• Michelle Plunkett

California SB 9 - Effective 1/22/2021


Even if you haven’t been tracking the numbers, you likely know that California has been experiencing a housing shortage for years now. In 2016, McKinsey & Company estimated that in order to satisfy pent-up demand, California needs to build 3.5 million homes by 2025. During the 2008 Great Recession, local new construction slowed and we’ve never really caught up to meet the demand in our housing market since. It seems clear that to exit this crisis, California needs to build more homes. The problem is that government does not always know how to make that happen. They create complex solutions that often trigger new complications.

Case in point, the state legislative response to this housing crisis is the controversial SB 9 which was passed and signed into law this year and becomes effective January 1, 2022.


How it works

SB 9 has two important components:

  1. Allows owner of a single-family zoned lot to split their lot into two separate lots;

  2. And, it allows single family home owners to convert their property into a duplex.

Thus, where there was once a single family home, there could be 4 units by taking advantage of both components.


There are restrictions on what properties qualify for such development:

  • Not allowed if the home has been tenant occupied in the last 3 years.

  • Properties protected by local rent control laws can’t be demolished.

  • Low income property can’t be demolished.

  • Homes in Historic Districts are protected.

Other requirements may also limit the application of this new law:

  • Owner must intend to occupy one of the units for at least 3 years (added as an amendment); however, no penalty was written into the law in this regard.

  • Local planners can argue that public safety issues prevent such development (great way to create a lot of gray area for litigation; a windfall for attorneys).

  • After the split, both lots must be at least 1200 sq ft.

  • A flag lot can’t become landlocked.

  • Owners can not work in concert with each other to combine their continuous lots and then split the combined lot.

ADU overlay

Note that on January 1, 2020, California mandated that local planning departments must approve the building of Accessory Dwelling Units ("ADU”) and Junior Accessory Units ("Jr. ADU”). These accessory units are commonly known as “granny flats” or in-law’s units.” While SB 9 does not require local planners to allow an ADU or Jr. ADU where the owner has split the lot, it seems that using the duplex component without splitting the lot opens the door for a duplex on the un-split lot plus an ADU and a Jr. ADU as well.

Controversy

The controversy arises in that the state law has usurped the review power from local cities and counties that have traditionally controlled the long term planning process for their neighborhoods. The ADU laws began the process and SB 9 is part of the next step. According to the LA Times in September, California legislators may be headed towards Oregon’s 2019 legislation that flat out eliminates traditional single-family zoning statewide now being phased in there. If this is the goal of Sacramento, we must ask if this is what we want? And, will it help us in the housing crisis or will unintended negative consequences outweigh the benefits? If so, can this scheme be undone or will it be too late?

Impact

Local governments use zoning laws to regulate land development for the good of the community. City planning is a complex task requiring due care. Generally, the state sets zoning regulations, the county and city are then given the authority to decide on its own zoning rules and regulations within their borders. The end result is a well balanced community based on the population’s needs monitoring density and growth trends. Good planning will adjust if necessary. This is why local planning is important; it is closer and more accessible to the community that it serves. Good planning preserves the “character” of a community.

SB 9 adds density into these neighborhoods without any local planning oversight. No consideration is given to local area issues such as parking concerns, stress on infrastructure, trash pick up, available schools, and the like. This unchecked development places no responsibility on the developers to pay for any necessary infrastructure upgrades. That cost falls on the local community.

Note that if the development is near a transit line (within a 1/2 mile), no parking spaces are required. While this may make sense in some communities, it does not make much sense in many of our South Bay communities where parking is already at a minimum. That illustrates why planning is best done locally.


Does this new legislation do much to fix the affordable housing crisis? A July report from the Terner Center for Housing Innovation at UC Berkeley ("Terner Center Report") found:

  • Renting or selling a home developed under SB 9 would not be financially viable for many property owners.

  • SB 9 could enable the development of units on 410,000 of California’s single-family parcels, just 5.4% of such parcels in the state.

  • The legislation would make new development financially feasible on just 110,000 parcels

While proponents of the new law tout affordable housing as a goal, there is no requirement under SB9 that the new developments are low income housing units. So while the new homes may come to the market, developers may receive more benefits than low income families.


Organized Opposition

Many cities, including the League of Cities, are opposed to this new legislation as are many neighborhood groups and even some state legislators. They believe that SB 9 infringes on local decision-making. Burbank Councilwoman Sharon Springer opposes saying: “The bottom line is that I come from local government, and I really feel that those kinds of planning decisions are really best made at the local level where communities can talk about the best way to grow.”


A ballot initiative drive has taken hold to amend the California Constitution in an attempt to prevent such over reach. The initiative must gather the requisite signatures to be placed on the November 2022 ballot. Signatures must be collected and submitted no later than 131 days before the vote. For more information:

CommunitiesForChoice.org (led by Redondo Beach Mayor Bill Brand)

UnitedNeighbors.net

LivableCalifornia.org

In Summary

“Broadly speaking, there is no solution to the California housing crisis without the construction of millions of new houses,” said David Garcia, policy director for the Terner Center for Housing Innovation. However, the Terner Center Report (based on an earlier version of the SB 9, without the new amendments) said that development would be realistic in only about 410,000 parcels in California at most, or 5.4% of land now occupied by single-family houses. While this new legislation may create a limited amount of new housing, it also results in vast changes to our neighborhoods and its negative impacts may far outweigh its relatively small benefit.


SB 9 has drawn much criticism from both conservatives and progressives. Rather than a right / left issue, this seems to be a state vs. local government issue; a power grab if you will. Even McKinsey & Company, who advocates for more building in California, suggests that the housing gap needs to be solved at the local level. After all, many home owners did their due diligence before buying their home in order to choose the right long term purchase. Now, their surrounding neighborhood will change without any input from them.


There are likely better ways, more direct ways, to encourage more home building in the state. Perhaps by reducing excess regulatory and administrative burdens within the home building industry. The cost to build new homes in California is much higher than in all of the other states because of its heavy regulations. Or, by providing incentives to local governments to help with needed infrastructure upgrades to handle newly constructed homes. It is always mesmerizing when governments prefer to grab power and make their declarations from the top down on how we should act rather than trying to reduce costs and barriers, and supply incentives towards that action.

California needs to build more homes. Real solutions are needed that make sense. Rather than usurping power, the state should try partnering with local communities to help attain these goals in a substantial and meaningful way.

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