If there are truly no other options, then the developers are going to have to severely reduce the price of their real estate or choose not to build there. This is simply taking an implicit approach to things, which may or may not work.

If anything doing this is a way for cities to implicitly get citizens on board for investing more in public transit. All of the new apartment buildings in the hip parts of town don't have any parking for your cars, so you're forced onto public transportation more, which you might think stinks, so you now care more about voting for infrastructure improvement.