AB 130 and SB 131 Include Updates to Major California Housing Laws

On June 30, 2025, two budget trailer bills — Assembly Bill 130 (AB 130) and Senate Bill 131 (SB 131) — were signed by Governor Newsom and went into effect immediately. In addition to significant modifications to the California Environmental Quality Act (CEQA), AB 130 included numerous changes to California’s already complex housing laws. By attaching these provisions to the budget, the Governor was able to swiftly move these changes through the process. The Governor’s office characterized the trailer bills as “a comprehensive streamlining package that breaks down long-standing development barriers, modernizes CEQA review for critical housing and infrastructure, and creates new tools to speed up production, reduce costs, and improve accountability across the state.”

AB 130 makes permanent the five-hearing limit on housing development projects originally enacted under SB 330 (2019), as well as the requirement that the local agency determine whether the site of a housing development project is a historic site at the time the application is deemed complete. It also amends the Housing Accountability Act and Permit Streamlining Act to make various requirements of those laws permanent. These include the rule that housing development projects are subject to only the ordinances, policies, and standards in effect at the time a preliminary application was submitted, as well as the time limits for action on an application. The bill also repeals the expiration provisions of the Housing Crisis Act of 2019. While these changes do not necessarily change the status quo for processing housing projects today, the removal of the sunset clauses indicates the now permanent nature of the housing laws adopted in recent years.

The Governor’s bills also revised CEQA to add statutory exemptions for certain types of projects, including housing projects. Specifically, AB 130 includes Public Resources Code section 21080.66, which establishes a new statutory exemption for qualifying housing development projects that are 20 acres or less in size (or, in the case of a builder’s remedy project site, five acres or less) and that:

Are located in an incorporated city or urban area, and either previously developed or surrounded by urban uses,
Are consistent with applicable local plans,
Are at least half of the density that is deemed appropriate to accommodate lower-income households in the State Housing Element Law, as set forth in Gov. Code section 65583.2(c)(3)(B);
Do not require demolition of a historic structure;
Avoids hazardous sites and sensitive lands (e.g., prime farmland, wetlands, etc.);
Do not include any transient lodging (e.g., hotel, motel, or bed and breakfast inn);
Meet specific tribal consultation requirements and include mitigation for tribal cultural resources;
Include a condition of approval requiring an environmental assessment for hazardous substance releases, with mitigation requirements based upon results;
Comply with specific environmental hazard and air filtration standards if within 500 feet of a freeway;
Comply with prevailing wage and other labor standards if over 85 feet or if 100 percent of units will be dedicated to lower-income households and with additional labor provisions for projects in San Francisco.

Notably, practitioners should expect to see this exemption read in conjunction with another new CEQA provision in SB 131 concerning housing development projects that narrowly fail to qualify for any CEQA exemption due to a single disqualifying condition. In such “near miss” instances, SB 131 limits CEQA review to those environmental effects caused solely by that condition and waives the need for analysis of project alternatives, cumulative impacts, and growth-inducing effects. However, these “near miss” provisions do not apply to projects with multiple disqualifying conditions, or to projects involving distribution centers, oil and gas infrastructure or on protected lands. The changes to CEQA under SB 131 also exempt from CEQA rezoning actions that implement the provisions of a housing element adopted pursuant to Government Code section 65583(c), as well as agricultural employee housing projects.

Additionally, while the Permit Streamlining Act historically did not apply to ministerial projects, AB 130 amended the Permit Streamlining Act to cover any “housing development project…regardless of whether the process for permitting that entitlement is discretionary or ministerial.” It added a new 60-day time limit to approve or disapprove ministerial projects, except for projects subject to the Affordable Housing and High Road Jobs Act of 2022 (AB 2011), and a streamlined ministerial approval process for eligible residential developments in certain commercial zones. No similar exclusion was included for other statutes imposing ministerial processing for projects such as SB 35/423 (streamlined approval for certain housing projects in cities that haven’t met their required housing goals) or SB 6 (streamlined processing for certain residential projects in commercial zones). The bill creates a potential inconsistency with other laws governing streamlined ministerial projects that may have created different statutory processes and deadlines. In addition, there is now a 30-day limit to approve or deny projects following the conclusion of the new CEQA process for infill housing development projects that qualify for exemption under the new Public Resources Code section 21080.66, (see here).

AB 130 also creates new limitations on the ability of local agencies to enact local modifications to building codes. Historically, local jurisdictions were only allowed to make modifications to the state building codes to enact more restrictive standards that address local climatic, geological or topographical conditions, as long as they made specific findings and filed their local amendments with the State Building Standards Commission. In addition to those requirements, effective October 1, 2025, through June 1, 2031, a city or county cannot establish more restrictive building standards, including green building standards, applicable to residential units, unless the changes also meet one of the following:

The modifications are substantially equivalent to changes previously filed by the city or county and were in effect as of September 30, 2025;
The California Building Standards Commission deems the changes necessary to protect health and safety;
The changes relate to home hardening;
The changes are necessary to implement a local code amendment to align with a general plan approved on or before June 10, 2025.

Finally, AB 130 amends the Starter Home Revitalization Act of 2021 (SB 648) to allow small subdivision projects to create remainder parcels that do not count towards the 10-parcel limit. It also prohibits the sale of parcels in an SB 648 subdivision unless it contains a residential structure, is reserved for open space or common area, or is the last remaining parcel. Moreover, AB 130 includes some minor modifications to the Affordable Housing on Faith and Higher Education Lands Act of 2023 (SB 4) related to height and allowed ancillary uses. It also requires annual inspection of homeless shelters and adds revisions to the process for determining methodology for regional housing needs.

Senate Bill 131 primarily includes modifications to the California Environmental Quality Act, but also includes new funding for Homeless Housing Assistance and Prevention, contingent on meeting specific criteria related to housing and dealing with homelessness.

Please reach out to Ethan Walsh, Lauren Langer, Ryan Stager and Sergio Rudin for more information on implementing and reconciling these changes.

Disclaimer: BBK Legal Alerts are not intended as legal advice. Additional facts, facts specific to your situation, or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information herein.