Why Are L.A.’s Leaders Fighting State Law Incentivizing Transit-Oriented Housing?

By Patrick Sisson
April 22, 2026

When California Gov. Gavin Newsom signed landmark legislation allowing more housing construction near public transit, advocates celebrated the opportunity to address California's longstanding housing shortage.

But in Los Angeles, efforts to limit or delay implementation of Senate Bill 79 have raised questions about the city's commitment to expanding housing production.

The legislation allows greater residential density near major transit stops, potentially opening new opportunities for apartment construction in neighborhoods historically restricted by local zoning.

Meanwhile, Los Angeles continues to struggle with housing production. The city issued just 8,714 residential permits in 2025, barely above the 8,703 issued the previous year.

Regulatory hurdles, high construction costs, elevated interest rates and challenging financing conditions have made it increasingly difficult for developers to move projects forward.

“It's pretty widely accepted at the moment that the biggest obstacle to development in Los Angeles is actually high interest rates and the capital markets,” said Joshua Baum, founding principal of Hilgard Economics.

While some neighboring municipalities have continued advancing major residential projects, developers in Los Angeles face a combination of financial and regulatory obstacles that can undermine project feasibility.

Baum suggested that conditions could eventually improve as the state pursues additional housing legislation and efforts continue to revive the region's entertainment industry. But for now, the development environment remains challenging.

“It all just compounds, and eventually development doesn’t pencil,” said Baum. “The math has to math, and at some point development just gets broken. I think that’s where we are now.”