Owners of commercial property located near public transit may soon find it easier, faster, and more profitable to build tall apartment buildings on their land. On July 3, 2025, Senate Bill 79 passed a crucial Assembly committee. If passed during this legislative session, SB 79 would go into effect on January 1, 2026.
New SB 79 Process
SB 79 authorizes the construction of dense residential housing in residential, mixed-use, and commercial zoning districts on parcels located up to one-half (½) mile from a variety of transit stops, given certain conditions are met. This means local governments must allow residential construction on land zoned strictly for commercial purposes under SB 79.
SB 79 creates a tiered system based on the proximity of a parcel to a transit stop, the type of transit stop, and the frequency of service the transit stop offers. Generally, the closer to the transit stop a property is, and the higher the frequency of service the transit stop offers, the more housing the property can accommodate.
For instance, on the higher side of the spectrum, properties located within one-quarter (¼) mile of certain BART or Caltrain stops could accommodate a residential development measuring up to seven or eight stories, with a maximum density of no less than 120 dwelling units per acre. Such projects must also be allowed a Floor Area Ratio (“FAR”) of no less than 3.5. FAR measures the quantity of construction that can be built on a parcel relevant to the parcel’s size (e.g. a FAR of 1.0 means the building's total floor area is equal to the lot’s area).
On the lower side of the spectrum, properties located within one-half (½) mile, but more than one-quarter (¼) mile, of certain bus stops could accommodate a residential development measuring up to five or six stories, with a maximum density of no less than 80 dwelling units per acre. Applicable bus stops must feature service intervals of 15 minutes or less during the morning and afternoon peak commute periods. Applicable bus stops must also use separated bus lanes or rights-of-way that are dedicated for public transportation, among other requirements. Such projects must also be allowed a FAR of no less than 2.0.
Projects that directly border applicable transit stops are eligible for even taller building heights, increased density minimums, and increased FAR.
Generally, SB 79 projects must include affordable housing, though in lesser amounts compared to similar statutory schemes. Project applicants can satisfy SB 79’s affordability requirements in one of two ways: comply with a local jurisdiction’s inclusionary housing ordinance or pay any affordable housing fee, or, if neither of the aforementioned options exist, and the project proposes 10 or more units, the applicant can satisfy any of the affordability requirement under the state Density Bonus Law.[1] An applicant can thus only avoid affordability requirements under SB 79 if a project proposes 10 or fewer units in a jurisdiction that does not have an inclusionary housing ordinance or require payment of an affordable housing fee.
SB 79 does not in and of itself create a ministerial development process, meaning SB 79 projects must navigate traditional discretionary land use hurdles, including compliance with the California Environmental Quality Act (“CEQA”). However, SB 79 does allow applicants desiring a streamlined development process to utilize the ministerial process under Senate Bill 35.[2]
SB 79 Favors Affordable Housing
SB 79 mandates base-level affordability requirements. However, SB 79 can work alongside the Density Bonus Law and SB 35, two statutory schemes that aim to incentivize builders to construct affordable housing. Applicants seeking to reap the full benefits of SB 79 can take advantage of all three statutes simultaneously by adding additional affordable units to their projects.
Density Bonus Law
The Density Bonus Law requires that a local jurisdiction grant a developer proposing a housing project with at least five housing units a density bonus as well as incentives and concessions in exchange for the developer agreeing to add units to their project that are either affordable or dedicated to senior citizens. The law also requires that a local jurisdiction agree to waive or modify any number of development and zoning standards that would physically preclude the utilization of any granted density bonus, incentives, or concessions.
SB 79 authorizes an applicant to receive any density bonus owed to them under the state Density Bonus Law as a result of the applicant satisfying any of the law’s affordable housing requirements. SB 79 also not only permits applicants to take advantage of any concessions and/or incentives owed to them under the Density Bonus Law, but authorizes additional concessions. The number of additional concessions (e.g., a reduction in required parking minimums) depends on the proximity of a project to a transit stop, and the type of transit stop it is. SB 79 does include a caveat, however: local jurisdictions are not required to waive height limit standards under the Density Bonus Law for projects proposed under SB 79 if a proposed project exceeds local height limitations.
SB 35
Project applicants proposing an SB 79 project can also take advantage of the streamlined, ministerial development process created under SB 35. To qualify for approval under SB 35, a project must meet various requirements. For instance, applicable projects must be proposed for an infill site (generally, land located in an existing urban area). Further, projects must meet certain affordability requirements which vary depending on whether the jurisdiction in which the project is proposed has satisfied its housing allocation under the Regional Housing Needs Assessment, or whether the units to be constructed will be for rent or for sale, among other requirements. SB 35 projects must also be proposed on parcels zoned for residential or mixed-use, though SB 79 removes this requirement for SB 79 projects proposed for commercially zoned land. SB 35 also requires payment of prevailing wages and skilled labor requirements. SB 79 does not waive SB 35’s wage and labor requirements.
Other Pathways for Developing Commercial Property
SB 79 represents the latest legislative effort to allow residential construction in commercial zones, but not the first.
Assembly Bill 2011[3] provides a streamlined, ministerial approval process for projects proposed in commercial zones. AB 2011 applies to two categories of projects: 100% affordable projects and mixed-income projects located along commercial corridors. Both categories of projects require payment of prevailing wages to workers. Compared to SB 79, AB 2011 imposes stricter affordability requirements. Additionally, AB 2011 does not provide a pathway to avoiding prevailing wage requirements.
Senate Bill 6[4] provides that residential housing must be permitted in commercial zones if a variety of conditions are met. These conditions include relocation assistance to commercial tenants and various site-specific requirements. SB 6 includes no affordable housing quotas. SB 6 does not in and of itself create a ministerial approval process, though qualifying SB 6 projects can be stacked with SB 35. SB 6 mandates certain wage and labor requirements. SB 6 generally imposes more onerous conditions compared to SB 79. Additionally, SB 79 only imposes wage and labor requirements if developers utilize SB 35, while SB 6 imposes those requirements either way.
Conclusion
If passed by the legislature, SB 79 would be a boon to commercial property owners, especially those who own land in transit-rich, urban areas. SB 79 improves upon aspects of AB 2011 and SB 6, including certain wage, labor, and affordability requirements. However, each statutory scheme offers its own unique set of benefits depending on the goals of the developer and the location and character of the particular parcel to be developed.
If you are interested in adding housing to your commercial property, please contact Berliner Cohen’s land use attorneys for a consultation at 408.286.5800.