California Environmental Quality Act: transportation impact mitigation.

Senator Valladares, together with principal and secondary coauthors, advances a CEQA framework shift that allows a portion of a project’s transportation impact to be satisfied through a contribution to a Transit-Oriented Development Implementation Fund, with those funds directed toward affordable housing and related infrastructure under a state TOD program. The approach is presented as an optional, non-exclusive pathway that coexists with other mitigation strategies, and it is overseen by a newly created Office of Land Use and Climate Innovation in concert with the Department of Housing and Community Development.

Key mechanisms center on defining the contribution as full and complete mitigation for the portion of the significant transportation impact it addresses, with deposits permitted after the initial guidance is issued. The bill establishes definitions for the governing entities, regions, and the concept of location-efficient areas, and it requires guidance to specify the amount of contributions, the nexus between project impacts and funded projects, a process to validate contributions, and a methodology for estimating reductions in vehicle miles traveled. The guidance, issued by the Office in consultation with other state agencies, will also set proximity radii and the regional priorities for fund allocations, linking funding to affordable housing or related infrastructure that supports higher-density, transit-oriented development.

Implementation proceeds on a multi-year timeline: the initial guidance is due by mid-2026, with subsequent rulemaking for later guidance beginning in 2028, and a program-evaluation cycle starting once the first funds are distributed. Funds deposited into the TOD Implementation Fund are available to the department, upon legislative appropriation, to award priority funding for in-region, location-efficient, affordable housing and related infrastructure, with a tiered priority structure and an expedited review process for projects previously unable to receive sufficient funding elsewhere. The bill preserves local flexibility to assess vehicle miles traveled-related fees under existing Mitigation Fee Act authorities and requires ongoing stakeholder input and public participation on the initial guidance.

The authors frame the measure as an effort to harmonize environmental review with housing production and transit-oriented development through a standardized, evidence-based approach that promotes transparency and consistency. While the pathway is optional and subject to forthcoming definitions and methodologies, it positions the TOD Implementation Fund as a potential vehicle for addressing transportation impacts in ways that reflect regional planning strategies and sustainable growth goals. All substantive operational details, including contribution amounts and VMT-reduction methodologies, depend on guidance and subsequent regulatory updates issued under the new framework.