It’s a Wrap: California Legislative Session Ends with Significant Wins Despite a Tough Cycle

The California Legislature adjourned on September 13, sending bills to Governor Newsom for consideration. This ends the first year of the two-year session, during which more than 2,700 bills were introduced. Despite an unusual legislative cycle with many policy bills attached to the state budget process and an overall budget that slashed significant funding for housing priorities, NPH and our members and partners enjoyed some important victories:

• The reversal of some budget cuts to vital programs for affordable housing, including the state’s Low-Income Housing Tax Credit (LIHTC) and the Multifamily Housing Program (MHP)
• The creation of the brand-new California Housing and Homelessness Agency, which will help streamline our state’s housing finance system 
• The reauthorization of Cap-and-Trade, which allocates as much as $800 million to the Affordable Housing and Sustainable Communities (AHSC) Program annually, preserving California’s largest source of stable, long-term funding for affordable housing

Details on these victories and other key takeaways from the session are highlighted below.

Getting Up to Speed: State Budget Recap

Key Takeaway: Despite a challenging budget year, NPH worked alongside our members, housing champions in the California Legislature, and the Governor’s Administration to protect and restore meaningful investments for affordable housing, supporting our ability to continue advancing progress on voters’ number one concern: housing and homelessness.

California’s 2025 legislative session was dominated by efforts to manage a sizable budget deficit of approximately $12 billion. In response, the initial January budget proposal contained no funding for the housing programs that our members rely on to keep serving our Bay Area communities. We are proud that our collective advocacy efforts alongside our members and partners were successful in reinstating some funding for affordable housing programs. NPH worked closely with our industry coalition to reinstate $500 million for the state’s Low Income Housing Tax Credits (LIHTC), reinstate $120 million for the Multifamily Housing Program (MHP), and increase funding for the California Department of Housing and Community Development (HCD) for enforcement.

The finalized budget, however, contained no funding for many important programs, like CalHOME, which supports the construction of new affordable homeownership units, and the Homeless Housing, Assistance, and Prevention (HHAP) program, which supports cities’ and counties’ efforts to address homelessness and housing issues. Fortunately, SB 158 has been sent to the Governor, which would reinstate $500 million in Round 7 of HHAP. We look forward to supporting affordable homeownership in future revenue efforts.

New Legislation Supports & Streamlines Affordable Housing Development Throughout California

Key Takeaway: Major housing bills included in the state budget have already been signed into law. These bills will collectively support NPH members’ ability to produce, protect, and preserve affordable housing through a combination of reforms and funds.

Bills that went through the normal legislative process are waiting for the Governor’s signature now, but bills included with the state budget are already finalized. Budget trailer bills, which typically deal with mundane implementation details of the budget, were used this year to pass significant policies supporting housing development. AB 130 and SB 131 have already been signed and gone into effect, containing provisions from:

• AB 609 (Wicks) and SB 607 (Wiener) to significantly reform how CEQA applies to building infill housing
• AB 1244 (Wicks) to create a fund to support infill housing development with Vehicle Miles Traveled fees
• AB 306 (Schultz/Rivas) to freeze residential building codes through 2031
• SB 681 (Wahab) to limit Coastal Commission appeals on housing and apply the Surplus Land Act to more school-owned lands  

The trailer bills also contain language to allow for affordable developers funded by HCD to utilize equity in their affordable housing projects to finance further investments in affordable housing projects. Finally, NPH secured some updates in the state budget to SB 4 (Wiener, 2023), our bill to streamline 100% affordable housing on land owned by faith communities and non-profit colleges, making implementation easier.

Game Changer for Affordable Housing Finance: New California Housing and Homelessness Agency

Key Takeaway: NPH rallied our members to support the creation of the brand-new California Housing and Homelessness Agency, a major step forward in streamlining housing finance in California. This new agency will be integral in supporting our members to build more affordable homes more quickly.

On a parallel path to the legislative process, the Governor proposed a reorganization plan that would separate the California Business, Consumer Services, and Housing Agency (BCSH) into two agencies: one to focus on housing and homelessness and one to focus on the remainder of the BCSH portfolio, dubbed Business and Consumer Services (BCS). 

The proposal for the new agency was reviewed by the Little Hoover Commission, where NPH members showed up to make a forceful case for the need for a new agency and its potential impact on developing affordable housing. The plan went into effect on July 5, beginning the process of reorganization. Read more about the overall plan and process via Enterprise’s  A Plan to Simplify Housing in California. NPH is eager to work with the Governor’s Administration to ensure this reorganization supports the crucial work of our developer members.

