All you need to know about building on properties in Portola Valley under SB-9
Using SB-9 for real estate projects in Portola Valley is a great way for homeowners to get cash to pay off a big part of their loan. If you have money to add more units, you can generate rental income or create space for extended family members while still living in the primary home. A successful SB-9 project starts by understanding the eligibility, how the restrictions apply to the property, and which SB-9 option makes financial sense for property in Portola Valley.
What is SB-9 and how does it apply to the properties in Portola Valley?
What is SB-9?
Senate Bill 9 (SB-9) or the California HOME Act, was passed on September 16, 2021, to streamline the housing development process. This law mandates that proposed developments with up to two residential units in single-family residential zones undergo a ministerial approval process, which bypasses discretionary reviews and public hearings, provided they meet certain criteria designed to encourage more efficient housing opportunities.
How SB-9 applies to properties in Portola Valley?
SB-9 in Portola Valley enables property owners within single-family residential zones to develop up to two units through an expedited approval process overseen by the planning and building department. Public hearings are bypassed if the project complies with specific criteria. Compliance to local regulations, such as environmental and historical preservation standards relevant to the property's location, is crucial.
What can homeowners build under SB-9 or Portola Valley’s HOME Act?
Urban Lot Split under SB-9
An urban lot split involves dividing an existing parcel into no more than two separate parcels, ensuring that specific criteria and standards are followed.
In this case you could have the following unit configurations:
A. Lot 1 Single-Family Dwelling (SFD)
Lot 2 Single-Family Dwelling (SFD)
B. Lot 1 Single-Family Dwelling (SFD)
Lot 2 Duplex
C. Lot 1 Duplex
Lot 2 Duplex
D. Lot 1 Single-Family Dwelling (SFD) + Single-Family Dwelling (SFD)
Lot 2 Single-Family Dwelling (SFD)
E. Lot 1 Single-Family Dwelling (SFD) + Single-Family Dwelling (SFD)
Lot 2 Single-Family Dwelling (SFD) + Single-Family Dwelling (SFD)
Two-Unit Development under SB-9
A two-unit development under SB-9 includes projects that either create up to two new dwelling units or add one new dwelling unit to an existing primary dwelling unit.
You could have the following unit configurations:
- Single-Family Dwelling (SFD) + Single-Family Dwelling (SFD)
- Single-Family Dwelling (SFD) + Single-Family Dwelling (SFD) + ADU (max. size 1,200 sqft) or JADU (max. size 500 sqft)
- Duplex
- Duplex + ADU (max. size 1,200 sqft) or JADU (max. size 500 sqft)
- Duplex + 2 ADU (max. size 1,200 sqft)
Deciding which development option works best for you is not easy, unless you understand their cost and ROI for your property. You need an SB-9 Analysis for each option to make the best decision.
How large the new units could be and what are the lot contains?
- Units can be up to 850 square feet for one-bedroom units or up to 1,000 square feet for larger units if they do not comply with setback requirements.
- Units can be up to 1,200 square feet if they comply with setback requirements and are on parcels smaller than 3.5 acres, with a deed restriction preventing further subdivision.
- Units can be up to 1,500 square feet if they comply with setback requirements and are on parcels 3.5 acres or larger, with a deed restriction preventing further subdivision.
However, SB-9 allows any unit size if California State regulations are met.
Lot Content:
- A lot split can contain no more than two residential units per resulting lot, including both existing and new units.
- No ADU or JADU is allowed on a split lot, except on a lot that is not split and where the existing primary dwelling is demolished or reconstructed, allowing for two new primary units, one ADU, and one JADU.
What are the setbacks?
New SB 9 dwelling units should comply with the front yard setback requirements of the underlying zoning code. A minimum setback of 4 feet is required from the side and rear parcel lines. No setbacks are needed if the new unit is built in the same location as an existing structure.
What is the parking requirement under SB-9?
Each SB 9 unit should have 1 off-street parking space, unless the parcel is within a half-mile walking distance of a high-quality transit corridor or major transit stop, or if a car share vehicle is located within one block of the parcel.
What are the lot constrains under SB-9?
The lot split can divide a lot into a maximum of two parcels, each of similar size, ensuring neither is less than 40% of the original lot area. No resulting parcel can be smaller than 1,200 square feet.
Don't leave money on the table by limiting the size of your project to a minimum! SB-9 Analysis calculates for you the maximum building area so you can get the highest return.
Who and which properties are eligible for SB-9 or HOME Act?
What are the zoning districts for properties eligible for SB-9?
Properties in R-E, R-1, or M-R residential zones are eligible for SB-9.
Can you disregard the environmental restrictions on the lot?
No, you cannot bypass environmental restrictions on an SB 9 parcel in Portola Valley Town if the property meets any of the following criteria: it is prime farmland or farmland of statewide importance, designated for agricultural protection by local ballot measure, wetlands, part of a conservation plan, or habitat for protected species under state or federal law. Additionally, parcels under conservation easements are also subject to these restrictions.
Can you bypass the Historical Preservation limitations?
No, you cannot bypass Historical Preservation limitations if the parcel is located within a historic district, listed on the State Historic Resources Inventory, or designated as a city landmark or historic property according to Town of Portola Valley or San Mateo County ordinances.
