AB 2552: California Environmental Quality Act: Transit-Oriented Development Implementation Fund: contributions.
- Session Year: 2025-2026
- House: Assembly
- Latest Version Date: 2026-04-16
Current Status:
In Progress
(2026-04-29: From committee: Do pass and re-refer to Com. on APPR. (Ayes 11. Noes 0.) (April 29). Re-referred to Com. on APPR.)
Introduced
In Committee
Awaiting First Chamber Vote
Passed First Chamber
In Committee
Awaiting Second Chamber Vote
Passed Second Chamber
Enacted
The California Environmental Quality Act (CEQA) requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have that effect. CEQA also requires a lead agency to prepare a mitigated negative declaration for a project that may have a significant effect on the environment if revisions in the project would avoid or mitigate that effect and there is no substantial evidence that the project, as revised, would have a significant effect on the environment.
If a lead agency determines that a project will have a significant transportation impact, existing law authorizes the lead agency to mitigate the transportation impact to a less than significant level by helping to fund or otherwise facilitating housing or related infrastructure projects, including by contributing an amount, to be determined pursuant to guidance issued by the Office of Land Use and Climate Innovation, to the Transit-Oriented Development Implementation Fund for purposes of the Transit-Oriented Development Implementation Program. Existing law makes those moneys available to the department, Department of Housing and Community Development, upon appropriation by the Legislature, for the purpose of awarding funding for affordable housing or related infrastructure projects under the program in accordance with specified priorities. On or before July 1, 2026, and at least once every 3 years thereafter, existing law requires the office, in consultation with other state agencies, to issue guidance related to the implementation of these provisions, as provided. Existing law makes related findings and declarations.
This bill would provide that a contribution to the fund is full and complete mitigation for that portion of the projects significant transportation impact and a legally sufficient mitigation measure under CEQA. The bill would make additional related findings and declarations. authorize a lead agency for a land use project to require an applicant to contribute to the Transit-Oriented Development Implementation Fund if certain cost conditions are met and the department and the office have validated the reductions in vehicle miles traveled that are attributable to the project, as specified.
This bill would declare that it is to take effect immediately as an urgency statute.
The California Environmental Quality Act (CEQA) requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have that effect. CEQA also requires a lead agency to prepare a mitigated negative declaration for a project that may have a significant effect on the environment if revisions in the project would avoid or mitigate that effect and there is no substantial evidence that the project, as revised, would have a significant effect on the environment.
If a lead agency determines that a project will have a significant transportation impact, existing law authorizes the lead agency to mitigate the transportation impact to a less than significant level by helping to fund or otherwise facilitating housing or related infrastructure projects, including by contributing an amount, to be determined pursuant to guidance issued by the Office of Land Use and Climate Innovation, to the Transit-Oriented Development Implementation Fund for purposes of the Transit-Oriented Development Implementation Program. Existing law makes those moneys available to the department, upon appropriation by the Legislature, for the purpose of awarding funding for affordable housing or related infrastructure projects under the program in accordance with specified priorities. On or before July 1, 2026, and at least once every 3 years thereafter, existing law requires the office, in consultation with other state agencies, to issue guidance related to the implementation of these provisions, as provided. Existing law makes related findings and declarations.
This bill would provide that a contribution to the fund is full and complete mitigation for that portion of the projects significant transportation impact and a legally sufficient mitigation measure under CEQA. The bill would make additional related findings and declarations.
This bill would declare that it is to take effect immediately as an urgency statute.
(a)For purposes of this section, all of the following definitions apply:
(1)Department means the Department of Housing and Community Development.
(2)Office means the Office of Land Use and Climate Innovation.
(3)Region means the territory of the metropolitan planning organization within which a project is located, or the territory of the regional transportation planning agency within which a project is located if the project is located outside of the boundaries of a metropolitan planning organization.
(4)Transit-Oriented Development Implementation Fund means the fund created pursuant to Section 53561 of the Health and Safety Code.
(5)Transit-Oriented Development Implementation Program means the program established pursuant to Part 13 (commencing with Section 53560) of Division 31 of the Health and Safety Code.
(b)(1)(A)(i)If a lead agency determines that a project will have a significant transportation impact pursuant to the metrics adopted pursuant to paragraph (1) of subdivision (b) of Section 21099, the lead agency may mitigate the transportation impact to a less than significant level by helping to fund or otherwise facilitating vehicle miles traveled-efficient vehicle-miles-traveled-efficient affordable housing or related infrastructure projects, provided the projects meet the requirements of mitigation measures contained within this division and Chapter 3 of Division 6 of Title 14 of the California Code of Regulations, including by contributing an amount, to be determined pursuant to the offices guidance issued pursuant to subdivision (d), to the Transit-Oriented Development Implementation Fund for purposes of the Transit-Oriented Development Implementation Program.
(ii)A contribution made pursuant to this section to the Transit-Oriented Development Implementation Fund, in the amount determined consistent with the offices guidance issued pursuant to subdivision (d), is full and complete mitigation for that portion of the projects significant transportation impact and a legally sufficient mitigation measure under this division.(B)This section shall not preclude the lead agencys use of other mitigation strategies, including, but not limited to, transportation demand management, transit improvements, active transportation infrastructure, road diets, or utilizing local or regional mitigation banks and exchanges.
(2)Moneys may be deposited into the Transit-Oriented Development Implementation Fund pursuant to paragraph (1) beginning on or before July 1, 2026, as determined by the department.
(3)Consistent with paragraph (1), a project applicant may use the Transit-Oriented Development Implementation Fund as one optional strategy to mitigate a significant transportation impact under this division. The ultimate use of this mitigation option is subject to the discretion of the lead agency that retains full authority to determine the sufficiency of any proposed mitigation consistent with this division.
(c)(1)Moneys deposited into the Transit-Oriented Development Implementation Fund pursuant to subdivision (b) shall be available to the department, upon appropriation by the Legislature, for the purpose of awarding funding for affordable housing or related infrastructure projects, including infrastructure necessary for higher density uses, under the Transit-Oriented Development Implementation Program in the following priority order:
(A)First priority to affordable housing or related infrastructure projects in location-efficient areas, as defined in the offices guidance issued pursuant to subdivision (d), within the same region as the project.
(B)Second priority to affordable housing or related infrastructure projects within the same region as the project.
(C)(i)Third priority to affordable housing or related infrastructure projects in location-efficient areas that are outside of the originating region but within an adjacent region, provided the project site is located within a defined proximity radius established by the office issued pursuant to clause (ii).
(ii)The proximity radius shall be specified in the offices guidance and may vary based on regional characteristics such as population density and travel patterns. The intent of this provision is to support projects in neighboring regions that offer similar vehicle miles traveled-reducing vehicle-miles-traveled-reducing benefits due to the projects location efficiency, including access to high-quality transit, jobs, and essential services.
(2)Affordable housing or related infrastructure projects for which funding was applied from other state funding programs, but was not awarded due to limited program resources, or was awarded but a financing gap still exists, may be considered for funding pursuant to this subdivision. The applications for funding for these affordable housing or related infrastructure projects shall be eligible for consideration through a streamlined and expedited administrative review process to accelerate delivery.
(3)For each award of funding for affordable housing or related infrastructure projects pursuant to this subdivision, the department shall, in partnership with the office, confirm the estimated reduction in vehicle miles traveled associated with the affordable housing or related infrastructure project using the methodology established in the offices guidance issued pursuant to subdivision (d).
(4)A lead agency for a land use project may require the applicant to contribute to the Transit-Oriented Development Implementation Fund only if both of the following conditions are met:
(A)The cost of the vehicle-miles-traveled reductions established by the office is equal to or lesser than the cost of any other vehicle-miles-traveled mitigation measures that are required for the project by the lead agency, or, if the contribution is the only vehicle-miles-traveled mitigation measure that is required for the project by the lead agency, it is the least cost mitigation option that is feasible.
(B)The department and office have validated the reductions in vehicle miles traveled that are attributable to the project funded pursuant to this section by contributions to the Transit-Oriented Development Implementation Fund from transportation projects.
(d)On or before July 1, 2026, and at least once every three years thereafter, the office, in consultation with other state agencies, as appropriate, shall issue guidance related to the implementation of this section. This guidance shall include all of the following:
(1)A methodology for determining the amounts that are required to be contributed to the Transit-Oriented Development Implementation Fund pursuant to subdivision (b) to mitigate the environmental impacts associated with vehicle miles traveled.
(2)A definition of location-efficient areas that reflects a reasonable nexus between the location of the transportation impact of the project and the location of the vehicle miles traveled-efficient vehicle-miles-traveled-efficient affordable housing or related infrastructure project which shall consider the location efficient areas consistency with an adopted sustainable communities strategy pursuant to Section 65080 of the Government Code, alternative planning strategy pursuant to Section 65080 of the Government Code, or other adopted regional growth plan intended to foster efficient land use.
