Governor Gavin Newsom Signs AB 130 Into Law, Promises to Speed Up Housing Construction

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Governor Gavin Newsom’s new reform aims to fast-track affordable and high-density housing across Los Angeles, San Francisco, San Diego, and other cities—while sparking debate over new vehicle miles traveled (VMT) fees.

California faces one of the most severe housing crises in the United States, with a shortage estimated at more than 2.5 million homes. In response, Governor Gavin Newsom signed Assembly Bill 130 (AB 130), a major reform designed to cut through legal barriers that have long slowed or blocked housing development.

For over 50 years, the California Environmental Quality Act (CEQA) was often used by opponents—including labor unions, neighborhood associations, and even rival developers—to challenge or delay projects, sometimes for years. AB 130 sharply limits those legal maneuvers by removing CEQA as a basis to halt or stall qualifying housing developments.

Newsom called the reform a “historic breakthrough”, saying it will allow California to “build more housing, faster, and at lower cost.”

How AB 130 Speeds Up Construction

• Faster Approvals: Without CEQA lawsuits clogging up the courts, new housing projects could move from approval to groundbreaking in months instead of years.
• High-Density Projects Prioritized: The law specifically targets multi-family housing, transit-oriented developments, and infill projects in urban centers.
• Streamlined Environmental Review: Projects that meet pre-set sustainability and emissions standards won’t need case-by-case environmental reports, cutting 12–24 months off typical approval timelines.
• Predictability for Developers: With fewer legal risks, builders and investors can plan projects with more confidence, which is expected to attract new construction financing.

The law is expected to have its strongest impact in cities where housing demand is highest and CEQA lawsuits were most common, including:

• Los Angeles – particularly near transit corridors and downtown redevelopment zones.
• San Francisco & Bay Area – where nearly every major housing proposal faced CEQA challenges in the past decade.
• San Diego – transit-oriented housing around trolley lines is likely to accelerate.
• Sacramento, Oakland, and San José – large-scale infill projects could finally advance.

Together, these metro areas account for more than two-thirds of California’s housing shortfall.

AB 130 introduces a Vehicle Miles Traveled (VMT) provision, allowing local governments to require developers to pay fees based on the expected increase in driving from new projects.

• Supporters argue this will help fund road improvements, public transit, and affordable housing offsets.
• Critics, including the California Building Industry Association, warn it may add thousands of dollars in costs per housing unit, worsening affordability for working families.

Supporters vs. Critics

• Assemblymember Buffy Wicks (D-Oakland), who championed AB 130, emphasized its focus on unblocking sustainable, high-density housing.
• Urban policy experts like UC Davis law professor Chris Elmendorf warn that while the law simplifies approvals, the added costs from VMT could offset those gains, potentially deepening inequities in housing access.

Timeline for Implementation

• Signed into law: Summer 2025
• Goes into effect: January 1, 2026
• Immediate impact: Housing projects already in the pipeline may see litigation challenges dismissed or resolved within months.
• First wave of accelerated projects: Expected by late 2026 to 2027, when developers complete projects that would otherwise have been stalled under CEQA.

AB 130 could dramatically speed up California’s housing construction by stripping away decades of legal roadblocks. However, its long-term success will depend on how cities use the new VMT fees—either as a smart reinvestment tool or as an added cost burden that keeps housing out of reach.