2025 Housing Law Update

The California Legislature continues to enact new housing-related laws to combat the State's housing crisis and provide for more affordable housing. Last year, the Legislature passed and the Governor signed numerous bills into law with the goal of providing for more housing in the near future. This e-Alert summarizes some of the more important bills in this package, including Assembly Bill ("AB") 130, Senate Bill ("SB") 131, and SB 79. Please reach out to a Rutan attorney to learn more about these or any of the other housing-related bills passed during the 2025 legislative session.

AB 130 & SB 131: Enactment of Comprehensive CEQA Reform Package

AB 130 and SB 131 were budget trailer bills (effective June 30, 2025) that enacted significant reforms to the California Environmental Quality Act ("CEQA") and other statutory provisions which impact housing development throughout the State.

Among the most notable reform is a new CEQA exemption for residential infill housing developments that satisfy certain site specifications and other development standards. First, in order to qualify for the exemption, the project site generally must be: no larger than 20 acres (or not more than 4 acres if a builder's remedy project), located within an incorporated city or other urban area, and previously developed with a qualifying urban use or substantially surrounded with such uses (i.e., residential, commercial, etc.). Additionally, projects proposed on certain sensitive sites do not qualify, including designated hazardous waste sites, wetlands or habitat for protected species, as well as certain sites within the coastal zone and those within a very high fire hazard severity zone. Other requirements include a tribal consultation process, minimum density standards, and mandatory environmental assessments to detect any existing environmental hazards. The law also imposes obligations to pay construction workers prevailing wages and employ a skilled-and-trained workforce, but these generally only apply when the proposed development exceeds 85 feet in height.

AB 130 and SB 131 also contained several other key provisions affecting housing development. Notably, the law now allows for limited CEQA review for "near miss" housing projects. Under the "near miss" rules, for housing projects that would otherwise qualify for CEQA exemption but for a single condition, environmental review may be limited to the environmental effects caused solely by that condition, which the law defines as "a physical or regulatory feature of the project or its setting or an effect upon the environment caused by the project." This means that the project's environmental reports need not discuss project alternatives or growth-inducing impacts. However, projects located on natural and protected lands, and those that include certain non-residential uses like warehouse distribution centers or oil and gas infrastructure, among others, are not eligible under the near miss provisions.

The new laws also made permanent a number of provisions originally enacted through the Housing Crisis Act ("HCA") in 2020 by removing its January 1, 2030 sunset clause. The now permanent provisions include: (1) the Preliminary Application process for housing projects, which allows housing projects to vest based on standards in effect on the date of application submittal; (2) prohibitions on new local laws that reduce residential density, or impose housing moratoriums or residential unit caps; and (3) the five-hearing limit for qualifying housing projects.

Other notable reforms include:

• Changes to State building codes applicable to residential units frozen until June 1, 2031, subject to certain enumerated exceptions;
• Prohibition on appeals of certain housing projects within the Coastal Zone to the Coastal Commission, such as those made on grounds that the development is located in a sensitive coastal resource area or is not designated as the principal permitted use under zoning code; and
• New CEQA exemption for rezonings to implement a local Housing Element program.

SB 158: Technical Clean-Up to CEQA Reform Package

SB 158 was largely a technical "clean-up" bill meant to clarify certain aspects of AB 130 and SB 131, which went into effect earlier in 2025. Notably, SB 158 amended the "shot clock" provisions applicable to AB 130's new infill residential CEQA exemption. Previously, local agencies were required to approve or deny projects eligible under the new exemption within 30 days from the conclusion of the mandatory tribal consultation process. However, in order to allow sufficient time for agencies to determine project consistency in accordance with the Housing Accountability Act ("HAA"), the law now provides that local agencies must approve or deny eligible projects within 30 days from the later of the conclusion of tribal consultation or expiration of the time to make the HAA consistency determination. Further, SB 158 reduced the maximum site size for builder's remedy projects seeking to utilize the new infill residential CEQA exemption – from five acres down to four acres. It also added builder's remedy projects located on sites exceeding four acres to the list of projects that are ineligible to benefit from SB 131's new near miss provisions. Finally, SB 158 included new language specifying that certain housing projects are not eligible for exemption from CEQA, specifically including those located on a parcel adjacent to a California historical landmark, within a regulatory floodway, or certain types of wetlands.

SB 79: Overriding Local Zoning Laws for Transit-Oriented Housing Development

Effective July 1, 2026, SB 79 will generally require qualifying cities and counties to approve residential projects that meet the requirements of "transit-oriented housing development," at specified height and density limits, unless the local agency can demonstrate that there is an actual, identifiable "health, life, or safety" reason for denying the project. The new law will apply in the following counties: Los Angeles, Orange, San Francisco, Alameda, Santa Clara, San Mateo, Sacramento, and San Diego.

A residential project will be considered "transit-oriented housing development," if it meets all of the following requirements: (1) the nearest edge of a project parcel lies within one-half mile of a pedestrian access point to a qualifying transit stop, (2) the project is on a site zoned residential, mixed use, or commercial, and (3) the project is not on a site where within the last seven years, two or more units of rent or price controlled housing were occupied by tenants or demolished. For most projects, they will also be required to meet specified affordable housing requirements (e.g., 7% extremely low, 10% very low, or 13% low).

