October 22, 2025
By Derek Wyatt, Managing Director; Jordan LaMarche, Vice President; Evan Farrar, Senior Associate
California’s recent reforms to environmental and land use policy are beginning to reshape the state’s long-standing development constraints. Following the modernization of CEQA through AB 130 and SB 131, the passage of Senate Bill 79 (SB 79) represents the next major step, moving from simply clearing out friction in the development process to actively expanding where housing can be built.
While the recent CEQA reform tackled the process side of the equation by reducing delay and entitlement risk, SB 79 tackles the capacity side, opening the map for new multifamily housing in the very places where market demand and infrastructure capacity already support it. Together, these reforms signal a broader shift in California’s housing framework: from mitigating what prevents housing to identifying where new housing can naturally thrive.
A Structural Correction to Restrictive Zoning
California’s high cost of living has been perpetuated by local zoning that is overly restrictive of multifamily development in transit-rich locations. SB 79 directly addresses this by establishing statewide baseline entitlements for housing within walking distance of qualifying stations (with tiers by mode and distance), creating a clear, uniform framework that supersedes local discretionary barriers.
The law ties maximum building height to the quality and intensity of nearby transit service:
- Up to nine stories near heavy rail or high-frequency commuter rail stations
- Up to eight stories adjacent to light rail, frequent commuter rail, or qualifying bus rapid transit (BRT) lines, tapering with distance from the stop
These standardized entitlements not only clarify what can be built but also begin to level the playing field across jurisdictions, reducing the local uncertainty and political variability that have long defined land use processes in California’s cities.
Aligning Regulation with Development Economics
By raising baseline height limits, SB 79 significantly expands the feasibility range for Type III (podium) construction, which typically offers the most efficient balance between density and cost for urban infill projects. This adjustment aligns regulatory form with present-day market reality: projects that previously failed to “pencil” under local zoning may now achieve more viable yields without the cost premium of high-rise construction.
For example, RCLCO’s recent research and recommendations on Los Angeles’s Citywide Housing Incentive Program (CHIP) underscored the importance of such height calibrations in unlocking the “missing middle” of multifamily feasibility. SB 79 effectively scales that approach statewide: transforming select, politically negotiated opportunities into a consistent, as-of-right framework that improves predictability for developers and their capital partners.
Still, the success of SB 79 will depend on whether the added density and certainty in the entitlement process truly translates into enough additional value to offset the cost of the inclusionary requirements that accompany it. Since local jurisdictions retain the authority to impose affordability requirements that exceed the SB 79 requirements, the practical impact of SB 79 may vary widely. In cities where affordability requirements are too high or poorly calibrated across income levels, the additional density and flexibility alone may not be sufficient to restore feasibility, blunting the bill’s impact.
Unlocking Market Potential Around Transit
SB 79’s geographic focus also matters. Transit-served corridors already represent the strongest locations for multifamily development in the most undersupplied cities, with proven rent premiums, demonstrated demand, and zoning that is often more accommodating to density. These are the areas where developers have been looking to build, but have faced local constraints on height, density, and entitlement timelines.
By legalizing a broader range of multifamily forms in these corridors, SB 79 effectively widens the aperture for feasible development and brings more sites into play. The result is a larger pool of potential projects in locations that already have the underlying infrastructure, land values, and market depth to support higher-density housing.
Implications for Capital and Policy
When viewed alongside CEQA modernization, SB 79 signals a move toward a housing environment defined by predictability and scalability. CEQA reform addressed uncertainty and delay; SB 79 expands opportunity and capacity. Together, they begin to restore a sense of momentum to California’s development ecosystem.
The next challenge lies in translating this new legal capacity into tangible housing outcomes. Execution, including the interplay between the bill’s provisions and local affordability requirements, will determine whether this policy shift leads to measurable new supply. But California’s development environment appears to be moving in a direction that can credibly support renewed private investment.
If CEQA reform was about clearing the path, SB 79 is about opening the map. The message to the market is clear: California could, once again, be open for business.
