21.43 City Council
AGENDA REPORT
DATE: 02/19/2026
AGENDA OF: 02/24/2026
DEPARTMENT: Community Development/Economic Development/City Manager SUBJECT: Review of 2025 State of California Legislation Impacting Land Use, Housing, Homelessness Response, and Economic Development (CD/ED/CM)
LOCATION: Citywide
RECOMMENDATION: Motion to accept the review of 2025 State of California legislation impacting land use, housing, homelessness response, and economic development.
BACKGROUND: Staff has provided regular updates to the City Council regarding land use and housing-related State legislation since the 2018 Housing Blueprint Subcommittee report called for such updates. The goal of this report is to further acknowledge the breadth and depth of this past year’s legislation and summarize key pieces of legislation signed in to law in 2025 that impact the City’s land use, housing, homelessness response, and economic development decisions.
In 2025, the Governor signed approximately 70 bills into law related to land use, housing, homelessness response, and economic development. This represents the Legislature’s continued interest in community development and facilitating housing production at all affordability levels in California. Additionally, the state continues to support the Department of Housing and Community Development (HCD) and the Attorney General in the accountability and enforcement of housing requirements at the local level. While some new laws are more minor or place-specific, others are especially impactful to land use, housing, homelessness response, and economic development decision-making in Santa Cruz and are summarized below.
DISCUSSION: The 2025 legislative session featured several bills focused on southern California wildfire recovery that are not directly relevant to the City of Santa Cruz. There were three other bills that garnered statewide attention: Senate Bill (SB) 79, Assembly Bill (AB) 130, and SB 131. SB 79 sets height and density standards for housing development near highfrequency rail stations and dedicated bus lines. However, this bill does not apply to Santa Cruz County jurisdictions and will not be discussed further in this report, but additional info can be found in the resource links below. AB 130 and SB 131 contain, among other changes, significant California Environmental Quality Act (CEQA) reforms. They were previously standard
22.1 legislative bills but were turned into budget trailer bills and approved on June 30, 2025, rather than during the typical Governor bill signings in the fall. As urgency bills, they took effect immediately following their signing on July 1, 2025. These two bills and many other bills related to land use and housing streamlining, housing law enforcement, homelessness, affordable housing, and economic development are summarized below. The list below does not include every bill that was approved last year. A more comprehensive list of bills and their summaries can be found in the California League of Cities 2025 Legislative Report:
https://www.calcities.org/docs/default-source/advocacy/2025-leg-briefingbook.pdf?sfvrsn=f9e04838_9. The City’s California lobbing firm, Precision Advocacy, also prepared a summary of relevant bills that is more succinct than the League’s report. Precision Advocacy’s summary of new laws for 2026 relevant to the City and the City’s full legislative platform will be presented to Council along with new bills introduced in 2026 at a subsequent meeting . Another helpful summary of 2025’s housing bills was prepared by the law firm of Holland and Knight. That summary is available
at https://www.hklaw.com/en/insights/publications/2025/12/californias-2026-housing-lawswhat-you-need-to-know. Elements of the below summaries are taken from these resources.
Land Use and Housing Streamlining
AB 130
While this bill garnered the most attention for its new infill housing CEQA exemption, it also contains a wide range of provisions related to housing, the Coastal Commission, building codes, and homelessness.
CEQA. AB 130 creates a statutory CEQA exemption for infill housing projects of up to 20 acres. Previously, local governments often used a categorical exemption in CEQA Guidelines Section 15332 for infill projects of up to five acres, but Section 15332 contains exceptions that limit its applicability. For qualifying projects, the AB 130 exemption has fewer limitations and exceptions, and California courts have consistently upheld lead agencies' reliance on statutory exemptions as long as substantial evidence exists that a project meets all qualifying criteria. Multiple projects are already seeking to use this new AB 130 exemption in Santa Cruz, and it is expected to streamline CEQA review processes both here and throughout the state.
Housing. AB 130 expands applicability of the Permit Streamlining Act to ministerial approvals, expands annual housing element reporting requirements, and makes permanent certain portions of the Housing Accountability Act and Housing Crisis Act of 2019 that were previously set to expire. AB 130 also made various updates to requirements applicable to accessory dwelling units.
Building Codes. AB 130 limits the types of building code amendments that local jurisdictions can adopt through June 1, 2031.
SB 131
Similar to its assembly-sponsored counterpart (AB 130), this bill also garnered attention for its changes to CEQA exemptions, while also including a range of other, mostly-CEQA-related updates. SB 131 exempts rezonings related to Housing Elements, and it also limits the need for environmental review on projects that would have been exempt but for one environmental impact, in what is known as the “near-miss” provision. Under this provision, if a project only needs further analysis of one potential environmental impact, the rest of the document is considered complete, and the project does not need to submit the whole document again. The bill
22.2 also exempts a variety of other categories of uses from CEQA, including daycare centers and advanced manufacturing.