(3)A process for validating a projects vehicle miles traveled vehicle-miles-traveled funding contribution, which shall be designed to provide certainty to the lead agency and project applicant that the contribution satisfies applicable mitigation requirements under this division for significant transportation impacts.
(4)A methodology for estimating the anticipated reduction in vehicle miles traveled associated with affordable housing or related infrastructure projects funded pursuant to subdivision (c). This methodology may consider existing methodologies, but shall be tailored to the specific purposes and structure of this section, including accounting for relevant factors influencing vehicle miles traveled vehicle-miles-traveled reduction, including proximity to transit, job access, walkability, and the level of affordability, and the length of the affordability period, of the affordable housing or related infrastructure project.
(e)(1)(A)The initial guidance, which is required to be issued by the office on or before July 1, 2026, pursuant to subdivision (d), shall not be subject to the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(B)Before finalizing the initial guidance, the office shall provide public notice, make a draft version publicly available, and allow for a public comment period of at least 30 days. The office shall consider all comments received before issuing the final guidance.
(2)The office shall commence the regular rulemaking process for subsequent guidance on or before January 1, 2028, in compliance with the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(f)Beginning the year following the first distributions of funding pursuant to this section, the office, in consultation with the department, the Transportation Agency, and regions, shall evaluate the use of vehicle miles traveled vehicle-miles-traveled mitigation resources allocated pursuant to this section. The evaluation shall assess the distribution of funds across project types, the effectiveness of supported projects in reducing vehicle miles traveled, the affordability of the housing units produced, and other relevant metrics that reflect program performance. Based on this assessment, the department, in consultation with the office and the Transportation Agency, may revise program guidelines to enhance outcomes.
(g)This section does not prevent a local agency from charging local impact fees based on vehicle miles traveled pursuant to the Mitigation Fee Act (Chapter 5 (commencing with Section 66000), Chapter 6 (commencing with Section 66010), Chapter 7 (commencing with Section 66012), Chapter 8 (commencing with Section 66016), and Chapter 9 (commencing with Section 66020) of Division 1 of Title 7 of the Government Code).
SEC. 3.SEC. 2.This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:
The Office of Land Use and Climate Innovation is required to issue guidance for the implementation of a vehicle miles traveled vehicle-miles-traveled mitigation bank concept by July 1, 2026, and that date being the operative date of the concept, it is therefore necessary to have the relevant clarifications regarding this requirement provided by this act take immediate effect.
The Legislature finds and declares all of the following:
(a)The Legislature reaffirms that the California Environmental Quality Act (CEQA) established longstanding legal requirements for the imposition of mitigation measures on projects.
(b)Specifically, CEQA requires that mitigation measures:
(1)Be feasible, meaning capable of being accomplished in a successful manner within a reasonable timeframe, taking into account economic, environmental, legal, social, and technological factors.
(2)Be roughly proportional to the impacts of the project.
(3)Be supported by substantial evidence demonstrating a reasonable relationship, or nexus, between the mitigation and the impact it is intended to address.
(c)The Legislature further reaffirms that mitigation frameworks, including those aimed at addressing cumulative impacts such as vehicle miles traveled, must comply with these longstanding requirements that provide legal certainty, and equitable treatment of projects.
(d)Guidelines shall be developed in a manner that reflects and upholds these established principles.
(e)Providing certainty and predictability in the CEQA process is essential to advancing timely and cost-effective project delivery, while also ensuring that significant environmental impacts are identified and mitigated to the extent feasible.
(f)The mitigation option authorized by Section 21080.44 is consistent with CEQAs core purpose of reducing or avoiding significant environmental impacts whenever feasible, and that establishing a standardized, evidence-based approach to mitigation promotes transparency, accountability, and uniformity in the application of state environmental law.
(g)Project-by-project litigation challenging the legitimacy of a uniform mitigation framework undermines CEQAs efficiency and predictability, imposes unnecessary costs on public agencies and project applicants, and delays projects that provide environmental, housing, mobility, and climate benefits.
(e)(h)The Legislature further finds that existing guidance has been established in CEQA guidelines and subsequent technical advisories for addressing transportation impacts under CEQA. Impact analysis under CEQA is a dynamic process, continually informed by advancements in research, data, and practice. Currently, the Department of Transportation is developing updated methodologies for analyzing transportation impacts in rural settings, which are expected to be published on or before July 1, 2026. It is the intent of the Legislature that these ongoing efforts be integrated into relevant guidance for addressing transportation impacts that promote more effective practices statewide.
(f)(i)It is the intent of Legislature that lead agencies ensure that vehicle miles traveled mitigation is achieved through a balanced approach by ensuring a project invests in multiple types of mitigation measures when working to reduce the vehicle miles traveled impacts of a project.
(g)(j)It is the intent of the Legislature that this program serve as one optional strategy that a project applicant may use to mitigate a significant transportation impact under CEQA. The program established pursuant Section 21080.44 is intended to facilitate an existing category of mitigation, specifically, the development of vehicle miles traveled-efficient affordable housing or related infrastructure, by providing a streamlined and accessible mechanism through which applicants can contribute to eligible mitigation projects. This approach is consistent with established practices already used at the local and regional level across the state and provides project applicants an additional tool to support their mitigation efforts.
SEC. 2.Section 21080.44 of the Public Resources Code is amended to read:21080.44.(a)For purposes of this section, all of the following definitions apply:
(1)Department means the Department of Housing and Community Development.
(2)Office means the Office of Land Use and Climate Innovation.
(3)Region means the territory of the metropolitan planning organization within which a project is located, or the territory of the regional transportation planning agency within which a project is located if the project is located outside of the boundaries of a metropolitan planning organization.
(4)Transit-Oriented Development Implementation Fund means the fund created pursuant to Section 53561 of the Health and Safety Code.
(5)Transit-Oriented Development Implementation Program means the program established pursuant to Part 13 (commencing with Section 53560) of Division 31 of the Health and Safety Code.
(b)(1)(A)(i)If a lead agency determines that a project will have a significant transportation impact pursuant to the metrics adopted pursuant to paragraph (1) of subdivision (b) of Section 21099, the lead agency may mitigate the transportation impact to a less than significant level by helping to fund or otherwise facilitating vehicle miles traveled-efficient affordable housing or related infrastructure projects, provided the projects meet the requirements of mitigation measures contained within this division and Chapter 3 of Division 6 of Title 14 of the California Code of Regulations, including by contributing an amount, to be determined pursuant to the offices guidance issued pursuant to subdivision (d), to the Transit-Oriented Development Implementation Fund for purposes of the Transit-Oriented Development Implementation Program.
(ii)A contribution made pursuant to this section to the Transit-Oriented Development Implementation Fund, in the amount determined consistent with the offices guidance issued pursuant to subdivision (d), is full and complete mitigation for that portion of the projects significant transportation impact and a legally sufficient mitigation measure under this division.
(B)This section shall not preclude the lead agencys use of other mitigation strategies, including, but not limited to, transportation demand management, transit improvements, active transportation infrastructure, road diets, or utilizing local or regional mitigation banks and exchanges.
(2)Moneys may be deposited into the Transit-Oriented Development Implementation Fund pursuant to paragraph (1) beginning on or before July 1, 2026, as determined by the department.
(3)Consistent with paragraph (1), a project applicant may use the Transit-Oriented Development Implementation Fund as one optional strategy to mitigate a significant transportation impact under this division. The ultimate use of this mitigation option is subject to the discretion of the lead agency that retains full authority to determine the sufficiency of any proposed mitigation consistent with this division.
(c)(1)Moneys deposited into the Transit-Oriented Development Implementation Fund pursuant to subdivision (b) shall be available to the department, upon appropriation by the Legislature, for the purpose of awarding funding for affordable housing or related infrastructure projects, including infrastructure necessary for higher density uses, under the Transit-Oriented Development Implementation Program in the following priority order:
(A)First priority to affordable housing or related infrastructure projects in location-efficient areas, as defined in the offices guidance issued pursuant to subdivision (d), within the same region as the project.
(B)Second priority to affordable housing or related infrastructure projects within the same region as the project.
(C)(i)Third priority to affordable housing or related infrastructure projects in location-efficient areas that are outside of the originating region but within an adjacent region, provided the project site is located within a defined proximity radius established by the office issued pursuant to clause (ii).
(ii)The proximity radius shall be specified in the offices guidance and may vary based on regional characteristics such as population density and travel patterns. The intent of this provision is to support projects in neighboring regions that offer similar vehicle miles traveled-reducing benefits due to the projects location efficiency, including access to high-quality transit, jobs, and essential services.
(2)Affordable housing or related infrastructure projects for which funding was applied from other state funding programs, but was not awarded due to limited program resources, or was awarded but a financing gap still exists, may be considered for funding pursuant to this subdivision. The applications for funding for these affordable housing or related infrastructure projects shall be eligible for consideration through a streamlined and expedited administrative review process to accelerate delivery.
(3)For each award of funding for affordable housing or related infrastructure projects pursuant to this subdivision, the department shall, in partnership with the office, confirm the estimated reduction in vehicle miles traveled associated with the affordable housing or related infrastructure project using the methodology established in the offices guidance issued pursuant to subdivision (d).
