2025 END OF YEAR REPORT
CITY OF FOSTER CITY
Prepared by:
Dane Hutchings, Founder + CEO
(916) 974-9270
[email protected]
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TABLE OF CONTENTS
TRANSMITTAL LETTER................................ ................................ .............................. 3 CPPG/CITY OF FOSTER CITY 2025 LEGISLATIVE HIGHLIGHTS ................................ ..... 5 YEAR IN REVIEW ................................ ................................ ................................ ..... 6 KEY PERFORMANCE INDICATORS ................................ ................................ ............ 8 HIGHLIGHTS: LEGISLATIVE ADVOCACY SUCCESS ................................ .......... 8 SUMMARY OF ADVOCACY DELIVERABLES................................ .................... 11 LOOKING AHEAD ................................ ................................ ................................ .. 13 LOCAL GOVERNMENT REVENUE................................ ................................ .. 13 HOUSING AND LAND USE ................................ ................................ ........... 13 CALIFORNIA ENVIRONMENTAL QUALITY ACT CLEAN UP ............................... 14 ELECTION YEAR POLITICS ................................ ................................ ........... 15 GRANT FUNDING ................................ ................................ ....................... 16
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TRANSMITTAL LETTER
November 21, 2025
To: Stefan Chatwin
City Manager
City of Foster City
From: Dane Hutchings
Founder + CEO
California Public Policy Group
Dear Mr. Chatwin:
On behalf of the California Public Policy Group (CPPG), I want to thank you, your team, and the City of Foster City City Council for engaging our firm for state legislative advocacy services. This End of Year Report provides an overview of our work with the City during the 2025 legislative year and outlines next steps as we prepare for 2026.
Over the past year, CPPG worked closely with your staff to strengthen the City ’s presence in Sacramento and advance its policy objectives. Through consistent engagement with the Administration, state agencies, and legislative leadership, we continued to elevate the City’s profile and ensure that your local priorities were clearly understood in state-level policy discussions.
This year, CPPG again demonstrated its long history of leading successful vehicle license fees (VLF) advocacy on behalf of local governments. When the Governor’s January Budget proposed zero dollars for VLF backfill payments—despite California’s long -standing commitment to reimbursing affected jurisdictions—CPPG immediately mobilized. Working closely with client cities, counties, and partners across the state, we assembled the broadest and strongest VLF coalition to date , including local governments, statewide labor organizations, rank-and-file police, sheriff deputies and firefighter associations.
Although the final budget agreement —driven by the Administration —ultimately funded only two- thirds of the amount owed, CPPG’s work moved the State from a complete denial of its obligation to a substantial allocation. Importantly, we also created a durable, diverse coalition that will continue to influence negotiations going forward. CPPG will remain fu lly engaged with legislative leaders, local agencies, and labor partners to press for a long-term, comprehensive solution that fully restores and stabilizes VLF funding.
Our team actively monitored and engaged with more than 900 pieces of legislation, with the City taking positions on 12 measures and achieving positive outcomes on most of them. CPPG’s advocacy included direct meetings with legislators, drafting and coordinating position letters, developing policy analyses, and collaborating with stakeholder coalitions to mitigate adverse impacts and advance favorable outcomes. These efforts resulted in more than 220 m eaningful touchpoints with your staff or on your behalf.
1127 11TH STREET, SUITE 300, SACRAMENTO, CA 95814 • 916.974.9270 • PUBLICPOLICYGROUP.COM PAGE 4 As always, our work reflects a shared commitment to ensuring that state policies remain workable, fiscally responsible, and reflective of the needs of local agencies like the City of Foster City. We are grateful for your continued partnership and for the opportunity to represent your interests at the State Capitol. We look forward to building on the progress made in 2025 and continuing to deliver results in the year ahead.
Sincerely,
Dane Hutchings
Founder + CEO
California Public Policy Group, Inc.
Claire Sullivan
Associate Lobbyist
California Public Policy Group, Inc.
CC: Marlene Subhashini, Assistant City Manager, City of Foster City
1127 11TH STREET, SUITE 300, SACRAMENTO, CA 95814 • 916.974.9270 • PUBLICPOLICYGROUP.COM PAGE 5 CPPG/CITY OF FOSTER CITY 2025 LEGISLATIVE
HIGHLIGHTS
PIECES OF LEGISLATION TRACKED ON BEHALF
OF THE CITY
Legislation tracked and assessed for impacts on the City to its legal, operational, or fiscal authority and decision making.
SUCCESS RATE ON LEGISLATIVE
ENGAGEMENT—MAKING THE CITY’S VOICE
HEARD
CPPG achieved the desired outcome or secured critical
amendments to dramatically reduce adverse impacts to
the City. (7 desired outcomes out of 12 total positions.)
COMBINED DELIVERABLES AND
TOUCHPOINTS
Legislative updates, position letters, policy and political analyses, and meetings with the City and/or with the
Administration or the Legislature on behalf of the City. *From November 1, 2024 to October 31, 2025.
900+
7/12
250+
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YEAR IN REVIEW
The Legislature Returns: The California State Legislature held its Organizational Session in early December 2024, officially launching the 2025-26 legislative session, and reconvened in early January to begin regular business. The session welcomed 35 newly elected state legislators —25 Assemblymembers and 10 Senators —who joined a Legislature led by Assembly Speaker Robert Rivas (D -Hollister) and Senate President pro Temp ore Mike McGuire (D -Geyserville). In the Assembly, Josh Lowenthal (D -Long Beach) was appo inted the new Speaker Pro Tempore , with Cecilia Aguiar-Curry (D-Winters) remaining as Majority Leader. The 2024 election brought a minor shift in the Legislature’s composition, with Republicans gaining two seats in the Assembly and one seat in the Senate. In early May, a reorganization plan was introduced to dissolve the Business, Consumer Services, and Housing Agency and create two new entities: the Business and Consumer Services Agency and the California Housing and Homelessness Agency. The plan will take effect on July 1, 2026.