AB 1021
This bill makes it easier for K-12 school districts and the County Office of Education to build housing on their land. Among other things, it eliminates the requirement that such projects be located on infill sites and clarifies that projects in infill locations are exempt from CEQA.
AB 893
This bill expands AB 2011 (2022), which allows qualifying housing development on commercial corridors to be approved ministerially, to also include parcels located within half a mile of a public university, deemed “Campus Development Zones.”
AB 1154, SB 543, and SB 462
These three bills all relate to accessory dwelling units (ADUs) and junior ADUs (JADUs).
Most significantly, AB 1154 (Carrillo) eliminates owner-occupancy requirements for JADUs that have their own sanitary facilities. SB 543 (McNerney) requires local governments to determine whether an ADU or Junior ADU (JADU) application is complete within 15 days or else it will be deemed completed. The bill also specifies that ADUs of under 750 square feet and JADUs of under 500 square feet will not be subject to impact fees. SB 543 also sets new size measurement standards for ADUs and JADUs, allows JADUs to be eligible for fire sprinkler exceptions, and creates an ADU and JADU appeal process. SB 462 stipulates that Coastal Permits for ADUs are no longer appealable to the Coastal Commission. The first reading of the amendments related to these bills were went before City Council on February 10, 2026.
AB 325
This bill addresses housing price fixing by making it unlawful for a person to use a pricing algorithm, especially as they relate to housing prices. The bill would make it unlawful for a person to use or distribute a common pricing algorithm if the person coerces another person to set or adopt a recommended price or commercial term recommended by the common pricing algorithm for the same or similar products or services in the jurisdiction of the state.
AB 357
This bill allows Coastal Commission streamlining for Student Housing and provides limits on the Coastal Commission's review and oversight of a college or university’s Long Range Development Plan (LRDP). It also requires the Coastal Commission to "prioritize the provision of active transportation and public transportation facilities over vehicle parking spaces" when considering a new or amended LRDP and, specifically, to "defer to" the college or university "in determining the number of vehicle parking spaces necessary for residents of those facilities." AB 357 allows the Coastal Commission to designate proposed LRDP amendments as de minimis if they would have no impact on coastal resources. The de minimis determination must be made within 10 days of submitting the proposed LRDP amendment. LRDP amendments designated de minimis are automatically approved at the following Coastal Commission meeting, unless three Coastal Commissioners object to the de minimis designation, in which case the amendment must be set for public hearing. This change is intended to reduce delays associated with Coastal Commission consideration and approval.
22.3 SB 262
Current law allows HCD to designate certain local governments as "prohousing" in recognition of their adoption of policies that facilitate housing development. The prohousing designation affords local governments with priority access to state affordable housing and infrastructure funding. The City of Santa Cruz is a designated prohousing city and has already benefited from such funding awards. SB 262 expands the definition of prohousing to encompass not just policies that facilitate housing construction but also "policies that keep people housed," including safe parking programs, safe camping programs, programs that expedite low-barrier navigation centers, emergency shelters, and supportive housing. SB 262 does provide, however, that a local government may not secure the prohousing designation solely through the adoption of the types of policies that help keep people housed.
SB 358
Current law already requires that the City reduce or eliminate vehicle or traffic mitigation fees for housing development in transit-oriented zones. This law extends this exemption to include housing development within a half mile of specified neighborhood amenities like schools, libraries, hospitals, grocery stores, and parks.
Housing Law Enforcement
AB 712
This law provides that courts are required to award reasonable attorney's fees to housing developers who successfully sue a jurisdiction to enforce a state housing law. Previously, only Housing Accountability Act violations provided a clear pathway for housing applicants to recover attorney's fees. The new attorney's fees provided by AB 712 are broadly applicable to any housing reform law.
The bill also imposes new fines of $10,000 per housing unit (or a minimum fine of $50,000 per violation for projects with four or fewer units) when the applicant prevails in litigation after the agency had previously been warned in writing by the attorney general or HCD that their actions would violate the law and failed to correct the issue within 60 days. Fees can multiply upon subsequent violations.
SB 233 and AB 1275
These bills make changes to the timing of the HCD’s Regional Housing Needs Allocation (RHNA) process to better support local jurisdictions. Given the recently increased complexity of the RHNA and Housing Element processes and the strain it placed on local jurisdiction staff resources, these two bills set a variety of earlier timelines for HCD and councils of governments in preparing RHNAs in the 7th cycle, which for Santa Cruz is coming up in the late 2020s, to give jurisdictions more time to complete the 7th cycle Housing Element by the state’s target completion date.
AB 610
Housing element law requires that local governments, when drafting housing elements, identify and analyze "potential and actual governmental constraints" that will impact housing development and remove those governmental constraints as needed to meet the RHNA. AB 610 addresses the issue of local governments adopting new barriers to housing after securing housing element certification. Beginning in the seventh RHNA cycle, local governments will be required
22.4 to identify 1) any newly adopted or strengthened governmental constraints on housing adopted since the previous housing element and 2) any governmental constraints on housing that the local government is considering adopting within three years of housing element certification.
Homelessness
SB 340
This bill expands ministerial approval for emergency shelters that include the addition or expansion of onsite services for residents. Existing law requires an emergency shelter to include other interim interventions, including, but not limited to, a navigation center, bridge housing, and respite or recuperative care. This bill would additionally require an emergency shelter to include all services provided onsite, including the addition or expansion of services that are consistent with certain written, objective standards. By imposing a higher level of service on cities and counties in preparing and adopting a general plan, this bill would impose a state-mandated local program.
Affordable Housing
AB 670
Beginning with the Housing Element Annual Progress Report due by April 1, 2027, this bill allows the City to include the number of units in an existing multifamily building that were converted to affordable housing by imposition of long-term affordability covenants and restrictions that require the unit to be available to persons or families of low, very low, extremely low, or acutely low income at an affordable rent or affordable housing cost for at least 55 years, if the units meet certain criteria.
Economic Development
AB 671
This bill establishes a streamlined approval process for tenant improvements related to restaurants. The bill requires a local building department, upon the request and at the expense of the permit applicant, to allow a qualified professional certifier to certify that the plans and specifications of the tenant improvement comply with all applicable building, health, and safety codes. The bill would require the local building department to approve or deny the permit application within 20 business days of receiving a complete application and would deem the plan approved for permitting purposes if the local building department does not approve or deny the application within that timeframe.
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION:
This legislative update is not considered a project under CEQA in that it is only an informational update regarding state laws and does not involve any actions that will result in changes to the physical environment.
HEALTH IN ALL POLICIES (HiAP): This report presents information on recent state bills geared toward increasing housing production at all affordability levels and other improvements
22.5 to land use processes that help residents and builders alike. By expanding awareness of and following these laws, the City is advancing the HiAP pillars of equity, public health, and sustainability.
FISCAL IMPACT:
1. The recommendation in this report impacts the General Fund: No
2. This recommendation requires a budget adjustment: No
3. The recommendation creates an on-going expenditure commitment: No FISCAL IMPACT DESCRIPTION: The fiscal impacts of these bills vary. Over time, housing generally has a net negative fiscal impact due to the cost of services provided to residents, and many of these bills generally promote housing production not just in Santa Cruz but throughout the state. Some of the bills could ultimately have a negative fiscal impact, particularly over time; however, the direct fiscal impacts of these bills are unknown.
Prepared By:
Matt VanHua, AICP
Principal Planner
Submitted By:
Lee Butler, LEED AP, AICP
Director of Community
Development
Approved By:
Matt Huffaker
City Manager
ATTACHMENT:
None.
22.6 2025 Legislation
Update
February 24, 2026 City Council
22.7 Key Housing Bills
22.8 SB 79 – Higher Density near Transit
- Housing development within ½ mile of transit
- Ministerial, by-right approval for heights up to 75 feet - additional height bonus if within 200 feet of transit stop - Takes effect on July 1, 2026
- New version of 2019’s failed SB 50 bill from Senator Wiener
22.9 AB 130 – New CEQA Exemption for Housing
- Included in the Budget Bill and effective immediately July 1, 2025 - Creates statutory CEQA exemption for infill projects
- AB 130 exemption has fewer limitations and exceptions than current infill exemption
- Makes permanent portions of the Housing Accountability Act and Housing Crisis Act of 2019
- Limits Building Code amendments through June 1, 2031
22.10 SB 131 – CEQA Reform
- Expands uses exempted under CEQA (i.e., daycare
centers and advanced manufacturing)
- CEQA exemption also for rezoning that implements the
Housing Element
- “Near-miss” provision: if a project needs further analysis on only one potential impact, the rest of the document is considered complete
22.11 Other Bills of Note
22.12 ADUs, Housing Element, etc.
- AB 1154, SB 543, and SB 462 – ADU laws that require
Zoning Ordinance amendments (2nd reading today)
- AB 893 – “Campus Development Zones” potentially
allowing for more housing near some UCs (not UCSC)
- AB 1021 – makes it easier for school districts to build housing on their land
- SB 233 and AB 1275 – longer timeline for jurisdiction to complete 7th Cycle Housing Element
22.13 2025 Legislation
Update
February 24, 2026 City Council
22.14 23.1
24.1 24.2
24.3