(d)On or before July 1, 2026, and at least once every three years thereafter, the office, in consultation with other state agencies, as appropriate, shall issue guidance related to the implementation of this section. This guidance shall include all of the following:
(1)A methodology for determining the amounts that are required to be contributed to the Transit-Oriented Development Implementation Fund pursuant to subdivision (b) to mitigate the environmental impacts associated with vehicle miles traveled.
(2)A definition of location-efficient areas that reflects a reasonable nexus between the location of the transportation impact of the project and the location of the vehicle miles traveled-efficient affordable housing or related infrastructure project which shall consider the location efficient areas consistency with an adopted sustainable communities strategy pursuant to Section 65080 of the Government Code, alternative planning strategy pursuant to Section 65080 of the Government Code, or other adopted regional growth plan intended to foster efficient land use.
(3)A process for validating a projects vehicle miles traveled funding contribution, which shall be designed to provide certainty to the lead agency and project applicant that the contribution satisfies applicable mitigation requirements under this division for significant transportation impacts.
(4)A methodology for estimating the anticipated reduction in vehicle miles traveled associated with affordable housing or related infrastructure projects funded pursuant to subdivision (c). This methodology may consider existing methodologies, but shall be tailored to the specific purposes and structure of this section, including accounting for relevant factors influencing vehicle miles traveled reduction, including proximity to transit, job access, walkability, and the level of affordability, and the length of the affordability period, of the affordable housing or related infrastructure project.
(e)(1)(A)The initial guidance, which is required to be issued by the office on or before July 1, 2026, pursuant to subdivision (d), shall not be subject to the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(B)Before finalizing the initial guidance, the office shall provide public notice, make a draft version publicly available, and allow for a public comment period of at least 30 days. The office shall consider all comments received before issuing the final guidance.
(2)The office shall commence the regular rulemaking process for subsequent guidance on or before January 1, 2028, in compliance with the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(f)Beginning the year following the first distributions of funding pursuant to this section, the office, in consultation with the department, the Transportation Agency, and regions, shall evaluate the use of vehicle miles traveled mitigation resources allocated pursuant to this section. The evaluation shall assess the distribution of funds across project types, the effectiveness of supported projects in reducing vehicle miles traveled, the affordability of the housing units produced, and other relevant metrics that reflect program performance. Based on this assessment, the department, in consultation with the office and the Transportation Agency, may revise program guidelines to enhance outcomes.
(g)This section does not prevents prevent a local agency from charging local impact fees based on vehicle miles traveled pursuant to the Mitigation Fee Act (Chapter 5 (commencing with Section 66000), Chapter 6 (commencing with Section 66010), Chapter 7 (commencing with Section 66012), Chapter 8 (commencing with Section 66016), and Chapter 9 (commencing with Section 66020) of Division 1 of Title 7 of the Government Code).
SEC. 3.This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:
The Office of Land Use and Climate Innovation is required to issue guidance for the implementation of a vehicle miles traveled mitigation bank concept by July 1, 2026, and that date being the operative date of the concept, it is therefore necessary to have the relevant clarifications regarding this requirement provided by this act take immediate effect.
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Date
|
Status
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|---|---|
| Apr 29, 2026 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 11. Noes 0.) (April 29). Re-referred to Com. on APPR. |
| Apr 20, 2026 | Re-referred to Com. on H. & C.D. |
| Apr 16, 2026 | Read second time and amended. |
| Apr 15, 2026 | From committee: Amend, and do pass as amended and re-refer to Com. on H. & C.D. (Ayes 13. Noes 0.) (April 13). |
| Mar 16, 2026 | Referred to Coms. on NAT. RES. and H. & C.D. |
| Feb 21, 2026 | From printer. May be heard in committee March 23. |
| Feb 20, 2026 | Read first time. To print. |
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Date
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Description
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Location
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Votes
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|---|---|---|---|---|
| Apr 29, 2026 | Do pass and be re-referred to the Committee on [Appropriations] | Assembly Standing Committee on Housing and Community Development |
Passed |
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| Apr 13, 2026 | Do pass as amended and be re-referred to the Committee on [Housing and Community Development] | Assembly Standing Committee on Natural Resources |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
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Organization
|
Position
|
Date
|
|---|---|---|
| american council of engineering companies | ** Support | |
| Apartment Association of Greater Los Angeles | ** Support | |
| BOMA California | ** Support | |
| Building Industry Association of Fresno and Madera Counties | ** Support | |
| Building Industry Association of the Bay Area | ** Support | |
| Building Industry Association of Tulare/Kings County | ** Support | |
| California Apartment Association | ** Support | |
| California Association Of Realtors | ** Support | |
| California Building Industry Association (Sponsor) | ** Support | |
| California Business Properties Association | ** Support | |
| California Business Roundtable | ** Support | |
| California Chamber Of Commerce | ** Support | |
| California Council For Affordable Housing | ** Support | |
| California Hotel & Lodging Association | ** Support | |
| California Housing Partnership Corporation | ** Against | |
| Carlsbad Chamber of Commerce | ** Support | |
| Central Valley Taxpayers Association | ** Support | |
| Downtown San Diego Partnership | ** Support | |
| Enterprise Community Partners | ** Against | |
| Family Business Association of California | ** Support | |
| Home Builders Association of Kern County | ** Support | |
| Housing California | ** Against | |
| Inland Empire Economic Partnership | ** Support | |
| NAIOP of California | ** Support | |
| National Association of Royalty Owners - California | ** Support | |
| North State Building Industry Association | ** Support | |
| Orange County Business Council | ** Support | |
| Planning And Conservation League | ** Against | |
| Sacramento Metro Chamber of Commerce | ** Support | |
| San Diego Regional Chamber Of Commerce | ** Support | |
| Simi Valley Chamber of Commerce | ** Support | |
| Streets for All | ** Against | |
| The Two Hundred for Homeownership | ** Support | |
| Transform | ** Against | |
| UNITED CHAMBER ADVOCACY NETWORK UCAN | ** Support |
Date of Hearing: April 29, 2026
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Matt Haney, Chair
ABPCA Bill Id:AB 2552 (
Author:Ávila Farías) – As Amended Ver:April 16, 2026
SUBJECT: California Environmental Quality Act: Transit-Oriented Development Implementation Fund: contributions
SUMMARY: Adds new conditions and requirements for contributions to the Transit-Oriented Development Implementation Fund (TDIF), the statewide vehicle miles traveled (VMT) mitigation bank for affordable housing created by AB 130 (Committee on Budget), Chapter 22, Statutes of 2025. Specifically, this bill:
- Provides that a lead agency for a land use project may only require the applicant to contribute to the TDIF if both of the following conditions are met:
- The cost of the VMT reductions established by the Office of Land Use and Climate Innovation (LCI) is equal to or lesser than the cost of any other VMT mitigation measures that are required for the project by the lead agency, or, if the contribution is the only VMT mitigation measure that is required for the project by the lead agency, it is the least cost mitigation option that is feasible; and
- The Department of Housing and Community Development (HCD) and LCI have validated the reductions in VMT that are attributable to the project funded pursuant to this section by contributions to the TDIF from transportation projects.
- Includes an urgency clause.
EXISTING LAW:
- Requires lead agencies with the principal responsibility for carrying out or approving a proposed discretionary project to prepare a negative declaration (ND), mitigated negative declaration (MND), or environmental impact report (EIR) for this action, unless the project is exempt from the California Environmental Quality Act (CEQA). (Public Resources Code (PRC) 21000 et seq.)
- Requires LCI to prepare and develop proposed guidelines for the implementation of CEQA by public agencies. Requires the guidelines to include objectives and criteria for the orderly evaluation of projects and the preparation of EIRs and NDs. Also requires the guidelines to include criteria for public agencies to follow in determining whether a proposed project may have a significant effect on the environment. (PRC 21083)
- Requires LCI to prepare proposed revisions to the CEQA Guidelines establishing criteria for determining the significance of transportation impacts within transit priority areas (TPAs). Requires the criteria to promote the reduction of greenhouse gas (GHG) emissions, the development of multimodal transportation networks, and a diversity of land uses. (PRC 21099)
- Authorizes LCI to adopt CEQA Guidelines establishing alternative metrics to traffic “levels of service” (LOS) for transportation impacts outside of TPAs. Authorizes the alternative metrics to include the retention of LOS, where appropriate and as determined by LCI. Pursuant to this authority, LCI (under its former name: Office of Planning and Research) revised the CEQA Guidelines to identify vehicle miles traveled (VMT) as the most appropriate metric to evaluate a project’s transportation impacts and to apply VMT statewide. (PRC 21099)
- Establishes the Transit-Oriented Development Implementation Program (TOD Program), to be administered by HCD, to provide local assistance to cities, counties, cities and counties, transit agencies, eligible tribal applicants, and developers for the purpose of developing higher density VMT-efficient affordable housing or related infrastructure, including projects within close proximity to transit stations or projects that could increase public transit ridership. The TOD Program provides gap financing for rental housing developments near transit that include affordable units as well as necessary infrastructure improvements. (Health and Safety Code 53560)
- Establishes an in-lieu fee mechanism for VMT mitigation through the TDIF, as follows:
- Allows a project, which is under the jurisdiction of a regional transportation planning agency (RTPA) and has a VMT mitigation requirement pursuant to CEQA, to satisfy its VMT mitigation requirement by contributing an unspecified amount per VMT to the TDIF, which would then be available, upon appropriation, to HCD to provide financing for transit-oriented affordable housing developments or related infrastructure projects through the TOD Program.
