Major CEQA Overhaul Signed into Law to Accelerate Housing and Infrastructure in California

Photo Credit: California Governor’s Office

SACRAMENTO, July 1, 2025 (CALIFORNIA NEWS TODAY) – California has enacted sweeping environmental review reforms through budget trailer bills AB 130 and SB 131 to streamline development processes and support affordable housing, according to the state.

Photo Credit: California Governor’s Office

The legislation, included in the 2025–2026 state budget, updates the California Environmental Quality Act (CEQA) to fast-track projects across housing, infrastructure, and climate-resilient development. Eligible initiatives now include urban infill housing, wildfire prevention, broadband, utilities, farmworker housing, and community facilities.

The reforms also expand the Permit Streamlining Act, limit appeals of coastal housing developments, and make key elements of existing housing accountability laws permanent. Additionally, residential building standards are frozen until 2031—excluding emergency, fire-safety, and conservation-related updates—to help control construction costs.

The budget package introduces financial tools for infrastructure and affordable housing, including an equity-reinvestment fund and a new Vehicle Miles Traveled (VMT) Mitigation Bank to help developers meet environmental obligations while funding location-efficient projects.

It further strengthens enforcement of homeless shelter standards through annual inspections, reporting requirements, and penalties for non-compliant jurisdictions. A proposed renters’ tax credit has also been doubled, though it remains subject to future funding approval.

The budget allocates $500 million for homelessness aid in 2026–27, plus $81 million for a HomeSafe Program, $100 million for encampment resolution, and $81 million for family housing support. It also includes close to $1.03 billion in Homekey+ awards to build over 315 supportive housing units.

Homekey+ is funded via Proposition 1 bond proceeds and homelessness aid, with rolling application reviews underway.

The budget's housing reforms coincide with data showing that, from 2024 to 2025, California’s unsheltered homelessness grew by 0.45%, compared to a national rise of nearly 7%. Critics argue that while these reforms promise affordable development, they may compromise environmental review standards.

View the full press release here.

For more information, visit www.gov.ca.gov.

Source: California Govorner’s Office