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During the past several years, California legislators have been pushing through new legislation to increase potential housing opportunities in California. In October, Governor Newsom signed California Senate Bill 79 (SB 79), which opens up new residential developments near rail and bus stations in major California communities. Specifically, SB 79 creates rules to override local zoning regulations related to height and density for sites near transit-oriented development stops and applies to the "urban transit communities" of Los Angeles, Orange, San Diego, Alameda, San Francisco, San Mateo, Santa Clara and Sacramento. Assuming certain conditions are met, developers get streamlined ministerial approvals along with density bonuses and potential exemptions from CEQA.
As it pertains to public agencies utilizing eminent domain, the legislation may ultimately provide nearby property owners with "project benefits" that could offset severance damage claims in partial acquisitions of properties near transit (for example, acquiring the frontage off a property for street widening to accommodate a new transit line may diminish the property's remaining value, but the new zoning standards may result in additional density and height allowances that enhance the property's value). One other interesting question is whether public agencies themselves can take advantage of this new legislation to acquire property near transit stations for transit-oriented developments. While there may be ways to do so, SB 79 does not necessarily allow agencies to take advantage of the upzoning in such circumstances. In addition to requirements that the public agency's transit-oriented development meeting required residential and affordable housing goals, SB 79 has an additional condition that the "sites must not be recent acquisitions by eminent domain (post-July 1, 2025)." In other words, to take advantage of the new zoning overrides under SB 79, a public agency cannot have condemned out the property for the transit-oriented development.
We'll continue to monitor how SB 79 plays out in California for both private property owners and public agencies.
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