- Provides that the TDIF in 6) does not preclude the lead agency’s use of other mitigation strategies, including, but not limited to, transportation demand management (TDM), transit improvements, active transportation infrastructure, road diets, or utilizing local or regional mitigation banks or exchanges.
- Allows money to be deposited into the TDIF beginning on, or before, July 1, 2026, as determined by HCD;
- Makes money deposited into the TDIF available to HCD, upon appropriation, for purposes of awarding funding to affordable housing or related infrastructure, including infrastructure necessary for higher density uses under the TOD Program, in the following order:
- First priority to affordable housing or related infrastructure projects in location-efficient areas, as defined in LCI’s guidance, within the same region as the project;
- Second priority to affordable housing or related infrastructure projects within the same region as the project; and
- Third priority to affordable housing or related infrastructure projects in location-efficient areas that are outside of the originating region but within an adjacent region, provided the project site is located within a defined proximity radius established by LCI.
- Requires LCI, in consultation with other state agencies, to issue guidance related to implementation of the TDIF on or before July 1, 2026, and to update the guidance at least once every three years after. The guidance must include:
- A methodology for determining the amounts that are required to be contributed to the TDIF to mitigate the environmental impacts associated with VMT;
- A definition of location-efficient areas that reflects a reasonable nexus between the location of the transportation impact of the project and the location of the VMT-efficient affordable housing or related infrastructure project;
- A process for validating a project’s VMT funding contribution, which shall be designed to provide certainty to the lead agency and project applicant that the contribution satisfies applicable mitigation requirements for significant transportation impacts; and
- A methodology for estimating the anticipated reduction in VMT associated with affordable housing or related infrastructure projects funded pursuant to subdivision.
- Exempts the drafting of this initial guidance in e) from the Administrative Procedures Act (APA), but requires LCI to provide public notice of the draft, make the draft available for public comment, and consider all comments received during the public comment period before issuing final guidance. Requires LCI to commence the rulemaking process under the APA on or before January 1, 2028.
- Requires LCI, in consultation with the department, the Transportation Agency, and regions, to evaluate the use of VMT mitigation resources allocated through the TDIF. Requires the evaluation to assess the distribution of funds across project types, the effectiveness of supported projects in reducing VMT, the affordability of the housing units produced, and other relevant metrics that reflect program performance. Based on this assessment, HCD, in consultation with the office and the Transportation Agency, may revise TOD Program guidelines to enhance outcomes.
- Provides that the TDIF does not prevent a local agency from charging local impact fees based on VMT pursuant to the Mitigation Fee Act. (PRC 21080.43 and 21080.44)
FISCAL EFFECT: Unknown.
COMMENTS:
Author’s Statement: According to the author, “Last year’s budget trailer bill created a promising option under CEQA to mitigate a project’s effect on Vehicle Miles Traveled, namely the ability to meet some or all of this obligation by contributing funds to HCD’s Transit Oriented Development program to build affordable housing near transit. However, homebuilders are concerned that a lead agency could require a homebuilder to make a contribution to the program even if this form of mitigation were significantly more expensive than other mitigation options or created legal risk. AB 2552 seeks to prevent this possibility by providing that a lead agency may only require use of this mitigation option if the cost is less than or equal to other mitigation options, thereby ensuring that we are reducing the cost of new housing.”
California’s Statewide Housing Plan: In 2022, HCD released its most recent update to the statutorily required Statewide Housing Plan (Plan). The Plan “lays out a vision to ensure every Californian has a safe, stable, and affordable home.”[1] As part of that vision, HCD puts forward a statewide objective of Producing More Affordable and Climate Smart Housing. HCD writes:
“We aim to increase the supply of housing at all affordability levels throughout the state and target production in the places where people need it the most, without displacing existing residents. This objective seeks to facilitate a greater diversity of housing models and typologies, outside of the status quo, to meet California’s pressing and diverse housing needs. We must produce new housing in areas with high access to opportunities and services without displacing existing residents, mitigate the risk of climate change while developing new housing units, provide housing units that are affordable to all Californians, lower housing development costs, and continue to enforce existing housing laws to achieve results.”[2]
Two of HCD’s recommended actions associated with this objective are to:
- Encourage greater diversity of housing types in all neighborhoods; and
- Encourage new housing development in existing communities to reduce VMT and mitigate climate change while simultaneously addressing housing need.
Cost of Building Housing: It is expensive to build housing in California. The UC Berkeley Terner Center finds that challenging macroeconomic conditions, including inflation and high interest rates, affect the availability and cost of capital, resulting in rising costs for labor and materials.[3] Furthermore, workforce and supply shortages have exacerbated the already high price of construction in California, and economic uncertainty has made equity partners and lenders apprehensive about financing new housing development proposals.[4] These conditions are particularly acute during the early stages of development, when projects rely on higher-risk, higher-cost forms of capital, such as predevelopment and construction financing, which are often the most difficult to secure.
A 2025 study found that California is the most expensive state for multifamily housing production, in part due to the long timeline it takes to go from an application to an approved project.[5] This report found that longer production timelines are strongly associated with higher costs, and the time to bring a project to completion in California is more than 22 months longer than the average time required in Texas.[6] These cost and timing challenges can make it difficult to build housing at all in the current environment, and are especially pronounced for high-rise and other complex urban developments, which carry higher construction costs, longer timelines, and greater exposure to financing risk. More broadly, when development projects are perceived as too costly or risky, capital may be redirected to lower-risk investments or to other states with more predictable timelines and lower development costs, further constraining housing production in California.
SB 743 and VMT: CEQA requires cities, counties, and other public agencies to evaluate whether a project may have a significant impact on the environment, including transportation-related impacts. Historically, these impacts were assessed by examining whether a project would cause automobile delay at intersections or congestion on nearby roadway segments, typically measured using Level of Service (LOS).
SB 743 (Steinberg), Chapter 386, Statutes of 2013, directed changes to the CEQA Guidelines for evaluating transportation impacts, shifting CEQA analysis away from automobile delay or LOS and toward VMT. CEQA Guidelines section 15064.3 provides that VMT is generally the most appropriate measure of transportation impacts and defines VMT as the amount and distance of automobile travel attributable to a project. Beginning July 1, 2020, the VMT provisions applied statewide, and automobile delay, as measured solely by LOS or similar congestion metrics, generally no longer constitutes a significant environmental impact under CEQA. A project that exceeds an applicable VMT threshold may have a significant transportation impact, and significant impacts must be mitigated or avoided when feasible. Before the statewide implementation date, local agencies had the option to begin using VMT, and LCI noted that cities representing nearly one-fifth of California’s population had already done so. VMT mitigation may include a range of strategies, including transit passes, bicycle and pedestrian infrastructure, and transportation demand management programs. In some jurisdictions, developers may also have the option to pay into a VMT mitigation fee or program as a mitigation strategy.
Some Councils of Governments (COGs) have adopted, or are developing, regional programs to address VMT impacts and invest in infill housing development. For example, the Western Riverside Council of Governments has explored a program in partnership with local agencies, including the housing authority, to fund VMT-reducing activities. According to materials presented in a California Association COG webinar, these programs may treat certain affordable housing investments, particularly those located in lower-VMT areas, as a form of VMT mitigation, in some cases comparing their effectiveness or cost-efficiency to other strategies such as transit subsidies or bicycle infrastructure. The Housing Authority of the County of Riverside has identified multiple affordable housing projects with partial funding that could potentially be advanced with additional gap financing, and VMT mitigation funds may be one potential source of funding for such projects.
TOD Affordable Housing Development and VMT: A 2014 analysis of data from Caltrans' California Household Travel Survey (CHTS) by Transform and the California Housing Partnership provides empirical support for the nexus between TOD affordable housing and VMT reduction.[7] The analysis identified over 36,000 surveyed households and divided them into five income groups across three location types defined by proximity to transit. The study found that lower-income households drive 25–30% fewer miles when living within one-half mile of transit compared to those in non-TOD areas, and when living within one-quarter mile of frequent transit (HCD's definition of TOD), they drove nearly 50% less. Higher-income households drive more than twice as many miles and own more than twice as many vehicles as extremely low-income households living within one-quarter mile of frequent transit, indicating that affordable housing near transit produces greater per-unit VMT reductions than market-rate TOD. Within HCD-defined TOD areas, all income groups own cars at a rate at least 30% lower than in non-TOD areas, with extremely low-income households averaging only 0.70 vehicles per household compared to 1.65 for higher-income households.
