City Council
Report
City Council Meeting: June 10, 2025
Agenda Item: 12.C
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To: Mayor and City Council
From: Arminé Chaparyan, Director, Administration
Subject: Public Hearing and Adoption of an Emergency Interim Zoning Ordinance to Permit the Establishment of Accessory Dwelling Units (ADUs) as Part of Projects Utilizing Senate Bill 1123 on Vacant Parcels Zoned for Single-Unit Residential.
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of Statutory Exemption from the California Environmental Quality Act (CEQA) pursuant to Government Code Section 65913.4.5(b).
2. Introduce and Adopt an Emergency Interim Zoning Ordinance Permitting the Establishment of Accessory Dwelling Units (ADUs) as Part of Projects Utilizing Senate Bill (SB) 1123 on Vacant Parcels Zoned for Single-Unit Residential.
Summary
On September 19, 2024, Governor Newsom approved Senate Bill 1123 (SB 1123) which is available for applicants to use as of July 1, 2025. Primarily, SB 1123 expands upon prior State law (SB 684) to allow a parcel zoned for single-unit residential to be ministerially subdivided to up to 10 parcels. While most aspects of SB 1123 are compulsory, there are areas such as the inclusion of Accessory Dwelling Units (ADUs) that are at the discretion of each local jurisdiction. On May 13, 2025, City Council gave direction to staff to return on June 10, 2025 with an ordinance to allow ADUs in conjunction with projects utilizing SB 1123. For reasons explained in more detail below, and in order to ensure that ADUs are available as an option for applications filed as of July 1, 2025, the ordinance is being presented as an Emergency Interim Zoning Ordinance (IZO).
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Discussion
Approved on September 19, 2024, and applicable to applications filed on or after July 1, 2025, SB 1123 amends the provisions of the Government Code that require local jurisdictions to approve certain subdivisions up to 10 units ministerially that started with SB 684. SB 684, which applies to applications filed after July 1, 2024, required local agencies to ministerially approve (1) a subdivision resulting in 10 or fewer parcels for certain housing development projects, and (2) a housing development project consisting of 10 or fewer units on a parcel resulting from a subdivision under SB 684. Currently, for a subdivision to be eligible for streamlined, ministerial review under SB 684, the resulting development must be located on a parcel zoned for multi-unit residential developments that are no larger than five acres and substantially surrounded by qualified urban uses.
Amongst other amendments, SB 1123 expands the ability to ministerially subdivide a parcel to now also apply to housing developments located on “vacant” parcels zoned for single-unit residential development if it meets certain criteria. The primary stated purposes behind this legislation are to (1) continue to address California’s statewide housing crisis, (2) address the housing crisis’s impacts on economic growth, homelessness, and cost of home ownership, and (3) address the shortfall between California’s housing needs and the available housing supply created by restrictive policies at both the local and state level.
Overview of SB 1123
Below is a high-level overview of how the City is required to implement SB 1123. This overview is based on staff’s preliminary understanding of SB 1123 after conducting an independent review of the statutory language and legislative history along with publicly available third-party analysis. However, anticipated guidance from the California Department of Housing and Community Development (HCD), which has enforcement authority over implementation of SB 1123, and any applicable judicial guidance that may be issued, may necessarily change the below interpretation and, consequently, the City’s implementation of SB 1123.
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1. What parcels will SB 1123 apply to?
SB 1123 applies to housing developments located on parcels zoned for singleunit residential development.
2. Are there eligibility requirements?
Yes. SB 1123 requires that a parcel be (1) “vacant,” (2) no larger than 1.5 acres, and (3) substantially surrounded by qualified urban uses (which is all of Santa Monica).
3. What does “vacant” mean for purposes of SB 1123?
SB 1123 defines “vacant” as “having no permanent structure, unless the permanent structure is abandoned and uninhabitable”.
4. Does SB 1123 have any displacement and/or tenant protections? Yes. SB 1123 does not apply to projects that would result in the demolition or alteration of any of the following types of housing:
• Housing that is subject to a recorded covenant, ordinance, or law that restricts rent or sales price to levels affordable to persons and families of low, very low, or extremely low income.
• Housing that is subject to any form of rent or sales price control through a local public entity’s valid exercise of its police power. • Housing occupied by tenants within the five years preceding the date of the application, including housing that has been demolished or that tenants have vacated prior to the submission of the application for a development permit.
