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Homes in Commercial Zones
Revitalizing Commercial Districts
This bill makes it legal to build apartments and townhomes in areas zoned exclusively for commercial activities, turning empty parking lots and vacant storefronts into vibrant neighborhoods.
Homes in Commercial Zones
About the bill
"Converting an abandoned Sears store and the surrounding parking lots into a community of homes. Why would we not remove low-value structures and replace them with homes for families and workers eager to live in our communities?"
— Washington State Lieutenant Governor's Report on Commercial-to-Residential Housing, December 2025
What this bill does
Most jurisdictions have neighborhoods where commercial zoning prohibits the development of homes. This can include areas as diverse as dense downtown office districts, suburban and urban strip malls, and destination shopping centers surrounded by parking. In many locales, these areas are struggling due to the rise of online shopping, and the shift in consumer behaviors that followed the COVID pandemic.
This bill updates commercial-only zoning codes and legalizes residential uses in commercial areas. The bill’s streamlining provisions give builders a fast, predictable path to build housing in commercial areas, while preserving important health and safety provisions.
Why it's needed
Across the country, strip malls, office parks, and parking lots sit empty or underutilized, but outdated rules prevent redevelopment into housing. These sites could become neighborhood centers and community assets by adding homes and generating new tax revenue in areas where roads and utilities already exist. Allowing housing in commercial zones gives families more housing choices closer to jobs, shopping, and schools.
Frequently asked questions
What does this bill actually do?
- Opens up commercial land for homes. Housing can be built in commercial zones (including vacant lots, empty strip malls, and parking lots) without a local zoning change.
- Guarantees prompt, predictable approval. Local jurisdictions must approve or deny applications within 15 days for medium-sized buildings and 30 days for larger buildings. If the permitting authority misses the deadline, the project is deemed approved.
- Sets a floor on density and height. Local jurisdictions can’t impose height limits lower than what they already allow elsewhere. Every eligible project gets at least three stories or 45 feet.
- Eliminates parking mandates for homes. Parking mandates are prohibited for the residential portion of any eligible project. Builders may still choose to provide parking spots with new homes, based on their assessment of market need.
- Overrides local rules that block housing. Local jurisdictions can’t impose setbacks, lot coverage rules, or design standards to make eligible projects impossible to build.
What kinds of homes does this bill make possible?
Apartments above a coffee shop. Townhomes next to a grocery store. A mid-rise building where a parking lot used to be. This bill makes it legal to build a variety of housing types that a healthy community requires, and in commercial areas that previously allowed only shops and offices.
Why does this need to be a state law?
A statewide law creates consistency: builders, lenders, and investors can plan with confidence across the entire state.
Some jurisdictions already allow more residential development in zones that used to be exclusively commercial. But establishing a single, statewide standard gives builders the flexibility to focus on areas with the greatest demand, need, and potential, resulting in a better statewide outcome. Dallas and Fort Worth moved quickly to embrace Texas’s new residential-in-commercial law. Minneapolis enacted similar reforms on its own and saw apartment building surge and rents decline in both newer, high-end apartments and older, cheaper apartments alike.
The Legislation
Full model legislation text
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Annotated
Section 1. Title.
(a) This Act shall be known and may be cited as the “Homes in Commercial Zones Act.”
Establishes the title of the legislation as the “Homes Commercial Zones Act.”
Section 2. Purpose and Legislative Intent.
The purpose of this Act is to increase the availability of residential and mixed-use developments on sites zoned for commercial, office, retail, or parking uses. This Act allows residential projects as a permitted use without requiring a zone change. The Act also establishes a streamlined ministerial review process to expedite approvals and preempts conflicting local ordinances. By providing consistent statewide standards, this Act is intended to increase housing supply, improve housing affordability, and support residential and mixed-use development in commercially active areas.
The purpose of this legislation is to increase housing supply by allowing residential and mixed-use projects on commercially zoned land without requiring a zone change. The approach draws from Washington SB 6026, Florida’s Live Local Act, and California AB 2011, but does not require affordable units as a condition of eligibility.
Section 3. Definitions.
For purposes of this Act:
(a) “Census Urban Area” means an urban area identified by the United States Census Bureau in the most recent decennial census.
(b) “Commercial Zone” refers to areas designated under the local zoning code primarily for commercial, office, retail, or parking uses. This excludes zones primarily designated for industrial purposes, including heavy industrial, manufacturing, warehousing, logistics, or similar industrial uses, except where residential uses are expressly permitted under the applicable municipal zoning regulations. For the purposes of this Act, “parking uses” refer exclusively to sites zoned solely for parking purposes, with no allowance for other types of development or uses.
(c) “Eligible Project” means a residential or mixed-use development that meets the criteria outlined in this Act for streamlined approval.
