The São Paulo State Court of Justice (TJ-SP) may decide this Wednesday afternoon (26) whether the map behind São Paulo city's zoning law overhaul, in effect since 2024, stays in place or gets struck down, according to newspaper Folha de S.Paulo. The special panel's session starts at 1:30 p.m. local time, with the case 36th on the agenda.

The lawsuit, a direct constitutional challenge, was filed by the Attorney General's Office of the São Paulo state prosecutor's office (MP-SP), which has questioned Municipal Law 18.081/2024 since earlier this year. In February, appellate judge Luis Fernando Nishi already granted an injunction suspending permits for demolitions, tree removal and new construction across the city, ruling that the legislative process behind the law fell short on public participation and technical planning requirements. According to Brazilian outlet G1, the judge wrote that the challenged law contains flaws that prevent its existence, given that basic rules of community participation in the legislative process were not observed.

That injunction froze thousands of pending applications at the city's Urban Planning and Licensing Department: according to newspaper Estadão, 4,459 permit requests were held up, including 1,363 tied to subsidized and affordable housing projects. In April, however, Justice Edson Fachin of the Federal Supreme Court (STF), Brazil's highest court, granted a separate injunction favoring the City Council and the mayor's office, restoring the law's validity until TJ-SP issues a final ruling, as reported by Veja São Paulo magazine. The City Council had argued the freeze threatened as many as 197,000 construction jobs and roughly 90 billion reais (about 17 billion dollars) in investment.

What the merits ruling could change

Folha reported that the appellate judges may apply what Brazilian courts call modulação, a legal mechanism to limit the retroactive effects of a ruling, if they find the MP-SP's challenge valid. That could mean the decision would not apply to already-approved developments, or could even keep the current zoning map in force until city council members pass a replacement law, within a deadline still to be set. The City Council itself proposed that approach in a document sent to the court in late March, citing a similar 2021 ruling on zoning legislation in Louveira, a town in the São Paulo countryside.

Data the mayor's office submitted to the court shows the scale of the change: the revised map altered zoning for 293,591 lots, 7.5% of the city's total, and affected 3,992 blocks, or 6% of the total. Among the changes challenged by prosecutors, some of which the city's own technical staff had flagged for rejection, are expanded high-rise development corridors in blocks that do not meet the zoning law's own criteria, and the legalization of unauthorized subdivisions inside environmentally protected areas, as Folha had previously reported.

Any transition period built into the ruling would aim to protect permits, administrative acts and projects already finished or under construction since the law took effect, heading off a wave of litigation that could hit thousands of properties. Wednesday's ruling is expected to determine whether the zoning overhaul, which reshaped land use rules across Brazil's largest city, stands as written or must be redone by the City Council.