Preparing for Change: Key Takeaways from California’s AB98

On September 29, 2024, Governor Newsom signed into law AB 98 Planning and zoning: logistics use; truck routes (“AB 98”). AB 98 imposes state-wide building design and location regulations on new or expanded “logistics use” projects. The bill defines logistics use projects as, “building in which cargo, goods, or products are moved or stored for later distribution to business or retail customers, or both, that does not predominantly serve retail customers for onsite purchases, and heavy-duty trucks are primarily involved in the movement of the cargo, goods, or products.”[1] AB 98 would prohibit a city or county from approving a logistics use development that does not meet or exceed the standards outlined in the bill. AB 98 will become effective on January 1, 2026.

Who is Affected?

AB 98 applies to logistics use projects based on: (1) size, (2) zoning, and (3) distance from sensitive receptors.

Size – AB 98 will apply different standards based on whether the size of the proposed logistics use project is over or under 250,000 square feet. Projects that are 250,000 square feet or more will be required to apply Tier 1 21^st Century Standards. Logistics uses that are under 250,000 square feet will be required to apply 21^st Century Standards.

Zoning – AB 98 will apply different standards based on the zoning of the property on which the logistics use project is situated. Projects that require rezoning to industrial and are located in the Southern California “warehouse concentration region”, must conform to all AB 98 siting and operational requirements, no matter how far that project is from a sensitive receptor. The “warehouse concentration region” includes the Counties of San Bernardino and Riverside and the Cities of: Chino, Colton, Fontana, Jurupa Valley, Moreno Valley, Ontario, Perris, Rancho Cucamonga, Redlands, Rialto, Riverside and San Bernardino. Developments within this warehouse concentration region should look closely at the zoning designation of the land that they wish to develop.

Distance from Sensitive Receptors –AB 98 will impose requirements depending on how far a project is from a sensitive receptor. Projects that are within 900 feet of a “sensitive receptor” will be bound by AB 98. Sensitive receptors include residential area, school, daycare, public park, nursing home, or hospital.

AB 98 will not apply to projects that have an application on file by September 30, 2024. Additionally, projects seeking approval between October 1, 2024 to January 1, 2026 and are on land that is already zoned industrial may be approved without having to meet AB 98 requirements. 

AB 98’s Effect on Logistics Use Projects

AB 98’s requirements for proposed logistics uses can be summarized into four requirement categories: (1) location, (2) design, (3) truck routing plans, and (4) housing replacement.

Location Requirements

Projects under AB 98 must be located on arterial roads, collector roads, major thoroughfares, or local roads that predominantly serve commercial uses. A city or county may waive the location requirement if: (1) a project is in an industrial zone, and (2) the location requirement would be impractical because of unique geographic, economic, or infrastructure reasons.

Design Requirements

AB 98 introduces two new design standards: (1) 21^st Century Design Standards, described in California Government Code, § 65098(a) and (2) Tier 1 21^st Century Design Standards, described in California Government Code, § 65098(g). The design standards will be applied based on the size, location, or zoning of the proposed project, as discussed above.

21^st Century Warehouse Design Elements

Projects that are under 250,000 square feet will have to implement the 21^st Century Warehouse design elements. To abide by 21^st Century Warehouse design elements, projects must:

• Comply with or exceed all requirements of the most current building energy efficiency standards specified in Part 6 (commencing with Section 100) of Title 24 of the California Code of Regulations and the California Green Building Standards Code (Part 11 of Title 24 of the California Code of Regulations), including, but not limited to, the following requirements related to:

A. Photovoltaic system installation and associate battery storage;
B. Cool roofing;
C. Medium-and heavy-duty vehicle charging readiness;

• Include skylights in at least 1 percent of the roof area, or equivalent LED efficient lighting;
• Provide conduits and electrical hookups at all loading bays serving cold storage;
• Ensure that any heating, ventilation, and air-conditioning is high-efficiency;
• Ensure that forklifts shall be zero-emission by January 1, 2030, to the extent operationally feasible, commercially off-the shelf available, and adequate power available on site;
• Ensure that equipment used on site utilizing small off-road engines shall be zero-emission, to the extent operationally feasible, commercially off-the shelf available, and adequate power available on site.

Tier 1 21^st Century (“Tier 1”) Design Elements

Projects that are 250,000 square feet or larger will have to implement the Tier 1 21^st Century (“Tier 1”) design elements. The Tier 1 elements include all of the 21^st Century Warehouse design elements, with some differences and additions. The first significant addition requires the installation of photovoltaic system installation requirement on all warehouse square footage under Tier 1 shall be considered conditioned space. Second, the deadline for forklifts becoming zero-emission under Tier 1 shall be January 1, 2028, instead of January 1, 2030.

Additionally, logistics use projects under Tier 1 must:

• Have a microgrid-ready switchgear system capable of supporting distributed energy resources;
• Be advanced smart metering ready;
• Have a minimum of 50 percent of all passenger vehicle parking spaces preinstalled with conduit and all necessary physical infrastructure to support future charging of electric vehicles;
• Have a minimum of 10 percent of all passenger vehicle parking spaces installed with electric vehicle charging stations; and
• Provide conduits and electrical hookups at all loading bays serving cold storage.

Truck Routing Plans

Under AB 98, before a city or county issues a certificate of occupancy for a logistics use project, a facility operator must submit and get approval for a truck routing plan to and from the state highway system. The truck routing plan must be based on the latest truck route map of the city, county, or city and county.  In addition, AB 98 requires each local jurisdiction to update their General Plan Circulation element to include truck routes.  The truck routes are to avoid residential areas and must be updated by January 1, 2026 for jurisdictions within the warehouse concentration region and January 1, 2028 for all other jurisdictions.

Housing Replacement Requirement

AB 98 requires that a city, county, or city and county condition the approval of a logistics use project on 2-to-1 replacement of any demolished housing unit that was occupied within the last 10 years. This means that if a logistics project requires the demolition of housing units that have been occupied within the last 10 years, the developer will have to replace each demolished unit with two deed-restricted low- or moderate-income units within the area. Additionally, the city or county will require the developer to provide any displaced tenant with 12 months’ rent.

Bottom-Line for Warehouse Developers and Operators

AB 98 will significantly impact development costs and further challenge the siting of logistics use projects. AB 98 imposes stricter design standards, which will increase the costs of developing projects. Additionally, AB 98 limits the siting of prospective logistics use projects. Developers should carefully analyze the location, zoning and size of their project to determine how AB 98 applies.

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[1] AB 98,  (2024)

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