(d) “Floor Area Ratio” or “FAR” means the ratio of the total gross floor area of all buildings on a lot to the total area of that lot.
(e) “Generally Applicable” means a requirement that is imposed uniformly as part of a Local Authority’s generally applicable residential regulations, and that meets at least one of the following:
(1) it is generally applicable to all residential development in the same zone; or
(2) it is generally applicable to all ministerial residential permits in the jurisdiction; or
(3) it is applied uniformly to all new residential construction of a similar building type.
(f) “Local Authority” means a city, county, city and county, or other local jurisdiction with authority to approve land use, zoning, subdivision, site plan, design review, building permit, or other development approvals for an Eligible Project.
(g) “Ministerial Review” means a non-discretionary approval process based on Objective Standards, without public hearings, subjective local review, or protest periods.
(h) “Mixed-Use Development” means a project that includes both residential and non-residential components, with the residential portion making up at least 50% of the total floor area.
(i) “Objective Standard” means a zoning, subdivision, design, or development standard that is clear and measurable and does not require personal or subjective judgment by a public official or Local Authority.
(j) “Serviced Lot” means a legal parcel that is connected to municipal water and sewer systems or has access to functionally equivalent water and sewer infrastructure sufficient to serve the proposed development.
Defines the types of commercial land, housing projects, development standards, and approval procedures covered by the Act. Eligible sites must be located in Census Urban Areas and have access to adequate water and sewer service, while primarily industrial land is excluded.
The use of Census Urban Areas and serviced land is influenced by California AB 2011 and Arizona HB 2721.
Section 4. Eligibility for Residential Use in Commercial Zones.
(a) In any Census Urban Area, residential and mixed-use developments shall be permitted by right on legal parcels that meet all of the following criteria:
(1) Are located in Commercial Zones or are designated for commercial, office, retail, or parking uses; and
(2) Are Serviced Lots connected to municipal water and sewer systems, or have access to equivalent water and sewer infrastructure to ensure adequate service availability.
(b) Projects on eligible sites are not required to undergo zoning changes, special exceptions, variances, conditional use reviews, or comprehensive plan amendments.
Allows residential and mixed-use projects by right on qualifying land zoned for commercial, office, retail, or parking uses.
Projects may not be required to obtain a rezoning, variance, conditional use permit, special exception, or comprehensive plan amendment. This follows the general approach of Washington SB 6026, Florida’s Live Local Act, and California AB 2011.
Fully residential projects are allowed, while mixed-use projects must devote at least half of their floor area to housing.
Section 5. Development Standards.
(a) A Local Authority shall permit an Eligible Project at a residential density of not less than the greater of:
(1) the highest base residential density permitted by right in any residential or mixed-use zone within the jurisdiction; or
(2) seventy-five (75) dwelling units per acre.
Each component of a density calculation, including base density and bonus density, that results in a fractional dwelling unit shall be separately rounded up to the next whole number.
(b) Height restrictions shall not be imposed on Eligible Projects that are lower than:
(1) The maximum height allowed within a one-mile radius of the development site; or
(2) A minimum height of three stories or 45 feet, whichever is greater.
(c) An Eligible Project shall be permitted a Floor Area Ratio of not less than the greater of:
(1) 150 percent of the highest Floor Area Ratio permitted by right for residential or mixed-use development within the jurisdiction; or
(2) a Floor Area Ratio of 2.0
Establishes minimum density, height, and Floor Area Ratio standards for Eligible Projects.
Projects must receive the greater of the highest qualifying local standard or the Act’s minimums of seventy-five homes per acre, three stories or 45 feet, and a 2.0 Floor Area Ratio.
The structure is influenced by Florida’s Live Local Act, but the statewide minimums ensure that restrictive local zoning cannot leave too little capacity for practical multifamily housing.
Section 6. Preemption of Local Zoning Restrictions.
(a) Notwithstanding any local ordinance, rule, regulation, or policy to the contrary, the provisions of this Act shall preempt all conflicting local laws, which shall be deemed null and void to the extent of such conflict.
(1) Notwithstanding any other law, a Local Authority shall not impose an Objective Standard that would physically or financially preclude an Eligible Project at the density, Floor Area Ratio, height, or mixed-use intensity authorized by this Act.
(b) A Local Authority may apply Objective Standards to an Eligible Project only to the extent those standards are Generally Applicable and do not conflict with this Act.
(c) For purposes of this Section, a standard physically or financially precludes development if it, alone or in combination with other standards, makes impracticable the permitting, siting, construction, or financing of an Eligible Project authorized by this Act.
(1) Nothing in this Section prohibits a Local Authority from applying Generally Applicable building, fire, health, safety, utility-connection, floodplain, or historic-preservation standards, provided those standards do not physically or financially preclude development authorized by this Act.
