Pending State Housing Laws: New CEQA Exemptions and Expanded Opportunities for Streamlined Ministerial Approval

Various state housing bills are currently making their way through the California State Legislature that are expected to benefit mixed-income multifamily housing developers. The following summaries reflect the status of the pending legislation as of June 6, 2025. Future amendments are expected. Important upcoming dates in the legislative process include:

• September 12, 2025 – final date for the Legislature to pass bills.
• October 12, 2025 – final date for the Governor to sign or veto passed bills.
• January 1, 2026 – default effective date for approved bills (unless otherwise specified).

ASSEMBLY BILL 609: NEW CEQA EXEMPTION FOR QUALIFYING HOUSING DEVELOPMENT PROJECTS

AB 609 (Wicks, Alvarez, Carrillo, Flora, Quirk-Silva, Wilson, and Wiener) would create a new categorical exemption under CEQA for qualifying urban multifamily housing development projects.

Project and Project Siting Requirements

As currently proposed, AB 609 would exempt multifamily housing development projects from CEQA where all of the following requirements are met:

• The project must qualify as a “housing development project,” meaning that the project must dedicate at least two-thirds of the square footage for residential use, unless the project proposes at least 500 net new residential units and qualifies for 50% residential pursuant to Gov. Code § 65589.5(h)(2).
• The project must be consistent with the applicable general plan, zoning ordinance, and local coastal program (if applicable). If the zoning and general plan are inconsistent, the project shall be deemed consistent with both if consistent with one. The project shall be deemed consistent if there is substantial evidence to allow a reasonable person to come to that conclusion.
• The proposed residential density must be at least 50% of the minimum residential density deemed appropriate to accommodate housing for the jurisdiction, as specified in Gov. Code § 65583.2(c)(3)(B). That calculation would translate to at least 15 dwelling units per acre for a jurisdiction within a metropolitan county and 10 dwelling units per acre for a suburban jurisdiction.
• The project site must be no more than 20 acres.
• The project site must be within the boundaries of an incorporated municipality or located within an urban area, as defined by the United States Census Bureau.
• The project site must have been “previously developed with an urban use” or at least 75% of the perimeter of the site must adjoin (as defined) parcels that are developed with urban uses. The term “urban use” is defined to mean “any current or previous residential or commercial development, public institution, or public park that is surrounded by other urban uses, parking lot or structure, transit or transportation passenger facility, or retail use, or any combination of those uses.”
• If the project site is “not developed with urban uses” (defined above), it must not contain tribal cultural resources (found pursuant to a tribal consultation described in Public Resources Code § 21080.3.1) that would be affected by the project unless potential impacts would be mitigated, as specified.
• The project site must meet all of the SB 35 siting criteria under Gov. Code § 65913.4(a)(6). Recall that SB 35 siting criteria prohibit projects within environmentally sensitive areas, including certain coastal zone areas, habitat for protected species, wetland, very high fire hazard severity zone, hazardous waste site, delineated earthquake fault zone, special flood hazard area, regulatory floodway, land dedicated for conservation in an adopted natural community conservation plan, or conservation easement (as defined and specified and subject to certain exceptions).
• The project must not require the demolition of a historic structure that was placed on a national, state, or local historic register.
• A Phase I Environmental Assessment (ESA) must be conducted for the project site (as a condition of project approval), and if a recognized environmental condition is found, specified requirements must be met.
• For any housing developed within 500 feet of a freeway: (i) the building must have a centralized heating, ventilation, and air-conditioning system and the outdoor intakes for that system cannot face the freeway; (ii) the building must provide air filtration media for outside and return air that provide a minimum efficiency reporting value of 16, which must be replaced as specified; and (iii) the building must not have any balconies facing the freeway.

IMPLICATIONS

AB 609 would provide a useful alternative to the Class 32 urban infill exemption for multifamily housing development projects, and would be particularly relevant for larger projects not eligible for the Class 32 exemption (i.e., over five acres). AB 609 should also expedite the processing of categorical exemptions for urban infill housing development projects (as compared to the Class 32 exemption) because AB 609 would not require an analysis of potential impacts related to traffic, noise, air quality, or water quality. Rather, AB 609 projects would be required to meet stringent SB 35 siting criteria (as specified above). AB 609 also specifies that housing development projects falling under this new categorical exemption would be eligible for the benefits set forth under the State Density Bonus Law.

