What is SB-9 and how does it apply to the properties in Los Angeles City?

What is SB-9 or Senate Bill 9?

SB 9 is part of California's Planning and Zoning Law and it aims to address the housing shortage and promote infill development by allowing through a ministerial permit process, without discretionary review or hearing, to have 2 residential units per lot within a single-family residential zone. SB-9 also requires the local agencies, in this case Los Angeles City to ministerially approve a parcel map for an urban lot split that meets certain requirements.

A key provision of the legislation allows property owners to divide their lot, simplifying the process of selling or securing financing for additional homes on the same parcel.

How does SB-9 apply to properties in Los Angeles?

In Los Angeles City SB-9 is called The Housing Opportunity and More Efficiency (HOME) Act. The City adopted this Bill simplifying the procedures for lot splits and two-unit developments within single-family zones, aiming to increase housing supply.

What can homeowners build under SB-9 or Los Angeles’ HOME Act?

Urban Lot Split under SB-9

SB-9 allows to subdividing of an existing single-family zoned lot into 2 individual parcels. This allows property owners to divide their land into 2 separate lots without having to comply with the minimum lot size requirements typically imposed by local zoning regulations. The two lots should be roughly similar in size, with a division typically ranging from 40% to 60%. The minimum size of each new lot is 1,200 square feet. Homeowners could have up to 2 residential units on each lot, or a total of 4 residential units on the original lot.

Under this option, you could have the following unit configurations:

Not sure if your property is located in a Single-family zoned area?

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Two-Unit Developments under SB-9

You do not need to go through a lot split under SB-9. Property owners can keep the site as is and choose to build up to 2 primary dwelling units. This means they can build 2 separate residential units on the same lot, such as a duplex or two detached homes.

Under this option, you could have the following unit configurations:

How large could the new units be and what does the lot contain?

HOME Act or SB-9 does not limit you to a minimum size of a unit. The Building Codes may do so because you should build a livable unit. When it comes to the maximum size, SB-9 imposes on the local agency to allow 2 units that are at least 800 square feet in floor area and not to limit you to a maximum size that is less than 800 square feet.

When submitting plans for the permit, the homeowner could request a waiver from any objective zoning, subdivision, or design review standards that would have the effect of physically precluding an Urban Lot Split, the construction of up to two units, or either of the two units from containing 800 square feet in floor area.

What are the setbacks?

The front setback and height would still have to follow the standards imposed by the current single-family zone. For the side and rear yard setbacks, the building has to keep a minimum distance of 4 feet from the property line. In the urban lot split option, there’s no imposed setback for a structure that already exists lawfully.

What is the parking requirement under SB-9?

Projects are obligated to have one covered parking space for each existing and newly constructed unit. Alternatively, if certain criteria for parking exemption are met—such as proximity within a half mile of a High-Quality Transit Corridor or Major Transit Stop—no parking provision is required.

What are the lot constraints under SB-9?

In case you choose to go through an Urban Lot Split, even if your lot is very large, you can only split it into 2 new lots. In the case of large lots, where the base zone allows for smaller lots, property owners can choose to first subdivide the lot per right zoning and then per SB-9.

For instance, if your lot has a 10,000 sq ft area and the base zone allows for a 5,000 sq ft minimum lot size, you can Step 1) split the lot per base zone, then Step 2) choose one of the lots to go through an Urban Lot Split per SB-9. It is important to understand that adjacent lots owned by the same entity, cannot be both subdivided per SB-9.

Each resulting parcel should not be smaller than 40 percent of the original parcel's area intended for subdivision. Moreover, both newly created lots should have a minimum size of 1,200 square feet.

Development Analysis calculates the max size under SB-9 for the highest return.

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Who and which properties are eligible for SB-9 or the HOME Act?

What are the zoning districts eligible for SB-9?

The property must be situated within a designated single-family residential zone. Zoning designations for these areas in Los Angeles City are RA, RE, RS, R1, RU, RZ, and RW.

Can you disregard the environmental restrictions on the lot?

No. To protect environmentally sensitive areas, SB-9 does not apply to properties located within wetlands, designated hazardous waste sites, floodways, conservation areas, or habitats designated for protected species.

Can you bypass the Historical Preservation limitations?

No. Properties with historical significance are excluded from this bill. This includes structures designated as historic resources, those situated within a formally recognized historic district, or properties located within a Historic Preservation Overlay Zone (HPOZ).

Is it allowed to demolish an affordable unit?

No. SB-9 development projects are strictly prohibited from altering or demolishing existing affordable housing units, tenant-occupied housing, or units currently covered by a local Rent Stabilization Ordinance (RSO) on the property.