The Governor’s Budget: In early January, Governor Gavin Newsom revealed his proposed budget for fiscal year 2025 -26 during a press conference. The proposal projected total state spending at $322.27 billion, with a minor surplus of $363 million. The May revision to the January proposal indicated a slight reduction in total spending to $321.9 billion, with a deficit now projected at $12 billion. The deficit was based on the increasing costs of state programs and declining economic conditions from a “growth recession” caused by fed eral policies in conjunction with the wildfires which devastated Southern California, resulting in over 18,000 homes being destroyed. In mid-June, the Legislature met its constitutional deadline to advance a balanced state budget for fiscal year 2025-26, passing SB 101 (Wiener) [Chapter 4, Statutes of 2025]. The final budget totaled $324.7 billion in spending—about 10% higher than in 2024-25—and closed a $12.3 billion deficit.
In late June, provisions of several bills having to do with building standards and the California Environmental Quality Act (CEQA) were added into AB 130 (Committee on Budget) [Chapter 22, Statutes of 2025], the housing budget trailer bill. The final version of AB 130 represented one of the most consequential housing and land use measures of 2025. The bill established a moratorium on new or amended state and local residential building standard s—including energy, green building, and design requirements—from October 1, 2025, through June 1, 2031. Changes to CEQA in the bill included new categorical exemptions for certain infill and mixed -income projects, streamlined litigation timelines, and restrictions on the scope of CEQA challenges that can be brought against projects consistent with certified housing elements.
These CEQA changes were among the most far-reaching in years and signaled a broader legislative effort to reduce procedural barriers to housing construction. Perhaps most notably, AB 130 marked the first time in recent memory that major policy reforms were included in a budget bill instead of being pursued through standalone legislation. This approach enabled the provisions to advance rapidly through the legislative process, bypass most policy and fiscal debate, and take effect immediately rather than at the start of 2026.
More Housing Laws Aimed at Targeting Local Agencies: In 2025, the Legislature once again placed much of the responsibility for solving California ’s housing crisis on local governments. As in prior years, a central theme of the legislative agenda was curbing or preempting local control over land
1127 11TH STREET, SUITE 300, SACRAMENTO, CA 95814 • 916.974.9270 • PUBLICPOLICYGROUP.COM PAGE 7 use and housing decisions. Lawmakers advanced a series of measures designed to streamline approvals, override local zoning, and impose new state -level mandates on production targets and permitting timelines.
These actions reflect a persistent narrative that local governments continue to act as barriers to housing growth—a view that continues to shape state policy. Yet this approach often overlooks the substantial progress many cities and counties have already made. Across the state, local governments have implemented innovative programs to incentivize a ffordable housing, expedite approvals for infill and accessory dwelling units, and adopt more flexible zoning standards to support density and mixed-use development.
Notably, there has been a subtle but important shift in tone among some lawmakers, signaling a growing recognition that local agencies are not solely responsible for California’s housing shortfall.
For example, the Senate Housing Committee declined to advance Senator Scott Wiener’s (D-San Francisco) proposal to dramatically expand the controversial SB 9 (Atkins, 2022), citing the need to respect local community planning processes and acknowledging that eliminating all development fees would undermine the ability of local governments to fund essential public services.
Similarly, SB 499 (Stern ) [ Chapter 543, Statutes of 2025 ] was passed and signed by Governor Newsom, marking a rare acknowledgement of the balance between housing production and community infrastructure. The measure reaffirms the importance of parks and open space as critical public safety assets and restores the ability of public utilities to assess co nnection and capacity charges at the time of development —recognizing that such tools are vital for maintaining sustainable growth.
While these developments suggest a modest rebalancing of the state -local relationship, the Legislature’s broader framework still largely frames California ’s housing crisis as a failure of local governance. This ongoing tension between state mandates and local innovation risks complicating, rather than accelerating, the state’s long-term housing production goals.
Leadership Change Announced: In mid-June, Senator McGuire announced that Senator Monique Limón (D-Santa Barbara) would succeed him as Senate President pro Tempore. Senator McGuire, who had served as pro Tem since early 2024, is running for one of the newly drawn congressional districts created by Proposition 50. Senator Limón, a former Assemblymember, was formally elected Senate leader on September 13 and officially took office on November 17. She will lead the Senate through the remainder of the 2025-26 session and will term out in 2028.
Late Session Gut -and-Amends: In mid -August, Governor Newsom and legislative leaders introduced a legislative package that called for a special election to seek voter approval of Proposition 50. Voters approved the measure, which temporarily replaces California ’s existing congressional redistricting process until the next certification in 2031. In early September, with only days left in the legislative session, the Legislature introduced several bills to address affordability, including gasoline and energy costs, and greenhouse gas emissions targets. The legislation included two measures that extended the state’s Cap-and-Invest Program, which is funded by the Greenhouse Gas Reduction Fund and overseen by the California Air Resources Board . The legislation also allocated $1 billion annually from the Program to High-Speed Rail and an additional $1 billion in 2026-27 for other appropriations.
