California has enacted its most sweeping housing-production reform in decades after Gov. Gavin Newsom signed Assembly Bill 130, a measure that sharply curtails the use of the California Environmental Quality Act for most urban residential developments. The bill, passed with bipartisan support, exempts infill multi-family projects from time-consuming environmental reviews that critics say have been weaponized to stall construction for years.
Supporters argue the change will slash permitting delays, lower development costs and unlock tens of thousands of new units in a state where the median home now costs more than eight times median household income. Apartment-focused real-estate investment trusts, including Essex Property Trust, are expected to gain from a larger pipeline of market-rate projects, according to industry analysts.
The legislation reflects a compromise with organized labor: developers must pay prevailing wages only on fully affordable projects or buildings higher than 85 feet, easing a long-running union objection that had stalled earlier reform efforts. Environmental groups warn that limiting CEQA reviews will erode safeguards against pollution and congestion, underscoring the political trade-offs behind the housing push.
AB 130 takes effect on Jan. 1, 2026, giving cities six months to align local zoning ordinances. Lawmakers are preparing companion measures to expand accessory-dwelling units and streamline legal challenges, as Sacramento tries to narrow a housing deficit estimated at more than 2 million homes.
"easier to build ADUs and multifamily housing, while reducing red tape for homeowners, builders, and municipalities"
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