Prevents local requirements from making the housing authorized by the Act impractical or financially infeasible.
Local governments may continue applying generally applicable health, safety, building, fire, utility, floodplain, and historic-preservation rules. However, they may not use setbacks, design rules, open-space requirements, or similar standards to defeat the density, height, and floor area allowed by the Act.
This combines the objective-standard approach used in California AB 2011 with anti-preclusion language similar to Arizona HB 2721.
Section 7. Streamlined Approval Process.
(a) A Local Authority shall review an application for an Eligible Project through Ministerial Review. No public hearing, protest period, special exception, variance, conditional use review, comprehensive plan amendment, or other discretionary land use approval shall be required.
(b) A Local Authority shall determine whether an application is complete within fifteen (15) days after submission.
(c) If the application is incomplete, the Local Authority shall provide the applicant with one written notice that:
(1) identifies every missing item;
(2) identifies the Objective Standard, adopted code provision, or published application requirement that requires each item; and
(3) describes the information necessary to complete the application.
(d) A Local Authority shall not subsequently require an item that could have been identified in the initial notice unless the item becomes necessary because of a material change made by the applicant or a change in applicable law.
(e) If the Local Authority does not provide the required incompleteness notice within fifteen (15) days after submission, the application shall be deemed complete.
(f) After an application is deemed complete, the Local Authority shall approve or deny the application within:
(1) fifteen (15) days for an Eligible Project containing fewer than one hundred fifty (150) dwelling units; or
(2) thirty (30) days for an Eligible Project containing one hundred fifty (150) or more dwelling units.
(g) If the Local Authority does not approve or deny the application within the applicable period, the land use entitlement authorized by this Act shall be deemed approved.
(h) If a Local Authority denies an application or approves it subject to conditions, it shall provide a written determination that:
(1) identifies each eligibility criterion, Objective Standard, or adopted code provision the application does not satisfy;
(2) states the factual basis for that determination; and
(3) identifies each change necessary to bring the application into compliance.
(i) A Local Authority shall maintain a publicly accessible Ministerial Review process that identifies all required submission materials, applicable Objective Standards, and review deadlines. A Local Authority shall not require submission materials that were not publicly identified before the application was submitted.
Creates a ministerial approval process with clear deadlines.
A local government has fifteen days to determine whether an application is complete and must identify all missing information at one time. Once complete, projects must be approved or denied within fifteen days for projects below 150 units and thirty days for larger projects, or the application is automatically approved.
Any denial must identify the exact rule the project fails to meet, explain the reason, and state what must be changed to receive approval. The process draws from California AB 2011 and Florida’s Live Local Act but uses faster statewide deadlines.
Section 8. Environmental Exemptions and Compliance.
(a) A parcel located within one thousand six hundred (1,600) feet of the property boundary of a stationary source required to obtain a Title V operating permit under the federal Clean Air Act is not eligible under this Act.
(b) Nothing in this Act prohibits the application of an Objective Standard establishing a setback from an active railroad right-of-way, controlled-access highway, or major utility easement where the setback is required by generally applicable state or federal safety law. Any such setback shall be limited to the minimum distance necessary to satisfy that law and shall not be applied more restrictively to an Eligible Project than to comparable development.
Excludes land located within 1,600 feet of major stationary sources of air pollution that require a federal Title V operating permit.
It also allows safety setbacks from active railroads, controlled-access highways, and major utility easements when required by state or federal law. These setbacks must be limited to the minimum distance actually required for safety.
The Title V distance is a model-policy choice, while similar environmental exclusions appear in Washington SB 6026 and California AB 2011.
Section 9. Reporting and Accountability.
(a) Each Local Authority shall submit an annual report to the state housing agency detailing:
(1) any ordinance adopted or amended to implement this Act;
(2)the number of applications received under this Act;
(3) the number of entitlements approved and denied under this Act;
(4) the number of building permits issued and denied under this Act; and
(5) the number of certificates of occupancy issued under this Act.
Requires local governments to report the number of applications, approvals, denials, building permits, and certificates of occupancy issued under the Act.
The reporting will show whether projects are only receiving zoning approval or are actually moving through construction and completion. The approach is influenced by reporting requirements in Florida’s Live Local Act.
Section 10. Judicial Enforcement.
(a) An applicant or property owner aggrieved by a violation of this Act, including an unlawful denial, condition, or delay, may bring an action in a court of competent jurisdiction to enforce this Act.
(b) If the applicant or property owner prevails, the court shall order the Local Authority to comply with this Act and shall award reasonable attorney’s fees and costs. If the violation consists of a Local Authority’s failure to act within a deadline established by Section 7, the application shall be deemed approved in accordance with that Section.
