Federal rulings, CEQA reforms, and AB 380: Explore the 2025 housing policies reshaping California’s rental market. California’s AB 380 threatens long-term rent caps during emergencies. Learn how AACSC is fighting to protect housing providers.
Federal and State Housing Policy Update
Housing Policy at Every Level: Federal and State Issues to Watch
Federal Developments
At the federal level, courts have made it clear that the Federal Arbitration Act takes precedence over state laws that attempt to restrict the use of arbitration agreements. In a key decision, the Ninth Circuit in Chamber of Commerce v. Bonta confirmed that California cannot prohibit or penalize the inclusion of arbitration clauses in contracts. The U.S. Supreme Court reinforced this principle in AT&T Mobility LLC v. Concepcion, holding that state rules designed to invalidate arbitration agreements are preempted by federal law. Taken together, these rulings strengthen the ability of housing providers to rely on arbitration as a fair and efficient means of resolving disputes, reducing exposure to lengthy and unpredictable jury trials.
The U.S. Department of Housing and Urban Development is considering time limits and work requirements for Section 8 housing assistance. These measures, if enacted, could reduce stability for tenants and leave housing providers exposed to new risks when managing federally subsidized units.
A federal appeals court has delivered an important ruling for housing providers seeking accountability for the financial fallout of the pandemic. In Darby Development Company et al. v. United States, the Court of Appeals for the Federal Circuit determined that property owners may pursue claims for compensation tied to the eviction moratorium imposed by the Centers for Disease Control and Prevention. The decision rests on the principle that the moratorium may have constituted a government taking under the Fifth Amendment, which requires just compensation. By rejecting the government’s attempt to dismiss these claims, the court has affirmed that emergency policies cannot simply shift the costs of housing onto providers without consequence. For owners who carried the burden of unpaid rent throughout the pandemic, this ruling opens a potential pathway to recover losses while reinforcing the foundational idea that property rights remain protected even in times of crisis.
Statewide Legislation
California has recently enacted significant reforms to the Environmental Quality Act with the goal of speeding up development and bringing more housing supply to market. Governor Gavin Newsom signed Assembly Bill 130 and Senate Bill 131 into law on June 30, 2025, and both measures took effect immediately. Assembly Bill 130 creates exemptions for qualifying infill residential projects on underused urban parcels that meet local planning and zoning standards. It also streamlines reviews for certain coastal developments and reduces the number of public hearings that can delay approvals. Senate Bill 131 broadens these reforms by exempting projects tied to affordable housing, clean water, climate resilience, and advanced manufacturing. Together, the bills also establish faster deadlines for ministerial approvals, including a 60-day timeline for agency review, and freeze state and local building code changes for several years, giving developers greater predictability in costs and planning.
These reforms have not come without controversy. Assembly Bill 130 requires projects over 85 feet in height to pay prevailing wages and employ a skilled and trained workforce, which in practice often results in the use of union labor. Supporters view this as a safeguard for construction quality and worker protections. Critics argue that the mandate increases costs, reduces flexibility for developers, and undermines the affordability goals of the legislation. Despite these concerns, many in the real estate and investment community see the reforms as an important opportunity to reduce delays, limit litigation risk, and unlock long-stalled projects that are needed to address California’s housing shortage.
California is also advancing legislation that could fundamentally alter the way rental housing is managed during times of crisis. Assembly Bill 380, authored by Assemblymember Mark Gonzalez of Los Angeles, is one of the most concerning proposals of the current session. The bill would significantly expand the state’s authority over both residential and commercial rents during and after emergency declarations.
Supporters describe AB 380 as a tenant protection measure, but for housing providers it represents an overreach that would disrupt recovery efforts, deter investment, and set a precedent for long-term government control of private property. If enacted, the bill would double the existing post-emergency rent cap from thirty days to sixty days, extend “price gouging” protections to commercial real estate, and raise fines for alleged violations to as much as twenty-five thousand dollars. Perhaps most troubling, it would shift the burden of proof onto property owners, forcing them to justify even modest rent adjustments after an emergency, regardless of the real costs of rebuilding and repairs.
For multifamily housing providers, the risks are clear. Emergencies often result in extraordinary expenses for essential repairs and habitability improvements. Under AB 380, these costs could not be recovered because rent ceilings would remain locked at pre-emergency levels. This disconnect between real-world expenses and government-imposed caps sends a chilling signal: providers will be expected to shoulder the costs of disaster recovery without the ability to stabilize revenue. The bill also ignores the reality that emergency declarations in California often last months or even years. Hurricane Hilary, for example, led to an emergency proclamation that remains in place nearly two years later. AB 380 would leave providers indefinitely bound to outdated rents until the state chooses to lift or extend its controls.
The broader consequences extend beyond immediate financial strain. By tying rental income directly to the length of state emergency proclamations, Sacramento is effectively moving toward long-term management of private housing markets. This creates uncertainty for investors, undermines property values, and discourages reinvestment in aging housing stock. Instead of promoting resilience and recovery, AB 380 would create a risk environment that shrinks both residential and commercial supply at a time when California can least afford it.
AB 380 is currently sponsored by the Los Angeles County Board of Supervisors and will soon be heard in the Senate Appropriations Committee. The Apartment Association, California Southern Cities (AACSC), is strongly opposed to this measure and continues to advocate for its defeat. Housing providers are encouraged to contact their legislators and urge them to vote against the bill. The stakes are high: this proposal is not simply about rent caps during an emergency, it is about the future of property rights and the ability of owners to operate responsibly in California.