The VMT reductions associated with affordable housing TOD translate into long-term greenhouse gas benefits. The average difference in daily VMT for extremely low-income and very low-income households in HCD-defined TOD areas versus non-TOD areas is 19.25 VMT per day, or 7,026 VMT annually. While this study is now a decade old and vehicle ownership patterns, transit service levels, and travel behavior continue to evolve, it provides a window into the mechanisms by which affordable TOD can reduce VMT and GHG emissions.
TOD Program and TDIF: Existing law establishes the TOD Program, administered by HCD, to support the development of higher-density, VMT-efficient affordable housing and related infrastructure near transit. The program provides gap financing for affordable housing developments located in proximity to transit, as well as grants for the infrastructure necessary to support those developments, including improvements that enhance transit access and increase transit ridership. Eligible applicants include local governments, transit agencies, developers, and tribal entities.
Recent statutory changes enacted by AB 130 (Committee on Budget), Chapter 22, Statutes of 2025, expand the role of the TDIF by integrating it into CEQA VMT mitigation. Under this framework, if a lead agency determines that a project will have a significant transportation impact, the lead agency may mitigate the transportation impact to a less than significant level by helping to fund or otherwise facilitating VMT-efficient affordable housing or related infrastructure projects. Functionally, this means project proponents may be required, by the lead agency, to pay into the TDIF as a VMT mitigation measure. The statute does not preclude the lead agency from using or requiring other VMT mitigation strategies, including transportation demand management, transit improvements, active transportation infrastructure, road diets, or local or regional mitigation banks and exchanges. AB 130 just added the TDIF as an option for VMT mitigation.
Moneys may be deposited into the TDIF beginning on or before July 1, 2026, and are available, upon appropriation by the Legislature, to HCD for the purpose of funding affordable housing or related infrastructure projects through the TOD Program. AB 130 establishes a priority order for the use of these funds, prioritizing projects in location-efficient areas within the same region as the impacting project, followed by other projects within the same region, and then certain location-efficient projects in adjacent regions. LCI is required to issue guidance establishing, among other things, the methodology for determining TDIF contribution amounts, defining location-efficient areas, validating mitigation contributions, and estimating VMT reductions associated with funded projects. The concept of this TDIF structure was originally proposed as a standalone policy in AB 1244 (Wicks, 2025) and was later incorporated into AB 130 in an amended form.
As reflected in HCD’s 2026 draft guidelines, released on April 8, 2026, TOD Program funding is awarded to “mitigating projects” that must include an affordable housing component and may include related infrastructure improvements.[8] Eligible projects must generally be located in transit-accessible or “location-efficient” areas, meet minimum density and affordability requirements, and demonstrate that the project is financially infeasible without program assistance. Funding is typically structured as low- or no-interest loans for housing developments and grants for infrastructure, with long-term affordability restrictions (generally 55 years) imposed on assisted units.
LCI released its draft TDIF guidance for public comment in April 2026, providing the proposed framework for implementing AB 130’s TDIF.[9] The draft guidance outlines the methodology required by statute, including how TDIF contribution amounts would be calculated, how “location-efficient areas” would be defined, and how VMT reductions associated with funded projects would be estimated and validated. It also describes the overall program structure, including the process by which a lead agency determines a significant transportation impact, the “impacting project” elects to use the program subject to lead agency approval, a contribution is calculated and deposited into the TDIF, and HCD subsequently awards those funds to qualifying affordable housing or related infrastructure projects. A December 2025 announcement from LCI provided that the rollout of these measures would be implemented in phases, beginning with publicly funded projects.[10]
TDIF as VMT Mitigation Reactions: The enactment of the TDIF as a VMT-mitigation option through AB 130 faced vocal pushback, particularly from segments of the development community concerned about cost, feasibility, and legal uncertainty. During budget negotiations, developer groups, including the California Building Industry Association, opposed the proposal, warning that a VMT mitigation fee imposed at the discretion of local agencies could add tens of thousands of dollars to the cost of new homes. These concerns appear to be especially acute among greenfield and master-planned community developers, whose developments are more likely to generate significant VMT impacts and may have fewer feasible on-site mitigation options. While AB 130 does not create a new obligation to mitigate those impacts, it establishes a new, standardized pathway for doing so through contributions to the TDIF. As a result, developers have raised concerns that the policy could translate into more consistent and quantifiable mitigation costs, particularly for projects in suburban and rural areas.
At the same time, supporters (including environmental and affordable housing advocates) note that the framework could provide a more standardized, CEQA-compliant mitigation option and expand the range of feasible strategies for addressing VMT impacts, an issue that has proven legally and technically challenging for many lead agencies. Supporters also argue that the program aligns transportation mitigation with broader state climate and housing goals by directing mitigation funding toward VMT-efficient affordable housing in transit-accessible areas, rather than relying solely on traditional transportation improvements. In this view, the program allows affordable housing production itself, particularly in infill, transit-oriented locations, to function as a form of climate mitigation, while also helping to close persistent financing gaps for affordable housing developments that might not otherwise be built.
This Bill: This bill provides that a lead agency for a land use project can only require the applicant to contribute to the TDIF as a VMT mitigation measure if both of the following conditions are met:
- The cost of the VMT reductions established by LCI is equal to, or less than, the cost of any other VMT mitigation measures required for the project by the lead agency. If a contribution to the TDIF is the only VMT mitigation measure that the lead agency requires for the project, it must be the least cost mitigation option that is feasible; and
- HCD and LCI have validated VMT reductions attributable to affordable housing development or associated infrastructure funded through the TDIF, based on reductions demonstrated through contributions to the TDIF from transportation projects.
In effect, this bill conditions the use of the TDIF as a required VMT mitigation measure on both comparative cost and demonstrated VMT reduction performance, which may limit when lead agencies can rely on the fund to mitigate a land use project’s VMT impacts. This bill was substantially amended in the Committee on Natural Resources. As introduced, it would have stipulated that a contribution made pursuant to the TDIF, in the amount determined consistent with LCI’s guidance, is a full and complete mitigation for that portion of the project’s significant transportation impact and a legally sufficient mitigation measure under CEQA.
Policy Considerations: This bill raises policy considerations about how best to balance cost, flexibility, and effectiveness in mitigating the impacts of VMT under CEQA. Under existing law, lead agencies have discretion to select among a range of mitigation strategies, provided those measures are feasible, supported by substantial evidence, and reasonably related to the project’s impacts. By limiting required contributions to the TDIF to circumstances where the contribution is no more expensive than other feasible mitigation measures, this bill would make comparative cost a condition for using that mitigation pathway. Supporters argue that this approach helps ensure that VMT mitigation strategies remain cost-effective and do not unnecessarily increase the cost of housing production, noting that even relatively small cost increases can affect a housing development’s financial feasibility and resulting affordability.
Opponents contend that focusing primarily on cost could limit the ability of lead agencies to select mitigation strategies that provide longer-term or more durable environmental benefits. In particular, they note that VMT-reducing affordable housing in transit-accessible locations may offer sustained reductions in vehicle travel over time, which may not be fully captured through a simple cost comparison. They also raise concerns that the bill could constrain the use of the TDIF, which was established to link CEQA mitigation with affordable housing production, and thereby reduce the program’s potential to advance both climate and housing goals.
While this bill seeks to provide greater predictability and certainty to developers, in addition to controlling construction costs, it may also impact how frequently the fund is used as a mitigation pathway relative to other strategies, which could have implications for both VMT mitigation outcomes and the availability of funding for affordable housing and related infrastructure in location-efficient areas. Proponents argue that the increased cost-certainty that this bill would provide, and the guaranteed similar, if not lower, costs to use the TDIF as a VMT mitigation measure, will make the TDIF attractive to developers. Opponents maintain that the statutory price ceiling limits the TDIF’s viability before the program has even been implemented.
More broadly, the Committee may wish to consider how this bill aligns with the state’s housing and climate policy goals. The Statewide Housing Plan identifies reducing VMT and directing new housing to existing, infill, and transit-accessible communities as a core strategy for mitigating climate change. To the extent that VMT mitigation requirements increase costs for higher-VMT, greenfield projects, they may function as a policy tool that discourages sprawl and reinforces these state objectives. By prioritizing lower-cost mitigation options, this bill could reduce those cost differentials, potentially weakening incentives to site housing in lower-VMT locations and shifting development toward areas with higher baseline vehicle miles traveled. The Committee may wish to consider these policy tradeoffs in the context of the state’s broader housing production challenges and severe housing deficit. Housing development in California remains among the most expensive in the nation, driven in part by high labor and materials costs, financing constraints, and lengthy and uncertain approval timelines. These conditions can make projects difficult to finance, particularly in the early stages, and may discourage investment in new housing construction. In this context, efforts proposed by this bill to improve cost predictability and reduce financial risk may support sustained housing production. However, they could also limit the range of mitigation strategies that local agencies are able to require, potentially reducing their flexibility to rely on the TDIF as a mitigation tool.
