Gov. Newsom signs affordable housing bill changing where CA directs financing to build developments

OAKLAND, Calif. (KGO) -- Gov. Gavin Newsom visited the Bay Area on Monday to highlight one of California's top priorities: increasing affordable housing.

Newsom signed AB 179, a budget trailer bill including several housing provisions, aimed at cutting red tape and clearing the way for more affordable housing projects.

State leaders say the new law targets affordable housing gets financed, one of the biggest obstacles to construction. The legislation will aim to streamline how affordable housing projects receive state funding while encouraging cities to reduce development impact fees, which can add tens of thousands of dollars to a project.

MORE: Gov. Newsom signs package to boost home building, expand affordable housing

"We're streamlining bureaucracy, reorganizing a construct around a simple one-stop application around financing-focusing on real accountability at the local level, driving accountability at the state level with fundamental land use reforms, and time to develop reforms," Newsom said.

Supporters argue it could help direct California's limited affordable housing funding toward projects that are ready to move forward, while prioritizing affordable rental housing.

"We're going to make it much more easier to build, and we're going to get the money out the door faster," said state Sen. Jesse Arreguín, D-Oakland.

Arreguín said the legislation also seeks to address development impact fees that can increase the cost of housing projects.

Backers say the changes could lower development costs by roughly $60,000 to $70,000 per unit. They also acknowledge that financing is only one part of California's broader housing affordability challenge.

California consistently ranks among the most expensive states to build and buy a home.

Citing off statistics of the state's progress, Newsom argued California's issues with bureaucratic hurdles in the home-building process are "old talking points."

"We have proof points that suggest differently. Fifty-nine percent increase in housing construction, fifty-seven percent decrease in the time to getting permits. That's real. That's the receipt," Newsom said.

The announcement comes as new bipartisan housing reforms take effect at the federal level. Newsom praised the changes while noting similarities to policies California has already pursued.

"Look at that housing bill that was done federally. Looks a lot like what we've been doing here in the state of California," the Democratic governor said.

When ABC7 asked how the federal changes could work alongside California's housing efforts, Newsom said both approaches focus on reducing regulatory hurdles and giving local governments more flexibility.

"It's really about getting rid of those regulatory thickets. It's really about creating flexibility. And, and doing what you can to support, localism. And I think what they did, what we've done is going to feed very nicely into what the counties and cities will be doing all across this nation and substantively, all across the state of California," Newsom said.

The legislation passed with overwhelming bipartisan support, drawing just 18 no votes across both chambers. Supporters say the changes won't solve the state's housing crisis overnight, but they hope it will help get more affordable housing projects built faster, including developments like the one Newsom visited in Oakland.