On June 30, 2026, the Governor’s Office of Land Use and Climate Innovation (LCI) issued guidance for the Statewide Vehicle Miles Traveled Mitigation Program, establishing a new mechanism for mitigating transportation impacts under CEQA. The Guidance implements the provisions of Assembly Bill (AB) 130, which authorized the creation of a new statewide framework to mitigate transportation impacts by contributing to affordable housing production.
Key Takeaways
- Under the new program, CEQA projects can choose to contribute to a fund that will be allocated to regional affordable housing development.
- The funds will be awarded as gap financing to qualifying affordable housing projects.
- The program will initially be limited to publicly funded projects.
Background
Historically, transportation analyses under CEQA focused on congestion and delay—Level of Service (LOS)—for assessing impacts. Senate Bill 743 (2013) established vehicle miles traveled (VMT) as the appropriate metric for assessing transportation impacts, shifting the focus from whether a project slows traffic to whether it increases the number of miles driven.
In 2025, Governor Gavin Newsom signed AB 130, which directed LCI to develop guidance for a voluntary, statewide VMT mitigation program under CEQA. The program seeks to address a key issue with VMT mitigation: while enhancing affordable housing is an effective strategy for reducing VMT impacts, building affordable housing often requires investment at a scale that exceeds the transportation impacts of any individual project. Even for projects that could mitigate at that scale, it may not be appropriate to include a residential component. AB 130 directed LCI to develop a mechanism for projects to contribute proportionally to the development of regional affordable housing.
2026 Guidance
The Guidance establishes a two-part program: (1) a fund that projects can pay into to mitigate VMT impacts; and (2) a process for allocating those funds to VMT-efficient affordable housing and related infrastructure projects. Lead agencies that determine a project will have a significant VMT impact under CEQA may use the mitigation program as an optional strategy to reduce that impact to a less-than-significant level, or, to the extent feasible, by contributing to the Transit-Oriented Development Implementation Fund (TDIF).
Under this framework, if a lead agency determines that a project will have a significant VMT impact, it may choose to mitigate some or all of a project’s significant VMT impacts through a monetary contribution deposited into the TDIF. The Guidance outlines the methodology for calculating the monetary contribution necessary to secure the VMT Mitigation Credits sufficient to mitigate a project’s impacts. Once calculated, the lead agency or applicant deposits the contribution amount into the TDIF.
The TDIF is awarded to qualifying projects through the Transit-Oriented Development Implementation Fund (TOD). The TOD program establishes prioritization of projects receiving TDIF funds. In summary, the program targets (1) location-efficient areas within the same region as the impacting project, (2) other areas within the same region as the impacting project, and (3) location-efficient areas within an adjacent region. This process is intended to maximize the VMT reductions caused by the development of affordable housing.
Once prioritized, TOD awards can be allocated to close the funding gap for qualifying projects. Importantly, contributions are restricted to projects that would not have been built “but for” the contributions received through this program, ensuring that Mitigation Credits allocated through this program comply with CEQA.
The affordable housing component of these projects will be deed-restricted for 55 years, legally binding the units to income-eligible buyers for that period. The Guidance also directs the development of a monitoring program to verify the VMT reductions achieved by projects receiving these funds. LCI will develop the final monitoring criteria and methods by January 1, 2028. The initial phase of implementation will focus on publicly funded projects to accommodate the available administrative capacity.