On January 1, 2022, City Halls across California opened to a whole new reality – property owners now have the chance to use their lot in a way that was once impossible. Gone are restrictive minimum lot sizes and burdensome zoning rules which kept single family lots in California etched in stone. The State legislature has declared California to be in a serious housing crisis and Senate Bill 9 (SB 9) by Senator Toni Atkins is set bring in the New Year with promises of more lots, more homes and more opportunity for ownership.
For owners, SB 9 invites you to re-imagine what you can with your lot and in exchange, SB 9 can provide new opportunities for financial gain and logistical support. For example, SB 9 gives owners the ability to split their lot into two under an “urban lot split” provision, otherwise referred to as a Parcel Map subdivision. Once approved, this means that an owner can either sell off half of their property or hold onto it to house a loved one or for a new stream of rental income. It will also allow an owner to keep the “family home” in the family without risking a complete tear down and redevelopment should the property go up for sale.
With respect to financial gain, selling half a lot could help draw down or eliminate a mortgage, allowing an owner the ability to own their home outright. SB 9 also allows the ability to make considerable rental income on a property. This is because eligible lots under SB 9, once limited to one single family home per lot, now have the ability to accommodate four units (or more) via an urban lot split. This means two homes on each lot – one for the owner and three rental units to help offset the owner’s expenses.
On the logistical front, owners will have new ways to bring family members and loved ones close to them, a move that many will find as the ultimate solution to aid with aging parents and children struggling to afford a home of their own. It will also provide new living opportunities for in-home care and assistance for those needing immediate help.
California needs more homes and SB 9 is intended to do just that. It may be the end of “single family zoning” as some have reported, but it is an injection into homeownership and new living opportunities that were once considered impossible.
But for cities and counties, it’s a time to scramble or a time to embrace. Change doesn’t come easily, especially when the rules change to allow for more development, but SB 9 has pushed the zoning limits to a new reality for city planners and leaders alike. The State legislature wants more housing units built – a point made crystal clear as part of the State’s 6th Cycle Housing process now underway. Across California, Housing Elements are being re-written to accommodate significant increases in the State’s housing goals, referred to as the Regional Housing Needs Assessment (RHNA). New programs are required at the local level for re-zoning lots to higher densities, increases in affordable housing unit production for lower income families, new opportunities for Accessory Dwelling Units (ADUs), and measures to ensure Affirmatively Furthering Fair Housing is intertwined in every General Plan across California.
Call it one more tool in the toolbox, or the toolbox itself, SB 9 targets the “one home per lot” pattern of development across California by giving property owners the ability to have more choices of what they can do with their property. Some may desire to build a second single family home or duplex on their lot, while others may see the benefits in splitting their lot in half and constructing additional homes on the second lot. SB 9 presses against zoning regulations and certain rules agencies have relied upon to ensure certain patterns of development. However with SB 9, cities and counties will be restricted from certain land use controls and practices when applications for SB 9 processing are submitted by property owners in 2022.
For eligible lots, jurisdictions will be required to allow small parcels to split into two and two single family homes or one duplex being provided per lot. Cities are prevented from applying “discretionary” or “subjective” processes to eligible SB 9 projects. Instead, SB 9 applications must be processed as “ministerial” or “by right.” This means that the government’s decision making ability on SB 9 applications must be objective, up-front and obvious to a property owner seeking to add more housing to their site.
It is important to note that SB 9 has several nuances for eligibility including measures to protect existing tenants, historic structures and environmentally sensitive areas. But, SB 9 at its core is not a protection bill, it is about more housing, more lots and more density to address California’s housing crisis. For example, the State legislature exempted all SB 9 projects from the California Environmental Quality Act (CEQA) – a streamlining provision added by the State to increase SB 9 processing times and reduce costs to owners. Further, SB 9 sets a minimum allowance of 800 square feet per home, regardless of a parcel’s zoning square footage limit or Floor Area Ratio (FAR). Similar to the State’s ADU law, cities and counties cannot impose side and rear yard setbacks greater than four feet from a property line.
SB 9 limits the ability for a city or county to apply its usual parking requirements. Per the bill, jurisdictions may only require one space per home developed under SB 9, except no parking may be required where: 1) the parcel is located within one-half mile walking distance of either a high-quality transit corridor or a major transit stop; or 2) where there is a car share vehicle located within one block of the parcel.
For new homes developed under SB 9, cities and counties may enforce that any such unit not be used as a short term rental. This means that the rental of any home built under SB 9 must be for a term longer than 30 days. Further, where an urban lot split is approved, SB 9 requires that the applicant/homeowner sign an affidavit stating that they intend to occupy one of the homes as their principal residence for a minimum of three years.