Allows an applicant or property owner to bring a court action when a local government unlawfully denies, conditions, or delays a project.
A successful applicant may recover attorney’s fees and costs. If the violation involves a missed approval deadline, the project receives the automatic approval provided under §7.
The attorney-fee provision is influenced by Florida’s Live Local Act.
Section 11. Enforcement and Penalties.
(a) No additional state-level commission approval or local implementing ordinance shall be required to implement the provisions of this Act or to process Eligible Projects under its terms. A Local Authority’s failure to adopt an implementing ordinance shall not relieve that Local Authority of its obligation to comply with this Act.
(b) The [State housing authority or agency] shall monitor compliance with this Act.
(c) If the [State housing authority or agency] determines that a Local Authority is not in compliance with this Act, it may refer the matter to the Attorney General, who shall be empowered to take necessary actions to ensure adherence to the provisions of this Act.
(d) This Act shall be interpreted and implemented in a manner to afford the fullest possible weight to the interest of, and the approval and provision of, the maximum amount of housing.
Makes the Act effective even if a local government has not adopted an implementing ordinance.
The state housing agency may monitor compliance and refer violations to the Attorney General. This prevents local inaction from delaying the housing rights established by the Act.
The self-executing structure draws from Florida law, while the statewide preemption approach is similar to Washington SB 6026.
Section 12. Severability.
If any provision of this Act is found invalid, the remaining sections shall continue in full force and effect.
Provides that if one part of the Act is found invalid, the remaining provisions continue in effect.
Section 13. Effective Date.
This Act shall take effect on [ Date ], and shall apply to all local zoning ordinances and to applications submitted on or after that date.
Establishes the date on which the Act takes effect and applies the new standards to local zoning rules and applications submitted on or after that date.
Lessons from other states
As many as 13 states have signed bills to allow multifamily homes in commercial zones. These bills have been successful across states big and small, including California, Hawaii, Rhode Island, and Texas.
Allowing homes in commercial areas doesn't just create more places to live. It creates the kind of connected, walkable neighborhoods where people can put down roots. Research shows that reducing land use barriers can lower housing prices and increase economic output. Benefits that flow to the workers, families, and communities that need them most.
Recommended reading:
- How Land-Use Regulation Undermines Affordable Housing, Mercatus Center (2015)
- Residential Housing Is Now Allowed in All Commercial Zones: Are California Cities Ready?, Terner Center for Housing Innovation at UC Berkeley (2023)
- Evidence of Mixed Use Economic Development Synergies, Lonnie Bryant and David J. Moore (2018)
Florida — enacted 2023
Florida's Live Local Act, described by the Florida Housing Coalition as "a generational retooling of state housing policy", gives developers a straightforward path to build apartments and mixed-use housing in commercial and industrial areas, without going through a rezoning process. The law pairs land use change with funding programs and tax incentives to make projects financially viable.
The Live Local Act excludes working waterfronts, airport-impacted areas, and land within a quarter-mile of military installations. It also requires every county to maintain a public webpage with clear policies and procedures so builders know exactly what to expect and cities can be held accountable when they don't follow through.
Since its passage, the law has helped add more than 3,000 affordable units across 23 properties. Opening commercial land to homes can produce real results, even when Local Authorities push back.
Texas — enacted 2025
Texas passed SB 840 in 2025. The law allows apartments and mixed-use buildings on land zoned for offices, shops, retail, or warehouses. No rezoning, no public hearing, no variance required. Cities can't demand traffic studies, impact fees, or more than one parking space per unit.
The law applies to Texas's 19 largest cities, where office vacancy rates have hovered around 24 to 28% since the pandemic. Those empty buildings and struggling commercial corridors are now potential neighborhoods. The bill passed with bipartisan support.
Montana — enacted 2023, expanded 2025
Montana's 2023 housing package, dubbed the "Montana Miracle", legalized homes in commercial zones statewide alongside a suite of other reforms. A 2025 follow-up cut parking requirements and extended the reforms to unincorporated areas. The results are real: one Missoula affordable housing developer found that the number of units she could build on one of her sites had doubled after the new rules took effect.
The 2023 reforms didn't address parking, and cities used those requirements to slow projects down. The 2025 package fixed that.
California — enacted 2022
California passed Assembly Bill 2011, the Affordable Housing and High Road Jobs Act, in 2022. The bill provides a clear approval pathway for residential projects in commercial zones across the state, subject to specific income and labor requirements. The bill also excludes application in environmentally sensitive areas, industrial zones, and historic sites on a national, state, or local historic register. A caution for other states: AB 2011's affordability and labor requirements were unfunded, and few projects have been built as a result.
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