Get ready to say goodbye to single-family-home zoning in 2022, Santa Cruz — for the most part

The meaning of single-family zoning has changed here in California. Here’s what you need to know about Senate Bill 9, The California Housing Opportunity and More Efficiency (HOME) Act.

What is SB 9?

SB 9 was signed into law on September 16, 2021 by Governor Gavin Newsom. Simply put, the law allows for many homeowners in California to subdivide their lots or build duplexes.

What is SB 9 intended to do?

SB 9 purports to help solve California’s longstanding housing crisis, which affects The City of Santa Cruz, and to a greater extent, Santa Cruz County and many other municipalities within the state. According to the Public Policy Institute of California, California has the second-highest homelessness rate in the U.S., and housing costs are the second-highest for homeowners and the third-highest for renters. In May 2021, The California Association of Realtors® reported that only 27% of households could afford a median-priced home in the first quarter. As housing prices continue to soar, we’re likely to see even more affordability issues.

How will SB 9 be implemented?

SB 9 bypasses municipal governmental processes through ministerial approval. It also extends the use of tentative maps from 12 to 24 months. That means that local governments have much less control over the subdivision process than they did previously, though the law’s exceptions do give municipalities some power.

It remains to be seen how the local government will work within the guidelines of SB 9 to create opportunities for affordable housing while walking the fine line of maintaining the uniqueness and character of our neighborhoods.

What properties qualify for SB 9?

Though the law sounds like a blanket approval, there are exceptions, one of which is meeting the requirements outlined in the Subdivision Map Act. Here are some of the most notable:

1. Property must be in an urbanized area or urban cluster. If located in a city, some of the boundaries of the parcel must be in U.S. Census Bureau-designated urbanized areas or urban clusters. Same thing goes for unincorporated parts of any county. You can determine whether your property qualifies here.
2. Each parcel must be roughly equal in size. Each lot must be divided into two separate parcels and contain no more than two residential units on each lot. This means you can have a maximum of four units on a plot of land that originally contained one. But, each parcel has to be at least 40% of the lot’s original area and at least 1,200 square feet. The idea is to keep the parcels as equal as possible. And SB 9 is a one-and-done law. Once the property has been subdivided, it’s out. Homeowners and developers can’t continue using the law to split properties into smaller and smaller parcels.
3. There are restrictions on demolitions and alterations. This law doesn’t give owners the right to just demo or alter whatever they want. It limits structural modifications to 25% of the existing walls, unless the local ordinance says otherwise. Affordable and rent-controlled housing is off the table completely, as is market-rate housing that has been tenant-occupied in the last three years. Same thing goes if the property has been withdrawn from the rental market in the last 15 years. And, if planning to make changes to a historic landmark or property located within a historic district, owners will need to take that up with local officials.
4. No short-term rentals are allowed. Every unit created under SB 9 must be rented for a minimum of 30 days.
5. Properties must be owner-occupied. One of the units on the lot must be owner-occupied for at least three years after parcels have been split or additions have been made. And the owners have to sign an affidavit to that effect.

What can municipalities regulate?

Local governments still retain control over easements needed for public services and facilities. They can command access to the public right of way, require that one off-street parking space be provided for each unit (most of the time), and limit unit use to residential only. They can also require a setback of 4-feet or less from the side and rear lot lines. Aesthetic restrictions are also allowed.

What can’t municipalities regulate?

Property owners can build up to two units, at least 800 square feet each; cities can’t impose objective zoning or subdivision standards that don’t allow that. Also out is requiring correction of nonconforming zoning conditions. Or requiring a setback (except 4-feet from rear or side lot lines) for existing or constructed structures, so long as they are the same dimensions. And, no owner-occupancy rules outside of those detailed in SB 9 are allowed.

Additionally, the law states that unless a project would have a “specific, adverse impact” on “public health and safety or the physical environment,” local
governments must allow it. And, if there are mitigation options, they must
implement those and allow the development to proceed.

What will the long-term impact be?

Santa Cruz, Santa Cruz County, and incorporated cities within our county are
continually looking for ways to create better housing solutions for residents and those who want to become residents. As local realtors, we work with local government agencies and citizen groups to help address the housing crisis. Affordability is a constant discussion amongst the realtor community. Housing affordability benefits all of our citizens among all economic groups. Will SB 9 help create housing affordability? That is the real question that remains to be answered.

Some experts, like those at UC Berkeley’s Terner Center for Housing Innovation, say that we can expect to see a gradual increase in available housing. It’s important to keep in mind that California has implemented laws designed to increase housing in the past, like the slew of ADU legislation we’ve seen over the past few years.

While the new law MAY allow your neighbor to build an ADU (Accessory Dwelling Unit) or additional structure on their property, bypassing pre-SB 9 requirements locally, will “NIMBY” sentiment create legal challenges to this new law? And if so, will these challenges take decades to move affordability forward?

Putting additional units on a property just for the sake of housing may become a slippery slope. Working with local governments on infill projects and repurposing poorly maintained or dilapidated properties seems a much better way to cure the housing crisis. Simple economic principles would dictate that more inventory should ease the trajectory of sky-high prices. Or at least slow it down.

The one thing SB 9 will not do is slow the drive of people wanting to relocate to our area. We are blessed to live in an amazing place, and no amount of regulation will stop people from wanting to live here.

Note: Clients with questions about the applicability of new laws to any specific property should consult with their own local land use experts and/or a qualified California real estate attorney.