SB 9 sets a minimum lot size of 1,200 square feet for each newly created lot and requires that a subdivision not exceed 40 percent in area of the original lot. This means that the two resulting parcels must be approximately of equal lot area to one another – a 50/50 to 60/40 split). SB 9’s minimum lot area otherwise pre-empts any larger minimum lot size standards.
When an urban lot split is processed, SB 9 prohibits cities and counties from requiring dedications of right-of-way or the construction of offsite improvements. However, the bill does allow for required easements for public services and facilities, as well as requiring that newly created lots have access to the public right-of-way. Further, cities and counties can require that the allowed use of the newly created lots be limited to residential uses. SB 9 also prohibits jurisdictions from applying setbacks for an existing structure or a structure constructed in the same footprint as the existing structure. In other words, agencies cannot require an existing home be made “conforming” simply by nature of approving a Parcel Map that may otherwise render the home’s location “non-conforming” with zoning rules.
SB 9 also gives a variety of eligibility factors for public agencies to consider when reviewing SB 9 applications. For example, urban lot splits could be prevented in a variety of situations such as: 1) On lots not located in a single-family residential zone, such as a multi-family, mixed use or commercial zone (single family zones are those where only one single family home is allowed per lot); 2) Where an urban lot split would require demolition or alteration of an existing housing unit deed restricted as affordable or a housing unit that has been occupied by a tenant in the preceding three years; 3) On lots where an urban lot split had previously occurred under SB 9; 4) On lots where its owner or any person acting in concert with the owner had previously subdivided an adjacent parcel under SB 9; and 5) On lots located in wetlands, under a conservation easement, including habitable for protected species, or on a site that has a historic property under state or local law.
SB 9 includes other ineligibility factors including lots consisting of farmland, hazardous waste sites or within an earthquake fault zone, sites identified for conservation under a natural community conservation plan, or sites located within a historic or landmark district.
Further, properties designated within a Very High Fire Hazard Severity Zone (VHFSZ) or within a 100-year floodplain are generally removed from eligibility unless certain building standards are met. Due to a reference made in SB 9 to Government Code Section 65913.4(a)(6)(D) and (G), lots located within the VHFSZ and 100-year floodplain would be eligible for SB 9 processing so long as the homes are required to comply with the State’s fire hazard mitigation measures or floodplain development requirements as required by the Federal Emergency Management Agency (FEMA).
Though considered a high bar to meet, SB 9 provides a mechanism for a city or county to deny an urban lot split if the “building official makes a written finding, based upon a preponderance of the evidence, that the proposed housing development project would have a specific, adverse impact, as defined and determined in…[Government Code Section 65589.5(d)(2)], upon public health and safety or the physical environment and for which there is no feasible method to satisfactorily mitigate or avoid the specific, adverse impact.” Note that the Preponderance of evidence is a standard of proof in which the city or county would need to prove to the judge that it is more likely than not to have occurred.
SB 9 will only allow agencies to apply objective, not subjective, development standards and/or design standards to new homes or urban lot splits, so long as the standards would not have the effect of physically precluding the construction of up to two homes on a lot or result in the homes being at least 800 square feet each. As a result, there will be instances where SB 9 will override a city or county’s minimum lot size, including minimum lot width and depth requirements for subdivisions. This is because if applied, the jurisdiction’s zoning rules would prevent an SB 9 urban lot split from occurring.
All things considered, it is clear that SB 9 will be an effective tool for property owners to use in 2022. Property owners get to have more say in what they can do with their property than local government and, although this may produce tension within local communities, it is the path that the State legislature has laid out for owners across California.
Through its team of attorneys and SB 9 consultants, Grid Legal is ready to help property owners and homeowners understand their full potential under the new law and other State housing legislation.
This is for informational purposes. This information is not intended to substitute for obtaining legal advice from an attorney. No person should act or rely on any information herein without seeking the advice of an attorney. No attorney-client relationship has been created. Additional facts or future developments may affect any laws, subjects, or information shared. Seek the advice of an attorney before acting or relying upon any information in this or any update from Grid Legal LLP.
Stephanie is a partner at the law firm Grid Legal, LLP where she specializes in working with developers, businesses, and homeowners on land development projects and real estate transactions. Joseph is a Principal in the land use consulting firm California Coastal Works and has over fifteen years of professional experience in public and private sector planning, land use policy and real estate development, policy development and permitting, managing planning departments, budget and fiscal oversight, and providing effective customer service delivery.