OAKLAND, Calif. — Gov. Gavin Newsom signed Assembly Bill 179 on Monday, approving sweeping changes to California’s affordable housing finance system that state officials say will reduce construction costs, accelerate housing production and continue funding for homelessness programs.
The legislation, part of the 2026-27 state budget, also establishes a new California Housing and Homelessness Agency intended to consolidate housing programs and improve coordination across state government.
State officials said AB 179 modernizes California’s housing finance system by creating what they describe as a “one-stop-shop” for state housing dollars while reducing impact fees that currently add significant costs to affordable housing developments.
According to the administration, the reforms are expected to save between $60,000 and $70,000 per affordable housing unit, allowing existing state housing investments to finance additional projects.
The legislation also extends California’s Housing, Homelessness Assistance and Prevention Program, or HHAP, while adding new accountability measures designed to ensure local governments demonstrate measurable reductions in street homelessness.
Under the recently approved state budget, California will invest $900 million in HHAP during the 2026-27 fiscal year and provide an additional $700 million for affordable housing finance programs.
The budget also positions California voters to consider an $11.25 billion Veterans and Affordable Housing Bond on the November ballot. State officials say the bond would provide additional long-term funding for affordable housing development and homeownership initiatives.
“When I took office in 2019, my goal was clear: to reverse decades of inaction on housing and homelessness and ensure there was enough housing and care for people to leave the streets,” Newsom said in a statement announcing the bill signing. “Through historic investments, stronger partnerships, and greater accountability, we’re seeing real progress that will benefit Californians not just today, but for generations to come.”
The governor added, “I’m grateful for the Legislature’s partnership, as together we add to this proven foundation with new laws that cut red tape, expand financing opportunities, and help communities build housing faster. Every Californian deserves a place to call home, and through this work, we’re turning that goal into reality.”
According to the administration, AB 179 represents the next phase of California’s housing strategy following hundreds of housing-related laws signed since 2019 and major California Environmental Quality Act reforms approved last year.
Officials said the legislation is intended to further reduce administrative barriers that slow affordable housing construction while improving the efficiency of state financing programs.
Among its provisions, the bill creates landmark “One-Stop Shop” financing reforms intended to streamline project delivery, reduce duplicative reviews and accelerate affordable housing production.
State officials estimate the changes will substantially lower per-unit development costs while allowing future housing appropriations to support a greater number of affordable homes.
The legislation also establishes a new Disaster Rebuilding Fund, directing $100 million to help homeowners rebuild following natural disasters by lowering financing costs associated with reconstruction. State officials said the fund is intended to help affected households repair or replace damaged homes more quickly and affordably.
Additional housing investments included in the budget provide $500 million for enhanced state low-income housing tax credits and $200 million for California’s Multifamily Housing Program to support the construction and preservation of affordable housing for lower-income residents.
The administration said new accountability requirements tied to HHAP funding will require certain cities and counties to meet additional local matching requirements and comply with Prohousing standards before receiving state homelessness funding.
Those requirements apply to cities with populations exceeding 300,000 and the counties in which those cities are located.
Sen. Jesse Arreguín, D-Oakland, chair of the Senate Housing Committee, praised the legislation during the signing ceremony.
“I am grateful for Governor Newsom’s transformative leadership on housing and homelessness,” Arreguín said. “This bill creates historic reforms to make sure we get affordable housing built faster, cut down the costs of building, and help reduce street homelessness. California is once again showing the rest of the country how we can address the twin crises of affordability and homelessness.”
State officials said the creation of the California Housing and Homelessness Agency will improve coordination among housing programs while helping streamline the distribution of state resources. The administration said combining housing and homelessness functions under a single agency will improve efficiency and better serve communities seeking state assistance.
Newsom’s office also highlighted broader housing and homelessness initiatives undertaken during his administration, arguing that California has implemented structural changes intended to reverse decades of underinvestment in housing production while expanding support for local governments addressing homelessness.
Those efforts include additional funding, stronger accountability requirements for local jurisdictions, expanded behavioral health initiatives and legislative reforms designed to remove barriers to housing development.
The administration cited recent federal homelessness data as evidence that those policies are producing measurable results. According to the governor’s office, California recorded the nation’s largest reduction in unsheltered homelessness, with 8,391 fewer people experiencing unsheltered homelessness, a 6.8% decline.
Officials also said the state’s overall homeless population declined by 2.8%, marking California’s largest statewide reduction since 2009.
State officials further said California ranked first nationally between 2023 and 2025 in reducing homelessness among veterans, individuals experiencing chronic homelessness, young adults ages 18 to 24 and parents younger than 25.
The administration also pointed to housing production data showing residential construction has accelerated during Newsom’s tenure.
According to the governor’s office, annual residential construction increased by 59% from approximately 70,000 homes in 2018 to about 111,000 homes in 2024. More than 682,000 housing units have been built statewide since 2019, while multifamily construction has reached its highest level in more than three decades.
Officials said streamlining legislation enacted since 2019 has reduced the average time from development application to entitlement by 57%, from 160 days to 68 days in 2024, while the time between entitlement and permitting has also declined. They added that local governments have now planned for approximately 3.6 million new homes, including 1.4 million affordable units, bringing California closer to meeting long-term housing needs.
The administration also noted that the housing legislation accompanies what it describes as a balanced 2026-27 budget that maintains a zero deficit while preserving major housing and homelessness investments.
Officials said California has continued building budget reserves, paying down long-term liabilities and investing in housing, education, transportation, behavioral health, public safety and climate resilience while maintaining the state’s fiscal position.
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As I predicted both the Feds and the State have now past major housing legislation.
Sadly as the nattering Nimby naysayers of negativity predicted the housing won’t get built here.
Oh good, they found the $5 billion :-|
“Oh good, they found the $5 billion :-|”
The NGO’s are partying as we speak.