Lastly, this bill raises questions about the clarity of the existing requirements of LCI and HCD, and efforts currently underway by those departments, when it comes to the use of the TDIF as a VMT mitigation measure. Supporters assert that the language requiring validation of VMT reductions by the state on transportation projects before contributions are imposed will help ensure that the program is grounded in demonstrated outcomes and provides a legally defensible VMT mitigation pathway. Opponents, however, argue that similar validation and guidance requirements already exist in statute and in LCI’s current program implementation efforts,[11] and that adding additional statutory conditions may be duplicative of existing law and executive branch efforts currently underway.
Arguments in Support: The California Building Industry Association, the bill sponsor, and a broad coalition of 26 building industry associations, chambers of commerce, and other organizations write in support: “AB 2552 is intended to ensure that California’s new statewide Vehicle Miles Traveled (VMT) Mitigation Program actually helps reduce emissions without driving up the cost of new housing.
The bill would provide that a lead agency may require a housing project to use the statewide mitigation option only if that option costs no more than other available mitigation measures. It also requires the state to validate that the program is producing real VMT reductions before its use can be imposed on land use projects, helping ensure the program is grounded in demonstrated results rather than assumption alone.
That matters because even modest cost increases can put housing further out of reach for California’s working families. A $1,000 increase prices out 11,302 California households. AB 2552 is designed to prevent this new mitigation pathway from becoming an expensive mandate on housing production and instead ensure it remains a workable, cost-effective option that supports both climate goals and housing affordability.”
Arguments in Opposition: Housing California, the Planning & Conservation League, the California Housing Partnership, Enterprise Community Partners, and Transform write in opposition: “By only allowing a CEQA lead agency to require a project developer to contribute to the TDIF if it is less costly than the cost of other VMT mitigation measures, AB 2552 elevates cost as a singular threshold requirement, even though CEQA provides lead agencies flexibility to evaluate mitigation strategies based on multiple factors, including feasibility, effectiveness, durability, and proportionality - not just cost alone. That flexibility is essential, as agencies often rely on a mix of mitigation strategies, and cost cannot be meaningfully assessed without a clear basis for comparison and without being required to consider the duration of the mitigation relative to a project’s significant transportation impacts.
AB 2552 is also inconsistent with a core principle of existing mitigation practices under CEQA: that lead agencies should be able to choose the VMT mitigation strategies that best fit project and community needs (among which affordable housing often ranks high). By constraining this flexibility, AB 2552 would limit the use of a proven mitigation strategy and undermine the program’s ability to deliver affordable housing and climate benefits. By imposing a new undefined standard, the bill reduces the ability of lead agencies to select mitigation options that effectively and durably address environmental impacts.”
Related Legislation
AB 130 (Committee on Budget), Chapter 22, Statutes of 2025, expanded the role of the TDIF by integrating it into CEQA transportation mitigation.
AB 1244 (Wicks) of 2025 introduced the concept of this TDIF for VMT mitigation structure, which was later incorporated into AB 130 in an amended form.
SB 743 (Steinberg), Chapter 386, Statutes of 2013, directed changes to the CEQA Guidelines for evaluating transportation impacts, shifting CEQA analysis away from automobile delay or LOS and toward VMT.
Double-Referred: This bill was also referred to the Committee on Natural Resources, where it passed with a vote of 13-0 on April 13, 2026.
REGISTERED SUPPORT / OPPOSITION:
Support
California Building Industry Association (Sponsor)
American Council of Engineering Companies
Apartment Association of Greater Los Angeles
Boma California
Building Industry Association of Fresno and Madera Counties
Building Industry Association of the Bay Area
Building Industry Association of Tulare/kings County
California Apartment Association
California Association of Realtors
California Business Properties Association
California Business Roundtable
California Chamber of Commerce
California Council for Affordable Housing
California Hotel & Lodging Association
Carlsbad Chamber of Commerce
Central Valley Taxpayers Association
Downtown San Diego Partnership
Family Business Association of California
Home Builders Association of Kern County
Inland Empire Economic Partnership
NAIOP of California
National Association of Royalty Owners - California
North State Building Industry Association
Orange County Business Council
Sacramento Metro Chamber of Commerce
San Diego Regional Chamber of Commerce
Simi Valley Chamber of Commerce
The Two Hundred for Homeownership
United Chamber Advocacy Network Ucan
Opposition
California Housing Partnership Corporation
Enterprise Community Partners
Housing California
Planning and Conservation League
Transform
Analysis Prepared by: Dori Ganetsos / H. & C.D. / (916) 319-2085
https://storymaps.arcgis.com/stories/94729ab1648d43b1811c1698a748c136 ↑
IBID. ↑
David Garcia, Ian Carlton, Lacy Patterson, and Jacob Strawn, Making It Pencil: The Math Behind Housing Development (2023 Update), Terner Center for Housing Innovation, December 2023, https://ternercenter.berkeley.edu/research-and-policy/making-it-pencil-2023/ ↑
IBID. ↑
https://www.rand.org/pubs/research_reports/RRA3743-1.html ↑
https://www.rand.org/pubs/research_reports/RRA3743-1.html ↑
Transform and California Housing Partnership Corporation, Why Creating and Preserving Affordable Homes Near Transit Is a Highly Effective Climate Protection Strategy (May 2014) ↑
Department of Housing and Community Development, Transit-Oriented Development Program
2026 Draft Guidelines, released April 8, 2026. ↑
Office of Land Use and Climate Innovation, DRAFT AB 130 Statewide Vehicle Miles Traveled (VMT) Mitigation Program Guidance, Released April 2026. ↑
https://lci.ca.gov/news/2025/12-30.html ↑
https://lci.ca.gov/news/2025/12-30.html ↑
Date of Hearing: April 13, 2026
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Isaac G. Bryan, Chair
ABPCA Bill Id:AB 2552 (
Author:Ávila Farías) – As Introduced Ver:February 20, 2026
SUBJECT: California Environmental Quality Act: transportation impact mitigation
SUMMARY: Provides that a contribution made to the Transit-Oriented Development Implementation Fund (TOD Fund), in the amount determined consistent with the Office of Land Use and Climate Innovation (LCI) guidance, is full and complete mitigation for that portion of a project’s significant transportation impact and a legally sufficient mitigation measure under the California Environmental Quality Act (CEQA).
EXISTING LAW:
- Requires lead agencies with the principal responsibility for carrying out or approving a proposed discretionary project to prepare a negative declaration (ND), mitigated negative declaration (MND), or environmental impact report (EIR) for this action, unless the project is exempt from CEQA. (Public Resources Code (PRC) 21000 et seq.)
- Requires LCI to prepare and develop proposed guidelines for the implementation of CEQA by public agencies. Requires the guidelines to include objectives and criteria for the orderly evaluation of projects and the preparation of EIRs and NDs. Also requires the guidelines to include criteria for public agencies to follow in determining whether a proposed project may have a significant effect on the environment. (PRC 21083)
- Requires LCI to prepare proposed revisions to the CEQA Guidelines establishing criteria for determining the significance of transportation impacts within transit priority areas (TPAs). Requires the criteria to promote the reduction of greenhouse gas (GHG) emissions, the development of multimodal transportation networks, and a diversity of land uses. (PRC 21099)
- Authorizes LCI to adopt CEQA Guidelines establishing alternative metrics to traffic “levels of service” (LOS) for transportation impacts outside of TPAs. Authorizes the alternative metrics to include the retention of LOS, where appropriate and as determined by LCI. Pursuant to this authority, LCI (under its former name: Office of Planning and Research) revised the CEQA Guidelines to identify vehicle miles traveled (VMT) as the most appropriate metric to evaluate a project’s transportation impacts and to apply VMT statewide. (PRC 21099)
- Establishes the Transit-Oriented Development Implementation Program (TOD Program), to be administered by the Department of Housing and Community Development (HCD), to provide local assistance to developers for the purpose of developing higher density uses within close proximity to transit stations that will increase public transit ridership. The TOD Program provides gap financing for rental housing developments near transit that include affordable units as well as necessary infrastructure improvements. (Health and Safety Code 53560)
- Establishes an in-lieu fee mechanism for VMT mitigation – permitting a project, which is under the jurisdiction of a regional transportation planning agency (RTPA) and has a VMT mitigation requirement pursuant to CEQA, to satisfy its VMT mitigation requirement by contributing an unspecified amount per VMT to the TOD Fund, which would then be available, upon appropriation, to HCD to provide financing for transit-oriented rental housing developments. (PRC 21080.43 and 21080.44)
THIS BILL:
- Provides that a contribution made to the TOD Fund, in the amount determined consistent with the LCI guidance, is full and complete mitigation for that portion of a project’s significant transportation impact and a legally sufficient mitigation measure under CEQA.
- Makes related findings.
- Is an urgency measure.
