SENATE COMMITTEE ON HOUSING
Senator Aisha Wahab, Chair
2025 - 2026 Regular
Bill No: SB 677 Hearing Date: 4/22/2025
Author: Wiener
Version: 4/9/2025 Amended
Urgency: No Fiscal: Yes
Consultant: Hank Brady
SUBJECT: Housing development: streamlined approvals.
DIGEST: This bill makes a series of substantive and technical changes to (SB 9, Atkins, Chapter 162, Statutes of 2021) and SB 35 (Wiener, Chapter 366, Statues of 2017) which streamlined ministerial approval for specific types of housing developments and parcel subdivisions.
ANALYSIS:
Existing law, pursuant to SB 9 (Atkins, 2021):
1) Requires a city or county to ministerially approve either or both of the following, as specified:
a) A housing development of no more than two units (duplex) in a singlefamily zone; and/or, b) The subdivision of a parcel zoned for residential use, into two approximately equal parcels (urban-lot split), as specified.
2) Authorizes a city or county to impose objective zoning, subdivision, and design review standards that do not conflict with state standards, except:
a) A city or county shall not impose objective standards that would physically preclude the construction of up to two units or that would physically preclude either of the two units from being at least 800 square feet in floor area. A city or county may, however, require a setback of up to four feet from the side and rear lot lines; and,
b) A city or county shall not require a setback for an existing structure or a structure constructed in the same location and to the same dimensions as the existing structure.
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3) Prohibits a city or county from requiring more than one parking space per unit for either a proposed duplex or a proposed lot split. Prohibits a city or county from imposing any parking requirements if the parcel is located within onehalf mile walking distance of either a high-quality transit corridor or a major transit stop, or if there is a car share vehicle located within one block of the parcel.
4) Authorizes a local agency to deny a housing project otherwise authorized by SB 9 if the building official makes a written finding based upon the preponderance of the evidence that the housing development project 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
5) Requires a city or county to include the number of units constructed and the number of applications for lot splits under this bill, in its Annual Progress Report (APR) to the Department of Housing and Community Development (HCD).
6) Requires a city or county to ministerially approve a parcel map for an urban-lot split only if the local agency determines that the parcel map for the urban-lot split meets specified requirements.
7) Authorizes a city or county to impose objective zoning standards, objective subdivision standards, and objective design review standards that do not conflict with the provisions of SB 9. A city or county may, however, require easements or that the parcel have access to, provide access to, or adjoin the public right-of-way.
8) Provides that a local government shall not be required to permit more than two units on a parcel.
9) Requires the HCD to notify a local government if it has taken an action in violation of SB 9, and authorizes HCD to notify the Attorney General (AG) if the local government is in violation of SB 9.
Existing law, under SB 35 (Wiener, 2017):
1) Allows a development proponent to submit an application for a development that is subject to the streamlined, ministerial approval process, and not subject to a conditional use permit (hereinafter referred to as “SB 35 streamlining”) if the development contains two or more residential units and satisfies all of the following objective planning standards:
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a) The development is located on a site that satisfies all of the following:
i) A site that is a legal parcel or parcels located in a city if, and only if, the city boundaries include some portion of either an urbanized area or urban cluster, as designated by the United States Census Bureau, or, for unincorporated areas, a legal parcel of parcels wholly within the boundaries of an urbanized area or urban cluster, as designated by the U.S. Census Bureau;
ii) A site in which at least 75% of the perimeter of the site adjoins parcels that are developed with urban uses;
iii)A site that is zoned for residential use or residential mixed-use development, or has a general plan designation that allows residential use or a mix of residential and nonresidential uses, with at least two-thirds of the square footage designated for residential use; and
iv)If the development contains units that are subsidized, the development proponent already has recorded, or is required by law to record, a land use restriction for 55 years for units that are rented or 45 years for units that are owned.
b) The development satisfies both of the following:
i) Is located in a jurisdiction that does not have a compliant housing element certified by HCD, or based on the last APR submitted by the jurisdiction to HCD, issued fewer building permits than the jurisdiction’s share of the regional housing needs allocation (RHNA), by income category, for that reporting period; and
ii) The development dedicates a minimum percentage of below market rate housing based on one of the following:
(1)Make 10% of the units in the project affordable to households making below 80% of the area median income (AMI). This standard applies to projects that include more than 10 units in the following jurisdictions:
(a)Jurisdictions that failed to submit the APR; or,
(b)Jurisdictions that submitted an APR that reflects that the jurisdiction failed to achieve its prorated target for issuing permits to above moderate-income housing developments required for the current RHNA cycle;
(2)Make 50% of the units in the project affordable to households making below 80% AMI. This standard applies in jurisdictions that submitted an APR that reflects that the jurisdiction failed to achieve its prorated target for issuing permits to housing developments affordable to SB 677 (Wiener) Page 4 of 21
households making 80% of the area median income than were required for the current RHNA cycle; or
(3)Developers may choose between the affordability levels specified in options (1) or (2) above for projects located in jurisdictions that do not meet either standard.
