A developer walked into Palo Alto city hall with two applications for the same piece of land. One builder. One lot. Two plans.
The first was the normal way. Eighty-nine homes, eight stories, and everything that comes with asking a city for permission. Hearings. Design reviews. Neighbors lined up at the microphone to explain why this particular building will end civilization.
The second barely asked the city for anything. Six stories, filed under a new state law called SB 79, which lets you build apartments near transit stops whether the city likes it or not.
So which one did Palo Alto approve?
If you know anything about Palo Alto, you’d guess the small one. Less density, and they can’t really stop it anyway. Say no to the bigger evil.
You’d be wrong. The Planning Commission approved the bigger project. Eighty-nine homes, eight stories, all of it.
Because that was the version where the city still got a say.
For decades the city held all the cards. A builder could spend two years and a fortune on drawings, hearings, and traffic studies, then watch a council vote it down because thirty angry people showed up on a Tuesday night. Every application was a gamble, and the house always won. That killed projects that got proposed. It also killed the ones nobody bothered to propose, because the math never worked.
Housing Wire reporter Richard Lawson has a name for what happened in Palo Alto. He calls it the shadow effect. Spooky. I like it.
A state housing law changes how a city votes even when nobody uses it. You won’t find SB 79 anywhere on that Palo Alto permit. You’ll find it in the room. Every commissioner knew it was there.
SB 79 took effect July 1st. Near major transit stops, it sets minimum heights and densities that local zoning can’t go below. The developer put that on the table. Jeff Smith, the director of development, said what everyone already knew. They wanted the city’s input and approval. But if that didn’t look like it was going to happen, the SB 79 option was sitting right there. Not the outcome he wanted. Just one he had.
That raises a fair question. If the state law was right there, why bring the harder plan at all?
Because a builder isn’t doing one project and leaving town. He’ll need that same city to approve his next one, and the one after that. Go over their heads today and they’ll remember it. Smith wanted the input, the feedback, and the approval. SB 79 was what he’d use if none of that was coming.
Then Commissioner Bart Hechtman turned to the neighbors who came to oppose the project and told them the truth. There’s another version of this. You’ll have a lot less to say about that one. And one thing that could push the owner in that direction is if this review drags on forever.
The commission approved it. Only two voted no, and even those two thanked the developer for not taking the other route.
The opponents got told to be realistic. By the government. That is not how Palo Alto hearings usually go.
This isn’t just a California thing.
In 2023 Florida passed the Live Local Act. If a developer’s plans meet certain requirements, the city has to approve the project on land zoned commercial, industrial, or mixed use. No rezoning. No public hearing. I’m not thrilled with all the requirements, but that’s a strong law for opening up building.
And some developers are choosing not to use it, for the same reason as Palo Alto.
Pinnacle, a Miami developer, is building income-restricted senior housing in Fort Lauderdale on an old office parking lot, with $40 million in financing already closed. The project qualified for Live Local. Pinnacle went through the city anyway. Partner Tim Wheat told Housing Wire that Live Local is what let them find the land, buy it, and line up the money. When it came time to build, they chose to work with the city instead.
Look at what the law actually did there. It didn’t get the building approved. It got the building financed. The bank knew exactly what was legally allowed on that land, so the usual uncertainty was off the table. Government kills projects on a whim, and that makes lenders nervous. Live Local took that risk out of the deal. Then Pinnacle turned around and worked with the city anyway.
That’s the real use of these laws. Not a shortcut you take. Leverage you hold.
Then there’s the 440-unit project in Fort Lauderdale where the developer skipped Live Local and went through regular review. Mayor Dean Trantalis was relieved. He told the Sun Sentinel that Live Local ties the city’s hands, and the regular process gives his staff more flexibility.
Normally I wouldn’t cheer a mayor calling a property rights law handcuffs. But look at the result. The mayor gets his flexibility, and 440 apartments are sitting in front of his staff. The city has every reason to find a way to say yes, because the other version is one they have no say in at all.
So here’s what all this means.
These laws change who has to prove themselves. For fifty years the builder had to justify the building and the city never had to justify anything. Saying no was free.
Now both sides have a reason to stay at the table. The city stays because it can be cut out. The builder stays because he needs them again next year. Neither one is doing it out of goodwill. They’re doing it because the other one finally has an option.
Nobody in these stories stormed out of the room. That’s what gives me hope.
The obvious way to judge a housing law is to count the permits filed under it. The bigger payoff is in how people behave. What a planning commissioner thinks is a normal thing to say at a hearing. What a developer believes is possible when he looks at an empty parking lot. Whether a city sees new housing as a threat to manage or a deal to close.
A light-touch law that sets a clear floor can change how an entire approval system works, including every project that never mentions it.
These laws could be stronger. I’d like to see California and Florida keep pushing toward real limits on local power over private property. But these smaller steps are doing more than anyone expected, and that’s worth celebrating.
Remember where we started. These cities used to hold a veto. Now they’re at the table. You can count that in homes.
So the next time someone says a state housing law barely got used, ask a better question. Ask how many homes got approved because it existed. Because for the first time, the city and the builder were standing on the same ground.
That’s the shadow effect, and it’s pointing the right direction.
The American Dream isn’t dead. It’s been blocked. And state laws are unblocking it right now.
