California Enacts AB 1751: Streamlined Path for Missing Middle Townhome Development

California Gov. Gavin Newsom signed Assembly Bill (AB) 1751 – the Missing Middle Townhome Ownership Act – into law on September 29, 2026, as part of a broader housing and homelessness legislation package.¹ Co-authored by Assembly Members Sharon Quirk-Silva and Buffy Wicks, AB 1751 establishes a first-of-its-kind ministerial approval pathway specifically designed for qualifying townhome ownership developments.

AB 1751 extends successful state permit streamlining models to for-sale townhome development applications and subdivision maps, offering a critical and attainable path to homeownership for working families, as well as new opportunities for property owners and developers of multifamily and underutilized single-family sites in cities and counties throughout California. The law takes effect January 1, 2027.

Key Provisions

Ministerial "By Right" Approval

Under the new law, qualifying townhome development projects are approved ministerially by local planning staff without discretionary review, public hearings or appeals, removing a historically major source of delay and uncertainty in California housing production. The new ministerial pathway also removes qualifying projects from environmental review under the California Environmental Quality Act (CEQA), as CEQA does not apply to ministerial approvals and AB 1751 expressly states that an AB 1751 subdivision map is not a "project" under CEQA, eliminating the CEQA litigation risk that can delay housing projects.

Grounds to disapprove AB 1751 projects are narrow. Local agencies may disapprove a qualifying project only if they make written findings, supported by a preponderance of the evidence, that the project would create a specific, adverse impact on public health and safety for which there is no feasible method of mitigation. Covered approvals include entitlements, grading, building and subdivision permits, as well as other permits required for construction and occupancy. Although AB 1751 authorizes jurisdictions to adopt an ordinance to implement the new ministerial pathway, projects are subject to the 60-day Permit Streamlining Act's approval shot-clock for ministerial projects.

"Townhome" Defined

AB 1751 defines "townhome" as a single-family dwelling unit of three stories or fewer of occupiable space that either shares a common wall with an adjacent unit or is separated from a neighboring unit by no more than the minimum fire separation distance required under the California Building Standards Code.

A qualifying "townhome development project" must satisfy all of the following criteria:

• The project must consist entirely of townhomes with a maximum of 150 units.
• The average floorspace across all units cannot exceed 1,750 net habitable square feet.
• The project must achieve at least 75 percent of the jurisdiction's applicable residential density under Government Code Section 65583.2(c)(3)(B), known as the "Mullin density."
• The project meets an inclusionary requirement reserving 10 percent of units at affordable housing cost, secured by 45-year affordability covenants, unless a stricter local inclusionary housing requirement applies or the project proposes less than 11 units.

No-Surprise Cost Protections

Another major benefit of the law is that projects are defined as housing development projects eligible for Senate Bill (SB) 330 protections, meaning once a developer submits a preliminary application, all local development fees and other applicable legal requirements are locked in. This "no-surprise" cost protection provides critical budgeting certainty for developers and lenders. Additionally, unlike other ministerial streamlining pathways, AB 1751 does not mandate labor requirements.

Preservation of Local Objective Standards

Local agencies retain the authority to impose objective general plan, zoning, subdivision and design standards that do not conflict with AB 1751. However, local agencies cannot impose standards that would physically preclude development at the statutorily authorized density, nor may they impose standards that apply solely because a project utilizes the AB 1751 pathway.

Eligible Sites and Exclusions

Eligible Sites and Projects

AB 1751 applies to both multifamily residential zoned parcels and underutilized single-family zoned parcels, provided that sites zoned for single-family use either 1) do not contain permanent residential structures or 2) contain only abandoned or uninhabitable residential structures.

Parcels created by the project must be served by an existing community water system with a valid domestic water supply permit or a municipal sewer system. AB 1751 prescribes minimum parcel sizes and requires that lots in non-urban areas be adjoined on three sides by developed parcels.

Exclusions

AB 1751 includes a number of exclusions that limit conversion of existing residential uses and impacts to environmentally constrained sites. AB 1751 cannot be used on any site subject to SB 79 (2025) and does not apply in San Francisco or supersede the Coastal Act. Other exclusions include:

• sites in single-family residential zones subject to affordability covenants or rent control
• sites with existing mobile home and recreational vehicle parks, historic resources, five or more housing units, homes subject to affordability covenants or rent control that would require demolition, homes that were subject to the Ellis Act within the past 15 years and Housing Element sites designated for lower-income units
• sites with a minimum residential density above 50 dwelling units per acre

Similar to other housing streamlining laws, sites are excluded on the basis of environmental conditions. AB 1751 streamlining may not be used on sites with any of the following characteristics:

• prime farmland
• wetlands
• habitat for protected species
• a conservation easement or designation as conservation property under an approved Natural Communities Conservation Plan
• high or very high fire hazard severity zones
• parcels that contribute to a historic district or are separately listed as historic resources

For parcels within a special flood hazard area, regulatory floodway or earthquake fault zone, or that have had hazardous materials spills from prior uses, AB 1751 may only be used with appropriate regulatory agency clearances, as well as compliance with applicable standards.

