California’s New Housing Law Aims to Address Urban Density and Housing Shortage

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A groundbreaking legislative measure known as the Abundant and Affordable Homes Near Transit Act, or Senate Bill 79, takes effect this July. The law paves the way for substantial urban housing developments near major transit stops throughout California, potentially resulting in the construction of over a million new housing units in dense urban areas.

This law mandates local governments to accept taller apartment and condominium buildings around rail stations, ferry terminals, and rapid transit bus stops. The bill overrides previous local restrictions that have hindered developmental progress. Crafted by State Senator Scott Wiener from San Francisco, this law represents a decisive step towards tackling California’s escalating housing crisis.

With plans underway, real estate developers are maneuvering cautiously to leverage these new provisions, with ambitions to commence projects as soon as the legal framework is in place. Sean Burton, Chief Executive of Cityview, has expressed optimism regarding the potential impacts of the law, anticipating it will accelerate housing development in Los Angeles and other regions.

The bill’s zoning guidelines facilitate the construction of midrise and high-rise multifamily housing, potentially legalizing up to 1.5 million new units in cities including Los Angeles. Developers can construct buildings up to nine stories tall adjacent to certain transit stops, with a tiered zoning system determining height limits based on proximity to the stop. This ranges from six to nine stories for areas close to heavy-rail lines like the L.A. Metro B and D lines, and from five to eight stories near light-rail lines and certain bus routes.

SB 79 is tailored to counties encompassing at least 15 passenger rail stations. This criteria applies to locales like Los Angeles, Orange, San Diego, Alameda, San Francisco, San Mateo, Santa Clara, and Sacramento. Among these, Los Angeles is anticipated to experience the most significant impact due to its extensive network of transit stops, with preliminary assessments estimating around 150 affected locations.

In anticipation of the law’s enactment, architecture firms such as SPF:architects are on the verge of unveiling residential projects strategically aligned with the new legislation. Although specific project details remain undisclosed to avoid potential opposition, the preparation signals readiness to capitalize on the law’s provisions.

Municipalities possess the option to delay the new zoning laws until 2030 by formulating density plans tailored to their preferences. However, if they fail to establish these plans by the deadline, they must abide by SB 79’s terms. Consequently, cities might face a surge in development proposals as stakeholders aim to comply with the regulations before local plans are finalized.

Los Angeles has maneuvered to temporarily temper the requirements through upzoning multiple regions, thus stalling full implementation of SB 79. Despite the local resistance, developers remain hopeful. Burton anticipates that new housing initiatives could flourish due to recent adjustments in state legislation, including SB 79 and amendments to the California Environmental Quality Act.

Alongside regulatory evolutions, developers must navigate financial obstacles like Measure ULA, commonly referred to as the mansion tax, which imposes additional real estate transfer taxes on luxurious properties. This tax presents challenges to profitable housing developments within Los Angeles, potentially shifting growth efforts to surrounding areas such as Santa Monica, Culver City, Pasadena, and others.

State intervention is seen as necessary by some industry leaders, emphasizing the critical need to address housing shortages by maximizing the utility of transit hubs. Billions have been invested in transit infrastructures, and an emphasis on developing appropriate housing density around these sites can alleviate pressing shortages and prevent further missed opportunities.