If a local ordinance requires a deeper dedication of affordability than the applicable standard noted above, the standard in the local ordinance applies.
c) The development, excluding any additional density or any other concessions, incentives, or waivers of development standards granted pursuant to the Density Bonus Law, is consistent with objective zoning standards and objective design review standards in effect at the time that the development is submitted to the local government;
d) The development is not located on environmentally sensitive site, as specified; and,
e) The development proponent certifies that the project will comply with prescribed labor and workforce standards, as specified. 2) Requires a local government that determines that a development submitted pursuant to SB 35 streamlining provisions is in conflict with any of the objective planning standards listed above, that it shall provide the development proponent written documentation of which standard or standards the development conflicts with, and an explanation for the reason or reasons the development conflicts with that standard or standards, as specified. 3) Provides that the development shall be deemed to satisfy the objective planning standards listed in 2) above, if the local government fails to provide the required documentation pursuant to 2) above.
4) Provides that design review or public oversight shall be completed in a manner that does not inhibit, chill, or preclude the ministerial approval of a project, as specified.
This bill:
1) Makes a series of changes to the housing development and lot split provisions codified by SB 9. Specifically:
a) Deems any covenant, restriction, or condition contained in a deed, or other instrument affecting the transfer or sale of any interest in a planned SB 677 (Wiener) Page 5 of 21
development, and any governing documents of a homeowners association (HOA) that either effectively prohibits or unreasonably restricts an SB 9 housing development or an SB 9 lot split void and unenforceable; b) Allows SB 9 lot splits and housing developments to occur on parcels where units occupied by low-income tenants if those units were destroyed in a disaster, as specified, or if they units were rented out for the first time in the months following a declared disaster, as specified;
c) Increases the cap on unit size that local agencies may place on SB 9 duplexes from 800 square feet per unit to 1,750 square feet per unit; d) Prohibits local agencies, special districts and water corporations from imposing impact fees on SB 9 duplex units that are less than 1,750 square feet each, and requires SB 9 units that are larger than 1,750 to be charged proportionally;
e) Prohibits local agencies from imposing a deed restriction or covenant that restricts rents to levels affordable to persons and families of moderate income, on SB 9 housing developments and lot splits as specified; f) Specifies that local agencies may only impose front and side setbacks that are measured from the original lot line, and prohibits local agencies from imposing setbacks between two units that exceed the minimum standards established in the California Building Standards Code;
g) Requires local agencies to provide a single application for applicants seeking subdivide a parcel using SB 9 lot split provisions and develop housing on each parcel under the provisions of SB 9;
h) Removes the requirement that an applicant for an SB 9 lot split must sign an affidavit stating that the applicant intends to occupy one of the housing units for a period of three years, as specified. Additionally this bill explicitly prohibits local agencies from imposing owner-occupancy requirements on SB 9 duplexes whether or not they are built on a parcel that requires a lot split;
i) Removes requirements that specified that new parcels created by lot splits are roughly proportional in size;
j) Removes a prohibition on using the lot split provisions of SB 9 to subdivide adjacent lots, as specified;
k) Prohibits local agencies from requiring an applicant for a lot split to form an HOA for the units developed on the split lots;
l) Requires local agencies to approve the formation of an HOA ministerially if an applicant elects to form an HOA as a part of a lot split application; m) Limits the ability of local agencies to establish certain driveway width and driveway length requirements, as specified;
n) Specifies that the ability of local agencies to require parcels created by a lot split to have access to or adjoin the public right of away, does not allow a SB 677 (Wiener) Page 6 of 21
local agency to impose an access method that would physically preclude the lot split if another access method would facilitate the lot split; o) Expresses legislative intent to make SB 9 projects eligible in the coastal zone in a manner that is consistent with the coastal standards established in SB 35;
p) Prohibits local agencies from denying a permit for an SB 9 housing development due to the presence of preexisting nonconforming zoning conditions, building code violations, or the presence of unpermitted structures that do not present a threat to public health and safety and that are not affected by the construction of the unit or units;
q) Requires local agencies that adopt local ordinances to implement the provisions of SB 9 to submit the ordinance to HCD within 60 days of adopting the local ordinance, and to respond to feedback from HCD within 30 days;
r) Requires local agencies that adopt an ordinance implementing the provisions of SB 9 to submit a copy of the ordinance to the HCD within 60 days of adoption, or within 60 days of the effective date of this section, and authorizes HCD to issue written findings regarding whether the ordinance complies with the law;
s) Requires local agencies to respond to a noncompliance finding from HCD regarding an SB 9 ordinance within 30 days. Specifically, local agencies must respond indicating that they will either:
i) Amend the ordinance to comply with the law; or,
ii) Adopt a resolution with written findings explaining why the agency believes the ordinance complies with the law.
t) Authorizes HCD to notify the AG that a local agency is in violation of SB 9; u) States that any action or proceeding to attack, review, set aside, void, or annul the decision of a local agency concerning a lot split, or of any proceeding, act, or determination taken, done, or made prior to the decision, or to determine the reasonableness, legality, or validity of any condition attached to the decision, including, but not limited to, the approval of a lot split, shall not be maintained by any person unless the action or proceeding is commenced and service of summons effected in accordance with existing law. Declares that this provisions subparagraph is declaratory of existing law; and,
v) Makes other technical and clarifying changes.
