HELL YEAH. California finally legalized apartment buildings near transit, statewide. Let's talk about the consequences.

BOTTOM LINE, UP FRONT: The big rezoning bill, SB79, passed the Legislature and it is a big fucking deal for dealing with the housing crisis. Because now it's legal to build apartments near public transit, statewide.

Side note before I begin - this post is about LA, but everything about this also applies to the Bay Area.

There are two crises that California faces these days. #1 is the housing crisis, because there just isn't enough housing to match the number of jobs. The housing crisis exists because cities have made it nearly impossible to build new housing. Some suburbs, like El Segundo, Beverly Hills, and Alhambra, have barely grown in 40-50 years despite skyrocketing demand.

The State has been trying to force cities to get their shit together for decades. The State created tools that local governments could choose to build more housing on their own terms, and city councils basically shrugged. The State tried to throw money at the problem and fund new affordable housing, but city councils buried new affordable housing in red tape - it costs almost as much to build a new rent-controlled apartment as to buy a single-family home. The State tried a quota system for cities, and LA cities were supposed to build 1.3 million homes by 2029. But cities put on a dog and pony show, promptly returned to business as usual, and Newsom chickened out. LA's cities are on pace to build 467,000, less than a third of the target.

Crisis #2 is the transportation. Traffic is horrible, and public transport isn't very useful, and it's facing a post-pandemic funding crisis. Transit works in New York, Tokyo and London because because they build stuff within walking distance of the stations. If you go to LA Metro stations in Rancho Park or El Segundo ... there's just not much there.

London's train stations have stuff you can walk to nearby...

... while LA's do not.

This year, the Legislature finally got serious. They passed laws streamlining the California Environmental Quality Act and allowing builders to get inspections done faster. (Buildings departments are legendary for being slow and corrupt.) SB79 completes the trifecta of big reforms this year. SB79 does two things: it legalizes apartments near public transit, overriding local laws, and it also allows public transit agencies to act as real estate developers on the land they own. Let's talk about what's in the bill; and here's a map of affected areas.

THE BASICS OF THE BILL.

There's two parts to the bill. There's the actual zoning standards, which a city can tweak but not override. There's also no way for a city to legally deny a building that matches the law.

1: WHAT THESE NEW APARTMENTS CAN LOOK LIKE.

Rather than giving a laundry list, SB79's key provisions are best listed as a table. Here's what you can build:

SB79 buildings have a requirement to build rent-controlled units (or equivalent below-market-rate condos). It's a sliding scale, based on the income level restriction. Keep in mind, "low-income housing" is a descriptor based purely on family size and salary, not a proxy for moral fiber or anything.

SB79's flavor of zoning actually reflects a return to the old way of doing things. In the past, LA allowed way more to be built than today. In 1960, LA City alone was zoned for 10 million homes, and by the 21st century, that number had been cut in half. I suspect that Sacramento would never have intervened if the cities hadn't been so unwilling to change. The cities fucked around, and oh boy, did they find out.

2: TRANSIT AGENCIES CAN BUILD APARTMENTS ON LAND THEY OWN.

The second part of the legislation is that Metro, and other transit agencies now have legal authority to develop land that they own near transit stations. This isn't a big deal in the short term. But in the long term, it opens the door for one of the things that made Tokyo's transit system so good - because Japanese transit operators develop and operate real estate. 20% of Japan Rail's revenue comes from its real estate unit. This isn't a new thing in Los Angeles, either. It's actually the oldest thing in LA. The old Red Car system made their real money developing real estate near the stations. This was normal during a century ago - Oakland's streetcar company was owned by a company called the "Realty Syndicate."

There's tons of opportunities for Metro and Metrolink to take advantage of, because much of the transit network was built as park-and-ride. Here's Redondo Beach station on the Pink Line, for example. There's four full acres of land that's used for parking lots - enough to house 2,000 people under SB79's baseline zoning.

3: WHERE SB79 DOESN'T APPLY.

Now, SB79 does have safeguards, because you don't want people to live in Bad Places. Nobody wants a repeat of the Palisades Fire. Thus, SB 79 doesn't apply to:

• Fire zones
• Areas vulnerable to sea level rise
• Buildings with rent-controlled apartments
• Designated historic areas (with limitations to prevent abuse)

These are pretty common-sense limitations, and they're probably going to have to be adjusted in the future.

THE END OF THE BEGINNING.

Now, I'm not going to say this is going to fix the housing market overnight. This is a crisis 50 years in the making. And the market is difficult, because the Administration's tariffs and immigration raids have wreaked hell on the construction industry. But it's still a big fucking deal, guys.

It's going to take more more reforms, more fixes to make LA and the Bay Area work again. But things are finally getting fixed. Let's do this.