Happy Tuesday, and welcome to the latest edition of Rent Free. This week’s newsletter includes stories on:
- The triumphant, albeit technical, return of missing middle housing in Arlington, Virginia
- New York’s Rent Guidelines Board allows a 3 percent rent increase.
- It’s not just Zohran Mamdani. In New York, everyone’s a socialist on housing.
But first, this week’s lead story is on California’s latest effort to reform its development-killing environmental review law.
On Monday night, Gov. Gavin Newsom signed into law budget legislation that exempts urban housing projects from the California Environmental Quality Act (CEQA), the state environmental review law that has become notorious for delaying new development.
Under Assembly Bill 130, housing projects of fewer than 20 acres located in incorporated communities and unincorporated urban areas will generally no longer have to conduct environmental reviews required by the CEQA.
You are reading Rent Free from Christian Britschgi and Reason. Get more of Christian’s urban regulation, development, and zoning coverage.
This wonky-sounding reform could amount to a major liberalization of housing construction, given just how burdensome CEQA’s procedural requirements can be.
“This is one of the biggest wins for housing in a generation,” said Brian Hanlon, CEO of California YIMBY, which sponsored some of the CEQA reforms that were rolled into the budget in an emailed statement.
At a press conference, Newsom hailed the housing provisions of the state budget as a win for the “abundance mindset” and a triumph of the YIMBY (“yes in my backyard”) movement dedicated to expanding housing production in the ultra-expensive Golden State.
“To the NIMBY movement that’s now being replaced by the YIMBY movement, go YIMBYs. Thank you for your abundant mindset.”
Newsom on signing infill housing bills tonight. pic.twitter.com/OJjihgT3RV
— Paul E Williams (@PEWilliams_) July 1, 2025
CEQA-mandated reviews can run hundreds of pages, even for something as simple as an apartment building or new subdivision, and take years to complete.
Given that CEQA allows third parties to sue over allegedly insufficient environmental reviews, projects can be delayed even more through lengthy litigation.
A 2022 study from the law firm Holland and Knight found that projects totaling half of California’s annual housing production were subject to CEQA litigation in 2020.
Because CEQA lawsuits are an effective tool for extracting concessions from developers, California’s interest groups, from labor unions to environmental groups, have been loath to support any weakening of the law.
Reforms to CEQA in recent years have thus tended to eat around the edges of the law, or otherwise been caveated with requirements that any CEQA exemptions be paired with union wage mandates and, in the case of housing projects, affordable housing mandates.
A.B. 130, in contrast, appears to be a pretty clean reform and mostly free from the usual poison pills.
Projects won’t need to include income-restricted affordable units in order to qualify for A.B. 130’s CEQA exemption. Union wage requirements will only apply to projects taller than 85 feet, 100 percent affordable projects, or projects of over 50 units in San Francisco.
Urban infill projects are defined broadly to be housing projects in incorporated areas and unincorporated urban lands. (Some coastal lands, historic sites, and environmentally sensitive areas like wetlands and fire zones are excluded from the exemption.)
Critics call CEQA the “law that swallowed California.” Perhaps the state is finally escaping its jaws.
In a narrow, technical ruling last week, a three-judge panel of the Virginia Court of Appeals reinstated Arlington County’s missing middle reforms by voiding a lower court decision that had blocked them.
Those reforms, formally the Expanded Housing Option (EHO), had permitted property owners in the northern Virginia community to build at least four, and in some cases six, homes on formerly single-family-only zoned lots.
Arlington neighborhood activists had fought the reforms tooth and nail throughout the yearslong process that led to the EHO passage in 2023. Homeowners immediately sued once they were passed.
In September 2024, a lower court judge struck down the EHO, saying that the county board had failed to consider all the localized impacts of new housing development in low-density neighborhoods.
As The Washington Post reports, the Virginia appeal court said that the plaintiffs “failed to join indispensable parties to the litigation” by excluding developers who were building EHO-enabled projects.
Per the Post, the plaintiffs can appeal the ruling to the Virginia Supreme Court or seek a new trial at the circuit court level.
In the meantime, the county says it will work to reinstate the EHO policy, allowing developers to once again apply for middle housing permits.
