Tracking SB 79 Implementation Before the Train Leaves the Station

Signed into law in October 2025, California Senate Bill 79 (SB 79) is intended to facilitate the development of multifamily housing near major public transit stops in urban transit counties. The groundbreaking law provides increased height and density standards based on a parcel's proximity to a transit-oriented development (TOD) stop and overrides local zoning controls and processes. These heightened standards take effect on July 1, 2026, at which time cities subject to SB 79 must apply those heightened standards when processing new applications.

Although the intent of SB 79 is to incentivize density along transit lines and help covered cities meet their housing goals, the law allows those cities significant flexibility in implementing the law. First, SB 79 allows cities to adopt implementing ordinances that conform local zoning to SB 79 and that may exclude certain parcels from SB 79's requirements, either permanently or on a temporary basis. Second, and separately, SB 79 allows cities to adopt a "TOD alternative plan" to adjust the law's default height and density standards.

With the July 1 deadline approaching, many cities are relying heavily on the implementing ordinance – particularly the temporary exclusion provisions – as a near-term tool to manage SB 79's impact, while treating the alternative plan as a longer-term strategy for the next (7th) Housing Element cycle. Other cities are already pursuing TOD alternative plans now, with the aim of adopting approved plans by the July 1 deadline. Still others are pursuing a hybrid approach.

This Holland & Knight alert summarizes the parameters governing the implementing ordinance, including the temporary and permanent exclusion options that cities are pursuing, as well as the TOD alternative plan. It also discusses the adoption process and the Department of Housing and Community Development's (HCD) role in reviewing both implementing ordinances and alternative plans.

SB 79 Implementation Options

As described in Holland & Knight's previous alert, SB 79 generally applies to all sites within one-half mile of a qualifying transit stop. The law provides two principal options by which cities may alter or delay its impact in these covered areas. First, cities may adopt an implementing ordinance to exclude certain sites from SB 79, either permanently or temporarily. Second, cities may adopt TOD alternative plans to adjust SB 79's statutory height and density standards.

Site-Specific Exclusions

SB 79 allows, but does not require, cities to adopt ordinances implementing SB 79's height and density standards. The primary purpose of these implementing ordinances is to ensure that a city's local zoning standards are compliant with SB 79. The law also provides, however, that the implementing ordinance may designate certain areas as exempt from SB 79, either temporarily or permanently.

Permanent Exclusions: The law allows two types of impacted sites to be permanently exempted from SB 79 pursuant to the implementing ordinance: 1) sites that lack pedestrian access to the transit stop despite their proximity and 2) sites in "industrial employment hubs" that meet specified criteria.¹

Temporary Exclusions: SB 79 also allows cities, through their implementing ordinances, to temporarily exclude certain sites from SB 79 until one year after the start of the next (7th) Housing Element cycle. The categories of sites eligible for temporary exclusion include 1) certain TOD areas that already have significant zoned housing capacity, 2) certain low-resource areas, and 3) sites that are in a very high fire hazard severity zone, contain a locally designated historic resource or are in a 1-foot sea level rise area.

Most notably, the implementing ordinance may temporarily exclude "[a] site that has been identified by the local jurisdiction which permits density and residential floor area ratio at no less than 50 percent of the standards specified" under SB 79. Several cities are reading this provision broadly to allow them to upzone SB 79-covered sites to permit 50 percent of SB 79's default capacity and then to exclude those same sites from SB 79 until the 7th Housing Element cycle. HCD has not yet commented on the legality of this broad approach.

TOD Alternative Plans

Separately, cities may adopt a TOD alternative plan in lieu of complying with SB 79's statutory default height and density standards, subject to limitations. First and foremost, the alternative plan must maintain the same total zoned capacity in transit-proximate areas as allowed under baseline SB 79. Second, the alternative plan cannot reduce the maximum density for any individual site by more than 50 percent of what would be permitted under baseline SB 79, unless the site meets criteria similar to those for excluded sites (e.g., sites in a very high fire hazard severity zone, containing a locally designated historic resource or in a 1-foot sea level rise area). Third, the alternative plan cannot count any site for more than 200 percent of its baseline SB 79 capacity.

This final limitation prevents alternative plans from concentrating the vast majority of SB 79 capacity on a small handful of sites while downzoning all other covered sites to 50 percent. Thus, while cities must still maintain a relatively broad distribution of capacity across the entirety of a covered transit-proximate area, the alternative plan option affords significant flexibility to tailor SB 79's defaults to cities' liking.

Although the alternative plan option is available to all cities impacted by SB 79, the detailed analysis required to develop, prepare and adopt a compliant alternative plan makes it impractical for most cities to complete before the July 1 effective date. For this reason, many cities are treating the implementing ordinance's temporary exclusion provisions as a near-term remedy, with the alternative plan being a longer-term strategy for the 7th Housing Element cycle and beyond.

Process for Adopting Exclusion Ordinances and TOD Alternative Plans

SB 79 sets forth a detailed, time-sequenced process for adoption of implementing ordinances and expressly requires HCD review and approval. Cities seeking to adopt implementing ordinances must comply with the following timelines:

• The city must submit the draft ordinance to HCD 14 days prior to adoption. HCD may, but is not required to, issue written findings in response to the draft ordinance.
• The city must submit the final adopted ordinance to HCD 60 days after its enactment.
• HCD has 90 days (subject to a 30-day extension) to review a final adopted ordinance and determine whether it complies with SB 79.

