In a landmark moment for California housing policy, Governor Gavin Newsom signed two transformative bills into law in June 2025—AB 130 and SB 131. They fundamentally reshape how the California Environmental Quality Act (CEQA) applies to infill housing. This legislation represents the most significant land-use reform in California since the Nixon administration.
Enacted as part of the state’s broader budget package, these reforms remove major procedural barriers for urban multifamily projects and signal a new direction in the state’s effort to address housing affordability through increased supply.
The implications for multifamily developers are immediate and far-reaching: faster approvals, reduced costs, and substantially lower entitlement risk. Beyond the tactical benefits, though, the CEQA reforms also represent a broader philosophical shift, one that embraces the emerging “abundance agenda” and aims to reposition California as a national leader in housing-forward policymaking.
Nearly 30 percent of California’s renter households are considered “severely cost burdened,” meaning they spend more than half their income on rent. Alleviating this burden by unlocking new opportunities to add housing supply is essential to addressing the state’s housing crisis. Importantly, the benefits of increased affordability extend beyond renters. Reducing housing costs also strengthens California’s labor market by giving employers an easier way to address a major challenge—attracting and retaining talent in high-cost regions.
Simpler, smarter
CEQA has long served as a foundational environmental protection law in California, but in the context of housing development, it has also become a tool for delay and obstruction. Historically, the law required some form of extensive environmental analysis for a wide range of projects, often regardless of location or scale. It also allowed lawsuits to be filed on the basis of almost any perceived environmental harm—real or not—which introduced lengthy delays and high soft costs for even modest infill proposals.
In a 2022 ruling on a notable case, Tiburon Open Space Committee v. County of Marin, the First District of the California Court of Appeal itself criticized the misuse of CEQA as a “formidable tool of obstruction,” particularly against housing projects that increase density. The case involved a 43-unit residential project that faced decades of NIMBY (not in my back yard) opposition and legal resistance, despite being backed by longstanding development rights.
The court upheld the county’s approval, reaffirming that environmental review must be tailored to an agency’s actual discretionary authority, especially when legal obligations such as the Housing Accountability Act limit that discretion. Citing research that CEQA lawsuits most frequently target new housing, the court warned that CEQA is being subverted to delay social and economic progress. The ruling provided a strong judicial endorsement for narrowing CEQA’s scope when applied to housing projects protected under state housing laws.
Enter AB 130 and SB 131. Together, they make three major changes:
- AB 130 establishes a firm statutory CEQA exemption for “housing-rich” infill projects without mandatory labor provisions—ones that are at least two thirds residential, no more than 85 feet (26 m) tall, and located on urban parcels of 20 acres (8 ha) or less. For these qualifying projects, permitting agencies are now required to approve or deny applications within 30 days of the completion of the exemption process. Projects that exceed 85 feet in height are permitted, but certain labor provisions will apply.
- SB 131 ensures that projects which narrowly fail to meet exemption criteria are reviewed only for the one specific environmental concern that disqualifies them and are not subjected to full-scope environmental analysis.
- The legislation also makes CEQA-exempt any rezonings that implement certified Housing Elements, removing one of the most time-consuming and litigious components of local planning efforts.
This targeted but sweeping reform removes the procedural burden from projects that pose little or no environmental risk, while preserving scrutiny for ones that truly merit it.
What it means for developers
For multifamily developers, the impact is both structural and immediate. By significantly streamlining the CEQA process for certain projects and reducing the litigation risk that often follows, these reforms meaningfully shrink project costs, timelines, and uncertainty.
First, it makes housing cheaper to build. Environmental review and litigation costs on CEQA-susceptible projects often run into the millions of dollars. This risk causes many projects to be canceled or never even attempted, due to perceived litigation threat. Avoiding this impediment not only preserves capital but lets teams reallocate dollars toward design, quality, or affordability.
Second, it makes housing faster to entitle. Based on internal analysis, we estimate that this reform reduces the entitlement timeline by 12 to 18 months. The ability to cut a year or more from the development timeline is a powerful lever, particularly in capital markets where time-based risk premiums often make or break a deal’s feasibility.
