California is enacting new legislation to revitalize housing options and develop new affordable housing developments statewide following a formal signing by Gov. Gavin Newsome.
The California Legislature enacted Assembly Bill (AB) 179 earlier this month to streamline financing for affordable housing developments. California continues to face a severe housing shortage, particularly for lower-income residents, while construction costs and lengthy funding and development processes have slowed construction. The reforms primarily affect affordable housing projects seeking state financial assistance.
The law creates a more coordinated state financing system through a single application process. Before the law, affordable housing developers often had to apply separately to multiple state funding programs, a process that could add months or even years before construction began.
Another provision seeks to reduce or eliminate development impact fees that can substantially increase construction costs. The fees help pay for local infrastructure such as roads, parks and utilities but can add significantly to the cost of affordable housing projects. California has some of the nation’s highest development impact fees, and the Newsom administration estimates eliminating those fees could reduce construction costs by $60,000 to $70,000 per affordable housing unit.
State officials say California must build substantially more housing to address years of underproduction and rising housing costs. The legislation is intended to accelerate affordable housing construction by reducing financing complexity and other cost barriers.
In addition to changing how affordable housing is financed, the law strengthens accountability for homelessness funding by requiring local governments receiving funding through the Housing, Homelessness Assistance and Prevention program to demonstrate greater progress in reducing homelessness. The 2026-27 state budget increased HHAP funding to $900 million and includes an additional $700 million for affordable housing.
Photo by D Goug from Pexels
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