2) Makes a series of changes to the streamlined ministerial approval process for affordable housing developments codified by SB 35 (Weiner 2017).
Specifically:
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a) Lowers the affordability threshold that developments must meet from 50% to 20% in order to be eligible for streamlining if they are located in jurisdictions that are meeting their prorated targets for issuing above moderate-income housing permits required in the current RHNA cycle; b) Allows SB 35 developments to occur on parcels where units occupied by low-income tenants if those units were destroyed in a disaster, as specified; c) Requires local agencies to demonstrate with a preponderance of the evidence that a development does not comply with the applicable environmental criteria necessary to be eligible for streamlining, as specified; d) Limits the types of historic sites that preclude SB 35 developments from moving forward to sites that are identified in the state or national register, as specified; additionally, allows projects to occur on sites only identified in a local historic register;
e) Requires HCD to determine if local agencies are achieving their prorated RHNA permitting targets on a two-year, rather than four-year cycle; and, f) Makes other technical and clarifying changes.
Background
SB 9 (Atkins, 2021). In 2021, the Governor signed SB 9 (Atkins, Chapter 162, Statutes of 2021), which allowed up to four homes on lots where currently only one exists. It did so by allowing existing single-family homes to be converted into duplexes; it also allowed single-family parcels to be subdivided into two lots, while allowing up to two units to be constructed on each newly formed lot.
According to the Terner Center, that bill had the potential to allow for the development of nearly 6 million new housing units. Assuming only five percent of the parcels impacted by this bill created new two-unit structures; this bill could result in nearly 600,000 new homes.1
The Terner Center evaluated the use of SB 9 through the end of 2022 (one year from its enacted date of January 1, 2022). Researchers collected data from 13 jurisdictions and found that SB 9 activity was relatively limited. For example, Los Angeles had the most activity, with 211 applications for new units under SB 9 in 2022. The state’s other large cities all reported very few applications for lot splits or new units. For example, the City of San Diego reported receiving just seven applications for new SB 9 units in 20222.
1 David Garcia, Single-Family Zoning Reform: An Analysis of SB 1120. (Terner Center for Housing Innovation, University of California, Berkeley, July 30, 2020) https://ternercenter.berkeley.edu/blog/sb-1120/ 2Muhammad Alameldin and David Garcia, "State Law, Local Interpretation: How Cities Are Implementing Senate Bill 9," Terner Center for Housing Innovation, June 8, 2022, accessed April 9, 2025, https://ternercenter.berkeley.edu/research-and-policy/state-law-local-interpretation-senate-bill-9/.
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Despite these initial reports, it is too early to draw any conclusions about SB 9’s overall impact, as homeowners and local governments are still learning about the provisions in the bill. Similarly, it took a couple years for accessory dwelling unit application and construction to increase after reforms took effect on January 1, 2017.
SB 35 (Wiener, 2017). SB 35 (Wiener, Chapter 366, Statutes of 2017) created a streamlined approval process for infill projects with two or more residential units in localities that have failed to produce sufficient housing to meet their RHNA. The streamlined approval process requires some level of affordable housing to be included in the housing development. To receive the streamlined process for housing developments, the developer must demonstrate that the development meets a number of requirements including that the development is not on an environmentally sensitive site or would result in the demolition of housing that has been rented out in the last ten years. Localities must provide written documentation to the developer if there is a failure to meet the specifications for streamlined approval, within specified a period of time. If the locality does not meet those deadlines, the development shall be deemed to satisfy the requirements for streamlined approval and must be approved by right.
Existing law requires HCD to determine when a locality is subject to the streamlining and ministerial approval process in SB 35 (Wiener) based on the number of units issued building permits as reported in the annual production report that local governments submit each year as part of housing elements. If a local government is not permitting enough units to meet its above moderate and its lower income RHNA, a development must dedicate 10% of the units in the development to lower income households to receive streamlined, ministerial approval. If the jurisdiction is permitting meeting its above moderate-income targets and not the lower-income RHNA, then developments must dedicate 50% of the units for lower income to have access to streamlining Comments
1) Author’s Statement. “Senate Bill 677 strengthens two of California’s landmark housing streamlining laws, SB 9 (Atkins, 2021) and SB 423 (2023, Wiener) to help communities across California meet their housing production goals and to help end the state’s severe housing shortage. SB 677 makes several changes to existing laws to streamline permitting and boost housing production in California. SB 9 sought to legalize duplexes across the state and functionally end single family zoning. Unfortunately, the law has at times proved difficult to utilize effectively, and as a result, too few applications have been submitted. SB 423 extended the sunset provision of SB 35 and has streamlined the production SB 677 (Wiener) Page 9 of 21
of tens of thousands of homes across California, but overly restrictive inclusionary requirements have limited the number of affordable homes produced under the law. SB 677 will strengthen these landmark laws. We are making real progress on housing in California, but we need to go further, faster to meet our housing goals and tackle the affordability crisis crushing families across the state. By strengthening some of our tools with lessons learned from the past few years, we can build on our progress and deliver a more affordable future for all Californians.”
