The newly enacted California State Budget delivers some long-overdue regulatory relief for commercial real estate. With the passage of AB 130 and SB 131, developers now have access to powerful tools to streamline housing and mixed-use development on housing rich development sites.

Key reforms include CEQA exemptions for qualifying projects, elimination of costly rezoning on commercially zoned land, and a 30-day deadline for local governments to act—cutting red tape and injecting new certainty into the entitlement process.

The 2025–26 State Budget includes another major policy win for commercial real estate: a much-needed pause on constant building code updates. Due to the efforts of CBPA and its partners, housing projects will now benefit from a six-year freeze on residential code changes, while commercial projects return to a predictable three-year update cycle.

This stability will reduce compliance costs—by an estimated 5–8% for mixed-use projects and 3–6% for commercial work—while also minimizing delays and redesigns caused by last-minute code shifts. The new rules also limit interim code updates to true emergencies, fire safety in Wildland-Urban Interface zones, or federally mandated accessibility changes. In short, this reform brings cost control, predictability, and efficiency to project planning, approvals, and leasing—delivering real value across California’s development landscape.

The 2025–26 State Budget introduces new CEQA rules under AB 130, allowing developers to mitigate transportation impacts by funding off-site improvements—like transit or affordable housing—through a new statewide vehicle miles traveled (VMT) mitigation fund. While this could lower costs for mixed-use projects near transit, the lack of finalized guidance and local agency discretion create uncertainty. Developers may see estimated cost savings of 15–20%, but could also face new fees and procedural risk until rules are finalized in 2028.

CBPA's Skyler Wonnacott provided primary opposition testimony in the Senate Public Safety Committee this week on AB 380 (Gonzalez; D-Los Angeles), a priority oppose bill for our industry. The bill would impose commercial rent control and eviction bans on leases during declared emergencies. While our industry supports the goal of preventing price gouging, the bill risks sweeping in legitimate, long-term lease agreements that have nothing to do with emergency-related abuses.

The bill passed the Senate Public Safety Committee with a vote of 4-1 and now heads to the Senate Appropriations Committee where we will continue our opposition efforts.