Last Friday, Governor Gavin Newsom signed the 2025–2026 state budget into law, following the passage of the housing-related budget trailer bill, AB/SB 131, on July 1. This year’s budget delivers significant victories for housing advocates, including key reforms to CEQA, updates to building standards, increased funding for affordable housing, and the adoption of CCAH’s sponsored bill language.
The budget’s passage followed intense negotiations between the Governor and the Legislature, driven by differing approaches to addressing the state’s $12 billion deficit. The Governor’s May Revise proposed deeper spending cuts—particularly to healthcare—while the Legislature pushed back, advocating for a more balanced approach. Ultimately, the final agreement rejected many of the proposed cuts and instead relied more heavily on reserve funds. The result: a $321.1 billion budget for the fiscal year. Summaries of the 2025 Budget Act agreement are available on the Senate and Assembly websites.
Key Highlights from the 2025–2026 State Budget:
- $500 million allocated for Low-Income Housing Tax Credits
- $120 million in funding for the Multifamily Housing Program
- Expanded CEQA exemptions for infill development in urban areas
- Moratorium on changes to certain state and local building standards from October 2025 through June 2031
- Establishment of a Vehicle Miles Traveled (VMT) mitigation program
In a major milestone for CCAH, the language from our sponsored bill—SB 686—was included in the budget via AB/SB 130, a trailer bill signed into law alongside the main budget. Rather than moving through the traditional legislative process, this bill was adopted as part of the budget package, which allows for statutory changes necessary to implement budget provisions.
SB 686: A Transformative Win for Affordable Housing
After three years of advocacy, collaboration, and dialogue with the Department of Housing and Community Development (HCD), the Legislature, and the Governor’s office, SB 686 is now law. This bill authorizes HCD to approve the early payoff of department loans—either in full or in part—and allows for the extraction of equity from developments for department-approved purposes. It also outlines eligible uses of loan and equity sources.
The inclusion of this language marks a pivotal shift in California’s housing policy. For too long, bureaucratic barriers have hindered the production of desperately needed housing. This budget signals a new direction—one that prioritizes solutions over red tape.
CCAH proudly celebrates this achievement and extends our deepest thanks to our members for your unwavering support and engagement. Together, we are making it easier to build the affordable housing California needs.