2) SB 9 changes: owner-occupancy. SB 9 requires that an individual seeking to exercise an urban-lot split agree to occupy one of the units on the resulting lot split for three years. The inclusion of an owner-occupancy requirement was debated as the policy of streamlining urban-lot splits initially went through the Legislature. Prior to SB 9’s passage, SB 1120 (Atkins 2020) would have authorized urban-lot splits in a very similar manner. SB 1120 passed in both the Senate and the Assembly without any owner-occupancy requirements, but ultimately failed passage due to legislative deadlines. Senator Atkins reintroduced the urban-lot split concept in SB 9, which moved through both houses of the Legislature with a permissive owner-occupancy requirement that mirrored the requirements of Accessory Dwelling Unit (ADU) law.
Specifically, early versions of SB 9 only temporarily authorized local agencies to impose owner-occupancy requirements on individuals executing urban-lot splits. Ultimately, the permissive authority was amended into a permanent requirement that local agencies impose 3-year owner-occupancy on individuals executing urban-lot splits. This bill will remove the obligation for an urban-lot split applicant to sign an affidavit committing to occupy a property for a period of three years, and it will prohibit local agencies from imposing owneroccupancy requirements on urban-lot splits and SB 9 housing developments. 3) SB 9 changes: expanding unit size & lot coverage. SB 9 prohibits local agencies from imposing objective standards that would physically preclude the construction of up to two units that are at least 800 square feet each, provided that the units meet a minimum setback of four feet from the side and rear lot lines. These two provisions effectively narrow the ability of local agencies to impose “lot coverage standards” on smaller units built under SB 9. Lot coverage standards are development limitations imposed by local agencies that restrict or limit the portion of a property that can be built upon. For example, a 50% lot coverage limit on a 1,200 square foot parcel means that not more than 600 square feet of the parcel can be developed with a permanent structure.
Under SB 9, a developer could ignore some or all of the locally adopted lot coverage requirements that create the 50% limit in order to build an 800 square SB 677 (Wiener) Page 10 of 21
foot unit, provided that the new development will be set back four feet from the property lines.
Setbacks are limitations on the ability of a property owner to develop on the perimeter of their property. For example, a four-foot side and rear lot setback means that structures cannot be developed on this portion of the lot. This effectively limits the total allowed “lot coverage” by shrinking the developable portion of a lot. In practice, on a single-family lot, a developer will locate a driveway or utilities (e.g. electric meter, air conditioning unit, refuse and recycling bins, etc.) in the side setback. A rear setback is typically a part of the back yard. A four-foot setback applied to adjacent lots ensures that neighboring buildings under SB 9 are at least eight feet apart. Existing SB 9 set back lot coverage standards are demonstrated below in a zoning diagram prepared by the City of Los Angeles Planning Department.
Figure 1: City of LA Planning. SB 9 Setback Diagram3
SB 677 proposes to increase the cap local agencies can impose on the size of SB 9 housing developments from 800 square feet to 1,750 square feet, a combined 3,500 square feet of living space per parcel if two units are built, and 7,000 square feet if four units are built across two parcels. Additionally, this bill will relax the setback requirements for SB 9 housing developments. The existing setbacks standard in SB 9 essentially voids any lot coverage standard that would physically preclude the development of an SB 9 development except for a minimum setback of four feet. SB 677 proposes to modify this requirement so that the ability of local agencies to impose four-foot setbacks is only allowed from the original lot-line. The only setbacks that could be
3 Los Angeles City Planning, Senate Bill 9 (SB 9), accessed April 9, 2025, https://planning.lacity.gov/projectreview/senate-bill-9.
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required between buildings on the same lot, or between buildings that are only separated by a new property line are the setbacks required in the California Building Code. The California Building Code allows for building-to-building setbacks of “0 feet” for exterior building walls that meet specified fire standards.4 For the “new property line” shown in Figure 1 above the buildingto-building setback between the two units could be reduced from a total combined setback of eight feet to an “air gap” of mere inches, this is typically seen in townhomes, where an air gap rather than a “shared wall” between units allows developers to avoid the obligation to form an HOA.
