California Housing Reform Takes On One of America’s Richest Cities

A major new California housing law is beginning to reverberate through one of the nation’s priciest real estate markets, prompting a surge of apartment plans in upscale neighborhoods and alarming homeowners who fear their communities could be permanently transformed.

Within weeks of Senate Bill 79, or SB 79, taking effect on July 1, developers moved quickly in Palo Alto, the wealthy Silicon Valley enclave, filing proposals for hundreds of new residences. City officials have acknowledged the speed and volume of applications caught them by surprise.

Known as the Abundant and Affordable Homes Near Transit Act, the law aims to confront California’s long-running housing shortage by permitting larger residential projects near rail stations and key bus corridors, even in places where existing local zoning would typically block that level of density.

Backers argue the measure could help relieve the state’s deep affordability crisis by adding thousands of homes in transit-friendly locations where demand for housing remains intense.

Opponents, however, say the policy risks remaking long-established neighborhoods, putting pressure on roads, schools and utilities, and potentially weakening home values in some of California’s most sought-after areas.

In Palo Alto, where the typical home is valued at about $3.6 million and a one-bedroom apartment rents for approximately $3,630 a month, SB 79 has already set off an immediate wave of development interest.

Over a hectic two-week stretch, developers filed nine multifamily housing proposals that together would add 341 apartments, before the city enacted a temporary moratorium on new applications under SB 79.

The plans include striking six- and seven-story apartment complexes with curved exteriors, glass-lined balconies and rooftop gardens — designs that, if built, could significantly reshape the look and scale of several Palo Alto neighborhoods.

One proposed development near a Caltrain station would create 17 apartments above existing retail space, while another six-story building would feature a green roof and decorative aluminum fins.

Mayor Vicki Veenker admitted city leaders had not anticipated such a flood of applications arriving so quickly.

‘We’ll see who follows through and in what manner, but it’s also important to note that these projects are a mixed bag,’ she told SFGate.

‘As the community and the council and staff digest this, we’ll all be able to come to a better understanding of what the impact is.’

The new law allows apartment buildings to override many local zoning restrictions if they’re located close to major transit.

Buildings next to rail stations such as Caltrain or BART can reach nine stories, while developments slightly farther away can still rise between six and seven stories depending on their proximity to transit.

The aim is to encourage people to live near public transportation, reduce car dependence and make it easier to build new housing in cities where restrictive zoning has long limited supply.

Housing advocates say California has failed to build sufficient homes for its population for decades, pushing prices far beyond the reach of many families.

‘This has really given a giant boost to the YIMBY (Yes In My Backyard) movement,’ Matthew Lewis, communications director for California YIMBY, told SFGate.

‘YIMBYs across the country were watching this bill because it was proof of concept that actually we can have nice things.’

However, not everyone is convinced.

Some residents fear taller apartment buildings will fundamentally alter the character of suburban neighborhoods.

One Peninsula resident accused supporters of not caring ‘how this law will disrupt the fabric of a neighborhood.’

Another warned it could lower property values and reduce residents’ quality of life, while others argued that additional housing would increase congestion, pollution and strain public services.

Others, however, say California has little choice if it wants to tackle soaring housing costs.

Pro-housing groups argue that concentrating development around transit hubs is one of the most effective ways to address both the state’s housing shortage and climate goals.

Palo Alto isn’t the only city grappling with the changes.

Some municipalities, including Redwood City, Belmont, San Mateo and South San Francisco, have opted not to seek exemptions from the legislation.

Others, including San Francisco and Los Angeles, are introducing alternative plans or phasing in parts of the law over the coming years.

In San Mateo, one proposal would replace a single-family home with a five-story building containing 20 studio apartments just a short walk from the city’s Caltrain station.

Meanwhile, cities including Mountain View and San Carlos have yet to receive any SB 79 applications.

The early response suggests developers are eager to take advantage of the new rules.

‘We are more than surprised at how successful it’s been,’ Jack Farrell, a research attorney with YIMBY Law, told SFGate.

‘There’s clear interest in this law being utilized to create more housing. 

‘If they were able to get nine projects in a two-week period, I can only imagine what it would be like if they were to just let SB 79 be in effect throughout the city.’

The battle highlights California’s growing housing divide.

While the state desperately needs more homes to address decades of underbuilding and sky-high prices, many affluent communities remain resistant to higher-density development.

Whether SB 79 ultimately succeeds in easing the housing crisis – or simply fuels more local opposition – may determine how far California is willing to go in overriding local zoning rules in pursuit of more affordable housing.