FISCAL EFFECT: Unknown
COMMENTS:
- From LOS to VMT. Level of service (LOS) is a measure used by traffic engineers to determine the effectiveness of elements of transportation infrastructure. LOS measures the presence of traffic and how quickly cars can move through a street. LOS was used for decades to analyze transportation impacts under CEQA. However, several years ago LOS became regarded as outdated, based on concerns it neglects transit, pedestrian crossings, and bicycles. Critics contended that an over-reliance on LOS considerations by planners had led to widening intersections and roadways to move automobile traffic faster at the expense of other, less polluting modes of transportation.
In response, SB 743 (Steinberg), Chapter 386, Statutes of 2013, required LCI to update the criteria for analyzing transportation impacts of projects to replace LOS in TPAs (areas within a one-half mile of a major transit stop). According to SB 743, “(n)ew methodologies under (CEQA) are needed for evaluating transportation impacts that are better able to promote the state’s goals of reducing (GHG) emissions and traffic-related air pollution, promoting the development of multimodal transportation system, and providing clean, efficient access to destinations.” Under SB 743, the criteria were required to promote the reduction of GHG emissions, the development of multimodal transportation networks, and a diversity of land uses. For areas outside of a TPA, LCI was authorized to adopt guidelines that would establish alternative metrics to LOS. Additionally, LCI could retain LOS as a part of those alternative metrics outside of a TPA, if and where LCI deemed appropriate.
Pursuant to SB 743, LCI proposed changes to the CEQA Guidelines that identify VMT as the most appropriate metric to evaluate a project’s transportation impacts and to apply VMT statewide. VMT measures the amount and distance of automobile travel attributable to a project. The Guidelines took effect July 2020 and agencies are now required to analyze the transportation impacts of a project using a VMT metric instead of LOS.
According to LCI’s Technical Advisory on Evaluating Transportation Impacts in CEQA, published in December 2018:
The transportation sector has three major means of reducing GHG emissions: increasing vehicle efficiency, reducing fuel carbon content, and reducing the amount of vehicle travel. The California Air Resources Board (CARB) has provided a path forward for achieving these emission reductions from the transportation sector in its 2016 Mobile Source Strategy. CARB determined that it will not be possible to achieve the State’s 2030 and post-2030 emission goals without reducing VMT growth. Further, in its 2018 Progress Report on California’s Sustainable Communities and Climate Protection Act, CARB found that despite the State meetings its 2020 climate goals, ‘emissions from statewide passenger vehicle travel per capita (have been) increasing and going in the wrong direction,’ and ‘California cannot meet its (long-term) climate goals without curbing growth in single-occupancy vehicle activity.’ CARB also found that ‘(w)ith emissions from the transportation sector continuing to rise despite increases in fuel efficiency and decreases in the carbon content of fuel, California will not achieve the necessary (GHG) emissions reductions to meet mandates for 2030 and beyond without significant changes to how communities and transportation systems are planned, funded, and built.’
Thus, to achieve the state’s long-term climate goals, California needs to reduce per capita VMT. This can occur under CEQA through VMT mitigation. Half of California’s GHG emissions come from the transportation sector, therefore, reducing VMT is an effective climate strategy, which can also result in co-benefits. Furthermore, without early VMT mitigation, the state may follow a path that meets GHG targets in the early years, but finds itself poorly positioned to meet more stringent targets later.
In addition to providing many examples of VMT-reduction measures, the technical advisory further addresses VMT-reduction programs and in-lieu fees:
Notably, because VMT is largely a regional impact, regional VMT-reduction programs may be an appropriate form of mitigation. In lieu fees have been found to be valid mitigation where there is both a commitment to pay fees and evidence that mitigation will actually occur. (Save Our Peninsula Committee v. Monterey County Bd. of Supervisors (2001) 87 Cal.App.4th 99, 140-141; Gentry v. City of Murrieta (1995) 36 Cal.App.4th 1359; Kings County Farm Bureau v. City of Hanford (1990) 221 Cal.App.3d 692, 727–728.) Fee programs are particularly useful to address cumulative impacts. (CEQA Guidelines, § 15130, subd. (a)(3) [a “project’s incremental contribution is less than cumulatively considerable if the project is required to implement or fund its fair share of a mitigation measure or measures designed to alleviate the cumulative impact”].) The mitigation program must undergo CEQA evaluation, either on the program as a whole, or the in-lieu fees or other mitigation must be evaluated on a project-specific basis. (California Native Plant Society v. County of El Dorado (2009) 170 Cal.App.4th 1026.) That CEQA evaluation could be part of a larger program, such as a regional transportation plan, analyzed in a Program EIR. (CEQA Guidelines, § 15168.)
(https://lci.ca.gov/docs/20190122-743_Technical_Advisory.pdf)
In implementing the VMT mitigation program established by AB 130 last year, LCI and HCD will need to consider requirements to assure funds awarded result in VMT reductions that match the VMT impacts created by the donor projects, in both amount and quality, including duration. Additional considerations may include demonstrating that the reductions claimed are additional, and would not otherwise occur absent the HCD award, and that the reductions are not counted toward any other requirement, such as a regional Sustainable Communities Strategy. Without good accounting, contributions to this program may be considered risky by developers.
- Author’s statement:
Last year’s budget trailer bill (AB 130) created a promising option under CEQA to mitigate a project’s effect on Vehicle Miles Traveled, namely the ability to meet some or all of this obligation by contributing funds to HCD’s Transit Oriented Development program to build affordable housing near transit. However, projects that rely on this option may still face litigation arguing that the mitigation is inadequate, even when the contribution follows state guidance. AB 2552 increases legal certainty for the VMT mitigation bank concept by expressly stating that a contribution to the TOD Program, in an amount determined pursuant to state guidance, constitutes full and complete mitigation for the portion of a project’s significant transportation impact addressed by that contribution, and is a legally sufficient mitigation measure under CEQA. This certainty will open to door to less expensive CEQA obligations and more affordable housing.
- Suggested amendments. The author and the committee may wish to consider amending this bill to replace the current provisions with the following:
(b) (4) A lead agency for a land use project may require the applicant to contribute to the Transit-Oriented Development Implementation Fund only if (A) the cost of vehicle miles traveled reductions established by the office is equal to or lesser than other vehicle miles traveled mitigation measures required for the project by the lead agency or, (B) if the contribution is the only required mitigation measure, it is the least cost feasible mitigation, and (C) only after the department and office have validated reductions in vehicle miles traveled attributable to projects funded pursuant to this section by contributions from transportation projects.
- Double referral. This bill has been double-referred to the Housing and Community Development Committee.
REGISTERED SUPPORT / OPPOSITION:
Support
California Building Industry Association (sponsor)
American Council of Engineering Companies
Apartment Association of Greater Los Angeles
Building Industry Association of Fresno and Madera Counties
Building Industry Association of the Bay Area
Building Industry Association of Tulare/Kings County
Building Owners and Managers Association of California
California Association of Realtors
California Business Properties Association
California Business Roundtable
California Chamber of Commerce
California Council for Affordable Housing
California Hotel & Lodging Association
Carlsbad Chamber of Commerce
Central Valley Taxpayers Association
Downtown San Diego Partnership
Family Business Association of California
Home Builders Association of Kern County
Inland Empire Economic Partnership
NAIOP California
National Association of Royalty Owners - California
North State Building Industry Association
Orange County Business Council
Sacramento Metro Chamber of Commerce
San Diego Regional Chamber of Commerce
Simi Valley Chamber of Commerce
The Two Hundred for Homeownership
Opposition
Streets for All
Analysis Prepared by: Lawrence Lingbloom / NAT. RES. /
Date of Hearing: April 13, 2026
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Isaac G. Bryan, Chair
ABPCA Bill Id:AB 2552 (
Author:Ávila Farías) – As Introduced Ver:February 20, 2026
SUBJECT: California Environmental Quality Act: transportation impact mitigation
SUMMARY: Provides that a contribution made to the Transit-Oriented Development Implementation Fund (TOD Fund), in the amount determined consistent with the Office of Land Use and Climate Innovation (LCI) guidance, is full and complete mitigation for that portion of a project’s significant transportation impact and a legally sufficient mitigation measure under the California Environmental Quality Act (CEQA).
EXISTING LAW:
- Requires lead agencies with the principal responsibility for carrying out or approving a proposed discretionary project to prepare a negative declaration (ND), mitigated negative declaration (MND), or environmental impact report (EIR) for this action, unless the project is exempt from CEQA. (Public Resources Code (PRC) 21000 et seq.)