The sponsors, California YIMBY, argue that SB 9 is underutilized due to a variety of factors, including the existing development standards local agencies are authorized to impose on SB 9 developments. The unit size and lot coverage changes noted above are identical to standards that apply to streamlined housing developments and subdivisions under SB 684 (Caballero, Chapter 783, Statutes of 2023). SB 684, also sponsored by California YIMBY, was originally intended to facilitate small lot subdivisions on lots zoned for multifamily residential development. SB 684 created a streamlined ministerial approval process to allow a developer to convert an existing multifamily lot into as many as 10 small lots. SB 684 allows for substantially reduced setback requirements in order to ensure that converting multifamily lots into single-family developments would not drastically reduce the density that could have been built on the parcel. SB 684 was recently expanded by SB 1123 (Caballero, Chapter 294, Statutes of 2024) to allow SB 684 developments on vacant singlefamily lots, as specified. SB 1123’s expansion to include vacant single-family lots takes effect July 1, 2025.
SB 9 intended to facilitate gentle density increases in single-family neighborhoods by creating a streamlined ministerial approval process for urbanlot splits that facilitate increased housing on developed lots. SB 684 intended to allow for the creation of starter homes on multifamily lots through small-lot subdivisions; however included development waivers and other provisions designed to mitigate any loss in density potential. SB 684’s expansion to allow streamlined ministerial approval of applications to subdivide vacant singlefamily parcels into 10 individually developable parcels could allow for substantial increases in density in single-family zones.
4 International Code Council, 2022 California Residential Code, Part 2.5, Volume 2: Chapter 3 – Section R302.1 Exterior Walls, accessed April 9, 2025, https://codes.iccsafe.org/s/CARC2022P2/part-iii-building-planning-andconstruction/CARC2022P2-Pt03-Ch03-SecR302.1.
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The committee may wish to consider whether it is premature to apply SB 684 development standards to SB 9 developments when SB 684’s expansion to cover single-family lots has yet to take effect.
4) SB 9 Changes: Impact fee waivers for larger developments. When approving development projects, counties and cities can require the developers to mitigate the project's effects by paying impact fees. Impact fees stem from a straightforward principle: new developments pay for the impacts that they have on the community and the burden they impose on public services. Local agencies reliance on impact fees has grown as a result of the constitutional limits placed on property and general taxes which have caused local government tax revenue to decline on a per-capita basis.
In order to facilitate development of certain types of housing, state law precludes local agencies from imposing impact fees on certain types of housing developments such as ADUs that are less than 750 square feet and limits the ability of local agencies to impose impact fees on JADUs. Limitations on local impact fees for ADUs and JADUs reflect that their limited size generates relatively little impact on services provided by a local agency and that these units are typically served by the same infrastructure that supports the primary dwelling unit.
This bill exempts SB 9 housing developments that are less than 1,750 square feet from local impact fees. It is unclear if this exemption applies to the total square footage contained in all of the units built as part of an SB 9 housing development project, or if this provision applies to each individual housing unit built as part of an SB 9 housing development project. Either interpretation would allow a developer to avoid impact fees when they use SB 9 to build a new 1,750 square foot single family home. However if the waiver is intended to apply to each individual unit built as a part of an SB 9 development, a developer could build the following configurations of SB 9 units without paying impact fees.
a) One unit built as a 1,750 square foot single family home; b) Two units built as a 3,500 square foot duplex;
c) Three units built across two parcels for a combined 5,250 square feet of living space
d) Four units built across two parcels for a combined 7,000 square feet of living space.
The Committee may wish to consider the potential effect broad impact fee waivers could have on the ability of local agencies to provide services.
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Several local agencies waive impact fees for affordable housing developments in order to spur affordable developments. For example, the cities of Sacramento, and Santa Rosa, and the Counties of Sonoma, and Sacramento implement programs that waive impact fees for affordable developments.5 Waiving these fees requires local agencies to consider trade-offs and access other sources of funds to balance accounts with forgone fee revenue. In a 2022 analysis of its fee waiver program for affordable housing developments, Sacramento city staff noted that over three and one-half years the total amount of fees not collected was $8.7 million. The city was able to backfill that with $1.3 million in grant funding, but had to address a shortfall of approximately $7.4 million in uncollected revenue. City staff noted that existing requirements for impact fees under the Mitigation Fee Act oblige the city to make findings every 5-years specifying the funding source and date waived impact fees will be backfilled. In consideration of this balancing obligation, city staff noted that options for the city included 1) identifying revenue sources to backfill uncollected funds, 2) narrowing program eligibility or reducing the amount waived, 3) winding down the program.6
This bill will require local agencies to waive impact fees for SB 9 developments that do not include affordable units, and it will preclude local agencies from requiring any SB 9 units to be affordable. Local agencies that stretch to waive impact fees for affordable housing do so at great financial burden, and they must constantly reassess their ability to continue to afford these fee waivers.
The Committee may wish to consider how mandatory impact fee waivers for market rate developments will impact the ability of cities to continue implementing fee waivers for affordable developments.
