On July 1, 2025, as part of the State of California’s budget adoption, Assembly Bill (“AB”) 130 and Senate Bill (“SB”) 131 took effect, which collectively make unprecedented changes to the California Environmental Quality Act, the Permit Streamlining Act, and other State laws that will significantly incentivize the approval of new housing in California. The most significant changes in these laws are summarized below:
1. New CEQA Exemption for Infill Housing Projects
Public Resources Code Section 21080.66 creates a new CEQA exemption for qualifying housing projects (either 100 percent residential projects or mixed-use projects containing at least two-thirds residential uses) that meet the following requirements:
- The project site must not be more than 20 acres, or 5 acres if the project is a builder’s remedy project.
- The project must be located within an incorporated municipality or Census-defined urban area.
- The project site must have been previously developed with an urban use, or sufficiently surrounded by or proximate to urban uses.
- The project must be consistent with the applicable general plan and zoning ordinance, as well as any applicable local coastal program, excepting deviations authorized by State density bonus law, which do not result in any inconsistency with these plans and programs.
- The project will be at least one-half of the applicable “Mullin” density specified by State law. This will amount to either 10 or 15 units per acre in most urban settings.
- The project must not be located in certain exclusion areas identified by SB 35, including farmland, wetlands, and conservation areas. Project sites may be located in fault zone areas, hazardous waste sites, very high fire hazard zones, and flood zones subject to additional standards.
- The project must not require the demolition of a historic structure.
- The project cannot include hotel, motel, bed and breakfast inn, or other transient lodging uses, unless the project application was deemed complete prior to January 1, 2025.
- The project must complete a tribal consultation process subject to specified timeframes for completion, complete a phase I environmental assessment and potentially perform remediation of any identified hazardous conditions, and, if the project is within 500 feet of a freeway, comply with specified development standards.
Provided that a project and project site meet all of the above criteria and is neither a 100 percent affordable housing project nor a project taller than 85 feet, no prevailing wage or other labor standards are required. Otherwise, 100 percent affordable projects must pay prevailing wages, and projects taller than 85 feet must pay prevailing wages and comply with “skilled and trained workforce” requirements.
2. New Streamlined CEQA Compliance Option
SB 131 also creates a new CEQA streamlining option for housing projects (with limited exceptions) that would otherwise be exempt from CEQA pursuant to a statutory exemption or certain specified categorical exemptions, but for a single condition that the project fails to meet. In such cases, the project need only perform CEQA analysis that is limited to potential effects upon the environment that are caused solely by that single condition. Furthermore, any single-topic environmental impact report prepared for a housing development project subject to this subdivision is not required to include any discussion of alternatives to the housing development project or the growth-inducing impacts of the housing development project.
3. New Program for Mitigating VMT Impacts
AB 130 creates a new option for projects to mitigate their impacts on Vehicle Miles Traveled (VMT) by paying into a new State Transit-Oriented Development Implementation Fund. AB 130 directs the Office of Land Use and Climate Development to determine the amount that must be contributed to the Fund, and to issue further guidance on this mitigation option, on or before July 1, 2026. Consequently, it does not appear that this option will be available until further guidance is provided by the Office of Land Use and Climate Development.
4. Amendments to the Permit Streamlining Act (PSA)
AB 130 makes the following changes to permit processing requirements in state law:
- Clarifies that the PSA applies to a housing development project, regardless of whether the required entitlement is subject to a discretionary or ministerial review process.
- Makes SB 35’s preliminary application process and other protective measures that benefit housing development project applicants permanent by removing the 2030 sunset date.
- Requires a public agency to either approve or disapprove an application within 60 days from “the date of receipt of a complete application” if the project is subject to ministerial review (with the exception of projects using AB 2011).
- Requires a public agency to either approve or disapprove an application within 30 days from the conclusion of the tribal consultation process required by Public Resources Code 21080.66 (the new infill CEQA exemption discussed above).
- Provides that if a public agency does not approve or disapprove a project in accordance with the required timelines in the PSA, then the application shall be deemed approved. The previously existing requirement that a public notice be given prior to the application being deemed approved has been deleted.
While these changes to the PSA create the opportunity for significantly streamlined review processes, we believe that the implementation of these changes could create some complications, and potential traps for the unwary. Consequently, we recommend discussing specific entitlement strategies with our office before attempting to use these new streamlining provisions.
5. SB 684/AB 1123 — Ten Unit/Ten Parcel Projects
Relatively minor changes have been made to SB 684 (Government Code Section 66499.41), which provides a ministerial review process for projects with up to 10 parcels and 10 units. Among other things, AB 130 allows the subdivider to create a remainder parcel in addition the parcels created for residential uses. AB 130 also places new limits on the ability of the subdivider to sell, lease, or finance newly created parcels that do not contain a residential structure.
6. Building Code Requirements for Residential Units
AB 130 places new limitations on the ability of cities and counties to modify Building Code standards that are applicable to residential units between October 1, 2025, and June 1, 2031. Exceptions include emergency standards to protect health and safety, changes related to home hardening, and changes that implement a local code amendment that “permits mixed-fuel residential construction consistent with federal law while also incentivizing all-electric construction as part of an adopted greenhouse gas emissions reduction strategy.”
The California Building Standards Commission is also prohibited from adopting new building standards affecting residential units during the same time period and with similar exceptions.
For assistance evaluating a specific project under these new laws, please contact our office.
This client alert is for general informational purposes only and does not constitute legal advice.