Ownership, Subdivision and Financing Structures

A key feature of AB 1751 is substantial flexibility in ownership and financing structures. This includes:

• Fee-Simple Lots. The streamlined approval process permits fee-simple lots with a minimum size of 600 square feet. Fee-simple ownership enables buyers to qualify for standardized mortgages and property insurance products.
• Common Interest Developments (CIDs). Projects may be structured as CIDs under applicable California law.
• Limited-Equity Housing Cooperatives. Cooperative ownership structures with limited equity restrictions are permitted.
• Community Land Trust/Nonprofit Model. Land may be owned by a nonprofit organization or community land trust with shared-equity transactions, including 99-year ground leases.
• Tenancy in Common. Tenancy-in-common arrangements are permitted.
• No Mandatory Homeowners' Association (HOA). The legislation does not require the formation of an HOA, although local agencies may require road maintenance agreements for internal roads within a project.
• Sale Restrictions. Individual parcels within a project may not be sold separately until each parcel contains a completed residential structure. Exceptions apply for parcels reserved for circulation, open space or common areas, as well as for the last undeveloped parcel in a project. Local ordinances may waive these restrictions.

Limitations and Requirements

Developers and landowners should be aware of the following limitations imposed by AB 1751:

• The statute prescribes height, massing, parcel size and density requirements.
• There is an inclusionary housing requirement reserving 10 percent of a project's units to lower-income households, unless a stricter local inclusionary requirement applies or the project proposes less than 11 units.
• Not all multifamily and single-family parcels are eligible. There are important exclusions limiting redevelopment of sites with existing residential units, environmentally constrained sites, historic resources and conversion of rural and suburban sites that don't meet AB 1751's definition of infill.
• Tribal consultation under Public Resources Code Section 21080.66(b) is required.
• AB 1751 does not supersede the California Coastal Act in the Coastal Zone.
• San Francisco is excluded from the bill entirely. However, recent local zoning changes in San Francisco already permit higher densities than those enabled by AB 1751.

Practical Implications for Developers

AB 1751 has the potential to reshape the economics and feasibility of for-sale residential development in California. Key practical implications include:

• Focus on Attainable Homeownership Opportunities. AB 1751 reflects the legislature's keen focus on expanding homeownership opportunities for working families. It is designed to directly address California's homeownership affordability crisis by enabling the development of fee-simple townhomes priced within reach of working and middle-class families. Unlike rental apartments, townhomes offer buyers the opportunity to build equity and long-term wealth. The combination of lower construction costs, streamlined approvals and flexible ownership structures positions AB 1751 projects to deliver homes at price points that meet the "missing middle" market – families with incomes too high for subsidized affordable housing but too modest for conventional single-family home purchases.
• Faster, More Predictable Entitlements. The ministerial approval pathway eliminates discretionary review, public hearings and CEQA litigation. The ministerial process and shot clock for approval drastically shorten project timelines and reduce soft costs. Townhome projects may now move to permitting on a significantly accelerated basis.
• Lower Construction Costs and Broader Builder Participation. Wood-framed townhomes with standard residential appliances are significantly less expensive to construct than five- or six-story apartment buildings requiring elevators and structured parking. By encouraging townhome development, AB 1751 encourages a residential product type with lower construction costs. The simpler construction allows smaller and mid-sized builders to participate in the market and benefit from the state's housing streamlining laws. Projects also allow phased construction, enabling developers to adjust the pace of delivery in response to market conditions.
• Conventional Financing and Insurance Access. Fee-simple townhomes and air-gap units qualify for standardized construction loans, mortgages and property insurance. This avoids the complex financing and insurance challenges that frequently arise for mid-rise condominium and apartment projects.
• Flexible Site Design. New projects under the law can accommodate various parcel shapes and sizes, ranging from a single row of homes along a street frontage to units arranged around a corner park. Parking can be accommodated in first-floor garages or as surface parking in rural and suburban settings.
• Project Scale Flexibility. Projects can range from a handful of homes to the statutory maximum of 150 units, with flexibility for phased development as market conditions warrant.
• New Opportunities for Single-Family Zoned Parcels. The ability to develop townhomes on underutilized single-family zoned land – provided no existing residents or affordable covenants are affected – opens new categories of development sites that were previously unavailable for higher-density ownership housing.
• Community Compatibility. Two- and three-story townhomes are historically familiar housing forms that integrate well into existing neighborhoods. Local objective design standards continue to apply, providing communities with assurance that new development will be consistent with neighborhood character.

Looking Ahead

AB 1751 may prove to be one of California's most consequential housing streamlining laws. By establishing a clear, ministerial pathway not subject to CEQA for townhome development, with flexible ownership structures and meaningful density requirements, AB 1751 has the potential to unlock development on thousands of parcels across the state and to meaningfully expand the supply of attainable, for-sale housing.

Holland & Knight's West Coast Land Use and Environmental Group and Real Estate Practice continue to monitor developments regarding housing in California. If you have any questions, contact the authors.

Notes

¹ AB 1751 added Section 65852.30 to the Government Code and adds Chapter 9 (commencing with Section 66499.45) to Division 2 of Title 7 of the Government Code.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.