Budget Act of 2026.

Bill scope expanded from solely adding Section 65589.10 (housing leadership designation) to also amending Sections 65583, 65585, and 65585.03 of the Government Code, transforming it into a broad housing element reform bill.

The original bill's Section 65589.10 (housing leadership designation with production thresholds of 5, 7.5, or 10 units per 1,000 residents depending on affordability tier) is retained but the bill's overall purpose shifts from a standalone incentive program to a comprehensive housing element content and compliance framework that incorporates the designation system as one component.

Mandatory emergency shelter planning: jurisdictions must identify zoning designations where emergency shelters are allowed as a permitted use without discretionary permits, with specific objective standards (max beds, parking, 300-foot proximity limit, onsite management, lighting, security). Site capacity is calculated at a minimum of 200 square feet per person. 'Emergency shelter' is defined broadly to include navigation centers, bridge housing, and respite care.

Multijurisdictional emergency shelter agreements: jurisdictions may satisfy shelter requirements through agreements with up to two adjacent communities, requiring at least one year-round shelter within two years of the planning period start, with capacity allocated among participants.

Governmental constraints disclosure statement: starting with the 7th housing element revision, jurisdictions must identify each new or amended governmental constraint adopted after the prior element's due date, plus any constraints the governing body can 'anticipate adopting' during the first three years of the planning period (defined as items appearing on a published agenda).

Fair housing assessment: jurisdictions must complete a detailed fair housing assessment before their first draft revision is available for public comment, including analysis of integration/segregation patterns, racially or ethnically concentrated areas of poverty, displacement risk, contributing factors, priorities, and strategies. A standardized reporting format will be developed by the department.

Assisted housing preservation analysis: jurisdictions must identify assisted housing developments eligible to change from low-income use within 10 years, estimate replacement costs, identify potential acquirers, and consider all available financing programs for preservation.

New rezoning deadlines: for the 6th housing element revision, rezoning must be completed within 3 years of adoption (or 1 year if the jurisdiction missed its statutory deadline). For the 7th and subsequent revisions, rezoning is due within 1 year of the statutory deadline, extendable to 3 years and 90 days if the jurisdiction submitted a draft 90+ days early, received substantial compliance findings by the deadline, and adopted within 120 days after the deadline.

Consequences for failing to meet rezoning deadlines: a local government may not disapprove a housing development project, require a conditional use permit or other discretionary permit, or impose conditions that would reduce density below what is allowed by right.

Housing leadership jurisdictions are exempt from the governmental constraints analysis (paragraph 5) and nongovernmental constraints analysis (paragraph 6) in their housing elements, providing regulatory relief as an incentive for high housing production.

Deemed substantial compliance: a housing element or amendment is considered in substantial compliance when the local agency adopts it for the current planning period and the department has not issued contrary written findings within 30 days of receiving notice of the legislative body's resolution.