All you need to know about building on properties in San Carlos City under SB-9
For real estate projects in San Carlos City, SB-9 is a useful option for homeowners looking to free up cash to pay off a significant part of their loan. With the right budget, you can also add extra units to generate rental income or create space for extended family, all while continuing to live in your main home. To make your SB-9 project work, start by learning about the eligibility criteria, how local restrictions apply to your property, and which SB-9 option suits your financial situation best.
What is SB-9 and how does it apply to the properties in San Carlos?
What is SB-9?
Effective January 1, 2022, the California HOME Act (SB 9 or Senate Bill 9) allows property owners to either split a single lot into two, permitting up to two units on each new parcel, or build up to four units on an undivided lot, all without requiring public hearings or subjective reviews. This law was signed by Governor Newsom on September 16, 2021.
What is Urban Infill Unit?
The San Carlos City Council adopted Ordinance 1603, which took effect on December 13, 2023, and replaced the previous Urgency Ordinance. This ordinance rebrands SB 9 units as Urban Infill Units and includes their regulations into the San Carlos Municipal Code.
How SB-9 applies to properties in San Carlos?
SB-9, known as the California HOME Act, allows properties in San Carlos to be developed by subdividing lots into up to two parcels, each capable of accommodating up to four units. This process does not require public hearings or discretionary reviews. San Carlos terms these units as Urban Infill Units and regulates them under specific guidelines in its Municipal Code. Applicants should submit applications to the Planning Division, obtain approval, and meet requirements such as lot size, setbacks, and parking. This facilitates streamlined development aimed at addressing housing needs in residential areas while following the zoning and development standards.
What can homeowners build under SB-9 or San Carlos’s HOME Act?
Urban Lot Split under SB-9
SB-9 allows for the division of a single-family residential lot into two distinct parcels, allowing the development of up to two units on each new lot.
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
SB-9 allows for the development of up to two residential units on a single-family lot, enabling the construction of either two new homes or one additional home on a parcel already containing one residence.
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?
The total floor area of all units cannot surpass the zoning district's limit, unless exempted by local laws or State regulations. Specifically, the rear-most unit cannot surpass 800 square feet.
Up to four units are allowed per lot, which can include combinations like a primary dwelling unit with an urban infill unit, two urban infill units, a primary dwelling unit with an ADU, or a primary dwelling unit with a JADU.
What are the setbacks?
They require a minimum front setback as per the zoning district and at least 4 feet from interior side and rear property lines. If a new SB 9 dwelling unit is built in the same location as an existing structure on the parcel, no additional setback is necessary.
What is the parking requirement under SB-9?
Under SB-9, each urban infill unit should provide 1 uncovered parking space on the property, measuring at least 10 feet wide by 20 feet deep. However, this requirement is waived if the parcel is within half a mile walking distance of a high-quality transit corridor or a major transit stop, or if there is a car share vehicle within one block of the parcel. Development should comply with uses allowed in the underlying zoning district.
What are the lot constrains under SB-9?
Under SB-9, parcels resulting from urban lot splits cannot create a flag lot configuration. They should be split into at least 40% and up to 60% of the original lot size, with each resulting parcel being a minimum of 1,200 square feet in size.
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 eligible for SB-9 include those within RS-3 or RS-6 zoning districts, which are primarily designated for single-family residences.
Can you disregard the environmental restrictions on the lot?
No, the project site is subject to environmental restrictions and is not located on lands under a conservation easement, as defined by state law.
Can you bypass the Historical Preservation limitations?
The project site should not be located within a historic district or appear on the State Historic Resources Inventory, so historical preservation limitations cannot be bypassed.
Is it allowed to demolish an affordable unit?
No, demolishing or altering an affordable unit in San Carlos isn't allowed if it's bound by a recorded covenant, ordinance, or law stipulating affordable rent for moderate, low, or very low-income individuals and families.
Is it allowed to build in High-Risk Areas?
No, building is not allowed in high-risk areas. The project site is not located in an earthquake fault zone, federally designated flood plain, or high fire severity zones as defined under state law.
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, before the parcel map is recorded, the applicant should sign and record an affidavit stating their intention to reside in one of the proposed or existing primary dwelling units or urban infill units for three years from the subdivision approval date. This rule does not apply if the applicant is a community land trust or a qualified nonprofit corporation.
Are existing tenants’ rights protected?
Yes, existing tenants' rights are protected. Housing that is subject to rent or price control through a public entity's police power cannot be demolished or altered. Additionally, properties where owners have withdrawn accommodations from rental or lease within 15 years prior to the development application, as well as housing occupied by a tenant within the last 3 years, are also protected.
What are the rental regulations?
The rental regulations specify that all dwelling units should be leased for a minimum period of 30 days and may not be used for short-term rentals.
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 means following prescribed procedures to streamline permit issuance without discretionary reviews or public hearings, aimed at expediting the process. However, approvals for lot divisions may still necessitate an extended period, potentially up to 18 months.
What are objective standards?
"Objective zoning standards," "objective subdivision standards," and "objective design review standards" are used in zoning, subdivision, and design review processes to eliminate subjective evaluations by government officials. These standards rely on standardized metrics that developers and officials can access before submission, ensuring consistent and dependable project assessments. This gives homeowners clear and predictable guidelines to evaluate their proposals.
What are the steps to get the permits?
Here are the steps to obtain SB 9 permits in San Carlos:
- Submit Application:
Prepare and submit an application for an Urban Infill Unit to the Planning Division.
- Planning Review:
The Planning Division will review the application for compliance with SB 9 requirements. Approval of the planning application is necessary before proceeding to the next step.
- Building Permit Application:
After receiving planning approval, submit a building permit application along with the required fees.
- Review Process:
The City will conduct a review process, which may involve multiple rounds of review lasting up to 30 days each, depending on the project's complexity and completeness of submission.
- Pre-Application Meeting:
Consider scheduling a pre-application meeting with a planner to streamline the process.
- Planner Assignment:
Once the formal application is submitted, the City will assign a planner who will provide updates on the application status.
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 acquisition), is $2,166,626. The expected value of the completed property in San Carlos is approximately $6,315,000, giving an ROI of [($6,315,000 - $2,166,626) / $2,166,626] * 100 = 191%.
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 acquisition, is $3,469,811. The anticipated market value for these duplexes in San Carlos is $10,104,000, resulting in an ROI of 191%.
Conclusion:
In San Carlos City, using SB-9 for property projects can lead to significant financial gains, making it a prime location for those considering new residential developments.