A new California law restricting the location and construction of warehouse and distribution facilities also impacts the design of freight trucking services. It also gives more power and responsibility to local jurisdictions for regulating the size and placement of these kinds of facilities.
Some in the distribution industry fear the new law will significantly increase the cost of developing and operating logistics facilities in the state, while proponents believe that it will help reduce emissions and protect the environment.
The law is a response to the rapid growth of warehouse facilities in regions like the state’s Inland Empire and is intended to address the environmental and community impacts associated with these developments, notes attorney Carey Heyman of the law firm of Clinton, Larson and Allen.
AB 98 was signed into law by Gov. Gavin Newsom in September. The new requirements apply specifically to warehouses that have an overall capacity of 250,000 square feet or more, as well as future expansions of currently existing facilities that plan to add 20% or more of logistics capacity to their overall footprint (excluding office space).
Keep in mind that the law also applies to facilities of less than 250,000 square feet if its loading bays are within 900 feet of what the law calls a “sensitive receptor,” which is defined as a residence, school, daycare facility, public recreation facility primarily used by children, nursing home or similar facility, as well as any hospital.
However, the new law explicitly excludes warehouse stores like Costco and facilities that are directly connected to rail lines, including intermodal freight handling operations and facilities that take direct delivery from railroads on their property. This exclusion could very well turn out to be a huge loophole because many larger private and for-hire warehouse-based logistics services facilities include spur lines that connect to major railroads.
The state-wide building design and location strictures that apply to these new or expanded logistics developments also will include newer standards regarding parking, truck loading bays, landscaping buffers, entry gates, and signage, and will require local government agencies to update the circulation elements of their general plans.
Starting on Jan. 1, 2025, these facilities must be located on arterial roads, collector roads, major thoroughfares or local roads that predominantly serve commercial uses. However, a city or county could choose to waive the location requirements for logistics buildings in industrial zones where location on such roadways is impractical due to unique geographic, economic or infrastructure reasons.
For all new or expanded logistics center uses, entry gates to the loading truck court must be positioned to allow a minimum of 50 feet of available stacking depth inside the property line. The stacking depth would increase by 70 feet for every 20 loading bays beyond 50 loading bays, to the extent doing so is feasible.
Keep in mind that AB 98 specifically exempts from compliance with these new restrictions logistics use projects approved before the bill’s effective date, and any logistics use projects that were subject to a commenced local entitlement process before Sept. 30, 2024.
Beyond Road Restrictions
The law’s new road requirements turn out to be just the beginning of a long list of restrictions that must be adhered to when constructing new facilities. Before the issuance of a certificate of occupancy that approves the building for logistics use, the facility operator will be required to submit for city or county approval a truck routing plan to and from the state highway system.
Among other things the routing plan would avoid passing what the law calls “sensitive receptors” to the maximum extent possible and must include measures to prevent truck queuing or stopping on public streets, point out attorneys Elysian Kurnik and Edward J. Corwin of the Lewis Brisbois Bisgaard & Smith law firm.
The law describes in detail requirements for the architectural design and construction of these kinds of logistics facilities, stating that the properties also will need to adhere to energy efficiency requirements (such as electric vehicle charging readiness, solar panels and high-efficiency heating, ventilation and air-conditioning systems).
New standards for parking areas and truck loading bays to maintain efficient and safe operations also are spelled out as well. All forklifts and specific equipment used in these warehouses must be zero-emission by 2030. The new warehouses also must meet current energy efficiency standards and ban trucks from idling their engines.
In the future, if a logistics project involves demolishing housing units that were occupied within the last 10 years, AB 98 would require the city or county to condition approval of the project on replacing each demolished unit with two low- or moderate-income units within the jurisdiction and providing any displaced tenant with 12 months rent.
In addition, the new law requires that cities and counties will update the circulation elements of their general plans and imposes monitoring requirements on the South Coast Air Quality Management District for the new facilities. This covers the western portions of Riverside and San Bernardino Counties, the southern two-thirds of Los Angeles County, and all of Orange County.
In addition, cities and counties located in what is defined as the Warehouse Concentration Region, which is located in what is defined as California’s Inland Empire, must update their circulation elements by Jan. 1, 2026. (This is defined as the counties of Riverside and San Bernardino and the cities of Chino, Colton, Fontana, Jurupa Valley, Moreno Valley, Ontario, Perris, Rancho Cucamonga, Redlands, Rialto, Riverside and San Bernardino.)
Logistics professionals should keep in mind that in California there exists a significant constituency for taking measures that are stronger than AB 98, according to attorneys for the law firm of Cox Castle. Despite support for this law by labor and building contractor groups, stakeholders ranging from municipalities, business interests and environmental groups mounted their own last-minute efforts to encourage Governor Newsom to veto the bill.
In the end, the detailed restrictions contained in the new measure is sure to add significant costs to the state’s supply chain, which also are sure to result from the limitations on the kinds of land available that is not close to “sensitive receptors.”
“Though these measures aim to enhance environmental protection and community health, they may also lead to higher operational costs and logistical challenges for warehouse operators in California,” according to attorneys Jameson B. Rice and Kristine Orozco Little of the Holland & Knight law firm.
