Two California housing advocacy groups have sued the city of San Diego, alleging that city planners illegally excluded properties from a state program designed to spur housing development near transit stations. The lawsuit, filed in August 2026, adds to the growing legal pressure on San Diego to address its housing crisis.
Californians for Homeownership and the California Housing Defense Fund filed the legal action, obtained by the Times of San Diego, arguing that the city ran afoul of state housing law by requiring projects to be connected to bus or rail stations by dedicated sidewalks to qualify for denser development under Senate Bill 79. The law, signed by Governor Gavin Newsom in October 2025, allows developers to build more housing than local zoning restrictions permit for projects near major transit stops.
The dispute centers on how San Diego interprets the phrase “near transit.” State law defines eligibility based on proximity to transit stops, but the city added a sidewalk connectivity requirement that the lawsuit claims effectively narrows the pool of eligible properties beyond what the legislature intended. The advocacy groups argue this additional requirement unlawfully excludes parcels that meet the state’s distance criteria but lack dedicated sidewalk access.
The lawsuit comes as San Diego grapples with persistent housing shortages and rising costs. The Summer 2026 Survey conducted by the Federal Reserve Bank of San Diego, which collected responses from real estate firms across California, found that more than 40% of respondents represent firms with over $500 million in assets, while more than 85% operate as privately held companies. The survey underscores the concentration of large, private capital in the state’s real estate market, which shapes development decisions.
Separately, the 22nd District Agricultural Association voted 5-3 in August 2026 to terminate an exclusive negotiating agreement with the city of Del Mar for a potential affordable housing project on Del Mar Fairgrounds property. The move puts pressure on Del Mar officials to find alternative sites for housing they have repeatedly declined to pursue within city limits.
The litigation and the Del Mar fairgrounds deal collapse illustrate the complex intersection of state housing mandates, local zoning authority, and community opposition that continues to shape San Diego’s development landscape. With Senate Bill 79 still in its first year of implementation, the outcome of this lawsuit could set an important precedent for how transit-oriented development rules are applied across California cities.
San Diego’s budget challenges further complicate matters. City Council candidate Richard Bailey has proposed returning to 2015 staffing levels to address what he describes as a $100 million annual deficit, though critics note this would require cutting police, firefighters, and other critical city employees.
Sources: Times of San Diego, San Diego Metro Magazine
