California’s Assembly Bill 98 (AB 98) introduces sweeping changes to the logistics and warehouse development sector, aiming to address significant public health and environmental concerns. With stricter environmental and operational standards, AB 98 is set to reshape how logistics projects are planned—especially those near schools, hospitals, and residential neighborhoods.

“Logistics use” means “a 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. ‘Logistics use’ does not include any of the following:(1) Facilities where food or household goods are sold directly to consumers and are accessible to the public; (2) Building primarily served by rail to move cargo goods or products; or (3) Strategic Intermodal Facilities.”

Below, we break down the key provisions of AB 98 and what they mean for developers, local governments, and communities.

Key Provisions of AB 98

AB 98 lays out new requirements for logistics use developments based on project size, location, and proximity to sensitive areas like schools and homes. Here are the major provisions:

Base Standards for Logistics Developments

All new or expanded logistics facilities must comply with a set of environmental standards, including:

• Green Building Standards: Compliance with California’s Title 24 Green Building Standards.
• Sustainability Features: Photovoltaic systems with battery storage, cool roofs, and energy-efficient HVAC systems.
• Electric Vehicle Infrastructure: Readiness for light, medium, and heavy-duty vehicle charging.
• Zero-Emission Equipment: By 2030, facilities must use zero-emission forklifts and small off-road equipment where feasible.

Tier 1 Standards for Larger Developments

For logistics facilities exceeding 250,000 square feet, additional measures will be required to reduce their impact on nearby communities. These include stricter environmental and design standards.

Stricter Requirements Near Sensitive Receptors

Projects within 900 feet of sensitive receptors (schools, hospitals, residential areas) will face more stringent design guidelines to mitigate disruptions:

• Distance from Sensitive Areas: Truck loading bays must be at least 500 feet away from sensitive receptors.
• Separate Entrances: Truck entrances must be via commercial roads to minimize neighborhood disruptions.
• Anti-Idling Measures: Electrical hookups at loading bays to prevent truck idling.

Housing Replacement

If a logistics project demolishes housing units, developers must replace them at a 2-to-1 ratio with affordable housing. Displaced tenants are entitled to relocation assistance, including 12 months of rent at current rates.

Circulation Element Updates

Cities and counties must update their Circulation Elements by January 1, 2028, to accommodate new truck routes, signage, and traffic patterns aimed at reducing disruption in areas with high warehouse concentrations.

Air Quality Monitoring

From 2026 to 2032, the South Coast Air Quality Management District will implement mobile air monitoring systems in warehouse-heavy regions to assess the effectiveness of AB 98 in reducing air pollution.

Exemptions to AB 98

AB 98 includes several exemptions:

• It does not apply to projects with entitlement applications submitted before September 30, 2024, or those approved before January 1, 2025.
• Existing logistics facilities that predate September 30, 2024, are exempt from certain setback requirements.

What Does AB 98 Mean for Stakeholders?

AB 98 will drastically change the logistics development landscape in California, particularly for developers and local governments who must meet the new environmental and operational standards. Local governments are under pressure to meet deadlines for updating their regulatory frameworks, while businesses will need to account for potential compliance costs and operational changes.

For communities in areas with a high concentration of logistics facilities, AB 98 may offer long-term benefits such as improved air quality and reduced environmental impacts. However, the economic trade-offs, including potential job losses and decreased investment, are still under debate.

Conclusion

AB 98 represents a major shift in how logistics facilities are developed in California. While the law aims to improve environmental sustainability and public health, its success will depend on careful planning and diligent implementation.

If you are involved in a logistics project or live in an area affected by these changes, KVK can provide expert guidance. Whether you need assistance navigating AB 98’s complex requirements or have questions about how it impacts your project, contact us today for legal support.