Earlier quoted context omitted.
Yes, it will. One of the problems with housing is that local governments get less revenue from housing than business. That gives them every incentive to approve commercial construction and deny residential. Take away the financial perverse incentive., and there is a lot of money to be made by approving badly needed dense residential housing near existing commercial buildings.
Prop 13 also applies to commercial real estate. The difference is that commercial properties require fewer public services, so costs are less. But the real difference is that there's usually much less NIMBY opposition to changes in commercial zoning than residential. Talk is cheap. What matters is who shows up to zoning board meetings. People tend to only show up when it effects their neighborhood, not so much when i…
To take the example that you just latched on to, if rezoning the land makes it worth more, and therefore increases local taxes, this becomes an incentive for the city to balance its budget by rezoning. And some of that rezoned land will get dense residential living. Which will reduce traffic congestion. And make everyone's lives better.