Housing Policy to Pay Attention to Right Now in Sacramento

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– What’s in (and out of) the state budget

– The housing bills gaining traction and the ones quietly dying

– How this legislative session could shape housing access in our region for years to come

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July 16, 2025

Reforming California’s Landmark Environmental Law to Reduce Barriers to Infill Housing Development

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Far too often, the California Environmental Quality Act (CEQA), intended to protect the environment, is applied in ways that stall housing development and add hundreds of thousands of dollars in consultant and legal fees. This can happen even with infill housing development that poses no threat to the environment and reduces greenhouse gas emissions by allowing people to live closer to where they work. New State laws aim to eliminate the use of CEQA as a barrier to most infill housing development. Read on to learn more about this tremendous win!

For years, advocates have made repeated efforts to reform the California Environmental Quality Act (CEQA), as the law has unintentionally blocked, delayed, and simply made it more difficult to build new housing. In addition to protecting the environment, CEQA has in many ways become a symbol for California’s broken housing production system. 

On June 30, 2025, Governor Gavin Newsom signed into law Assembly Bill (AB) 130 and Senate Bill (SB) 131, which contain significant reforms to CEQA relevant to housing development. Because they were part of the State’s budget process, these reforms took effect immediately on June 30, 2025. These two pieces of legislation reflect a high-stakes effort by Governor Newsom to bypass the normal legislative process that has seen similar reforms watered down in recent years.

AB 130 exempts qualifying infill housing-rich projects from CEQA, with no labor or wage standard requirements for projects up to 85 feet. It also imposes a new 30-day deadline for agencies to act to approve or disapprove qualifying projects, which is a significant change from current law. SB 131 limits CEQA review for housing projects that narrowly fail to qualify for a CEQA exemption. Where before these developments would have required an extensive full review, CEQA review for such projects is now limited to the environmental effects caused by the condition that triggered CEQA review.

The new CEQA exemptions do not require housing development to be restricted to below-market rents, but some market-rate housing may be required to satisfy the local government’s inclusionary standards or qualify for the State’s Density Bonus Law, which allows additional density and design concessions in exchange for a percentage of affordable homes. Most infill housing developments with 50% – 100% affordable units have already been exempt from CEQA.

The development must be consistent with local zoning standards and applicable general plan standards, with the exception of changes allowed by the State Density Bonus Law. The site must be within the boundaries of an incorporated municipality or “urban area” as defined by the U.S. Census Bureau. The project site is considered infill if it was previously developed with “urban uses” or is substantially surrounded by sites developed with urban uses. There are several different ways of satisfying this requirement that create more flexibility than prior “infill” exemptions. Any “current or previous residential or commercial development, public institution, or public park that is surrounded by other urban uses, parking lot or structure, transit or transportation passenger facility, or retail use, or any combination of those uses” can qualify as an “urban use.” 

Qualifying developments cannot require demolition of a historic structure that was placed on a historic register before the project’s preliminary application was submitted. Developments on farmland, wetlands and conservation/species habitat areas are excluded, and coastal sites, fire hazard zones, hazardous waste sites, earthquake fault zones and flood areas do not qualify for CEQA exemption.