Is it allowed to demolish an affordable unit?
No, it is prohibited to demolish or alter an affordable unit in Portola Valley Town if it is governed by a recorded covenant, ordinance, or law that mandates affordable rent levels for moderate, low, or very low-income individuals and families.
Is it allowed to build in High-Risk Areas?
Possibly. Building in high-risk areas in Portola Valley Town is subject to compliance with Resolution No. 2746-2017 and other local regulations. This includes following the guidelines governing construction near earthquake faults, active downslope areas, and high fire hazard severity zones designated by the Department of Forestry and Fire Protection. Restrictions also apply to parcels identified as hazardous waste sites, within earthquake fault zones, or special flood hazard areas, unless specific mitigations or exemptions are met according to local and federal standards.
Start by checking if your property is eligible for SB-9 because not all the single-family zoned lots are eligible.
What are the ownership and development limitations after completing a project using SB-9?
Does the homeowner need to reside on the property?
Yes, the homeowner seeking an SB 9 lot split should provide a sworn statement affirming their plan to live in one of the housing units as their main residence for at least 3 years after the lot split approval. This requirement excludes applicants who are community land trusts or qualified nonprofit corporation.
Are existing tenants’ rights protected?
Yes, SB 9 ensures the protection of existing tenants' rights by prohibiting the demolition or alteration of housing under specific conditions: Housing subject to rent or price controls enforced by public entities. Parcels where accommodations have been withdrawn from rent or lease within the past 15 years. Housing occupied by tenants within the last 3 years prior to the development application submission date.
What are the rental regulations?
All units created should be rented for periods longer than 30 days.
How can you get the permits under SB-9 or HOME Act?
Projects subject to SB-9 can move forward using a ministerial permit process, avoiding discretionary review or hearings.
What does ministerial approval mean?
Ministerial approval in housing development involves following predefined procedures to facilitate permit issuance without discretionary reviews or public hearings, with the goal of expediting the process. However, in situations involving lot divisions, approvals may still require up to 1 and a half years.
What are objective standards?
"Objective zoning standards," "objective subdivision standards," and "objective design review standards" are utilized in zoning, subdivision, and design review procedures to eliminate subjective assessments by government officials. These standards rely on external, standardized metrics accessible to developers and officials prior to submission. This ensures consistent and reliable evaluation of projects, providing homeowners with clear and predictable guidelines to assess their proposals.
What are the steps to get the permits?
To obtain SB 9 permits in Portola Valley, here's what you need to do:
- Notification: When an SB 9 residential development application is submitted, the town notifies all property owners within a three-hundred-foot radius of the subject parcel.
- Ministerial Review: The planning and building director or their designee processes SB 9 residential development applications without public hearings or discretionary reviews, provided they meet objective requirements.
- Approval Process: If the application meets all objective requirements, it is approved by the planning and building director.
- Denial Criteria: An SB 9 lot split application may be denied if it does not meet objective requirements or if the building official determines, based on evidence, that it would adversely impact public health, safety, or the environment without feasible mitigation.
- Fees: The town council sets fees in accordance with relevant Government Code sections to cover the costs of processing SB 9 applications.
The permitting process is complex, and you'll need to hire professionals to draft the drawing set and to go through the process for you. SB-9 Analysis comes with referrals to local professionals that can help you complete the project.
How fast can you complete a project per SB-9?
This information outlines the different phases of the project along with their respective durations.
Feasibility Study with deciding the final scope of the project:
• Maximum of 3 days (CityStructure)
• Weeks if using other resources
Secure Financing: 2 to 3 weeks
Hiring the Team: 2 weeks
Design Process:
• Schematic Design: 1-2 months
• Permit Set / Design Development Drawing Set: 2-3 months
• Construction Drawing Set: 2-3 months
Permit Planning and Building Permits: 9 to 15 months with the possibility of extending further due to departmental backlogs
Construction:
• Lot Split only: 1 year
• Single Family House/Duplex: 1 year
• Accessory Dwelling Unit (ADU): 3 to 6 months
How much does a SB-9 project costs?
In this analysis, we'll explore two scenarios to assess anticipated expenses, property assessments, and potential profits for real estate ventures.
Scenario 1
New 4,000 sq.ft 3-Story Duplex + 1,000 sq.ft ADU
In this first option, we recommend building a three-story duplex with a total of 4,000 square feet, plus a 1,000-square-foot Accessory Dwelling Unit (ADU). The estimated overall cost, which includes construction, permits, and professional fees (excluding land), is $2,158,933. The expected value of the completed property in Portola Valley is approximately $6,810,000, giving an ROI of [($6,810,000 - $2,158,933) / $2,155,346] * 100 = 215%.
Scenario 2
Lot Split with 2 new 4,000 sq.ft 3-story Duplexes
For the second option, we suggest dividing the lot to build two separate three-story duplexes, each with 4,000 square feet. The estimated cost, excluding land, is $3,462,833. The anticipated market value for these duplexes in Portola Valley is $10,896,000, resulting in an ROI of 215%.
Conclusion:
In Portola Valley, real estate projects under SB-9 offer impressive returns, making it a compelling spot for anyone thinking about development projects.