5) SB 9 and SB 35 changes: affordability criteria. Several provisions of this bill affect the affordability criteria that apply, or that local agencies may apply, to SB and SB 35 developments.
a) Provisions relative to SB 9.
i) Prohibiting affordable deed restrictions. SB 677 prohibits local agencies from requiring an SB 9 developments to include an affordable deed
5 Paulina Pineda, “Santa Rosa Proposes Waiving Millions in Housing Fees to Spur Development,” The Press Democrat, March 12, 2024, accessed April 9, 2025;Emma Murphy, "Sonoma County Board of Supervisors Waives Impact Fees for Affordable Housing Projects for 2 Years," The Press Democrat, March 12, 2025, accessed April 9, 2025; Sacramento County, Development Fee Deferral Programs - Affordable Housing, accessed April 9, 2025; "Sacramento's 'Zero-Dollar Rate' Program Spurs Affordable Housing Development," Sacramento City Express, January 22, 2024, accessed April 9, 2025,
6 City of Sacramento. City Council Report: Evaluation of Reduced Residential Development Impact Fees for Affordable Dwelling Units. Discussion Item 31. 9 August 2022.
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restriction. Imposing a deed restriction on all SB 9 developments, which may only include a single new unit could function as a 100% inclusionary ordinance, arguably this would make most SB 9 projects financially infeasible (and likely present constitutional issues). The sponsors note a 2022 analysis by the Terner Center identifying four jurisdictions that required affordable deed restrictions for SB 9 developments in their ordinances implementing SB 9 as evidence of the need for this change.
ii) Solving the same problem again, and again? HCD prepared several technical assistance letters that reviewed several local agency’s SB 9 ordinances, including the presence of inclusionary requirements in their ordinances. In the case of each ordinance, HCD concluded, “the Ordinance’s inclusionary requirement raises concerns that it may render implementation of SB 9 economically infeasible. Therefore, the City should remove the requirement.”7 HCD’s review of these ordinances was conducted in the context of the HCA limitations on policies that reduce a site’s residential capacity and Housing Element Law’s limitations on government constraints as well as policies that conflict with a jurisdictions obligation to Affirmatively Further Fair Housing (AFFH).
HCD reached these conclusions prior to the enactment of SB 450 (Atkins, 2024) which further amended SB 9.
The ordinances noted in the Terner Center analysis were adopted prior to SB 450 (Atkins); that bill explicitly prohibits local agencies from imposing objective standards --- such as an inclusionary requirement --- on SB 9 projects that are not applied uniformly to developments within the underlying zone. This change in law effectively prohibits local agencies from imposing inclusionary requirements on SB 9 developments unless they impose identical inclusionary requirements on other housing developments. The changes in SB 450 effectively preempted local agencies from imposing deed restrictions that are unique to SB 9 projects.
Finally, under current law, an SB 9 development only allows a single project to create up to four units on an existing parcel. In order for an existing local inclusionary ordinance to apply to an SB 9 development, a
7 California Department of Housing and Community Development, City of Temple City – Housing Crisis Act, Letter of Technical Assistance, April 29, 2022;
California Department of Housing and Community Development, City of Temple City – Follow-Up Letter of Technical Assistance, December 15, 2022;
California Department of Housing and Community Development, City of Dana Point – Letter of Technical Assistance, April 17, 2023;
California Department of Housing and Community Development, City of Camarillo – Letter of Technical Assistance, June 19, 2023.
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local agency would need to adopt an ordinance that requires at least 25% of the units in any development to be affordable. 25% is much higher than local inclusionary ordinances implemented across the state, and many inclusionary ordinances are only applicable to projects that include 10 units or more. Finally, it is unclear that a 25% inclusionary requirement would be upheld as constitutional.
Prior to the enactment of SB 450 HCD advised local agencies that imposing inclusionary ordinances on SB 9 developments could violate various housing laws. SB 450 made it clear that existing law prohibits local agencies from imposing deed restrictions that are unique to SB 9 projects. It is also clear that a local inclusionary ordinance that applies across the jurisdiction, would not apply to an SB 9 project currently, as SB 9 projects are currently limited to four units, and would require an inclusionary threshold that is exceptionally high, raising constitutional questions.
Given the clarity in the law and HCD’s prior actions, the committee may wish to consider what problem is there to solve.
iii)Preempting affordability? While existing local inclusionary requirements are already not applicable to SB 9 developments, this bill also expands the scope of potential SB 9 projects. Specifically, this bill deletes a provision that prohibits urban-lot splits from occurring on adjacent parcels. This change, coupled with the removal of owneroccupancy requirements could be used by developers to supersede existing inclusionary ordinances that would normally apply to these projects. For example, under this bill, one developer could purchase five adjacent parcels and convert them into 10 parcels, with each of the new parcels eligible for an SB 9 duplex development (allowing for 20 total units). The bill additionally requires local agencies to create a single application for a developer using both the urban-lot split and the housing development provisions of SB 9. Logically, a local agency may consider this example of a 20-unit subdivision and the associated housing development to be one SB 9 housing development project. A local inclusionary ordinance that generally applies to all projects that include more than 10 units would normally apply to this project. However, by explicitly prohibiting local agencies from imposing affordable deed restrictions on SB 9 developments, the bill would preempt the application of even a modest 5% inclusionary ordinance.