Whether they will is a big if, given the still-active lawsuit. Builders have little assurance that their permits won’t just be invalidated again.
New York City’s Rent Guidelines Board voted on Monday to allow rent increases of 3 percent on one-year leases and 4.5 percent on two-year leases at the city’s roughly one million rent-stabilized apartment units.
The increases are nearer the upper end of the proposed increases that the board had floated earlier in the year. They’re certainly above the rent freeze that numerous mayoral candidates, including Democratic nominee Zohran Mamdani, have called for.
Nevertheless, property owners complain that this year’s increase is once again below inflation, amounting to a real rent decrease. Rent stabilized buildings will continue to struggle financially and fail to cover rising operating and maintenance costs, they say.
“While we are disappointed that the [board] once again adjusted rents below inflation, we appreciate that they stood up to political pressure calling for rent freezes that would accelerate the financial and physical deterioration of thousands of older rent-stabilized buildings,” said New York Apartment Association CEO Kenny Burgos in an emailed statement.
New York Assemblyman Zohran Mamdani’s upset win in the New York City Democratic mayoral primary has produced shock and/or awe that the country’s largest city might actually elect a self-described socialist as its chief executive.
While his primary victory is hardly a positive development for those who like free minds and free markets, it’s hard to get too exercised about the socialist specter of his housing policies. As I wrote last week, everyone in New York City politics is already a socialist on housing, even if they don’t proudly tout the label.
Mamdani’s headline policy, promoted in lots of upbeat campaign videos, is to freeze rents on the city’s roughly one million rent-stabilized apartments.
That might sound radical. But it wasn’t that long ago that the city’s Rent Guidelines Board, under former Mayor Bill De Blasio, pushed through a rent freeze on rent-stabilized apartments. Current Mayor Eric Adams supported that freeze.
Meanwhile, former Gov. Andrew Cuomo, who Mamdani bested in the primary, was the governor who signed into law the 2019 Housing Stability and Tenant Protection Act, which closed off several other avenues by which landlords were able to raise rents outside of the Rent Guidelines Board process.
Landlords have argued in numerous court challenges that the 2019 law effectively already socialized their properties by severely limiting their ability to decide who they rent to or whether they want to keep their properties on the rental market at all.
The 2019 law system tanked the values of rent-stabilized properties and is pushing an increasing number of them into foreclosure. Years of board-allowed rent increases in the low single digits have further eroded the financial position of landlords.
Cuomo and Adams both opposed a rent freeze during the campaign. But neither is fundamentally challenging the post-2019 system. Adams has even criticized the upper-end board-proposed allowable rent hikes (which property owners say are woefully insufficient) as too high.
A rent freeze aggravates building owners’ problems, but it doesn’t fundamentally change the trajectory that New York rent-stabilized real estate is on.
It would be an odd political taxonomy indeed to say that a zero percent allowed rent increase is radical socialism but a 2 percent allowed increase is sensible, centrist policymaking.
- The new coalition government of Germany voted to extend the country’s rent-control law through 2029. The law limits landlords from charging over 10 percent above average rental prices in areas determined to have a “strained housing market,” reports English-language The Munich Eye.
- Sen. Mike Lee (R–Utah) has withdrawn his provision of the budget bill that would have required the federal government to sell off a small amount of its Western land holdings. You can read my analysis of his bill here.
— Mike Lee (@SenMikeLee) June 29, 2025
- Speaking of, the American Enterprise Institute’s Housing Center has produced a handy new interactive map showing where Lee’s bill could produce new housing.
New @AEI map: Under @SenMikeLee‘s proposal, developing just 0.05% of BLM land —180 sq mi, excluding ALL protected areas— could yield ~1M homes over 10 years.
This could significantly reduce the ~2.8M-home shortage in the Western U.S. while returning ~$15B to the Treasury.
Map⬇️ pic.twitter.com/KexXVKh2Mg— Tobias Peter (@TobiasPeterAEI) June 27, 2025
- Harvard’s Joint Center for Housing Studies has released its latest annual “State of the Nation’s Housing” report. One highlight I noticed:
From the new JCHS report: https://t.co/wB6qjvg0AA
— Christian Britschgi (@christianbrits) June 24, 2025