- Requires LCI to prepare and develop proposed guidelines for the implementation of CEQA by public agencies. Requires the guidelines to include objectives and criteria for the orderly evaluation of projects and the preparation of EIRs and NDs. Also requires the guidelines to include criteria for public agencies to follow in determining whether a proposed project may have a significant effect on the environment. (PRC 21083)
- Requires OPR to prepare proposed revisions to the CEQA Guidelines establishing criteria for determining the significance of transportation impacts within transit priority areas (TPAs). Requires the criteria to promote the reduction of greenhouse gas (GHG) emissions, the development of multimodal transportation networks, and a diversity of land uses. (PRC 21099)
- Authorizes OPR to adopt CEQA Guidelines establishing alternative metrics to traffic “levels of service” (LOS) for transportation impacts outside of TPAs. Authorizes the alternative metrics to include the retention of LOS, where appropriate and as determined by OPR. Pursuant to this authority, OPR revised the CEQA Guidelines to identify vehicle miles traveled (VMT) as the most appropriate metric to evaluate a project’s transportation impacts and to apply VMT statewide. (PRC 21099)
- Establishes the Transit-Oriented Development Implementation Program (TOD Program), to be administered by the Department of Housing and Community Development (HCD), to provide local assistance to developers for the purpose of developing higher density uses within close proximity to transit stations that will increase public transit ridership. The TOD Program provides gap financing for rental housing developments near transit that include affordable units as well as necessary infrastructure improvements. (Health and Safety Code 53560)
- Establishes an in-lieu fee mechanism for VMT mitigation – permitting a project, which is under the jurisdiction of a regional transportation planning agency (RTPA) and has a VMT mitigation requirement pursuant to CEQA, to satisfy its VMT mitigation requirement by contributing an unspecified amount per VMT to the TOD Fund, which would then be available, upon appropriation, to HCD to provide financing for transit-oriented rental housing developments located within the same county as the “donor” project. (PRC 21080.44)
THIS BILL:
- Provides that a contribution made to the TOD Fund, in the amount determined consistent with the LCI guidance, is full and complete mitigation for that portion of a project’s significant transportation impact and a legally sufficient mitigation measure under CEQA.
- Makes related findings.
- Is an urgency measure.
FISCAL EFFECT: Unknown
COMMENTS:
- From LOS to VMT. Level of service (LOS) is a measure used by traffic engineers to determine the effectiveness of elements of transportation infrastructure. LOS measures the presence of traffic and how quickly cars can move through a street. LOS was used for decades to analyze transportation impacts under CEQA. However, several years ago LOS became regarded as outdated, based on concerns it neglects transit, pedestrian crossings, and bicycles. Critics contended that an over-reliance on LOS considerations by planners had led to widening intersections and roadways to move automobile traffic faster at the expense of other, less polluting modes of transportation.
In response, SB 743 (Steinberg), Chapter 386, Statutes of 2013, required OPR to update the criteria for analyzing transportation impacts of projects to replace LOS in TPAs (areas within a one-half mile of a major transit stop). According to SB 743, “(n)ew methodologies under (CEQA) are needed for evaluating transportation impacts that are better able to promote the state’s goals of reducing (GHG) emissions and traffic-related air pollution, promoting the development of multimodal transportation system, and providing clean, efficient access to destinations.” Under SB 743, the criteria was required to promote the reduction of GHG emissions, the development of multimodal transportation networks, and a diversity of land uses. For areas outside of a TPA, OPR was authorized to adopt guidelines that would establish alternative metrics to LOS. Additionally, OPR could retain LOS as a part of those alternative metrics outside of a TPA, if and where OPR deemed appropriate.
Pursuant to SB 743, OPR proposed changes to the CEQA Guidelines that identify VMT as the most appropriate metric to evaluate a project’s transportation impacts and to apply VMT statewide. VMT measures the amount and distance of automobile travel attributable to a project. The Guidelines took effect July 2020 and agencies are now required to analyze the transportation impacts of a project using a VMT metric instead of LOS.
According to OPR’s Technical Advisory on Evaluating Transportation Impacts in CEQA, published in December 2018:
The transportation sector has three major means of reducing GHG emissions: increasing vehicle efficiency, reducing fuel carbon content, and reducing the amount of vehicle travel. The California Air Resources Board (CARB) has provided a path forward for achieving these emission reductions from the transportation sector in its 2016 Mobile Source Strategy. CARB determined that it will not be possible to achieve the State’s 2030 and post-2030 emission goals without reducing VMT growth. Further, in its 2018 Progress Report on California’s Sustainable Communities and Climate Protection Act, CARB found that despite the State meetings its 2020 climate goals, ‘emissions from statewide passenger vehicle travel per capita (have been) increasing and going in the wrong direction,’ and ‘California cannot meet its (long-term) climate goals without curbing growth in single-occupancy vehicle activity.’ CARB also found that ‘(w)ith emissions from the transportation sector continuing to rise despite increases in fuel efficiency and decreases in the carbon content of fuel, California will not achieve the necessary (GHG) emissions reductions to meet mandates for 2030 and beyond without significant changes to how communities and transportation systems are planned, funded, and built.’
Thus, to achieve the state’s long-term climate goals, California needs to reduce per capita VMT. This can occur under CEQA through VMT mitigation. Half of California’s GHG emissions come from the transportation sector, therefore, reducing VMT is an effective climate strategy, which can also result in co-benefits. Furthermore, without early VMT mitigation, the state may follow a path that meets GHG targets in the early years, but finds itself poorly positioned to meet more stringent targets later.
In addition to providing many examples of VMT-reduction measures, the technical advisory further addresses VMT-reduction programs and in-lieu fees:
Notably, because VMT is largely a regional impact, regional VMT-reduction programs may be an appropriate form of mitigation. In lieu fees have been found to be valid mitigation where there is both a commitment to pay fees and evidence that mitigation will actually occur. (Save Our Peninsula Committee v. Monterey County Bd. of Supervisors (2001) 87 Cal.App.4th 99, 140-141; Gentry v. City of Murrieta (1995) 36 Cal.App.4th 1359; Kings County Farm Bureau v. City of Hanford (1990) 221 Cal.App.3d 692, 727–728.) Fee programs are particularly useful to address cumulative impacts. (CEQA Guidelines, § 15130, subd. (a)(3) [a “project’s incremental contribution is less than cumulatively considerable if the project is required to implement or fund its fair share of a mitigation measure or measures designed to alleviate the cumulative impact”].) The mitigation program must undergo CEQA evaluation, either on the program as a whole, or the in-lieu fees or other mitigation must be evaluated on a project-specific basis. (California Native Plant Society v. County of El Dorado (2009) 170 Cal.App.4th 1026.) That CEQA evaluation could be part of a larger program, such as a regional transportation plan, analyzed in a Program EIR. (CEQA Guidelines, § 15168.)
(https://lci.ca.gov/docs/20190122-743_Technical_Advisory.pdf)
- Author’s statement:
Last year’s budget trailer bill created a promising option under CEQA to mitigate a project’s effect on Vehicle Miles Traveled, namely the ability to meet some or all of this obligation by contributing funds to HCD’s Transit Oriented Development program to build affordable housing near transit. However, projects that rely on this option may still face litigation arguing that the mitigation is inadequate, even when the contribution follows state guidance. AB 2552 increases legal certainty for the VMT mitigation bank concept by expressly stating that a contribution to the TOD Program, in an amount determined pursuant to state guidance, constitutes full and complete mitigation for the portion of a project’s significant transportation impact addressed by that contribution, and is a legally sufficient mitigation measure under CEQA. This certainty will open to door to less expensive CEQA obligations and more affordable housing.
- Suggested amendments. The author and the committee may wish to consider amending this bill to replace the current provisions with the following:
(b) (4) A lead agency for a land use project may require the applicant to contribute to the Transit-Oriented Development Implementation Fund only if (A) the cost of vehicle miles traveled reductions established by the office is equal to or lesser than other vehicle miles traveled mitigation measures required for the project by the lead agency or, (B) if the contribution is the only required mitigation measure, it is the least cost feasible mitigation, and (C) only after the department and office have validated reductions in vehicle miles traveled attributable to projects funded pursuant to this section by contributions from transportation projects.
- Double referral. This bill has been double-referred to the Housing and Community Development Committee.
REGISTERED SUPPORT / OPPOSITION:
Support
California Building Industry Association (sponsor)
American Council of Engineering Companies
Apartment Association of Greater Los Angeles
Building Industry Association of Fresno and Madera Counties
Building Industry Association of the Bay Area
Building Industry Association of Tulare/Kings County
Building Owners and Managers Association of California
California Association of Realtors
California Business Properties Association
California Business Roundtable
California Chamber of Commerce
California Council for Affordable Housing
California Hotel & Lodging Association
Carlsbad Chamber of Commerce
Central Valley Taxpayers Association
Downtown San Diego Partnership
Family Business Association of California
Home Builders Association of Kern County
Inland Empire Economic Partnership
NAIOP California
National Association of Royalty Owners - California
North State Building Industry Association
Orange County Business Council
Sacramento Metro Chamber of Commerce
San Diego Regional Chamber of Commerce
Simi Valley Chamber of Commerce
The Two Hundred for Homeownership
Opposition
Streets for All
Analysis Prepared by: Lawrence Lingbloom / NAT. RES. /
Discussed in Hearing
Assembly Standing Committee on Housing and Community Development
Assembly Standing Committee on Natural Resources
Bill Author
Bill Co-Author(s):