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KEY PERFORMANCE INDICATORS
Our legislative advocacy for your City involves the CPPG team engaging with individual lawmakers— both within and beyond the City’s legislative district —as well as committee staff, the Governor’s Administration, and regulatory officials to advance the City’ s policy objectives. This collaborative approach is designed not only to move the City’s priorities forward but also to mitigate potential legal, operational, and fiscal challenges arising from state legislation.
Effective advocacy depends on raising awareness and sharing key information about priority issues.
Empowering your City Council, staff, and advocacy team is essential to advancing your state policy priorities. Our efforts range from collaborating with lawmakers and legislative staff to refine bill language and offer technical amendments, to building strong coalitions that align with the City’s goals. These efforts include educating legislators, mobilizing supporters, engaging the media, and forging strategic partnerships—all while maintaining a clear and focused approach.
Over time, a sustained legislative advocacy effort helps your City to develop strong alliances and enduring relationships with your allies. Working with legislators to familiarize them with your concerns often results in lawmakers —even those outside your legislative district —becoming champions for your specific issues. Establishing personal connections with legislators enhances your City’s credibility, allowing for significant influence in the legislative process. While sustained advocacy does not guarantee success on every front, a lack of engagement will lead to state policies that undermine local decision making and introduce new legal, operational, or fiscal hurdles.
The following highlights summarize our key accomplishments for your City in 2025, demonstrating how our efforts advanced your interests or reduced potential impacts on your agency.
Highlights: Legislative Advocacy Success
✓ SB 423 (Gonzalez) Housing: real property transfer taxes: affordability covenants (City of Foster City: Oppose)
[Please note: an official position was not adopted due to time constraints.] In the final days of the 2025 legislative session, SB 423 was “gut and amended” to include language that would have prohibited cities from imposing a real estate transfer tax on certain newly constructed residential and commercial properties. The proposal would have barred transfer taxes for 15 years following the issuance of a certificate of occupancy for multifamily and commercial developments and for five years on single -family homes rebuilt after a disaster. Another version of the proposal extended thes e restrictions to document transfer taxes, posing significant fiscal impacts for local governments statewide.
CPPG mobilized immediately, working directly with city clients to quantify potential revenue losses and prepare city -specific impact analyses. Our team also coordinated with each city’s legislative delegation, the League of California Cities, and external partners such as the California Professional Firefighters, amplifying statewide opposition and elevating the issue politically.
1127 11TH STREET, SUITE 300, SACRAMENTO, CA 95814 • 916.974.9270 • PUBLICPOLICYGROUP.COM PAGE 9 Our coordinated advocacy resulted in SB 423 being narrowed to apply only to the City of Los Angeles before ultimately stalling at the end of session.
✓ AB 382 (Berman) Pedestrian safety: school zones: speed limits (City of Foster City:
Support)
AB 382 enhances student and pedestrian safety by authorizing local jurisdictions to lower speed limits in school zones to 20 miles per hour, and in some cases 15 miles per hour, within 500 feet of school grounds. The bill also allows cities to act immediat ely through local ordinances until 2029, after which a statewide 20 mph limit will apply under defined conditions.
This measure modernizes the Vehicle Code and aligns with local Vision Zero and Safe Routes to School goals —giving cities greater flexibility to address real -world traffic safety concerns near schools.
CPPG worked directly with Assemblymember Berman’s (D -Menlo Park) office, engaged key stakeholders, and testified in support on behalf of the City through each policy and fiscal committee hearing.
On October 10, AB 382 was signed into law by Governor Newsom (Chapter 555, Statutes of 2025). The bill’s passage marks a statewide win for child safety and local control.
✓ AB 1337 (Ward) Information Practices Act of 1977 (City of Foster City: Oppose) AB 1337 sought to expand the Information Practices Act of 1977 to include all local agencies—cities, counties, schools, and special districts—removing their long-standing exemption from the Act. The proposal would have imposed sweeping new data collection and disclosure mandates on local governments, conflicting with existing privacy laws and creating significant operational, fiscal, and legal challenges for city staff.
Acting on behalf of the City of Foster City, CPPG provided a detailed legislative analysis outlining the bill’s fiscal and administrative impacts, convened a multi -association coalition to strengthen local government opposition, and worked directly with the Senate Judiciary Committee to convey city - specific concerns about implementation feasibility and unfunded mandates.
As a result of this collective effort, AB 1337 did not advance from the Senate Judiciary Committee, halting its progress in 2025 and marking a significant success for local governments by preserving existing local data governance practices.
✓ SB 358 (Becker) Mitigation Fee Act: mitigating vehicular traffic impacts (City of Foster City:
Expressed Concerns)
Initially introduced with a mandatory 50% reduction in local vehicle mitigation fees for transit - oriented housing projects, SB 358 drew early opposition from cities concerned about revenue loss and operational limitations. CPPG engaged early with the autho r’s office, coordinating a multi - jurisdictional meeting of agencies within the Member’s district to outline these concerns and propose workable amendments. Moreover, we worked with both the Senate and Assembly Local Government Committees.
1127 11TH STREET, SUITE 300, SACRAMENTO, CA 95814 • 916.974.9270 • PUBLICPOLICYGROUP.COM PAGE 10 The final bill shifted from a fixed fee cut to a trip -generation-based standard, allowing local calibration through existing VMT and nexus models. It also introduced amenity -based eligibility, requiring projects to be within one-half mile of at least three community-serving destinations—such as parks, grocery stores, restaurants, or schools —ensuring that reduced fees apply only to developments genuinely located in walkable, transit -rich areas. These targeted amendments substantially reduced fiscal and opera tional impacts, leading the City of Foster City to adopt a “neutral” position once the bill was amended.
