Update: Final Guidance Issued for AB 130 Statewide VMT Mitigation Program

On June 30, 2026, the California Governor’s Office of Land Use and Climate Innovation (LCI) released final guidance for the Assembly Bill 130 Statewide Vehicle Miles Traveled (VMT) Mitigation Program (the Program) following the draft guidance discussed in our April 24, 2026, Legal Alert, available here.

The final guidance clarifies several issues relevant to Program access and administration but largely maintains the draft framework under which lead agencies may allow applicants to mitigate significant VMT impacts under the California Environmental Quality Act (CEQA). Of particular relevance to private developers, initial Program access will be limited to publicly funded projects.

Final Guidance Preserves the Core Contribution-Based Framework

As discussed in our prior Legal Alert, LCI developed guidance for a voluntary statewide VMT mitigation program that gives lead agencies another option for mitigating significant transportation impacts measured by VMT. Under this framework, a lead agency may choose to mitigate some or all of a project’s significant VMT impacts through a monetary contribution deposited by the lead agency or applicant representative, as applicable, to the Transit-Oriented Development Implementation Fund. The California Department of Housing and Community Development (HCD) would then award those funds to support VMT-efficient affordable housing and related infrastructure projects designed to reduce vehicle travel and mitigate the VMT impacts of contributing projects.

Program Rollout Begins with Publicly Funded Projects

While the Program remains potentially available to any CEQA project with significant VMT impacts, HCD will initially focus Program access on projects receiving funding support from public sources, including direct financial assistance, grants, subsidies, loans, tax credits, or other funding support from federal, state, regional, or local public sources. HCD and LCI may revisit this approach through future guidance updates. Private developers should, therefore, monitor early Program use and continue evaluating more traditional mitigation options for projects with significant VMT impacts during this initial phase.

Updated Credit Values and Sub-Area Pricing

The Program uses VMT Mitigation Credits to calculate the monetary contribution required to offset a project’s significant VMT impacts. LCI updated the VMT Mitigation Credit values to include an additional three percent administrative cost for administering, tracking, reporting, and updating the Program, which LCI will evaluate every three years and adjust if needed to account for demand.

The final guidance also implemented sub-area pricing for the Southern California Association of Governments (SCAG) and Metropolitan Transportation Commission (MTC) regions, as these jurisdictions are larger and more diverse than other metropolitan planning organizations. Contributions made within those sub-areas will still be collected, monitored, and prioritized within the broader SCAG and MTC areas consistent with the draft guidance’s framework.

Additional Support for Program Use as CEQA Mitigation

The Program’s mitigation theory remains the same: VMT-efficient affordable housing is expected to generate fewer vehicle miles traveled than comparable market-rate housing, and those reductions can be used to mitigate significant VMT impacts from other projects. The final guidance provides additional detail showing how those reductions are calculated to support the CEQA nexus between a project’s VMT impacts, the required contribution, and the VMT reductions expected from funded mitigation projects. This includes regional and sub-regional data regarding trip generation, trip lengths, VMT generation per unit, and affordable housing development costs.

Program Implementation Remains Ongoing

The final guidance establishes the Program’s operational foundation while HCD administration and future rulemaking will shape its use. LCI states that it will continue coordinating with HCD on implementation details and begin formal rulemaking to adopt the guidance as CEQA regulations. In addition, Assembly Bill 130 requires LCI to update its implementation guidance at least once every three years after July 1, 2026.

HCD has also issued Transit-Oriented Development Implementation Program Guidelines addressing how funds will be awarded to eligible affordable housing developments and related infrastructure projects. Future funding announcements will provide details concerning available funds, application requirements, scoring, deadlines, and award terms.

Allen Matkins will continue monitoring implementation of the Program, LCI’s CEQA rulemaking, and early agency use of the Program. For questions relating to the final guidance or CEQA transportation mitigation, please contact the Allen Matkins land use and natural resources team.