Third, it makes housing development less risky. Prior to the reforms, even by-right developments could be stalled by frivolous lawsuits or last-minute community appeals. AB 130’s statutory exemption offers a level of legal protection that was previously unknown for infill development in California, giving developers and their capital partners far greater predictability.
Together, these shifts create a clearer path for infill housing, enabling developers to focus on execution and giving capital providers more confidence to invest in a state with a recent history of combativeness toward potential investors.
More housing, lower rents
This reform is a critical and necessary intervention in the state’s broader affordability crisis. By making building easier, CEQA reform directly addresses California’s chronic housing undersupply, which has been the primary driver of rent inflation.
The economic theory is simple: when demand outpaces supply, rents rise. In practice, however, the evidence is even clearer. States such as Texas and Florida, which have looser regulatory frameworks and higher rates of new housing starts, have experienced significantly lower (in some cases even negative) rent growth in the face of population booms. California, with its historically slow and unpredictable approval process, has experienced the opposite—skyrocketing rents despite modest population growth.
If California is serious about making housing more affordable, this type of supply-side reform is essential. The California Environmental Quality Act reform won’t fix every issue overnight, but it will significantly expand housing supply—leading to a more stable housing market.
Political shift toward “abundance”
What makes these reforms especially notable is their philosophical underpinning. AB 130 and SB 131 reflect a broad embrace of the “abundance agenda,” a phrase popularized by New York Times bestselling authors Ezra Klein and Derek Thompson. The abundance agenda holds that to fulfill progressive goals related to affordable housing, climate resilience, public transit, and clean energy, governments must remove the procedural bottlenecks that prevent these projects from getting built.
Governor Newsom has increasingly aligned with this view, acknowledging that well-intentioned regulation often backfires when it comes to executing big, necessary projects.
California’s pivot also stands in contrast to more laissez-faire red-state models. Rather than abandoning environmental standards altogether, the state is showing how liberal jurisdictions can build aggressively while preserving core protections. For example, this reform includes clear language that protects sensitive areas such as wetlands, wildfire zones, and designated historic buildings. California’s recently overhauled Office of Land Use and Climate Innovation has been tasked with mapping the specific plots that qualify for CEQA exemption; its publication deadline is July 1, 2026.
What qualifies, what doesn’t
Not every site will qualify under AB 130’s CEQA exemption, so developers should carefully assess eligibility early in the entitlement process. To qualify, a project must meet all of the following:
- Located on urban infill land (to be mapped by the Office of Land Use and Climate Innovation with a publication deadline of July 1, 2026)
- 20 acres (8 ha) or less
- Generally be at least two thirds residential by floor area
- Have a height of 85 feet (26 m) or less (or comply with additional labor standards if taller)
- Be consistent with objective zoning and design standards (with the ability to deviate using permitted State Density Bonus Law density bonuses, incentives/concessions/waivers of development standards)
- Avoid designated sensitive areas, such as wetlands, flood zones, earthquake zones, wildfire zones, or the demolition of designated historic buildings
Projects that don’t check every box may still benefit from SB 131’s partial exemption, which limits CEQA review only to the element that disqualifies the project (for instance, a site that meets all the required criteria except for its location in a protected wetland).
Also worth noting is that although CEQA reform significantly cuts entitlement friction, it does not override local zoning or discretionary reviews. Cities retain the authority to approve or deny on the basis of zoning, setbacks, and other local land-use controls. Much of this local discretion has been eliminated over the last several years, however, as the legislature has strengthened other state laws, such as the Housing Accountability Act and the State Density Bonus Law. Regardless, CEQA reform works best in cities that have already aligned their zoning with their housing goals.
What comes next
California’s CEQA reforms represent the most aggressive housing-forward policy shift in the state’s recent history. For multifamily developers, they offer a long-awaited green light that reduces costs, shrinks timelines, and lays a legal path to build. For policymakers, they signal a maturing, pragmatic view of environmentalism that balances legitimate protection with the urgent need to house Californians.
These changes constitute a crucial step toward unlocking new housing opportunities, particularly for low- and middle-income residents in high-demand areas. They also offer the opportunity to position California as a pioneer for blue state housing law reform.
In an era defined by scarcity and gridlock, California is finally embracing some common-sense reform. For those of us working to deliver new housing, the message is clear: It’s time to build!