On October 10, Governor Newsom signed a significantly amended version of SB 358 into law (Chapter 515, Statutes of 2025).
❖ AB 339 (Ortega) Local public employee organizations: notice requirements (City of Foster City: Oppose)
AB 339 exemplified a growing trend in state policymaking —efforts to restrict or complicate a local agency’s ability to contract for essential services. As introduced in January 2025, the bill would have required local agencies to provide 120 days’ notice to every bargaining unit for any service contract (new or renewal) involving similar or related work. It also allowed bargaining units to reopen existing MOUs and demand “meet-and-confer” negotiations for each affected contract. Collectively, these provisions would have made local contracting virtually unworkable. Recognizing the threat, CPPG engaged early, providing a detailed analysis, coordinating with the League of California Cities, the California Contract Cities Association, and the California Chamber of Commerce, helping to build a broad opposition coalition to educate legislators on the operational and fiscal consequences for local governments.
Through sustained advocacy, CPPG and coalition partners secured a series of major amendments that substantially reduced the bill’s impact before its passage. Key amendments included:
• Elimination of the “meet and confer” requirement and the removal of the MOU reopening provision.
• Reduction of the notice period from 120 days to 45 days. • Full exemption for contracts related to declared states of emergency. • Targeted exemptions for:
o Construction, alteration, demolition, installation, repair, and maintenance work. o Specialized data, software, or services related to those activities. o Contracts for the planning, design, administration, oversight, or delivery of public works, residential, commercial, or industrial projects subject to uniform codes or standards.
While AB 339 was ultimately signed into law, these amendments transformed a bill that would have crippled local contracting into one that is far narrower in scope and more administratively manageable for cities like the City of Foster City.
On October 13, Governor Newsom signed a significantly amended version of AB 339 into law (Chapter 687, Statutes of 2025).
❖ SB 707 (Durazo) Open meetings: meeting and teleconference requirements (City of Foster City: Oppose)
1127 11TH STREET, SUITE 300, SACRAMENTO, CA 95814 • 916.974.9270 • PUBLICPOLICYGROUP.COM PAGE 11 Upon introduction, SB 707 proposed sweeping changes to California’s Brown Act, dramatically broadening the definition of “legislative bodies” and imposing a series of costly new mandates on local agencies. As introduced, the bill would have required all legislative bodies to:
• Provide opportunities for remote public participation; • Translate meeting agendas into multiple languages using human translators; • Offer live interpretation services during meetings;
• Provide physical public access to computers during meetings; • Require all employment matters discussed in closed session to be publicly disclosed; • Obtain a four-fifths vote for any closed-session action or to conduct a special meeting.
Recognizing the significant fiscal and operational impacts, CPPG immediately engaged alongside a broad coalition of local government stakeholders to oppose the measure. As chair of the Senate Local Government Committee, Senator Durazo later merged four sep arate—largely favorable — Brown Act-related proposals into SB 707, creating a challenging dynamic in which local agencies supported certain provisions while strongly opposing others.
Throughout the spring, CPPG played a central role in negotiations, working closely with committee staff, the author’s office, key legislators, and other stakeholders to secure substantial amendments that removed or narrowed nearly all of the bill’s most bu rdensome provisions. These changes significantly reduced the measure’s fiscal and operational impacts while introducing new flexibility for legislative bodies subject to the Brown Act. However, the combining of measures effectively split the local governme nt coalition, with three statewide local government organizations shifting their position to support the bill and another moving to neutral.
Despite these improvements, several problematic provisions remained. In the final month of the legislative session—with a fractured local government coalition, CPPG directly led the opposition coalition, meeting with virtually every member of the Assembly to urge rejection of the bill. As the session drew to a close, CPPG successfully led efforts to have SB 707 placed on the Inactive File on September 11, effectively stalling it for the year. However, due to commitments Senator Durazo had made to the author s of the consolidated measures, the bill was pulled from the Inactive File in the final hours of session and passed both houses on September 13.
While disappointing that the bill ultimately advanced, CPPG’s advocacy directly resulted in major amendments that dramatically mitigated local agency impacts and preserved greater flexibility within open meeting requirements.
On October 3, Governor Newsom signed a significantly amended version of SB 707 into law (Chapter 327, Statutes of 2025).
Summary of Advocacy Deliverables
At CPPG, our commitment extends far beyond traditional state legislative advocacy —it’s a year - round partnership dedicated to serving the City of Foster City in every capacity possible. We tackle local challenges that intersect with state interests, collaborate with City staff on innovative policies, and deliver educational resources that enhance the Council ’s and staff’s understanding of critical issues.
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In advocating for your City, consistent communication with your staff and Council is a top priority for our team. Keeping you well -informed supports our ability to effectively and successfully represent your interests. To this end, we provide memos tailored to your City that include specific analyses of legislation and regulatory matters, and updates on the legislative process, as needed. In 2025, CPPG sent your team 30 m emos with analyses or updates that illustrated City -specific impacts and/or potential funding sources for the City. These memos kept you informed about specific legislation and policies of potential interest to your City, especially those that may impact your City ’s operations, authority, or decision making.
We kept you updated on important developments in the Capitol through regularly scheduled Zoom meetings. These check -in meetings served as essential touchpoints, framing the continuous and often daily dialogue we maintained with City staff through calls, te xts, and emails. Additionally, we held presentations for your staff and Council whenever necessary, providing insights on legislative developments and highlighting the City ’s active participation in the legislative process. This consistent exchange of info rmation ensured that everyone stayed aligned and informed as we navigated the complexities of governance together.