Together, We Win: Funding for the Affordable Housing and Sustainable Communities (AHSC) Program Is Defended and Increased

Key Takeaway: NPH advocated with our members and partners to successfully defend the allocation of funds for the Affordable Housing and Sustainable Communities (AHSC) Program during the Cap-and-Trade negotiations. AHSC provides California’s largest source of stable, long-term funding for affordable housing and is critical for California to achieve its housing and climate goals. Over the last eight rounds of funding, AHSC has funded over 20,000 homes and is crucial to our members’ collective work.

In the last weeks of the session, there was a renewed push to reauthorize the Cap-and-Trade Program, which was set to expire in 2030. The program is a key element of California’s strategy to reduce greenhouse gas emissions and complements other measures to ensure that California cost-effectively meets its environmental goals.

Led by Assembly Speaker Rivas, Senate Pro-Tempore McGuire, and the incoming Senate Pro-Tempore Senator Limón, the reauthorization process was uncertain until the final days of the session, when a deal was finally struck. Many proposals were being considered that would have cut the Affordable Housing and Sustainable Communities (AHSC) Program’s funding significantly. This potential loss of AHSC prompted NPH and our members and partners to take decisive action to save this critical program, which has funded over 20,000 homes and continues to be central to the collective work of affordable housing developers. NPH was very active in this reauthorization process, educating legislative offices about the AHSC’s importance for housing and its effectiveness in reducing greenhouse gas emissions; circulating proposed language; and coordinating with the offices tasked with getting the reauthorization done. 

AB 1207 (Irwin) and SB 840 (Limón) now reauthorize the Cap-and-Trade Program through 2045 and rebrand it as “Cap and Invest,” laying out a new framework for funding the many programs that receive the proceeds from the program’s auctions: 

• High-Speed Rail, a fund for the legislature’s discretionary spending, and a few other programs are the first to receive funding from the Greenhouse Gas Reduction Fund (GGRF) 
• Then, programs historically supported by the GGRF, like AHSC, receive proportional allocations of the remaining funds
• Going forward, ASHC will receive a maximum of $800 million a year, which is more than the program has ever received on an annual basis. AHSC will reach that cap handily if the Cap-and-Trade auctions continue to perform at expected levels.

“Cap-and-Invest” was signed into law on September 19 during a signing ceremony in San Francisco, and took effect immediately. We are grateful to both the NPH members who reached out to offices to express their support for the program and the strong coalition of housing and transportation organizations that supported the effort to protect successful programs like AHSC.

Looking Ahead: Governor’s Next Steps and the Statewide Affordable Housing Bond

Key Takeaway: NPH looks ahead to the 2025 bills that await the Governor’s signature and the 2026 legislative session, where we will work to bring a housing bond to the 2026 ballot. The 2026 Statewide Housing Bond remains a critical opportunity to fund affordable housing at scale throughout California. 

With the legislature adjourned, attention turns to the Governor considering 2025 bills. Some of the bills that NPH strongly supports are waiting for the final stroke of his pen, including:

• AB 699 (Stefani) would allow for clearer ballot language about bonds and tiered taxes in local jurisdictions
• AB 480 (Quirk-Silva) would give developers new flexibility to switch between allocated and certified credits
• AB 1339 (González) would commission a study on the impacts of rising insurance costs on HCD- and CDLAC/TCAC-supported affordable housing 
• SB 158 is a result of a final push during the last days of the legislative session and would reinstate $500 million for Round 7 of the Homeless Housing, Assistance, and Prevention (HHAP) Program, which was not included in the budget negotiations during the summer. 

Both AB 736 (Wicks) and SB 417 (Cabaldon) would place a $10 billion affordable housing bond on the November 2026 ballot to fund affordable housing development. These are both still in the Senate, not yet on the Governor’s desk. Historically, bond bills do not advance until the year when they would appear on the ballot, which would be 2026.

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If Passed, the Statewide Affordable Housing Bond Would:

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We look ahead to January, when the California Legislature reconvenes, to dig back into our collective advocacy toward this critical housing bond.

At a time when voters are increasingly attuned to how homelessness and housing affordability will shape California’s future, this housing bond could spur higher voter turnout and overall public support. We know that voters want action on affordable housing, and each year, our coalition of housing advocates is getting bigger and stronger. NPH stands ready to fight for the statewide housing bond in January when the legislature reconvenes. Learn more about the statewide affordable housing bond and sign your organization on to endorse.

Getting Up to Speed: State Budget Recap
New Legislation Supports & Streamlines Affordable Housing Development Throughout California
Game Changer for Affordable Housing Finance: New California Housing and Homelessness Agency
Together, We Win: Funding for the Affordable Housing and Sustainable Communities (AHSC) Program Is Defended and Increased
Looking Ahead: Governor’s Next Steps and the Statewide Affordable Housing Bond