• A parcel on which an owner of residential real property has exercised the owner’s rights under the Ellis Act to withdraw accommodations from rent 4 of 10
or lease within 15 years before the date that the development proponent submits an application.
SB 1123 further clarifies that the following types of housing do not qualify as “vacant”, making parcels improved with these types of housing ineligible for development under SB 1123:
• Housing that is subject to a recorded covenant, ordinance, or law that restricts rent or sales price to levels affordable to persons and families of low, very low, or extremely low income.
• Housing that is subject to any form of rent or sales price control through a local public entity’s valid exercise of its police power. • Housing occupied by tenants within the five years preceding the date of the application, including housing that has been demolished or that tenants have vacated prior to the submission of the application for a development permit.
5. Are there subdivision limitations/requirements?
Yes. In addition to the parcel being required to be vacant, zoned for single-unit residential, no larger than 1.5 acres, and surrounded by qualified urban uses, SB 1123 requires that a subdivision of a parcel comply with the following:
• The parcel is located within an incorporated City
• The parcel is located within an urbanized area
• The parcel was not established pursuant to this section or Section 66411.7 (“SB 9/450”)
• The parcel is not located within one of the following areas:
o Prime farmland or farmland of statewide importance
o Wetlands
o High or very high fire hazard severity zone
o Hazardous waste site
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o Delineated earthquake fault zone, unless the development complies with applicable seismic protection building code standards o Special flood hazard area, unless a development proponent is able to satisfy all applicable federal qualifying criteria
o Regulatory floodway, unless the development has received a norise certification o Land identified for conservation in an adopted natural community conservation plan
o Habitat for protected species
o Land under conservation easement
• Newly created parcels shall be no smaller than 1,200 square feet (multiunit parcels require newly created parcels to only be 600 square feet) o Minimum parcel size, width, depth, frontage, and dimensions do not apply.
6. What types of housing may be developed under SB 1123? The housing units on the parcel proposed to be subdivided are one of the following:
• Constructed on fee simple ownership lots.
• Part of a common interest development (e.g., condominiums, planned developments, stock cooperatives, community apartment projects). • Part of a housing cooperative.
• Constructed on land owned by a community land trust (additional qualifiers apply).
• Part of a tenancy in common.
7. How many parcels can be created using SB 1123?
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SB 1123 allows for the ministerial subdivision of a parcel to up to 10 newly created parcels as long as they meet certain requirements and limitations. While the statutory language does not expressly state that a jurisdiction is required to allow a subdivision meeting eligibility requirements under SB 684 or SB 1123 to surpass its local density limits, on May 5, 2025, HCD issued a Technical Assistance to the City of Morro Bay regarding SB 684 that appears to have clarified that local density limits cannot prohibit the creation of up to 10 parcels, including parcels that make up common interest developments (i.e. ownership condos), as long as the project meets all requirements within the State law.
Because SB 1123 expands SB 684, and the language HCD analyzed does not appear to have been amended as part of SB 1123, it appears this analysis would similarly apply to projects applying under SB 1123.
City of Morro Bay – 2900 Alder Ave – Letter of Technical Assistance
8. What can be built on each resulting new parcel after subdivision? The HCD Technical Assistance letter to Morro Bay further appears to indicate that while SB 1123 allows for the creation of new parcels that might exceed or override standards compared to what is permitted in the subject zoning district, the maximum allowable density per the underlying zoning district still applies for each resulting parcel created. In the case of the R1 zoning district, this means that only one single-unit dwelling is permitted per newly created parcel. SB 1123 prohibits the addition of ADUs unless a local jurisdiction chooses to allow them.
9. Can a jurisdiction impose development standards on an SB 1123 project? Yes. The City can impose objective zoning standards, objective subdivision standards, or objective design standards that are related to the housing development or to the design or improvement of a parcel, as long as they do not 7 of 10
conflict with the provisions implementing SB 1123, Government Code Sections 65852.28 and 66499.41, including, but not limited to:
• Impose a height limit less than the height allowed pursuant to the underlying zoning district.
• Impose any requirement that applies to a project solely or partially on the basis that the subdivision or housing development receives approval under SB 1123
• Require a setback between units, except as required in the California Building Code.