Each month, CPPG supplied your City with a legislative summary that highlighted key developments in the Legislature and updates on legislation, along with announcements from the Administration, all of which were tailored to your City’s specific interests. Additionally, our Monthly Activity Reports meticulously documented every touchpoint CPPG had with and on behalf of the City.
Updates on Legislative and Regulatory Processes, and Detailed Legislative Analys es: CPPG provided the City with several detailed analyses of pieces of legislation. These analyses were critical in helping the City assess pending legislation’s potential implications for operations, local discretion, and/or authority. CPPG also provided timely informational reports during critical stages of the budget and policy processes and followed up to answer any questions and close the loop.
These updates provided your City with the necessary situational awareness of statewide trends and of regulatory, fiscal, and legislative developments. Examples of these reports include but are not limited to:
• Analysis of AB 1337 (Ward)
• Analyses of SB 79 (Wiener) [Chapter 512, Statutes of 2025] • Analysis of SB 677 (Wiener)
• Analysis of SB 681 (Wahab)
• California Environmental Quality Act (CEQA) Bills
• Advanced Clean Fleets regulations
• Organizational Session
• Homeless funding accountability
• Howard Jarvis initiative
• National Pollution Discharge Elimination Systems (NPDES) • Budget updates: January proposal, May revision, and June final • Housing package budget trailer bills
• Appropriations Suspense Files
• End of session
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LOOKING AHEAD
Local Government Revenue
California continues to face a structural deficit, compounded by growing uncertainty around federal health care policy. The Legislative Analyst ’s Office (LAO)—the Legislature’s nonpartisan research and advisory division—recently warned that new federal actions reducing Medi-Cal reimbursements and provider tax revenues could cost the state ’s General Fund billions of dollars annually. These losses—combined with lower federal participation and higher county administrative burdens —will likely intensify pressure on state finances and heighten the risk of future cost shifts to local governments.
In lean fiscal years, both the Administration and the Legislature have historically viewed local revenue sources as soft targets for backfilling state shortfalls. As the state contends with federal retrenchment in Medi-Cal and other programs, legislation in 2026 is likely to push additional costs, enforcement duties, and programmatic responsibilities onto local agencies.
In one of its earlier forms, SB 423 (Gonzalez ) proposed a cap on local document transfer fees —a measure with significant implications for municipal revenue stability. While the bill was ultimately narrowed to apply solely to Los Angeles and stalled in committee, it reflected a broader trend of proposals seeking to limit local fiscal authority. Similar statewide measures affecting multiple jurisdictions are expected to reemerge in 2026.
Additionally, development impact fees, Quimby fees, and other local cost -recovery mechanisms may once again be targeted as part of broader efforts to “reduce barriers” to housing and economic development. Restricting or eliminating these local funding tools would undermine the ability of local governments to maintain infrastructure, parks, affordable housing programs, and essential public services.
As the fiscal and policy landscape continues to evolve, local governments must remain vigilant in safeguarding existing revenue streams and defending against legislation that creates new unfunded mandates. Ensuring that local governments retain the authority and resources necessary to meet community needs will be a central advocacy priority heading into the 2026 legislative session.
Housing and Land Use
Continuing a trend of recent years, the 2025 legislative session saw the introduction of hundreds of housing-related measures, exceeding the volume introduced in prior years. In an unprecedented move, about 300 pages of statutory changes were enacted throu gh the 2025 -26 state budget. The pace of housing legislation is expected to remain intense in 2026. Anticipated trends include proposals to increase densities and building heights around transit corridors, expand zoning reforms to promote infill development, and impose new or expanded planning and reporting requirements.
Lawmakers are also likely to pursue further changes to accessory dwelling unit and duplex laws, as well as adjustments to the Davis -Stirling Act aimed at limiting common -interest development restrictions.
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Recent state housing measures have increasingly shifted costs and responsibilities onto local governments while limiting their discretion in land use planning. These policies often overlook the broader factors contributing to California ’s housing crisis, including construction labor shortages, financing constraints, rising materials costs, and speculative ownership of existing housing stock.
Despite these challenges, cities and counties continue to demonstrate leadership by approving and entitling housing p rojects at significant levels. Local governments remain committed partners in addressing the state ’s housing needs; however, mandates imposed without corresponding resources or flexibility risk undermining sustainable, long-term progress.
California Environmental Quality Act Clean Up
Significant reforms to the California Environmental Quality Act (CEQA) were enacted in 2025 through the state budget process—marking the most substantial changes to the law in decades. Despite the scale of that reform package, several issues remain unresol ved. Some legislators who reluctantly supported the 2025 reforms have signaled their intent to pursue further “clean-up” legislation, focusing on concerns such as more prescriptive requirements for tribal consultation and clarification of the definition of “advanced manufacturing.” Additional CEQA -related bills may therefore emerge in 2026 to address these outstanding matters. Although many of these proposals are framed as technical adjustments, they carry the potential to introduce new mandates or increase litigation risks for local governments. Because cities and counties serve as the primary implementers of CEQA, it will be critical that any reforms remain both workable and adequately resourced—in order to maintain environmental protections while supporti ng responsible and sustainable development.
Advanced Manufacturing: The 2025 CEQA reforms exempt nine project types from environmental review, including “advanced manufacturing, ” defined broadly to encompass big tech, semiconductors, aerospace, and electronics industries. Stakeholders have raised concerns — especially labor and environmental groups—that the definition is overly expansive and could erode environmental or community protections unless narrowly tailored and clearly defined.
