Listen: Timothy Murphy, President and Chief Executive Officer at North State Building Industry Association
The New CEQA Fix Won’t Solve Sacramento’s Housing Challenges
Timothy Murphy
President and Chief Executive Officer at North State Building Industry Association
July 18, 2025
Governor Newsom’s signatures on AB 130 and SB 131 resulted in the most sweeping California Environmental Quality Act (CEQA) overhaul in decades and are welcome news. By exempting infill housing projects of up to 20 acres from CEQA – by trimming discovery requirements for most urban lawsuits – the reforms should shave months, even years, off the approval timeline for apartment mid-rises, mixed-use corridors and adaptive-reuse projects.
The Governor’s bold move to tie CEQA reform to approval of the state budget was a brilliant maneuver.
But while increasing infill housing is necessary and welcome, we can’t stop now. The Sacramento region cannot meet its housing needs with infill alone, and without further CEQA reforms, the same delays and litigation we’ve been faced with for decades will make it impossible to build homes outside the urban core that would finally make a difference.
According to the Sacramento Area Council of Governments’ Draft 2025 Blueprint, the six-county region will need approximately 278,000 new homes over the next 25 years. Under SACOG’s most optimistic scenario, only 20% of the existing capacity in infill locations is expected to be developed by 2050. It stands to reason that much of the housing demand will likely be met by communities that are either currently growing or have potential for additional growth, such as Elk Grove, Folsom, Roseville, Rancho Cordova, and Yuba City.
While many environmentalists and urban planners firmly believe that future homes should only be built in the urban core, the realities of the marketplace must be considered. Polling by the BIA, the Placer Business Alliance and the Rancho Cordova Chamber of Commerce in 2022 showed that prospective homebuyers in our region overwhelmingly preferred to live in suburban and rural areas. While 25% of those surveyed wanted to live in high-density urban areas, 38% wanted their new home to be in the suburbs and 32% wanted to live in rural areas. Restricting the supply outside the urban core will only increase prices and cause unnecessary delays in production.
In addition, increased housing affordability is simply not possible unless the ever-escalating number of fees imposed by cities, counties and school districts is brought under control. The average amount of these fees is north of $100,000 per home. Clearly, this must be addressed as well.
And finally, the reform legislation directs the Governor’s Office of Land Use & Climate Innovation to design a fee-based “bank” for offsetting vehicle-miles-traveled impacts. Because local governments may impose uncapped fees under that formula, clean-up legislation is needed to keep fees from spiraling upward even faster.
So while we should commend the Governor and the Legislature for finally addressing CEQA abuse, we also need to be realistic. The reforms fix yesterday’s infill issues but do not solve today’s housing crisis. A second phase of legislation for genuine CEQA reform that streamlines the development of single-family detached housing is essential. And given the fierce resistance that can be expected from environmentalists and labor coalitions, it may be that this governor, or the next, will need to repeat the budget strategy.
Because until Sacramento’s housing engine—the suburban subdivision—is included in the reform conversation, the region will keep bearing the costs of litigation-induced delays: higher home prices and stalled economic growth.
We can celebrate this first step, but state and local elected officials should not kid themselves that they’ve reached the goal line.