CP&DR News Briefs July 7, 2026:American Canyon Annexation; Impact Fees; State TOD Guidelines; and More

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American Canyon Annexation Spurs Lawsuit from Developer

A Watson Ranch project developer has sued in Napa Superior Court to block a proposed 281-acre expansion of American Canyon's city boundary, arguing it violates a 2008 voter-approved measure barring urban limit line expansion without voter approval through 2030. The disputed annexation, sought by landowners the Hess and Laird families rather than the city, would add to a separate 86-acre expansion already approved on June 1. Although the larger expansion still needs approval from the Napa County LAFCO, the lawsuit seeks to address already approved county and city related tax-sharing and housing-allocation agreements. This dispute follows an earlier, ongoing lawsuit filed by Watson Ranch entities in October accusing the city of breaching development agreements, particularly over delays in extending Newell Drive as a relief route for Highway 29.

Budget Trailer Bill Goes After Impact Fees

The big budget news on housing was a trailer bill (AB 179) that created a new Cabinet-level housing agency as well as the Housing Development and Finance Committee, which is designed to consolidate consideration of affordable housing funding from different state programs. But the bill also contains a kicker involving impact fees: If a city or county is applying for funding for an affordable housing funding but doesn’t wait impact fees,  then the state will reduce the funding by the amount of the fees. Gov. Gavin Newsom signed the trailer bill on June 30.

State Releases Guidelines to Promote Transit-Oriented Development

The Department of Housing and Community Development and the Governor’s Office of Land Use and Climate Innovation has released the 2026 Transit-Oriented Development Guidelines to implement the Transit-Oriented Development Implementation Program created by AB 130. The guidelines establish a framework for funding affordable housing and related infrastructure in transit-accessible locations while giving local agencies a new option to mitigate transportation impacts under the California Environmental Quality Act. Under the new program, CEQA lead agencies may contribute to the Transit-Oriented Development Implementation Fund, a statewide Vehicle Miles Traveled mitigation bank administered by HCD, instead of pursuing project-specific VMT mitigation measures. HCD will use those contributions to fund affordable housing projects in locations that promote lower driving rates and greater transit use.

Fresno Streamlines Approvals for 20% Affordable Developments

The Fresno City Council adopted a policy that will allow housing developments that set aside at least 20% of units for low-income renters to enjoy a streamlined approval process, even bypassing review by the Planning Commission and City Council in certain areas. The measure will keep the city in compliance with its state-mandated Housing Element, which outlines how the city will address a housing shortage. Mike Karbassi cast the lone dissenting vote, citing concerns that ministerial approval reduces opportunities for public input and appeals. Failing to adopt the policy, however, would have meant risking losing state funding eligibility or facing litigation from the California Attorney General.

Downtown Los Angeles, San Jose Score Poorly on Survey of Global Downtowns

A new 2026 survey found that downtown Los Angeles ranks among the least vibrant urban centers in the world, with only about 65% of residents describing it as vibrant compared with more than 80% in cities such as New York City, Chicago, Sydney, and Shanghai. In the same survey, San Francisco ranked seventh for vibrancy nationwide. The Gensler Research Institute City Pulse report highlighted several shared qualities between successful downtowns, including a mix of housing, jobs, shops, and entertainment, walkable streets, attractive public spaces, strong after-hours activity, good lighting, and a sense of personal safety. Researchers also found that thriving downtowns encourage visitors to stay and socialize rather than simply arrive for errands or events and leave. On three aesthetic measures--”beautful,” “memorable,” and “iconic”--downtown San Jose finished dead last among major U.S. cities. Downtown Los Angeles continues to struggle with post-pandemic office vacancies, business closures, and declining foot traffic, with nearly 40% of office space in the Financial District and 30% of retail space sitting vacant. Concerns about safety, along with parking costs and availability, have further discouraged visitors, even as crime is down 10% from last year. For Los Angeles, the report suggests that restoring a critical mass of residents, workers, and businesses will be essential to rebuilding the downtown’s vibrancy.

CP&DR Coverage: Fulton on CEQA-Busting Ballot Measure

The California Chamber of Commerce initiative revising the California Environmental Quality Act has qualified for the November. If it passes – which in my view is likely – it will fundamentally alter the CEQA process for certain types of projects, including apparently all housing projects. But even if it doesn’t pass, it’s the end of an era. It probably means that the importance of “significance” – and the judgment of lead agencies and their environmental scientists about what’s significant and what’s not – goes away. In fact the whole idea of impact analysis – the crux of both CEQA and NEPA – will go away. In that sense, CEQA as we know it will be dead.