Tribal Consultations: Under current law, local governments must offer consultation within 14 days and allow a 60 -day period for consultation to conclude. Local officials continue to seek clearer guidance on those timelines; tribal and indigenous organizations, conversely, are advocating for more time and meaningful engagement to ensure consultation is substantive.
Endangered Species Act: With the passage of SB 131 and AB 130 (both chaptered June 30, 2025), the definition of “natural and protected lands” was narrowed, prompting stakeholders to demand clarification that this change does not weaken conservation protections for critical species habitat.
Ballot Measure & Legislative Implications: In addition to statutory reforms, a proposed statewide ballot initiative titled the “Building an Affordable California Act”—filed by the California Chamber of Commerce and expected to appear on the November 3, 2026 ballot if qualified —seeks to further redefine the CEQA review process. The measure would establish strict deadlines for lead agencies (e.g., 365 days for EIRs, 180 days for Negative Declarations) and impose accelerated judicial-review timelines under a “substantial evidence” standard rather than “prejudicial abuse of discretion.”
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Because the ballot initiative could drastically shift how CEQA is implemented statewide, it may in turn influence the Legislature ’s approach to any follow -up statutory changes. In practical terms, local governments should anticipate that reforms in 2026 may come not only through bills but also through the interplay of voter -driven mandates and legislative reactions. This means advocates should maintain a dual focus: (1) refining the technical statutory language governing CEQA implementation, and (2) monitor ing how ballot measure outcomes could prompt additional legislative or budgetary changes.
Election Year Politics
Political Climate: With the upcoming national midterm elections, California’s political environment is expected to become increasingly charged and unpredictable. Voters will choose a new Governor on November 3, 2026, marking the end of Governor Newsom’s tenure as he positions himself for a likely presidential run. In the lead-up, the Administration is expected to double down on policies that contrast sharply with those of the Trump Administration —particularly around climate action, healthcare access, and housing production.
Election years often amplify high-profile policy debates, and 2026 will be no exception. The Governor and legislative leaders will be eager to showcase tangible progress on housing, homelessness, and cost-of-living issues —areas where public frustration rem ains high. We can expect an increased emphasis on high -visibility housing enforcement measures, streamlined development proposals, and budget initiatives designed to demonstrate fiscal responsibility while maintaining progressive priorities.
Public safety will also remain a central political issue, as lawmakers seek to balance community concerns over rising property crime and retail theft with ongoing efforts to reform the criminal justice system. One area that we are focusing on is the ongoing funding for Proposition 36 . Despite the overwhelming voter approval rating, the Administration and the Legislature only allocated $ 100 million in this year’s budget for implementation. Next year could see a refocus on additional funding for the measure.
The combination of federal-state political tension, economic uncertainty, and leadership transitions will make 2026 a uniquely volatile year in Sacramento—one where policy outcomes are increasingly shaped by electoral dynamics as much as by sound governance.
Governmental Operations Measures: Even-numbered years traditionally bring a wave of labor - sponsored legislation. While often directed at large corporations, many of these proposals extend to the public sector—adding costs, compliance obligations, and new restrictions on local discretion.
Measures that limit a local agency ’s ability to contract for specialized or temporary services, increase employer costs, or undermine the collective bargaining process are expected to resurface in 2026.
Growing concern over the public-sector use of artificial intelligence (AI) is also expected to drive new legislation in 2026 . Labor organizations view AI as a potential threat to public -sector jobs, while privacy and community advocates are focused on data protection, algorithmic bias, and the
1127 11TH STREET, SUITE 300, SACRAMENTO, CA 95814 • 916.974.9270 • PUBLICPOLICYGROUP.COM PAGE 16 preservation of human oversight. Together, these interests are likely to fuel a broad push for regulation. Anticipated proposals may require agencies to disclose AI use in decision-making, hiring, procurement, or public safety operations; conduct bias and privacy assessments; or establish internal AI governance frameworks. While intended to enhance transparency and accountability, these measures could impose significant new reporting and compliance burdens —particularly for smaller agencies with limited technical capacity.
Similarly, “transparency” and “good governance” reforms are expected to return in 2026. This year’s SB 707 (Durazo) [Chapter 327, Statutes of 2025] enacted one of the most complex revisions to the Ralph M. Brown Act in decades, creating new requirements for remote participation, agenda posting, and language access. While the bill’s intent was to enhance public participation, its implementation has already proved to be administratively burdensome for local agencies. Following pushback from community groups who argued the bill did not go far enough, Senator Durazo has signaled plans to expand translation, accessibility, and recordkeeping requirements in the upcoming session.
Grant Funding
Prepared by: Jake Whitaker, Director of Grant Services
After a tumultuous year with major changes in the landscape of federal funding, many municipalities have started to pivot away from pursuing federal grant opportunities due to new requirements included in grant award agreements prohibiting diversity, equit y, and inclusion (DEI) practices and requiring cooperation with federal immigration enforcement efforts. However, the state of California faces a multi -year structural deficit, limits the state’s ability to backfill the loss of federal funding opportunities across the multitude of impacted areas, including transportation, clean energy adoption, and public safety.
Funding through Proposition 4, colloquially known as the “Climate Bond,” is currently being rolled out and represents the most immediate opportunity for municipalities to apply for discretionary grant funding. Due to the legislature’s failure to include an exemption to the Administrative Procedures Act (APA) for Climate Bond programs, the grant funding solicitations must follow the full administrative approval process which has contributed to a delay of approximately six months.