AB 609 was passed by the Assembly on May 19, 2025, and has been ordered to the Senate.

SENATE BILL 79: NEW CEQA EXEMPTION FOR PROJECTS ON TRANSIT AGENCY LAND

As currently proposed, SB 79 (Wiener) would create a new CEQA exemption for a private project or public project (i.e., a project ultimately operated by a public agency) that proposes residential, commercial or mixed-uses and meets the following requirements:

• The project must either be: (i) located “entirely or principally” on land owned by a public transit agency; or (ii) at least partially encumbered by an existing operating easement in favor of a public transit agency, in which case all parties must consent to the application (as specified) and the easement must either authorize the project or be terminated prior to the commencement of construction.
• The project must include at least one of the following:
  • A project component identified in Public Resources Code § 21080.25(b)(1)-(5) or (7). This includes pedestrian and bicycle facilities; wayfinding projects; transit prioritization projects (as defined); new high-occupancy vehicle lanes, bus-only lanes, or part-time transit lanes; a public project within the boundaries of an urbanized area or urban cluster for bus rapid transit, bus, or light rail service; and a public project to construct or maintain infrastructure or facilities for powering zero-emission public transit buses, trains, or ferries (as each is specified).
  • A public project for passenger rail service facilities (other than light rail service), including the construction, reconfiguration, or rehabilitation of stations, terminals, rails, platforms or existing operations facilities, which will be used exclusively by zero-emissions or electric trains.
  • An agreement between the project applicant and public transit agency to finance the transit capital infrastructure, transit maintenance, or transit operations, including through a proposed public financing district, community financing district, or tax increment generated by the project.

If the project requires the construction of new passenger rail storage and maintenance facilities at an offsite location distinct from the principal project site, the new CEQA exemption would not apply to that component of the project.

SB 79 was passed by the Senate on June 3, 2025, and has been ordered to the Assembly. Please see our separate article titled “Pending State Housing Law: High-Density Transit-Oriented Development Projects” for more information about the other amendments proposed under SB 79.

SENATE BILL 607: CEQA REFORM

SB 607 (Wiener, Wicks, and Ahrens) was ordered to the inactive file at the request of Senator Wiener on June 5, 2025. The bill was gutted by the Senate Appropriations Committee and replaced with placeholder language for continued negotiations after backlash from environmental justice and conservation organizations and labor unions, notwithstanding Governor Newsom’s declared support for the bill. SB 607 now provides that the Legislature “intends to enact legislation as part of the 2025 state budget process that expedites projects such as those that provide housing, clean energy jobs, and critical transportation and lead to economic development for hardworking California families” to “ensure that critical projects are not delayed or impeded by the numerous outdated requirements in the California Environmental Quality Act, without compromising environmental protections.”

As previously proposed, SB 607 would have amended CEQA in several significant ways. The proposed amendments to render the “unusual circumstances” exception inapplicable to the Class 32 urban infill exemption and to revise the standard of review to be more deferential to the local agency on its decision to adopt a Mitigated Negative Declaration or Negative Declaration would have created greater legal certainty and helped expedite CEQA review. Under current law, it is not uncommon for a lead agency to prepare an EIR for legal defensibility purposes even if the project would not result in any significant unavoidable impacts. Limiting the scope of CEQA review for a project that narrowly misses qualifying for a statutory or categorical exemption would have served a similar purpose.

SB 607 would have also expanded the applicability of the Class 32 exemptions pursuant to mapped urban infill sites. The objective and measurable “safe harbor” thresholds for significant traffic, noise, air quality, and water quality impacts would have also expanded the applicability and defensibility of the Class 32 exemptions.

SENATE BILL 677: AMENDMENTS TO EXISTING LAWS: SB 9 AND SB 35/SB 423

SB 677 (Wiener and Wicks) failed to advance by a vote of 4 to 3 at the Senate Housing Committee meeting on April 22, 2025, but reconsideration was granted. SB 677 would have amended SB 35/SB 423 and SB 9 in significant ways to expand opportunities for the streamlined ministerial approval of qualifying housing development projects.