• Require parking to be enclosed or covered
• Impose side and rear setbacks from the original lot line greater than four feet for new construction.
• Impose parking requirements when a parcel is located within one-half mile walking distance of either a high-quality transit corridor or if there is a car share vehicle located within one block of the parcel.
• Impose the following development sizes:
o For a housing development project consisting of three to seven units, inclusive, floor area ratio standard that is less than 1.0. o For a housing development project consisting of 8 to 10 units, inclusive, floor area ratio standard that is less than 1.25. o The average total area of floorspace for the proposed housing units on the lot proposed to be subdivided does not exceed 1,750 net habitable square feet
10.Does the Santa Monica Municipal Code Chapter 9.64, the City’s Affordable Housing Production Program, apply to projects utilizing SB 1123? Yes. The housing development project on a parcel proposed to be subdivided is required to comply with any local inclusionary housing ordinances adopted by a local agency.
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11.What is the process to approve a subdivision submitted pursuant to SB 1123? The City is required to review a subdivision pursuant to SB 1123, or a housing development project on a parcel that has been subdivided under SB 1123, ministerially, without discretionary review or a hearing, within 60 days from the date an application is deemed complete. If a local agency does not act within 60 days, the application shall be deemed approved.
12.Can a jurisdiction deny a subdivision application submitted pursuant to SB 1123? Yes. A jurisdiction can deny an application that does not meet all the requirements of SB 1123 or any applicable objective standard. And, if a project does otherwise meet all the requirements of SB 1123 and all applicable objective standards, the jurisdiction may deny the project only “if it makes a written finding, based upon a preponderance of the evidence, that the proposed housing development project would have a specific, adverse impact” on “public health and safety and for which there is no feasible method to satisfactorily mitigate or avoid the specific, adverse impact.”
13.What other modifications did SB 1123 make?
In addition to the above, SB 1123 modified the minimum density requirements of SB 684 based on whether the subject parcel is identified in a jurisdiction’s housing element
Council Direction
As mentioned above, there are areas of SB 1123 that give local jurisdictions discretion to decide for themselves. One of these areas is the application of ADUs. SB 1123 states that “a local agency is not required to permit an accessory dwelling unit or a junior accessory dwelling unit on parcels created through the exercise of the authority contained within this section.” Additionally, if a local jurisdiction does decide to permit ADUs, “the units shall not count as residential units” when determining how many units 9 of 10
can be established within developments that have subdivided a parcel pursuant to SB 1123.
On May 13, 2025, City Council gave direction to staff to return with an ordinance to allow ADUs in conjunction with projects utilizing SB 1123. The attached Emergency IZO implements this direction in order to be effective in time for SB 1123’s effective date of July 1, 2025. Staff have also received inquiries and stated interest in the use of SB 1123 when it becomes available. With approval of this ordinance, all applicable provisions under State ADU law and the City’s local implementation will be available to parcels created utilizing SB 1123, including, but not limited to, the number of ADUs that can be permitted on a single parcel.
Policy Question
Council’s direction to allow ADUs was in conversation with the applicability of SB 1123 within the City’s single-unit dwelling zoning districts. However, SB 1123 was only an expansion of an already existing Government Code. As the Government Code applies to more than just single-unit residential zoned parcels, staff asks the following policy question:
Policy Question:
Should ADUs be permitted in all projects that utilize Government Code 66499.41, which includes parcels within both single-unit and multi-unit zoning districts?
Options:
➢ Yes, allow ADUs in all zoning districts utilize Government Code 66499.41
➢ No, only allow ADUs when Government Code 66499.41 is utilized on parcels zoned for single-unit residential.
Environmental Review
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The amendment to the Zoning Ordinance is statutorily exempt from the California Environmental Quality Act (CEQA) pursuant to Government Code Section 65913.4.5(b), which states that an ordinance to implement Government Code Sections 65852.28 and 66499.41 (SB 1123/SB 684) shall not be considered a project subject to CEQA (Section 21000 et seq of the Public Resources Code).
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the recommended action. Staff will return to Council if specific budget actions are required in the future.
Prepared By: Ross Fehrman, Principal Planner
Approved Forwarded to Council
Attachments:
A. 2025.06.10 - SB 1123_EIZO
B. Written Comments
C. PowerPoint Presentation