Governor Newsom recently signed Senate Bill 9 and Senate Bill 10 into law. Both bills are designed to help alleviate the housing shortage the state faces by streamlining some of the processes to build new units. Together these laws have created a significant amount of confusion and Californians are looking to get an understanding of what the real-world effect of these will be on communities throughout the state. We’ve started unpacking the two bills to give you a better understanding of what they mean for you. Given that these are new, it’s best to consult a realtor, your local municipality, and HOA before making any changes to your property. As time passes and more information becomes available on the actual impacts, we will update this article to keep you informed.
Senate Bill 9
Senate Bill 9 (SB 9) allows properties zoned as single-family to now have duplexes and to be subdivided. While that sounds like it will dramatically change the look and feel of neighborhoods overnight, it dictates that the property must meet specific requirements to be eligible. The text of the bill is available here
. At a high level, some of the key elements that the property needs to conform to include:
- It must be within an urbanized area or urban cluster.
- It cannot be:
- Prime farmland
- Land within high fire hazard severity zone, unless it meets specific state requirements
- A hazardous waste site
- An earthquake fault zone
- Land within the 100-year floodplain or a floodway
- Land identified for conservation under a community conservation plan
- Habitat for a protected species
- Located in a historic or landmark district, or a site that has a historic property or landmark under state or local law
It needs to be owner-occupied for at least three years after the approval of a lot split unless the applicant is a community land trust or qualified nonprofit corporation
It cannot be tenant occupied within the last three years
There are limits on the amount of demolition or alteration that can be done to the unit based on specific situations
Beyond the requirements listed in SB 9, the text details what limits municipalities can and cannot dictate to properties that plan to utilize the new law. For example:
Cities and counties are not allowed to implement zoning, subdivision, and design review standards that do not conform to the bill except in specific instances
Cities and counties cannot require more than one parking space per unit for a proposed split or duplex. In specific situations where the parcel is located near high quality mass transit or car share vehicles, there are no parking requirements.
Local agencies can deny a housing project if a building official makes a written finding that the development would have “a specific, adverse impact upon health and safety or the physical environment and there is no feasible method to satisfactorily mitigate or avoid the specific adverse impact” (Senate Floor Analysis SB9)
Requires that rentals are 30 days or longer
A local government is not required to permit more than two units per a parcel
Senate Bill 10
Senate Bill 10 (SB 10) is designed to create even more units. However, it is at the discretion of a city or county as to whether they want to pass an ordinance that will allow for the creation of up to ten residential units on a single parcel at a specified height outlined in the ordinance. One of the criteria is that the parcel must be in a transit-rich area or an urban infill site. Definitions, as they pertain to the bill, are available on the California Legislative Information website toward the bottom of the page
. If a local agency implements an ordinance related to SB 10 it needs to make a declaration that the zoning change is for that reason, the ordinance needs to clearly mark the area affected, provide a finding that the increase in density is in line with the city’s obligation to increase fair housing, and it requires a two-thirds vote of the local legislative body to supersede existing zoning restrictions. SB 10 goes on to clarify CEQA exemptions for these projects, which can be viewed here.
So What Does This Actually Mean?
That’s a great question and it’s where most of the confusion actually lies. Some people are afraid that these laws will drastically impact their neighborhood. Based on the very specific criteria needed to take advantage of SB 9 and the necessity for a local agency to implement SB 10, it seems unlikely to make significant changes to most of San Diego County.
According to the 2020 US Census, there are a little over 1.2 million housing units within the county. That figure includes residences other than single-family homes. The Terner Center for Housing Innovation at UC Berkeley studied the potential impact SB 9
would have on the state utilizing data from tax records, the US Census, Zillow, and several other sources. Once they collected the data, they made several assumptions to help reflect a number of variables including construction costs, the possibility that a homeowner would not want to utilize SB 9, and that certain parcels would not meet the requirements to be eligible under SB 9. Using the model on San Diego County, the Terner Center determined there are 554,500 single-family parcels in the county. After removing properties that are not eligible and those that do not make financial sense to take advantage of SB 9, there were only 9,000 parcels that would likely generate new units. Put another way, only about 1.6% of the single-family parcels in the county are likely to take advantage of the new law. However, it is worth noting that those parcels are projected to generate 54,500 new units.
Again these are both new and we are just beginning to get an idea of how they will be implemented. These laws will take effect on January 1, 2022, so there is some time to gain greater clarification before they are enacted. As we learn more we will update this post to keep you up to date on the latest information.
Yours in real estate,
Disclaimer: The materials are provided for informational purposes only and does not constitute legal advice. Transmission of the information is not intended to create, and receipt does not constitute, an agent-client relationship between any agent and any other person, group or entity. Furthermore, no representations or warranties whatsoever, express or implied, are given as to the accuracy or applicability of the information contained herein. No one should rely upon the information contained herein as constituting legal advice. The information may be modified or rendered incorrect by future legislative or judicial developments and may not be applicable to any individual reader’s facts and circumstances.