For example, the bill would have required more frequent Regional Housing Needs Allocation (RHNA) progress reporting and would have reduced the current 50% project affordability requirement (where applicable) to 20%, which would have expanded opportunities for SB 35/SB 423 projects pursuant to the most recent (and forthcoming) HCD statewide RHNA compliance determinations.

It is not uncommon for a housing development project to be disqualified from SB 35/SB 423 due to required compliance with SB 35 siting criteria. SB 677 would have shifted the burden of proof to the local agency, which would have been required to demonstrate with a preponderance of the evidence that the project does not qualify with SB 35 siting criteria, which would have created a high threshold for the local agency.

The proposed exception to the housing demolition and alteration prohibitions under SB 9 and SB 35/SB 423 in the event of involuntary damage or destruction by “an earthquake, other catastrophic event, or the public enemy” would have also been an important change to accommodate redevelopment after natural disasters and other destructive events.

ASSEMBLY BILL 1206: HOUSING PROJECTS UTILIZING PRE-APPROVED PLANS

AB 1206 (Harabedian and Haney) would provide for the streamlined ministerial (i.e., no CEQA) approval of qualifying housing projects. AB 1206 would require local agencies to develop a program for the preapproval of single-family and multifamily housing plans by July 1, 2026. The local agency would thereafter be required to approve a qualifying project within 30 days of receipt of a “completed” application without discretionary review.

As currently proposed, the following requirements would need to be met to qualify under AB 1206:

• The project cannot propose more than 10 dwelling units.
• The project must use a plan that has been preapproved by the local agency within the then-current triennial California Building Standards Code rulemaking cycle.
• The project site must “meet the soil conditions, topography, flood zone, zoning regulations, and design review standards for which the preapproved plan was designed.”

Local agencies would be authorized to voluntarily accept additional plans at higher densities in additional zoning districts into the pre-approved housing plan program.

AB 1206 was passed by the Assembly on May 8, 2025, and has been ordered to the Senate.

ASSEMBLY BILL 507: ADAPTIVE REUSE PROJECTS

AB 507 (Haney and Stefani) would provide for streamlined ministerial (i.e., no CEQA) approval of qualifying projects that propose to adapt nonresidential buildings for residential or mixed uses. The residential component of a qualifying adaptive reuse project would be deemed a use “by right” regardless of existing zoning.

Adaptive Reuse Project Requirements

As currently proposed, the following requirements must be met for a project to qualify as an “adaptive reuse project” under AB 507:

Threshold Requirements

• The project must involve “the retrofitting and repurposing of an existing building to create new residential or mixed uses including office conversion projects.”
• At least 50% of the square footage (excluding underground space) must be designated for residential uses. Mixed-use projects would be permitted, but any nonresidential use must be “consistent with the zoning or continuation of an existing zoning nonconforming use.”
• If the existing building proposed for conversion is more than 50 years old, specified requirements must be met.
• The existing building cannot be an industrial building unless the building is no longer economically viable for industrial use. Any proposed nonresidential use cannot be industrial.
• The existing building cannot be a tourist hotel unless the hotel use has been discontinued for at least five years. Any proposed tourist hotel use would be subject to the existing approval process required by the local agency (e.g., conditional use authorization), which could separately trigger CEQA review.
• Subject to multiple specified siting requirements, an adaptive reuse project could include the development of new residential or mixed-use structures on undeveloped and parking areas on the same parcel as, or on an adjacent parcel to, the building proposed for conversion. Notably, the developer must comply with specified labor requirements, including payment of prevailing wages, for any adjacent new construction (as specified).

Site Requirements

As currently proposed, AB 507 provides that:

• The project site cannot exceed 20 acres.
• The project site must be within a city that has an urbanized area (as defined) within its boundaries, or within an urbanized area of a county.
• At least 75% of the site perimeter must adjoin (as defined) parcels that are developed with urban uses (not defined in AB 507 but separately defined in AB 2011).
• A Phase I Environmental Site Assessment (ESA) must be conducted for the project site, and if a recognized environmental condition is found, specified requirements must be met.
• The project cannot violate the terms of any conservation easement applicable to the project site.