Some early appropriations made in January 2025 are currently going through public comment on the draft grant program guidelines, while other Climate Bond programs appropriated at the end of session in September 2025 are just now undertaking the APA approval process. The FY 25-26 budget appropriated $3.3 billion of the total $10 billion in spending authorized by the Climate Bond. While these funding opportunities are a welcome reprieve, grant funding is anticipated to be highly competitive with increased demand and the structure of the Climate Bond itself spreads these dollars across many different areas of investment—making this a wide yet shallow pool of funding.
Transportation
• Cycle 8 of the California Transportation Commission (CTC)’s Active Transportation Program is anticipated to be released in March 2026. The goals of the program are to increase biking and walking trips, increase the safety and mobility of non -motorized users, advance efforts of regional agencies, and enhance public health.
1127 11TH STREET, SUITE 300, SACRAMENTO, CA 95814 • 916.974.9270 • PUBLICPOLICYGROUP.COM PAGE 17 • The CTC has announced the Local Partnership Program for another round of funding. This program provides funding to projects where voters have approved fees or taxes dedicated solely to transportation improvements or that have imposed fees. Eligible activities include projects that address aging infrastruct ure, road conditions, active transportation, transit, and rail. The State has appropriated $202 million for this program. Applications are anticipated to be released around summer of next year.
• The U.S. Department of Transportation (USDOT) was planning to release a solicitation for the Better Utilizing Investments to Leverage Development (BUILD) program in November 2025 (potentially delayed due to the prolonged government shutdown). Funding can be used for surface transportation infrastructure projects with significant local or regional impact. • The USDOT is currently reviewing the Bridge Investment Program (BIP) , which has one remaining fiscal year of funding appropriated by the IIJA. BIP focuses on projects that address existing bridges that are either in poor condition or at -risk of falling into poor condition. The timeline for the re-release of the BIP solicitation is currently unclear. • The Federal Railroad Administration (FRA) is anticipated to hold competitions for the Consolidated Rail Infrastructure and Safety Improvements (CRISI) program and Railroad Crossing Elimination (RCE) program in 2026. These two programs are popular opportunities for jurisdictions pursuing grade separation projects. Timelines for these competitions are unclear. Currently, funding for FY 25 and FY 26 appropriated by the Infrastructure Investment and Jobs Act (IIJA) have not been obligated for projects.
Parks and Recreation
• The State has appropriated $188.5 million through the Climate Bond (Prop 4) for the Statewide Park Development and Community Revitalization Program . The program’s intent is to create new parks and new recreation opportunities in critically underserved communities across California. Draft guidelines will be released soon for public comment.
The upcoming Round 5 competition, which will be held in Summer/Fall 2026, will be the only Climate Bond-funded round of grants.
• The Art in California Parks Grant Program is anticipated to be released in Spring 2026 for Round 3. The goal of the program is to revitalize local parks with diverse experiences that foster creativity, community connection and transform them into hubs of art, culture, and nature.
• The federal Outdoor Recreation Legacy Partnership (ORLP) program is currently paused for administrative review. ORLP funds a wide variety of recreational projects and facilities, from sports fields and playgrounds to walking trails and community gardens. The timeline for review and resumption of grant funding competitions is currently unclear. • The federally funded Land and Water Conservation Fund (LWCF) , however, has not been impacted by shifts in federal policy or administrative procedures. LWCF dollars are managed and awarded by the State as a federal pass -through grant. The LWCF provides matching grants to local governments for outdoor recreation projects. Grant competitions are typically held annually. The California State Parks Office of Grants and Local Assistance (OGALS) notes that the next LWCF competition is “coming soon.”
• The California State Parks Office of Grants and Local Services (OGALS) had a public comment period for the Recreational Trails Program (RTP) Non -Motorized this summer and
1127 11TH STREET, SUITE 300, SACRAMENTO, CA 95814 • 916.974.9270 • PUBLICPOLICYGROUP.COM PAGE 18 are working on revisions of the guidelines. The next application cycle is anticipated to be released in 2026 or 2027.
• OGALS also had a public comment period for the Habitat Conservation Fund this spring and are working on revising the guidelines. The next application cycle is anticipated to be released in 2026 or 2027. This program funds projects for nature interpretation programs to bring urban residents into park and wildlife areas, protect ion of various plant and animal species, and acquisition and development of wildlife corridors and trails.
Water Quality and Conservation
• The Bureau of Reclamation has stated that several WaterSMART funding opportunities were planned to be launched in Fall 2025 prior to the government shutdown: Small-Scale Water Efficiency Program, Water and Energy Efficiency Grants, and Drought Resiliency Projects. • The State Water Resources Control Board accepts applications for the Clean Water State Revolving Fund and Drinking Water State Revolving Fund on a rolling basis. The annual Intended Use Plan drafts are published in November/December of each year. The RLF programs are funded through a combination of annual state and federal investments.
However, available funding is expected to tighten in the co ming years with the expiration of IIJA supplemental federal funding.
• The State Water Resources Control Board is currently accepting applications for the Water Recycling Planning Grant . Applications are accepted on an ongoing basis until 6/30/2027.
Projects can include recycled water treatment, recycled water storage, distribution, and pumping, and groundwater recharge.
Economic Development
• The Economic Development Administration has announced the Disaster Supplemental Grant Program for areas that received major disaster declarations because of hurricanes, wildfires, severe storms and flooding, tornadoes, or other natural disasters in 2023 -2024.
The program provides funding to support economic recovery in these affected areas.
Applications are accepted on a rolling basis for Readiness and Implementation projects until funds are exhausted. For the Industry Transformation Path, applications are due 3/3/2026.
