RMO World – Issue 50: December 2025 Holiday Edition

We are grateful to have spent some time around the holidays with some of our wonderful RMO ambassadors. We had a great luncheon this past week and we look forward to our next get together.

The holiday season is here. California’s construction industry enters a unique stretch filled with both opportunity and challenge. While many industries wind down this time of year, construction across the state often keeps moving. Mild weather in most regions and consistent demand for housing and infrastructure help maintain steady activity, even as the calendar shifts toward year-end.

For many contractors, the final weeks of the year are a chance to push projects forward before new budgets, regulations, or funding cycles begin. With lighter traffic in some areas and fewer public events, crews can sometimes work more efficiently, especially on road improvements, utility upgrades, and large-scale developments. It’s a window where momentum matters, and every productive day counts.

At the same time, the holiday season requires balance. Labor availability can dip as workers take time to be with family, and material deliveries may slow due to holiday shipping schedules. Effective planning becomes essential—project managers often order materials early, adjust staffing, and streamline tasks to keep work progressing without unnecessary pressure on crews.

Still, construction during the holidays remains an important economic driver. It supports local jobs, keeps vital projects on track, and helps California move toward its long-term goals for growth and sustainability, even in the midst of celebration.

As the holiday season approaches, Mercy Housing California continues its ongoing efforts to address the state’s need for affordable, service-enriched housing. The organization, one of the largest nonprofit housing developers in the state, has recently opened new communities designed to support families, seniors, and individuals who have previously experienced homelessness.

These newly completed developments reflect Mercy Housing’s broader focus on providing long-term, stable housing paired with onsite resident services. Many of the organization’s properties include access to educational programs, after-school activities, workforce resources, and health and wellness support. By integrating these services, the developments aim to promote stability and improve outcomes for residents over time.

While the holiday season often highlights themes of home and community, the timing also underscores the broader housing challenges California continues to face. Rising construction costs, limited land availability, and increasing demand for affordable units place ongoing pressure on developers and nonprofit providers. Mercy Housing’s recent openings contribute to statewide efforts to expand the availability of accessible housing options and address these persistent shortages.

The organization’s latest projects add to its portfolio of communities across urban and suburban regions, offering a mix of multi-family units built to meet local needs. As these developments begin welcoming residents, they represent another step toward expanding California’s affordable housing inventory at a time when stable living environments remain critical for many households.

This article is intended for informational purposes only and not as an endorsement of any organization or person.

Starting January 1, 2026, two major reforms will reshape private construction contracting and payments in California. First, under Senate Bill 61 (SB 61), most private works contracts entered on or after that date must limit retention (the portion of payment withheld until completion) to a maximum of 5 % of each payment and of the total contract value. This aligns private contracts with public-works retention standards in the state. Contractors, subcontractors and owners must now revise contract templates, flow-down terms, and payment schedules accordingly.

Second, under Senate Bill 440 (SB 440), the “Private Works Change Order Fair Payment Act”, new rules will govern claims, change orders and payments for private work of improvement. Owners must respond in writing to claims within 30 days, undisputed amounts must be paid within 60 days (or interest accrues), and subcontractors gain stronger protections on flow-down claims and mediation rights.

In addition, significant updates to building and safety code requirements will take effect January 1, 2026 under the 2025 edition of California Building Standards Code (Title 24). These include changes to how occupied roofs are classified (impacting building height and egress), stricter rules for battery energy storage systems (BESS) and other structural/energy-efficiency provisions.

Together, these changes require project owners, contractors, design teams and lenders to update contracts, billing workflows, construction designs, inspection procedures and compliance checklists ahead of 2026. Failure to adapt risks payment delays, higher costs, non-compliance and legal exposure.

Here are some sources for further reading:

• New California Law Limits Construction Retention to 5% on Private Contracts
• California Construction Laws Changing in 2026: New Rules for Payments & Retention
• California’s SB 440: New Private Construction Claim Rules Effective January 2026
• California’s 2025 Title 24 Code: The 5 Biggest Changes Impacting Construction in 2026 and Beyond

This article is for information purposes only and is not legal advice of any kind, nor should it be seen as a comprehensive resource on the topics discussed. This article is not an endorsement of any organization. Any links provided are for informational purposes only.