Affordability Requirements

As currently proposed, AB 507 provides that:

• For rental housing, either: (i) 8% of the units must be designated for very low-income households and 5% of the units must be designated for extremely low-income households; or (ii) 15% of the units must be designated for lower-income households. The units must be affordable for a period of 55 years.
• For owner-occupied housing, either: (i) 30% of the units must be designated for moderate-income households; or (ii) 15% of the units must be designated for lower-income households. The units must be affordable for a period of 45 years.
• Where different local affordability requirements apply, the project must include the higher percentage requirement and the lowest income target, unless local requirements require greater than 15% lower-income units (only), in which case other specified requirements apply.
• Affordable units must be distributed evenly throughout the project and must be comparable to market rate units in bedroom and bathroom count and type and quality of appliances, fixtures, and finishes.

Project Review and Approval

As currently proposed, AB 507 provides that:

• Once the project is determined by the local planning director (or equivalent) to be consistent with AB 507 requirements, the local agency must approve the project within 60 or 90 days, depending on whether the project proposes more than 150 housing units. The consistency determination must be based on whether there is “substantial evidence that would allow a reasonable person to conclude that the project is consistent with the objective planning standards.” If the local agency fails to make a timely consistency determination, the project shall be deemed consistent as a matter of law.
• Any subdivision application associated with the project must be approved on the same timeline and would also be exempt from CEQA.
• The local agency may require the project to comply with the objective planning standards set forth in a local adaptive reuse ordinance adopted pursuant to AB 507 (as specified). However, the local agency cannot require studies, information, or materials that are irrelevant to determining the project’s consistency with applicable objective planning standards or evidence of consistency with standards for post-entitlement permits prior to project approval.
• Any required design review must be objective and strictly focused on assessing compliance with AB 507 criteria.
• If an existing building proposed for conversion does not have existing onsite parking, parking cannot be required for that portion of the project, except to comply with applicable bicycle, electric vehicle, and disability parking requirements. Parking may be required for new construction (where applicable) under specified circumstances (but see the reduced parking requirements under the State Density Bonus Law and Gov. Code § 65863.2).
• The project will be eligible for the benefits under the State Density Bonus Law, meaning that a density bonus, incentives/concessions, and/or waivers or reductions in local development standards may be requested. AB 507 specifies that the threshold affordability requirements for an adaptive reuse project (see above) would only apply to the base density.
• The project may include rooftop structures that exceed any applicable height limit by one story, if the rooftop is used for shared amenities or equipment (e.g., exercise facilities). A density bonus waiver or incentive/concession cannot be used to circumvent this limitation.
• An existing building to be adapted shall be exempt from all impact fees that are not reasonably related to the impacts resulting from the change from nonresidential to residential or mixed use. Fees charged must be roughly proportional to the difference in impacts caused by the change of use. This exemption would not apply to any new construction.
• The local agency cannot require alteration of an existing building envelope, unless required by any applicable building code.
• The local agency cannot adopt or impose any requirement, including but not limited to increased fees or inclusionary housing requirements, that would apply partially or solely on the basis that the project is an adaptive reuse project.
• The local agency must issue any subsequent permit (i.e., grading, demolition, encroachment, building permit, final map) without imposing additional procedural requirements and without unreasonable delay.

Implications

As detailed in our prior legal alert, a substantially similar adaptive reuse bill, AB 3068, was proposed during the previous legislative cycle. However, that bill was ultimately vetoed by the Governor on the basis that certain provisions regarding labor standards lacked clarity or were written too broadly. The primary difference between AB 507 and AB 3068 is that labor requirements have been removed, except for new construction (where applicable). The absence of labor requirements would make an adaptive reuse project more financially feasible.

As currently proposed, AB 507 would also authorize local agencies to establish an adaptive reuse incentive program, whereby specified funds would be set aside to subsidize affordable housing units in qualifying adaptive reuse projects up to 30 years. Local incentive programs would help offset the cost of adaptive reuse projects.

AB 507 was passed by the Assembly on May 23, 2025, and has been ordered to the Senate.

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