Housing Construction
• The California Department of Housing and Community Development (CalHCD) has appropriated $120 million for FY 25 -26 for the Multifamily Housing Program . The program funds projects for new construction or rehabilitation of existing housing development, as well as the conversion of nonresidential structures into residential structures. Funding is anticipated to be released in 2026.
• The Strategic Growth Council’s Affordable Housing Sustainable Communities receives a continuous annual appropriation from Cap -and-Invest Greenhouse Gas Reduction Fund.
This program provides funds for projects that achieve GHG reductions and benefit communities through accessibility of affordable housing, employment centers, and key destinations via low-carbon transportation. Guidelines are anticipated to be released early 2026.
1127 11TH STREET, SUITE 300, SACRAMENTO, CA 95814 • 916.974.9270 • PUBLICPOLICYGROUP.COM PAGE 19 • The legislature appropriated an additional $100 million for the Encampment Resolution Funding (ERF) program for FY 25 -26. However, this funding will be used for “look back” awards for unfunded projects from the ERF Round 3 competition. CPPG does not anticipate a Round 4 ERF competition in 2026.
Sustainability, Resilience, and Climate Action
• The Strategic Growth Council has released the draft guidelines for Round 6 of the Transformative Climate Communities Program. This program provides funds for community- led development and infrastructure projects that achieve major environmental, health, and economic benefits. The State has appropriated $100 million from the Climate Bond for this program. Draft guidelines are currently open for public comment until 1/2/2026. • The Strategic Growth Council has released the draft guidelines for Round 2 of the Community Resilience Center Program . This program provides funds for development and implementation of community resilience centers that mitigate the public health impacts of extreme heat and other emergency situations. The State has appropriated $55 million from the Climate Bond for this p rogram. Draft guidelines are currently open for public comment until 1/2/2026.
• The Extreme Heat and Community Resilience Program has announced a second round of funding. The Climate Bond appropriated $22 million for FY 25 -26. Funding will be used for planning projects that combine community services and physical improvements to protect communities from extreme heat. The RFP and Pre-Application Interest Form are anticipated to be released early 2026.
• The Climate Bond appropriated $46 million for the Urban Greening Program in FY 25-26. This program funds projects that result in the conversion of existing built environments into green space and green infrastructure. NOFOs are anticipated in early 2026. • The Coastal Conservancy has received Climate Bond funding appropriations of $62 million in FY 25 -26 for coastal resilience projects and $32.5 million in FY 25 -26 for sea level rise adaptation projects. Proposals are being accepted through the Coastal Conservancy Grants rolling application process.
• The EPA’s Brownfield Assessment and Cleanup Grants were anticipated to be released November 2025, but were delayed due to shutdown. These grants provide funds to conduct planning activities, develop cleanup plans, and implement cleanup activities for brownfield sites. It is currently unknown when the NOFO s will be released, but applications are expected to be due 60 days after solicitations are released.
Fire and Emergency Response
• FEMA’s Assistance to Firefighters Grant (AFG) is anticipated to be released Winter 25/26. This program funds equipment, protective gear, emergency vehicles, training, and other necessary resources for protecting the public and emergency personnel. • The Staffing for Adequate Fire and Emergency Response (SAFER) Grant is anticipated to come out Winter 25/26. The SAFER Grant is designed to directly fund fire departments or volunteer firefighter organizations to help increase or maintain the number of trained firefighters.
1127 11TH STREET, SUITE 300, SACRAMENTO, CA 95814 • 916.974.9270 • PUBLICPOLICYGROUP.COM PAGE 20 • The Fire Prevention and Safety (FP&S) is anticipated to release solicitations Winter 25/26.
The goal of this program is to reduce injury and prevent death through fire prevention programs and firefighter health and safety research and development. • Future funding remains uncertain for FEMA’s Pre -Disaster Mitigation programs, which include the Hazard Mitigation Grant Program (HMGP) , Flood Mitigation Assistance (FMA) , and Building Resilient Infrastructure and Communities (BRIC) . These programs fund a wide variety of mitigation activities, including flood protection, hazardous fuels treatment, retrofitting structures, and supplying backup power via generators for critical facilities. Going forward, options to fund these types of projects may be limited t o the Congressional appropriations aka “earmarks” process.
• The Community Microgrid Enablement Program through PG&E is anticipated to announce a Third Round in 2026. This program provides funding to enable a community microgrid through studies and equipment for a safe transition.
Public Safety
• The California Office of Traffic Safety annual OTS Grant is due January 31, 2026. This program provides funding for a variety of priority program areas with local crash data that demonstrates a need for funding. These priority program areas include: Alcohol Impaired Driving, Distracted Driving, Drug-Impaired Driving, Emergency Medical Services, Motorcycle Safety, Occupant Protection, Pedestrian and Bicycle Safety, Police Traffic Services, Communications and Public Affairs, and Roadway Safety and Traffic Records. • The U.S. Department of Justice (USDOJ) is currently accepting applications for the Bulletproof Vest Partnership (BVP) , with a due date of 12/19/2025. BVP reimburses local government agencies for up to 50% of the cost of body armor vests purchased for law enforcement officers. These reimbursements are awarded on a competitive basis.
Libraries
• The current administration has taken action to terminate funding from the Library Services and Technology Act (LSTA), which is passed through to the California State Library from the federal Institute of Museum and Library Services. LSTA funds a variety of programmatic grant programs available to local libraries from the State Library. While there are active lawsuits challenging the administration’s actions, future funding availability remains uncertain.
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