On September 16, 2021, Governor Newsom signed a pair of bills, Senate Bills (SB) 9 and 10, which mark a continuing effort by the California Legislature to support expansion of the state’s housing production. SB 9 permits owners of certain properties in urban, single-family zoned neighborhoods, to split a single parcel and develop up to four residential units on that property. SB 10 permits local governments to override existing single-family home zoning in urban areas (and removes barriers from doing so), via enactment of ordinances enabling development of up to ten units per lot. SB 9 & 10—especially in conjunction with SB 35, State ADU laws, and the Housing Accountability Act—further loosen the reins on future development of housing in California. However, because the new laws also aim to preserve existing housing, and rental housing in particular, they come with restrictions that are important to consider. Both bills take effect on January 1, 2022.
SENATE BILL 9:
Among other things, SB 9 adds two new sections to the California Government Code, sections 65852.21 & 66411.7. The former permits development of up to two units per lot in urban, single-family zoned neighborhoods, and the latter permits “lot-splits” in these neighborhoods. When invoked together, an owner may develop up to four homes on a parcel that was previously restricted to one.
There are numerous limitations on the manner in which local government may consider applications submitted under these laws. Perhaps most importantly, these applications are considered ministerially, meaning that local “discretionary” criteria and public opinion (hearings) do not apply (coastal development hearings excepted). Rather, only local “objective” standards may be considered. By way of example, a local standard specifying a property’s maximum height could be an objective standard that might apply, while a local standard requiring “compatibility with the neighborhood” would not. Even further, a local agency may not even impose objective standards if (1) such standards would physically preclude development of the homes altogether, or (2) preclude any of the units from being at least 800 sq. ft in size. Finally, ministerial review also precludes local agencies’ application of the California Environmental Quality Act (CEQA) to deny, or impose conditions upon, development.
In addition to restrictions on local governments’ discretion, the statutes also enumerate owner limitations on development. For instance, owners who seek a lot split must agree to reside in a home on one of the lots for a minimum of three years. No unit on that parcel may be rented for less than 30 days (i.e., no Airbnb’s). There are also size restrictions on these lot splits. Specifically, one of the new parcels cannot be less than 40% of the size of the original parcel. In practice, this could mean that if there were an existing home on 70% of the parcel, a lot split creating a new parcel with the remaining 30% would be denied. Further, the new parcels must be no smaller than 1200 square feet each—unless the local agency permits it. For those owners that have large lots to split, and therefore size is no issue, they are nonetheless only permitted to invoke the lot-split law once as to that original parcel, and adjacent parcels. In other words, owners may not use this law to ultimately end up with 4, 8, 16, 32, etc. lots, where there used to be one; two lots are the maximum permitted under this law. Further, to those owners who have successfully invoked both the two-unit and lot split laws, a local agency has the authority (where it otherwise may not) to deny addition of accessory dwelling units on these developments.
Certain properties are precluded from the benefit of these laws altogether. For example, the proposed development or lot split must not require demolition or alteration of rent controlled or affordable housing, or any housing which has been occupied by a tenant in the last 3 years. If an owner of the subject parcel exercised its right to withdraw the property from the residential rental business via the Ellis Act in the prior 15 years before the date of application submittal, this is also grounds for denial. Further, the property may not be located in certain potentially hazardous or sensitive locations, such as earthquake fault zones, prime farmland, wetlands and other environmentally sensitive areas, hazardous waste sites, very high fire hazard or flood zones, and historic districts. Finally, even if the property meets all other criteria under the statutes, the local agency can still deny the application if specific adverse health and/or safety issues would result from development.
SENATE BILL 10:
SB 10 adds new section 65913.5 to the California Government Code, which permits a local agency to enact an ordinance, without local restrictions, to allow development of up to 10 units on any one residential parcel in urban, single-family zoned neighborhoods that are close to public transit. The ordinance is exempted from CEQA review, but project applications made pursuant to those ordinances are not. These projects, unlike the projects under SB 9, may not be approved ministerially. In essence, SB 10 makes cities’ deconstruction of single-family zoning easier, giving local government greater flexibility to permit small multifamily development in urban, transit-rich neighborhoods.
The attorneys at Zacks, Freedman & Patterson can assist you with SB 9, SB 10 and all your real estate matters. Contact us at your convenience to request a consultation.
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