For projects in close proximity to heavy rail transit or very high frequency commuter rail (e.g., 72 or more trains per day), the maximum heights vary between 65-95 feet, maximum densities vary between 100-160 units per acre, and maximum floor area ratios vary between 3.0-4.5. For projects in close proximity to high frequency commuter rail (e.g., 48 trains per day), light rail, or Bus Rapid Transit lines), the maximum heights vary between 55-85 feet, maximum densities vary between 80-140 units per acre, and maximum floor area ratios vary between 2.5-4.0.

A more detailed summary of SB 79, can be found here.

AB 610: Disclosure of Constraints to Housing Development

Existing law requires a housing element to include an analysis of potential and actual governmental constraints upon the maintenance, improvement, or development of housing for all income levels, including, among others, locally adopted ordinances that directly impact the cost and supply of residential development. Existing law also requires the analysis to demonstrate local efforts to remove governmental constraints that hinder the locality from meeting its share of the regional housing need.

For adoption of the 7th and all subsequent revisions of the housing element, AB 610 requires the housing element to include, in addition to the above-described analysis, a potential and actual governmental constraints disclosure statement that contains, among other things, an identification of each new or amended potential or actual governmental constraint, or revision increasing the stringency of a governmental constraint, that was adopted after the due date of the previous housing element and before submittal of the current draft housing element to the State Department of Housing & Community Development ("HCD").

AB 507: Streamlined Approval of Adaptive Reuse Projects

AB 507 establishes a new ministerial approval process for projects that convert non-residential buildings into multi-family housing, known as "adaptive reuse" projects. For an adaptive reuse project to qualify under AB507, a specified percentage of the housing must be dedicated to affordable housing, the proponent must comply with prevailing wage requirements, and the project must comply with any objective planning standards contained in a local implementing ordinance.

AB 1050: Redacting Restrictive Covenants on Commercial Property

Under prior law, recorded covenants were unenforceable to the extent that they precluded development of an affordable housing project. AB 1050 extends this to any proposal to redevelop commercial property to a housing project permitted by state housing laws or local land use and regulations, regardless of affordability.

AB 1007: Reduction of Permit Streamlining Act Timeframes for Responsible Agencies

This bill amends the Permit Streamlining Act to generally shorten the timeframe a responsible agency has to approve or disapprove a housing development project from 90 days to 45 days, measured from either the lead agency's approval or the date the responsible agency accepted the completed application, whichever is longer.

AB 301: Imposition of Shot Clock on State Agency Post-Entitlement Phase Permits

This bill extends existing post-entitlement phase permit rules for housing projects to include state-issued permits. By January 1, 2026, state agencies must post lists of required post-entitlement phase permit application submittal requirements, as well examples of completed application and permits. There is a 15 business day timeline for the state agency to determine whether the application for a post-entitlement phase permit is complete and 30-60 business days to approve or deny the permit. If the state agency misses the statutory review deadlines, the permit will be deemed approved.

SB 786: Resolution of Planning Conflicts Regarding Development Standards

This bill provides that if a quantified development standard in a general plan element is inconsistent with a quantified development standard contained in another element, the provisions of the most recently adopted element shall control. For most jurisdictions, the most recently adopted element, will likely be the housing element. A "quantified development standard" refers to a site's maximum density or requirements for a height limit, setback, maximum or minimum unit size, or floor area ratio.

SB 808: Expedited Judicial Review of Housing Project Denials

This bill establishes a "fast track" procedure for judicial review of an agency action to deny a permit or other entitlement for a housing development project. Upon the filing and service of a petition for writ of mandate challenging such an agency action, the agency must prepare the record of proceedings within 15 days from the date the petition was served on it. The court clerk must set a hearing for review of the petition no later than 45 days from the date the petition is filed. Moving, opposition, and reply papers shall be filed in accordance with the Rules of Court. Following the conclusion of the hearing, the court shall render its decision no later than 30 days after the matter is submitted or 75 days after the date the petition is filed, whichever is earlier. Actions brought pursuant to this section, including when on appeal from a decision of a lower court, shall be given preference over all other civil actions before the court when setting the matter for hearing and holding the hearing.

AB 712: Imposition of Fees and Penalties for Violation of Housing Reform Laws

This new law provides that in any action brought by the applicant for a housing development project against a public agency to enforce the public agency's compliance with a housing reform law where the applicant is found to be the prevailing party, the court must: (1) award the applicant its reasonable attorneys' fees and costs and (2) impose a fine of $10,000 per unit (first offense) and $50,000 per unit (for multiple offenses of the same law within a single planning period) if the agency was advised in writing prior to the commencement of the action by the State Attorney General or HCD that the agency's action would represent a violation of a specific housing reform law. The applicant must first notify the agency in writing of the factual elements of the dispute and the legal theory forming the basis for the allegation that the agency's action violated the housing reform law at least 60 days prior to filing suit. A "housing reform law" is defined broadly as "any law or regulation, that establishes or facilitates rights, safeguards, streamlining benefits, time limitations, or other protections for the benefit of applicants for housing development projects, or restricts, proscribes, prohibits, or otherwise imposes any procedural or substantive limitation on a public agency for the benefit of a housing development project."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.