Quick Hits & Updates

The Trump administration suspended federal funding for Los Angeles Homeless Services Authority, citing concerns about financial mismanagement. Federal funding accounts for about 7% of LAHSA’s budget and primarily supports permanent housing subsidies through HUD’s Continuum of Care program, which promotes community solutions to homelessness. The agency warned that losing federal support could jeopardize housing assistance for thousands of formerly homeless residents and increase the risk of people returning to homelessness.

A feasibility study found that redevelopment of Alameda Point's 31-acre Main Street Neighborhood North could be financially viable if the city secures between $164 million and $240 million for infrastructure improvements. The estimated costs include about $176 million for backbone infrastructure and site improvements, plus $64 million for Main Street infrastructure, shoreline stabilization, and levee construction, although those costs could be reduced by up to $75 million through phased infrastructure work and grant funding. 

After talks of rolling back Los Angeles’ “mansion tax”, the Los Angeles City Council approved a $544.3 million spending plan funds, the largest single-year allocation since the measure took effect in April 2023. The plan is the largest single use of Measure ULA funds so far, calling for $381 million toward affordable housing programs and $163.3 million for homelessness prevention programs. A study Measure ULA finds that it creates a sizable hidden cost by suppressing property transactions. California reassesses property values only at the time of sale, so fewer transactions mean fewer reassessments slowing growth in the broader property tax base. The study, led by Daniel Green of Harvard Business School, estimates about 80 percent of Measure ULA revenue is offset by lower future property-tax collections.

The California Water Commission approved $268.9 million in conditional supplemental funding for the proposed Sites Reservoir Project in Colusa County, bringing the project's potential state funding through the Water Storage Investment Program to nearly $1.4 billion. The reservoir would provide 1.5 million acre-feet of water storage by capturing excess Sacramento River flows during wet years for use during droughts, while also supporting flood protection, wildlife refuges, recreation, and up to 200,000 acre-feet of emergency drought water supplies. 

Los Angeles County Metro's $400 million Vermont Avenue bus lane project can proceed without bike lanes for now, denying a preliminary injunction sought by Streetsblog LA editor Joe Linton who argued the proposal triggers Measure HLA, the 2024 law requiring street safety upgrades whenever the city repaves qualifying stretches of road. 

Palo Alto has adopted  zoning changes aimed at revitalizing commercial districts by allowing a broader range of businesses that previously faced zoning barriers to occupy storefronts. The reforms streamline permitting, ease parking requirements, and expand allowable ground-floor uses as the city works to reduce downtown vacancies and adapt to shifts in retail demand. City officials say the changes are helping attract new businesses while preserving restrictions on traditional medical offices and other non-retail uses.

San Diego, which has maintained a place in the top ten most expensive cities in the U.S., has fallen to 12th place with median one-bedroom rents dropping 2.2% annually to $2,200 a month. Analysts attribute the slide primarily to a surge in apartment construction, as San Diego County built more multifamily housing per capita than any other California metro and ranked second nationally as a share of total construction, after New York. 

Oakland home values are at their lowest in a decade according to data from Zillow. Oakland has seen the starkest home value drop among U.S. cities with at least 100,000 residents, tied with Cape Coral, Florida, which was dubbed the worst housing market in America last year. In March the typical home value in Oakland was about $716,000, reflecting a drop of more than $90,000, or 11.4%, after adjusting for inflation. Larger such as emptying downtowns, crime rates and a shift toward the suburbs combined with high mortgage rates have hurt demand for homes in both San Francisco and Oakland.

The Urban Institute published a new interactive tool which allows users to explore where and how effectively states and urban areas have invested in transit-oriented development. The study found that better transit leads to higher ridership, and residents of places like New York City, San Francisco, and DC travel on transit more than seven times as frequently as people living in those other regions. It also found that housing near frequent transit sites encourages better ridership, with areas like Los Angeles and San Francisco performing best, each providing transit service within a half mile of at least 90 percent of homes.

Humboldt County residents have launched a ballot initiative to ban large industrial warehouses from the county's Coastal Zone, a direct response to a proposed Amazon distribution center in McKinleyville. The measure would cap new warehouse facilities at 20,000 square feet, effectively blocking Amazon's roughly 40,000-square-foot proposal, while exempting marine-dependent industries like fishing and aquaculture. Organizers submitted the measure through Indivisible Trinidad and must collect 4,874 verified signatures from registered county voters before the Board of Supervisors can adopt it or place it on the November ballot.