California loosens environmental law. Will it speed up Sacramento housing growth?
New California state laws will make it easier for developers to build housing in areas of Sacramento that are outside downtown and midtown.
Gov. Gavin Newsom on Monday signed laws to loosen parts of the California Environmental Quality Act, which groups sometimes use to block new housing across the state.
While the city of Sacramento had already rolled back parts of CEQA for downtown and midtown, building infill housing in other parts of the city will now be faster and cheaper, which means there could be more of it, said Wesley Sagewalker, chief financial officer of Gateway Development.
If the state had made the change earlier, Gateway Development and Urban Capital LLC would have saved a lot of time and money to get city approvals to build 220 tiny homes for homeless permanent housing in North Sacramento and south Sacramento, they agreed.
“We would’ve saved thousands of dollars in land use attorney fees,” Sagewalker said. “We also would’ve avoided delays that almost caused us to miss the deadline (to secure state Homekey funding).”
Project Homekey is a program that awards state funding to new projects that will provide permanent housing for the homeless.
In addition to making it easier to get approval for government entities, the new law will likely cut down on CEQA lawsuits. In recent Sacramento CEQA lawsuits, judges have ultimately typically ruled that the project can continue. However, it can take years to get a ruling.
“Those two to three year delays come with hundreds of thousands of dollars of direct legal costs,” Sagewalker said. “In that time interest rates can be hiked and your project can go underwater. These delays can be a death nail.”
Two organizations last year filed CEQA lawsuits against an LPA Design Studios plan to build four infill high-rise towers with 787 market-rate apartments along the American River. A judge eventually ruled the project, called American River One, could move forward.
“(Without the lawsuit), the approvals would have been final and ready for the next entitlements [further plans, building permits, etc.] last fall,” Sabrina Teller, attorney for the property owners, 500 Bercut LLC and IM Investments Inc., said in an email. “Only now is the project owner finally clear of the litigation cloud, so the delay caused by litigation was approximately nine months. Of course, now with building materials becoming more expensive since last fall, that delay will cause more expense.”
It’s unclear when the project will be built, said Anthony Scotch, a broker involved with the project. It still needs a developer.
It’s not clear if the law will help all CEQA lawsuits. A neighborhood association filed a CEQA lawsuit against a planned 81-unit apartment building in Carmichael. The litigation is ongoing.
“County counsel said it is unlikely that this case will be affected by (the new state law),” said Kim Nava, a county spokesperson.
A group of more than 100 environmental groups across the state Friday sent a letter to Newsom and lawmakers opposing the bill, saying it would get rid of important environmental protections.
“This bill is the worst anti-environmental bill in California in recent memory,” the letter said. “It represents an unprecedented rollback to California’s fundamental environmental and community protections at a time in which the people of California grapple with unprecedented federal attacks to their lives and livelihoods.”
This story was originally published July 3, 2025 at 1:38 PM.
