California Just Changed
Housing Rules

California’s housing crisis just met its biggest regulatory shift in years. On July 1, Governor Gavin Newsom signed Assembly Bill 130 and Senate Bill 131, legislation that exempts urban infill housing from the state’s signature environmental law, the California Environmental Quality Act (CEQA). The move cuts years off the approval timeline and curtails lawsuits that have stalled housing across the state.

Developers can now proceed with certain projects without preparing CEQA documents, even if those projects would have triggered litigation in the past. The result? Faster timelines, lower development costs, and a race to build in California’s urban cores—including San Diego.

Summary for Investors:

• Time-to-completion improves dramatically: The average four-year approval window for housing may shrink by half or more.

• Litigation risk drops: Investors no longer face costly CEQA lawsuits on eligible urban infill projects.

• Infill locations gain value: Properties in transit-rich, zoned areas now present faster ROI potential.

• Zoning certainty matters: Projects consistent with local zoning are favored.

Summary for Developers:

• Urban housing now CEQA-exempt: No EIR, no CEQA lawsuits—for eligible mixed-use and multifamily in urban infill zones.

• Mixed-use projects benefit: Commercial + residential projects are covered, promoting density and walkability.

• Speed to entitlement accelerates: Fewer delays = more predictable project timelines and financing.

• Transit-oriented projects are prioritized: Proximity to public transit increases eligibility.

• Effective now: Projects can capitalize immediately.

Summary for Tenants and Renters:

• More apartments coming sooner: Less red tape means more units built in high-demand neighborhoods.

• Focus on urban density: Infill development adds housing without expanding urban sprawl.

• Mixed-income potential: Faster timelines may encourage more affordable and workforce housing.

• Fewer local veto points: CEQA lawsuits from neighborhood groups can no longer stall housing supply.

What AB 130 and SB 131 Actually Do

Key Provisions

• Exempt CEQA review for qualifying housing projects in urban infill areas.

• Applies to both new housing and mixed-use development in areas already zoned for such uses.

• Ends the ability for opponents to file lawsuits alleging environmental harm under CEQA for these projects.

• Applies statewide, but only to designated infill areas—typically those with existing infrastructure and proximity to transit.

• Takes effect immediately as of Monday, July 1, 2025.

What Qualifies as Urban Infill?

• Located in an urbanized area as defined by state law.

• Must be zoned residential or mixed-use and meet density minimums.

• Within half a mile of public transit in many cases.

• Cannot be on land designated as sensitive habitat or open space.

San Diego County: What Changes, Where

San Diego stands to gain significantly from this reform, with numerous neighborhoods already qualifying as urban infill. Below is a breakdown by region and submarket.

Downtown & Central San Diego

Neighborhoods: Barrio Logan, East Village, Bankers Hill, Golden Hill, Hillcrest

What to Expect: Fast-tracking of mixed-use and mid- to high-density apartment buildings—particularly those already zoned and close to transit lines. Community groups may lose influence over delaying projects via CEQA lawsuits.

Watch Areas:

Barrio Logan: Industrial-to-residential transitions near the trolley line could accelerate.

East Village: Opportunity zones and underutilized parcels may see renewed interest.

Park Boulevard corridor (Hillcrest to City College): Strong zoning, high walkability, and consistent transit service position it well for new infill housing.

East County

Neighborhoods: Santee, El Cajon, Lakeside, La Mesa

What to Expect: More moderate growth, particularly in areas already connected to trolley or bus routes. Entitlement-heavy towns like La Mesa may now see shorter timelines.

Watch Areas:

Downtown La Mesa: Proximity to the Orange Line and a walkable village core make it a standout.

El Cajon Transit District: Redevelopment opportunities around the Main Street and El Cajon Blvd corridors.

Santee near Trolley Station: Likely uptick in mid-density projects now exempt from CEQA review.

North County

Neighborhoods: Escondido, San Marcos, Vista, Oceanside (inland areas)

What to Expect: Cities with well-defined zoning and proximity to the SPRINTER rail corridor will benefit most. Others may require zoning updates to take full advantage.

Watch Areas:

San Marcos Civic Center Area: Long-term growth plans, paired with proximity to transit and CSU San Marcos, make this a key zone to watch.

Downtown Escondido: Opportunity for redevelopment of low-rise parcels into multi-family housing.

Vista Village District: Existing zoning, transit, and underutilized commercial property could converge to attract infill builders.

South County

Neighborhoods: Chula Vista, National City, San Ysidro, Imperial Beach

What to Expect: Strong growth potential near transit-rich corridors, especially where Blue Line Trolley access overlaps with residential zoning. Affordable and workforce housing developers may be first movers.

Watch Areas:

Chula Vista Bayfront and E Street Corridor: High visibility and close to both the trolley and the future Bayfront redevelopment.

National City near 8th Street Station: Zoning already supports density, and CEQA exemption removes a major roadblock.

San Ysidro Transit Center vicinity: Close to international border and strong transit hub, with aging housing stock—prime for CEQA-exempt redevelopment.

Conclusion: The Biggest CEQA Shift in Decades

For investors and developers, the message is clear: Act fast in transit-served, zoned urban areas, but navigate the post-CEQA reform landscape with precision to avoid pitfalls.

As investors and developers ourselves, we can identify key eligibility criteria for CEQA exemptions, ensuring projects meet state-defined thresholds for urban infill and transit access. Just as important is a project’s alignment with local zoning and planning frameworks—since consistency with existing general plans is now a gateway to bypassing full environmental review.

Our team offers strategic guidance through the evolving regulatory terrain, from parcel selection to entitlement strategy, helping clients and seize opportunities.

With long-term success tied closely to local implementation and evolving municipal policies, we provide not just insight, but foresight—positioning you to build smarter, faster, and with greater confidence.

Written by Aidan James