rise in the use of air conditioning, which is leading to a huge demand push on our electricity system at the same time that vehicle electrification is also adding demand to the system—and at the same time that a sea change is happening in our utility sector.

Besides going bankrupt, utilities are also just changing. CCAs are changing the dynamic, while distributed generation is changing the way we use energy. We need to make sure those systems are resilient, both to climate impacts and to cyberattack. The more we distribute our energy systems, the more vulnerable they are.

Mitigation and resilience go hand in hand. California is not going to be able to reach our climate goals or show leadership as a state without resilient systems. By 2050, Los Angeles will go from having an average of four and a half days per year over 97 degrees to having more than 30. Heatwaves will cause two to three times as many deaths in the state. We will see a two-thirds decline in our water supply statewide, which will have a huge impact on Southern California in particular. In terms of fires, we’re looking at a 70 percent increase in burn area. That’s why this conversation about where we build and don’t build becomes more important: If we keep pushing into the wildlife-urban interface (WUI), then we’ll keep upping that risk.

We are focused on building resilience into everything the state does. That means thinking about how we spend money on infrastructure and highways, as well as on our own buildings and our systems. We’re also focused on helping others do the same. At this point, anyone doing place-based investment needs to be thinking about climate impacts, so that we’re not spending again and again on emergency services and rebuilding.

My role is to incorporate all these ideas into larger questions about planning. A big goal of this administration is to bring climate into the discussion about sustainability in the state, instead of keeping it as a separate environmental initiative.

At OPR, we run the Integrated Climate Adaptation and Resiliency Program (ICARP), an interagency program on resilience. Part of ICARP is the Adaptation Clearing House, which is an important resource that collects all the different agencies’ data on climate change impacts. You can look at a corridor and see the fire risk, flooding risk, heat projections, etc., and incorporate all of that into your climate planning. We were also involved in the development of UrbanFootprint with Peter Calthorpe, which offers an even more granular, parcel-by-parcel look at climate risks as well as zoning.

We know that these issues are integrated, and we need collaborative solutions. Nobody has the answer. These problems are really hard, and to a certain extent, new. We are learning all the time about what’s actually working or not working on the ground—what does or doesn’t pencil out, what is or isn’t doable, and where there are pressure points that actually need public-sector intervention. And we need your support in figuring this out.

Q&A- TPR: California is a state of 40 million people—almost the size of the entire East Coast—and all the responsibilities you’ve described fall on just a few people in Sacramento, who, curiously, are mostly from the Bay Area. There is a honest desire on the Governor’s part to have a statewide perspective, but the absence of Southern California perspectives in the capitol portends political trouble.

One example of governing from within a Bay Area bubble appears to be how housing affordability is being addressed by legislature with the apparent support of the Governor.

Reading of the deliberations on SB 50 and SB 4, it appears that the state legislature is acting much like a local planning and zoning agency—trading waivers from residential upzoning legislation in return for votes, and usurping the authority of local planning agencies in cities like Los Angeles (a city of some 4 million inhabiting 470+ sq. miles) in the name of affordability. And Yet, as legislators vote to “increase housing supply”, a host of IPOs are coming to market in the Bay Area that are going to quickly create thousands of millionaires who will buy up all that newly upzoned, high density development in a nanosecond.

How is the Office of Planning and Research going to bring some sense to the conversation about housing affordability?

Kate Gordon: The Governor has not endorsed SB 50 as yet, although he generally supports bills that will dramatically increase housing supply.

There is a tension here because we have a responsibility, as the Governor’s office, to look at the entire state and think about how we are getting to 50 million by 2050. How is that growth going to happen? Where is it going to happen? How do we get more units built in an appropriate way, without shutting a ton of people out? How do we maintain a balance between local involvement and the reality that the state needs to grow more sustainably? I don’t have the answer to those questions.

You’re right about the administration’s Bay Area focus, and we’re trying to adjust for it. The Governor feels strongly that because the Legislature is so urban—40 percent of the Legislature is from LA County—the Executive Branch has a responsibility to look out for the other parts of the state. So, there is a lot of focus on the often-ignored Central Valley, Inland Empire, and other areas that have gotten much less attention from the state over the last eight years. We feel a responsibility to do that—not least in order to maintain our climate goals of lowering VMT, which means infill and conservation. We feel strongly that those are the two sides of the coin, and we feel strongly about resilience, because we pay when things burn down or flood.

This tension is challenging, and my only answer for you is that we’re trying to maintain a balance.