California Enacts Landmark Housing and Infrastructure Reform — Major CEQA Streamlining, Permitting Acceleration, and Funding Tools Now Law

Key Takeaways for Clients

• CEQA Exemptions: AB 130 and SB 131 include broad exemptions and streamlining under the California Environmental Quality Act (CEQA) for qualifying housing, infrastructure, and infill projects. Notably, rezonings to implement approved housing elements are now CEQA-exempt, as are certain facilities for advanced manufacturing, high-speed rail, farmworker housing, childcare, health clinics, and food pantries.
• CEQA Record Reform: SB 131 drastically reduces the size of the administrative record by excluding electronic internal agency communications that were not presented to the final decision-making body. The record would still include communications reviewed by a lead or local agency executive or supervisory administrative official.
• CEQA Procedural Reform: SB 131 adds a new tribal consultation process for certain CEQA-exempt housing projects. AB 130 adds a special “near-miss” review process for housing projects that meet all but one eligibility criteria for a CEQA exemption.
• Permitting and Approval Acceleration: The package expands the Permit Streamlining Act, limits appeals to the Coastal Commission for certain housing projects, and makes key provisions of the Housing Accountability Act and Housing Crisis Act permanent.
• Regulatory Predictability: Residential building code changes are frozen until 2031 (with limited exceptions), providing near-term planning stability for new construction.
• New Financing Tools: The Affordable Housing Excess Equity Program and new CEQA VMT Mitigation Bank offer innovative ways to fund new development, especially infrastructure for VMT-efficient affordable housing, and to offset development-related transportation impacts.
• Accountability Measures: The new laws enhance state enforcement powers, requiring jurisdictions to undergo annual inspections of homeless shelters and face funding consequences for noncompliance with housing obligations.
• Expanded Renter Support: The Renters Tax Credit is set to more than double, pending appropriations, increasing affordability for lower-income Californians.
• Homekey+ Funding Launch: Governor Newsom also announced over $100 million in new awards under the voter-approved Prop 1, supporting over 300 units of permanent supportive housing statewide — part of over $2 billion in anticipated funding for future Homekey+ rounds.

Why It Matters
These reforms represent a significant shift in California housing and land use policy, promising to reduce barriers, increase predictability, and align regulatory frameworks to meet ambitious housing and climate goals. However, the scale and scope of the reforms create potential uncertainty, particularly in the absence of technical assistance or interpreting caselaw.

These reforms present significant changes to:

• CEQA compliance pathways
• Local rezoning efforts and housing element implementation
• Permitting strategies in the Coastal Zone
• Funding opportunities through Prop 1, HHAP, and Homekey+
• Compliance with new reporting, shelter oversight, and enforcement standards

Next Steps
We are closely analyzing the trailer bills and implementing legislation. Our team is available to assist with:

• CEQA strategy and exemption applicability
• Navigating state funding programs and preparing grant applications
• Advising public agencies and tribal governments on local implementation and compliance
• Supporting developers with permitting and entitlement under the new framework