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Additionally, SB 9’s duplex provisions allow ministerial streamlining to be used to streamline development of one single-family unit. A developer that already owns a small master planned 20-lot single-family subdivision in a jurisdiction with a 10 percent inclusionary ordinance would ordinarily be required to make two of the 20 homes affordable.
However, under this bill, the developer could opt to use SB 9 authority to streamline the approval of all 20 single-family homes. This bill’s changes to SB 9 mean that using this streamlining authority would allow the developer to ignore the local inclusionary ordinance entirely.
The committee may wish to consider whether SB 9 should be a tool that allows developers to supersede local inclusionary ordinances for singlefamily developments. b) Provisions relative to SB 35. Developers seeking to qualify for streamlined ministerial approval under SB 35 must deed-restrict a portion of the units in the development for affordable housing. The percent of units that must be deed-restricted depends on the number and type of housing development permits issued by the jurisdiction where the development will take place. In jurisdictions failing to meet their lower income RHNA targets, but successfully meeting their above-moderate RHNA targets, developers must dedicate 50% of the units to affordable housing. This bill would reduce this threshold from 50% to 20%.
6) SB 9 changes: allowing urban-lot splits on all residential parcels. The housing development provision in SB 9 (Gov Code 65852.21) and the urban-lot split provision of SB 9 (Gov Code 66411.7) may be utilized in concert or independently. A developer could use the urban-lot split provision and the housing development provision to obtain ministerial approval of an urban-lot split and housing development placing four units on newly subdivided land.
Additionally, a developer may use the urban-lot split provision on its own to subdivide an existing parcel without a predetermined use for the two newly created parcels. However, current law allows local agencies to place restrictions on the future uses of a parcel that is created using the urban-lot split provisions of SB 9. SB 9 provides that notwithstanding Density Bonus Law (DBL), ADU law, and JADU law, local agencies are not required to permit the creation of more than two units on a parcel created through an urban-lot split.
Under existing law, an urban-lot split will always increase the potential density of land that is subdivided because it only applies to single-family residential parcels and allows two units per parcel. This bill will expand the scope of urban-lot splits to include all residential parcels, including multifamily and SB 677 (Wiener) Page 17 of 21
mixed-use parcels. Allowing urban-lot splits on higher-density multifamily parcels substantially expands the scope of SB 9.
The Housing Crisis Act (HCA) specifically prohibits local agencies from reducing the residential development capacity of land, unless the local agency concurrently upzones another area to ensure that there is no net loss in residential capacity in the jurisdiction. SB 9 allows local agencies to limit the development capacity of parcels created by an urban-lot split to no more than two units. However, the HCA prohibits local agencies from imposing this limitation unless the local agency concurrently upzones another area in the jurisdiction. Given that local agencies must approve lot-splits ministerially within 60 days, it is unlikely a local agency could concurrently upzone another area of the jurisdiction in that time. In practice, the HCA would prevent a local agency from reducing the development capacity of a parcel created by an urban-lot split in a multifamily zone.
The changes in this bill also prohibit local agencies from imposing deed restrictions on any parcel created using the urban-lot split provisions of SB 9.
This allows a developer to preempt the application of existing local inclusionary ordinances on multifamily developments. For example, under this bill, a oneacre multifamily parcel zoned for 60 units per acre could be subdivided into two parcels, and developed with 30 units on each parcel. This bill would render a locally adopted inclusionary ordinance inapplicable to this development.
The committee may wish to consider the impact of exempting urban-lot splits on multifamily parcels from local inclusionary requirements.
Finally, this bill could afford market-rate developers relief from certain development standards that might otherwise only apply to developments that include affordable housing. DBL allows a developer to waive development standards if they include affordable units in their development. Developers often use these waivers to reduce standards, such as the scale of commercial space they are required to include in their project. This encourages market-rate developers to add affordable units to their residential projects. Under SB 9, local agencies are required to only allow residential uses on parcels created by an urban-lot split. By expanding SB 9 to include any parcel that allows residential use, including mixed-use parcels, this bill allows developers to effectively rezone mixed-use parcels by using an urban-lot split to create parcels that are residential only. Because local agencies are required to only allow residential use on parcels creating using an urban-lot split, this bill would allow a market-rate developer to eliminate any obligation to include commercial space in an area zoned for mixed-use development without SB 677 (Wiener) Page 18 of 21
including any affordable units. In addition to prohibiting the application of inclusionary requirements on multifamily parcels generally, this bill could undercut a key incentive that encourages developers on mixed-used parcels to include affordable units voluntarily.
The committee may wish to consider the impacts of allowing market-rate developers to access development incentives currently reserved for affordable developments.
