California Budget Bills Plug Holes to Stop Certain Projects from Sinking

Note: This is the 10th update in our series covering AB 130 and SB 131, two bills that work substantive changes to the California Environmental Quality Act (CEQA) and California housing law. Click here to learn more about other recent updates in these bills.

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Assembly Bill (AB) 130, signed into law as part of the 2025 housing budget package, continues to fill gaps in recent laws that allow for the ministerial processing of certain types of housing projects. These statewide ministerial streamlining laws require applicants to meet specific site and development criteria in exchange for streamlined processing and exemptions from CEQA.

Recognizing that these criteria may unintentionally exclude certain beneficial projects, and in response to ongoing efforts to make statewide ministerial housing laws more feasible, the legislature added key clarifications to laws promoting small-scale subdivisions with Senate Bill (SB) 684 in 2023 and SB 1123 in 2024 and affordable housing on faith-based and educational lands with SB 4 in 2023.

More Flexibility for Small-Scale Ministerial Subdivisions Projects (SB 684 / SB 1123)

In an effort to launch more small-scale starter homes, SB 684 and SB 1123 require local agencies to ministerially approve certain subdivision and housing projects of up to 10 units on parcels in multifamily and single-family zones.

AB 130 amends Government Code Section 66499.41 to:

• Unlock many new parcels for subdivision and housing development by allowing applicants to designate a “remainder parcel” that does not count toward the 10 parcel maximum, provided it does not (1) contain any new residential development and (2) is exclusively dedicated to servicing the housing project;
• Require that local agencies not count the remainder parcel toward the residential density limit (which varies by jurisdiction size);
• Restrict the separate sale, lease or financing of resulting parcels, unless that parcel contains (1) a new unit in compliance with the building code; (2) an existing, legally permitted structure; (3) internal circulation, open space or common areas for the other units; or (4) only the undeveloped remainder parcel. However, local agencies may authorize the separate, sale, lease or financing of parcels;
• Ensure applicability in charter cities, promoting consistent statewide implementation in urbanized areas and clusters (as defined by the U.S. Census Bureau); and
• Subject eligible projects to the Permit Streamlining Act deadlines (see Brownstein’s alert here for more information).

These changes aim to enable more starter home projects by opening up larger sites through the use of remainder parcels. However, the new limits on separate sale, lease and financing may pose challenges for underfunded projects.

Clean-Up for Affordable Housing on Faith and Education Lands Projects (SB 4)

SB 4 created a statewide, ministerial approval pathway for qualifying projects on any land owned by either an independent institution of higher education or a religious institution. For more details on SB 4, see Brownstein’s coverage here.

AB 130 amends SB 4 to:

• Expand the scope of childcare centers and facilities that can be included in projects by removing limits on the number of children served;
• Allow projects to qualify for ministerial processing even if they do not meet local nonresidential use parking requirements;
• Clarify that projects may exceed the local height limit by 11 feet (or one story); and
• Apply Permit Streamlining Act deadlines to SB 4 projects.

(Gov. Code Section 65913.16(h) – (k).) These changes are intended to improve the feasibility of affordable housing development on underutilized religious and higher education land.

Some may argue AB 130 only makes modest changes to SB 684, SB 1123, and SB 4, however, the legislature’s willingness to amend these statutes to address narrow issues signals an intent to help these projects navigate uncertain entitlement waters. 

To learn more about AB 130 and SB 131 and their impacts on existing housing laws, please contact the authors.

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This document is intended to provide you with general information regarding AB 130 and SB 131 in California. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed.