We’ve got CEQA to thank for the fenced-off, boarded-up eyesore at Sunset Boulevard and Gordon Street in Hollywood.

That building, an old Spaghetti Factory restaurant, should have been a new 23-story condo and office tower by now. Except that it was killed by CEQA, the California Environmental Quality Act. Not because the project was environmentally unsound. In fact, it successfully fended off a lawsuit from neighbors brought under CEQA that went all the way to the California Supreme Court.

The developers won, but by the time they got that court victory in January, they had dropped from financial exhaustion. A notice of default had been filed on the project last summer. So, opponents really won. They killed it with CEQA.

Had it not been for that lawsuit, probably by now the building would be up, complete with condos aimed at middle-class workers, creative offices, retail space and even a little park. Instead, we’ve got the boarded-up, abandoned restaurant that’ll sit there for God knows how many years.

But not all is bleak. It’s a fine graffiti canvas.

Of course, you could say it’s just one project. Except that it’s not. The Hollywood Chamber of Commerce figures the Sunset-Gordon project is one of six that won’t be done now in Hollywood because of CEQA. Including construction work, that means 6,000 jobs lost.

In the latest newsletter from the chamber, President and Chief Executive Leron Gubler said: “Virtually all major development in Hollywood has ground to a halt.” He went on to say that “other developers are reconsidering doing projects in the community because they are fearful of frivolous lawsuits.”

Of course, you could say Hollywood is just one place. Except that it’s not. Projects all over the state are routinely killed by opponents. And their weapon of choice is CEQA.

CEQA is the California law that basically requires projects to prove they won’t be harmful to the environment. Of course, complying is time-consuming and costly, with the added expenses passed on to the eventual tenants and end users.

But the real problem is that in the 40 years of CEQA’s existence, a cottage industry has developed in which greenmail artists use CEQA to file lawsuits under the guise of some environmental reason to shake down developers – perhaps demanding a union contract or a sweetener for the neighbors. Competitors, likewise, use CEQA lawsuits to delay and frustrate any upstarts, effectively stifling competition.

The time and money developers spend on all of this gets papered over when economic times are good. After all, the developer just has to pass the costs through to the end users. But when times are bad, the pass-through pipeline gets gummed up. And CEQA, which had been an expensive nuisance, becomes a wanton killer.

Because CEQA’s murderous tendencies have been unmasked by the Great Recession, the drumbeat to moderate CEQA has grown. Reportedly, more than a dozen reform bills have been introduced in the Legislature this year.

But CEQA’s like a third rail in Sacramento. Nobody will touch reform. Last year, one bill called for a limited number of projects – just a few in the state – to be exempt from nuisance lawsuits. These projects would have already passed muster with CEQA environmental requirements and be selected by a state panel. Remember, they wouldn’t get anything special other than an exemption from shakedown lawsuits. Even that modest proposal died in committee. Nobody would touch it.

In the recent newsletter from the Hollywood chamber, Chairman Sam Smith wrote, “Over the past few years we have seen both the economy and ‘greenmail’ litigants lay waste to Hollywood’s future and most of its premier development projects.” As a result, he and Gubler said, the Hollywood chamber has made reform of CEQA its No. 1 priority this year.

Let’s hope chambers and business groups all over the state do the same. We shouldn’t let this law kill again.

Charles Crumpley is editor of the Business Journal. He can be reached at ccrumpley@labusinessjournal.com.

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