7) Protected Units. In order for a project to qualify for streamlined ministerial approval under SB 9 or SB 35, the project site must comply with a series project specific and of site specific criteria. Both streamlining processes are excluded from occurring on sites that require the demolition or alteration of certain types of protected housing, including housing occupied by tenants, housing subject to a deed restriction or price control and housing where tenants were evicted, as specified. This bill would invalidate this protection for housing units on properties where the structures were destroyed in a disaster. 8) Double-referral. This bill was also referred to the Local Government Committee.
Related/Prior Legislation
SB 1123 (Caballero, Chapter 294 Statutes of 2024) — requires, starting July 1, 2025 local agencies to ministerially approve the subdivision of vacant, singlefamily lots to allow for up to 10 units as specified and makes other changes to SB 684 (Caballero), Chapter 783, Statutes of 2023.
SB 450 (Atkins, Chapter 286, Statutes of 2024) — amended the process established by SB 9 (Atkins), Chapter 162, Statutes of 2021 for the ministerial approval by a local agency of a duplex in a single-family zone and the lot split of a parcel zoned for residential use into two parcels.
SB 684 (Caballero, Chapter 783, Statutes of 2023) — required local agencies to ministerially approve subdivision maps for specified projects in urban areas that include 10 or fewer housing units.
SB 423 (Weiner, Chapter 778, Statutes of 2023) — extended the sunset, amended the labor standards, and made other changes to SB 35 (Wiener), Chapter 366, Statutes of 2017.
SB 677 (Wiener) Page 19 of 21
SB 9 (Atkins, Chapter 162, Statutes of 2021) — required ministerial approval of a housing development of no more than two units in a single-family zone (duplex), the subdivision of a parcel zoned for residential use into two parcels (lot split), or both.
SB 1120 (Atkins, 2020) — would have required ministerial approval of duplexes and specified subdivision maps. This bill died on the Senate Floor (Unfinished Business).
SB 35 (Wiener, Chapter 366, Statutes of 2017) — created a ministerial approval process for specified infill, multifamily housing development projects.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes POSITIONS: (Communicated to the committee before noon on Wednesday, April 16, 2025.)
SUPPORT:
California YIMBY (Sponsor)
Housing Action Coalition (Sponsor)
Lisc San Diego (Sponsor)
21st Century Alliance
AARP
Abundant Housing LA
Active San Gabriel Valley
Alexander Pedersen - Vice Mayor, Capitola
Bay Area Council
Bernal Heights Neighborhood Center
Brian Barnacle - Councilmember, Petaluma
Buildcasa
California Apartment Association
California Community Builders
Chamber of Progress
Circulate San Diego
City of Berkeley Councilmember Rashi Kesarwani
Council of Infill Builders
East Bay for Everyone
East Bay YIMBY
Eastside Housing for All
Emily Ramos - Vice Mayor, Mountain View
Fremont for Everyone
Front Porch
SB 677 (Wiener) Page 20 of 21
Generation Housing
Grow the Richmond
Habitat for Humanity California
Home Match, a Front Porch Community Service
House Sacramento
Jamboree Housing Corporation
Leadingage California
Lucas Ramirez - Councilmember, Mountain View
Mark Dinan - Councilmember, East Palo Alto
Mountain View YIMBY
Napa-solano for Everyone
Northern Neighbors
Northern Neighbors Sf
Peninsula for Everyone
People for Housing - Orange County
Phoebe Shin Venkat - Councilmember, Foster City
Power CA Action
Redlands YIMBY
San Francisco YIMBY
Santa Cruz YIMBY
Santa Rosa YIMBY
Sergio Lopez - Mayor, Campbell
Sloco YIMBY
South Bay YIMBY
South Pasadena Residents for Responsible Growth
Spur
Student Homes Coalition
Ventura County YIMBY
Westside for Everyone
YIMBY Action
YIMBY Democrats of San Diego County
YIMBY Los Angeles
YIMBY Slo
Zach Hilton - Councilmember, Gilroy
OPPOSITION:
Association of California Cities - Orange County (ACC-OC) California Association of Realtors
California Association of Recreation & Park Districts
California Rural Legal Assistance Foundation
California Contract Cities Association
SB 677 (Wiener) Page 21 of 21
California Special Districts Association
Catalysts for Local Control
City of Carlsbad
City of Corona
City of Hidden Hills
City of Lakewood CA
City of Norwalk
City of Rosemead
City of Whittier
Community Associations Institute - California Legislative Action Committee Communities for a Better Environment
Leadership Counsel for Justice and Accountability
League of California Cities
Murrieta; City of
Norwalk; City of
Pacific Palisades Community Council
Public Advocates
Public Counsel
Public Interest Law Project
San Rafael/marin County Council of Mayors & Council Members; City of Simi Valley; City of
State Building and Construction Trades Council
Strategic Actions for a Just Economy
Western Center on Law & Poverty
Westside Regional Alliance of Councils
6 Individuals
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