If HCD determines that the adopted ordinance does not comply with SB 79, the city has up to 60 days to respond, either by amending the ordinance or providing findings that explain the enacted ordinance's compliance with SB 79 notwithstanding HCD's findings. If the local government neither amends its ordinance nor adopts findings addressing HCD's concerns, HCD must notify the city that it is in violation of SB 79 and may also notify the California Attorney General's Office.

The transitionary period between ordinance adoption and HCD approval in relation to SB 79's effective date is likely to be murky – and exponentially so in the event of an HCD finding of non-compliance. Applicants who seek to "vest" to SB 79's default standards must carefully track ordinance adoption, HCD review and plan applications strategically.

The process for adopting a TOD alternative plan is more varied. A city may adopt a TOD alternative plan as part of its Housing Element revision, in which case the standard HCD review and certification process will govern the TOD alternative plan as well. Alternatively, a city may adopt a TOD alternative plan through an SB 79 implementing ordinance, in which case the HCD review process set forth above will apply.

In the next (7th) Housing Element cycle, these will be the only two options for adopting a TOD alternative plan. In the interim, the statute leaves open the possibility that an alternative plan may be adopted through other procedures, such as the possibility that HCD will review existing zoning to determine whether it complies with SB 79.

How Cities Are Responding

With the July 1 deadline looming, cities are taking markedly different approaches to SB 79 implementation. Most cities seeking to vary SB 79's default standards are relying on the implementing ordinance and its exclusion provisions as the pre-July 1, 2026, implementation strategy, with alternative plans being considered as a longer-term tool. The following examples provide a non-exhaustive illustration of the range of approaches being taken.

• Los Angeles, San Francisco and San Jose are pursuing implementing ordinances that permanently exclude sites under the industrial employment hub exclusion. HCD has certified San Jose's ordinance as meeting the statutory requirements.
• Los Angeles is also relying on the temporary exclusion provisions (particularly the 50 percent capacity provision) to effectively delay SB 79 implementation for the entire city, as is Palo Alto.
• San Jose, San Diego and Oakland are relying solely on implementing ordinance exclusions for near-term adjustments, with TOD alternative plans being prepared for longer-term compliance.
• San Francisco and South Pasadena are simultaneously pursuing implementing ordinance exclusions and TOD alternative plans as joint near-term compliance strategies.
• Beverly Hills has adopted a TOD alternative plan as its near-term compliance strategy, but its adopted plan was rejected by HCD.
• Mountain View is likewise pursuing a TOD alternative plan as its sole near-term compliance strategy, but the city has not yet adopted the plan.

HCD's Responses to Date

As of this publication, HCD has provided formal feedback to two cities regarding SB 79 implementation: HCD rejected Beverly Hills' TOD alternative plan, but approved San Jose's exclusion ordinance.

As discussed, Beverly Hills moved quickly to adopt a TOD alternative plan before July 1, 2026. On May 8, 2026, however, HCD issued written findings concluding that the TOD alternative plan did not substantially comply with SB 79. HCD identified two principal deficiencies related to density and capacity and rent-stabilized sites. The city has until July 7, 2026 (60 days from HCD's letter) to respond.

Meanwhile, on June 4, 2026, HCD issued written findings that San Jose's implementing ordinance's exclusion of industrial employment hub sites was in substantial compliance with SB 79. HCD's findings simply verified that the sites were properly subject to the statutory exclusion, because they met the contiguous acreage, prior general plan designation and other statutory requirements. Notably, HCD stated that the ordinance was in compliance "as of the date of this letter," reinforcing the need to achieve HCD approval to demonstrate compliance.

Key Takeaways

Developers and property owners who are looking to take advantage of the development capacity provided under SB 79 should carefully track how cities are implementing the law along with HCD's responses. The key dynamics to watch include:

A number of cities are relying on implementing ordinance's temporary exclusion provisions – particularly the 50 percent capacity provision – to delay full SB 79 implementation until the 7th Housing Element cycle. Whether HCD will approve blanket 50 percent upzonings as a basis for temporarily excluding all covered sites from SB 79 is an unresolved question that could affect the development landscape across the state.

The TOD alternative plan should be viewed as a longer-term tool, likely to become more significant during the 7th Housing Element cycle. In the near term, Beverly Hills' experience with HCD illustrates both the difficulty and the risk of pursuing an alternative plan on a compressed timeline as the sole compliance strategy.

For now, the process of adapting to SB 79 is likely to involve uncertainty, with a more structured and orderly process anticipated in the next Housing Element cycle. Tracking the regulatory updates will be critical to ensure that applicants position themselves most favorably before the SB 79 opportunity train leaves the station.

Notes

¹ This second option is available to only those cities with at least 15 qualifying transit stops in their jurisdiction (i.e., Los Angeles, San Francisco, Oakland, San Jose, Santa Clara, Sacramento, San Diego).

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.