California Senate Bill 9 explained- Santa Cruz County

[Dax Nollenberger]

You have probably heard about a magical bill that allows more flexibility in usage for your lot and potentially provides more available housing for California residents looking to rent. That bill, of course, is Senate Bill 9 or SB9 for short. In 2021, Governor Newsom signed the bill into law to help address California’s housing shortage. The goal was to streamline the process of lot splits and/or develop two primary units on one parcel.

The opposition of the bill argued it would be the end of single-family zoning as we know it as SB9 allows streamlining of multiple primaries (or duplexes) on a single lot.

The proponents of the bill argued it would help solve the ever-increasing housing shortage in California.

For Santa Cruz, both of those predictions turned out to be quite fanciful.

Before I dive into why it’s turned out to be less impactful than expected, I do want to discuss the benefits of the bill… for those eligible. There are opportunities for those that understand the bill. For local investor-savvy buyers, you can identify properties that have eligibility and create forced equity through lot splits or increased housing. For multi-generational families looking to create a family compound, now you have the potential to find one lot and turn it four primary homes (lot split required in this case).

Another major benefit is less red tape. Streamlined processes, especially as it relates to government, is always welcome. If your property meets all the eligibility requirements, there should be less friction to get approval on development or lot splits. That decreased friction comes in the form of no hearing and local government approval.

Less red tape doesn’t mean no red tape…

What becomes clear after adding all of the eligibility requirements is that not many parcels qualify for SB9 and even fewer make sense as an SB9 candidate.

To avoid boring you with a breakdown of each eligible category, I’ll summarize here.

For a property to be eligible: it must be within an urbanized area that is zoned residential, not in a historic district, no Ellis act, no affordable housing or rent control, no occupied tenants the last three years, not in a protected area, and no natural hazards.

To develop using SB9: you must make sure your septic is up to current standards, have no renters the last three years (or you can’t demolish more than 25% of existing structural walls), it can’t be used as a short-term rental once built (Airbnb or otherwise), and must have enough parking and standard setbacks.

You can develop two primary units per parcel and no more than four units per project (two primary units + ADU + JADU)

To lot split using SB9: the property can’t already be split (by SB9) nor can you split a property adjacent to a property you already split, the properties must be relatively even in size (40/60 split threshold) and at least 1200 sq ft for parcels served by sewer or at least 1 acre for parcels with septic systems, the new lots must be residential, can’t have more than 4 total units per project, and the owner must occupy one of the lots as their principal residence for a minimum of three years from the date of approval.

So, you can either do:

No lot split: two primary units + ADU + JADU

Or

Lot split: two primary units each or one primary and one ADU each

Wrapping up, this bill can be impactful for residents that have an eligible property or can identify eligible properties. A split and/or additional home can be a significant value add. That said, the touted impact of SB9 on available housing in Santa Cruz was overstated. The laundry list of eligibility requirements wrapped into this bill don’t mesh with Santa Cruz topography, zoning, protected areas, natural hazards, and available inventory.

To learn how to determine if your property is eligible, reach out!