California’s new law that lets apartment buildings up to nine stories get built near major transit stops could fuel construction across the state — but not in Los Angeles, said CityView Chief Executive Officer Sean Burton.
The longtime developer, who is building 500 units near Los Angeles International Airport, said Senate Bill 79, signed by Gov. Gavin Newsom in October to allow multifamily development to override zoning restrictions, will be curtailed in Los Angeles by the city’s voter-approved transfer tax — Measure ULA — and a slow permitting process even as other regions capitalize on the law’s streamlined development rules.
Without those impediments in Los Angeles, the new streamlined regulation process "can really help spur significant housing development and build the kind of critically needed units to address the affordability crisis," Burton said.
He added that “you’re going to see a housing boom in California, and it’s unfortunately going to skip the city of Los Angeles."
Despite the high rents in Los Angeles that point to potential profits for developers, high construction costs, the difficulty of obtaining financing packages and what developers say is red tape have hindered the construction of residential units in recent years.
“We’ve been the largest builder in LA County for more than a decade,” Burton said. “But we just can’t make the numbers work anymore.”
The city approved just 17,200 residential units in 2024, about 30% of its annual target, according to officials. Burton attributes the drop largely to Measure ULA, the mansion tax that he says reduced multifamily permits by 20% overnight.
The ULA transfer tax — a tiered levy on property sales above $5 million — adds as much as 8% to project costs at sale or refinancing, a hit that can erase margins and deter investors from backing new construction. Many lenders now view Los Angeles as too risky, forcing projects to stall or relocate to nearby cities where profits are more easily made.
Unlocking sites for development
SB79 represents a victory for housing advocates led by state Sen. Scott Wiener of San Francisco, who said it “unwinds decades of overly restrictive land use policies.”
Supporters such as the advocacy group California YIMBY — standing for “yes in my backyard” — say the law can finally deliver the state’s long-promised “housing abundance” when it takes effect July 1.
Mission-oriented housing developers in Los Angeles — such as affordable housing nonprofits and service providers — applauded the measure, saying it will help boost economic mobility in the city by adding more housing near transit lines and creating opportunities for residents.
“The core of SB79 aligns perfectly with our mission: building housing alongside pathways to self-sufficiency,” André Bueno, chief investment officer of Los Angeles–based affordable housing developer Better Angels, wrote in an email to CoStar News. “Placing high-density housing within a half-mile of rail and bus rapid transit lines is a deliberate and strategic approach.”
In Los Angeles, transit advocacy group Streets for All estimates the law would make 448,000 new housing units eligible for by-right development — assuming developers can secure financing and overcome local opposition.
Changing the narrative
But not everyone is convinced the law will have a major impact. A report by Hilgard Economics concluded that high costs and financing hurdles mean the legislation is “unlikely to trigger a new wave of construction.”
Mayor Karen Bass and most of the Los Angeles City Council opposed SB79, calling it an overreach that “usurps local control.”
Community groups have also mobilized against the law, arguing that it threatens the character of established neighborhoods by allowing mid-rise buildings in areas traditionally reserved for single-family homes.
The law builds on earlier efforts to fast-track affordable housing and accessory dwelling units and applies to eight major counties, including Los Angeles, San Diego and San Francisco.
It also aligns with Newsom’s goal of allowing Californians to live “15-minute lifestyles,” close to jobs and public transit.
“There’s a lot of promise here,” Burton said. “But we need to show that we’re pro-jobs, that we’re going to build housing and bring down costs. That’s how we change the narrative.”