SB-9 requires limitations on alterations and demolitions for existing tenant-occupied units within a two-unit development. No more than 25% of the exterior walls of a unit occupied by a tenant in the last three years can be altered or demolished.

Similarly, SB-9 prohibits alterations or demolitions of units where an Ellis Act eviction (used to remove rent control) has occurred within the last 15 years.

Is it allowed to build on a property in Coastal Zones?

Maybe. For properties located within a Coastal Zone, an additional permit – a Coastal Development Permit (CDP) – is required. Without CDP approval, the SB-9 project cannot proceed.

Is it allowed to build in High-Risk Areas?

Likely yes. For properties located within Very High Fire Hazard Severity Zones, Earthquake Fault Zones, or special flood hazard areas, SB-9 eligibility remains possible. There are stringent requirements to mitigate the risk for each hazard which may increase dramatically the cost of your project.

What are the limitations after completing a project using SB-9?

Does the homeowner need to reside on the property?

Yes, but for a limited time. Only in the case of Urban Lot Split, the owner (or a designated representative) should live on one of the newly created lots for a minimum period of 3 years. This rule encourages homeowners to use this program to address their own long-term housing needs first and then to create more units and make a profit through selling or renting them. However, in instances not involving a Lot Split, residency in one of the units for 3 years is not obligatory.

If you’re considering creating 2 units and an ADU and selling them after completing the project, the answer is Yes. You can also immediately sell 3 units out of the 4 units if you go through an Urban Lot Split.

What are the rental regulations?

SB-9 prioritizes long-term housing options. Short-term and vacation rentals are strictly prohibited. Units created under SB-9 can only be rented for periods of 30 days or longer. However, homeowners retain the ability to participate in home-sharing programs as an accessory used to their primary residence.

Are existing tenants’ rights protected?

Yes. If an SB-9 project results in a reduction in existing tenant services or amenities (such as storage space or green areas), those tenants may be entitled to a rent reduction. This ensures that existing tenants are not negatively affected by the development.

Can condominiums be proposed as part of my Urban Lot Split application?

No, condominiums may not be proposed in conjunction with a ministerial Urban Lot Split Parcel Map application. If you are interested in developing condominiums as part of your project, you should first record the approved Urban Lot Split Parcel Map, build the proposed dwelling units, and obtain the Certificates of Occupancy. After receiving a Certificate of Occupancy for these dwelling units, a separate Parcel Map filing for a condominium conversion will be required. However, please be advised that the Parcel Map for a condominium conversion will not be subject to the streamlined procedures associated with SB 9 Urban Lot Splits. As such, the Parcel Map for condominium conversions will be subject to standard filing fees, environmental review, public hearings, and an appeal period.

Additionally, off-site public improvements will be required.

What is the difference between SB-9 and SB-684?

SB-684 is a newer bill than SB-9, and it streamlines the development process of up to 10 units on urban lots that are smaller than 5 acres. As opposed to SB-9, SB-684 is applicable on properties that are within multi-family zoning areas or on vacant lots within single-family zoning areas. The great part about SB-684 is that it doesn't have the ownership limitations that SB-9 imposes after development.

Below we compared SB-9 and SB-684 for you to understand the development framework outlined by each bill.

How can you get the permits under SB-9 or the HOME Act?

What does ministerial approval mean?

A ministerial approval process is non-discretionary and administrative and is based on objective standards only. A ministerial SB-9 Two Unit Development or Urban Lot Split is not subject to a public hearing or CEQA. Despite this, in the case of a Lot Split, the process still takes around 6-9 months to complete.

What are objective standards?

“Objective zoning standards”, “objective subdivision standards”, and “objective design review standards” are criteria used in zoning, subdivision, and design review processes that do not rely on a personal or subjective judgment from public officials. Instead, they are based on external and uniform benchmarks or criteria that are accessible to both the development applicant and the officials before submission. This approach ensures consistency and predictability in evaluating projects, providing homeowners with clear expectations regarding the outcome of their proposals.

What types of objective standards qualify for a waiver under SB 9?

For SB 9 Two Unit Developments, waivers could be requested after the issuance of plan check corrections for the associated LADBS building permit application. For SB 9 Urban Lot Splits, waivers could be requested as part of an Urban Lot Split application with City Planning.

Examples of what are considered objective standards that may be waived based on a determination that if, not granted, would physically preclude an SB 9 project:

a. Height limitations, front yard setback, driveway width, and/or passageway requirements regulated by the LAMC, or more restrictive zoning standards that may be superseded by Specific Plans or Overlays regulations.

b. Objective subdivision standards may include street frontage, minimum lot width, and access strip requirements associated with a site’s underlying zone.

c. Objective design standards could include plane break requirements regulated by the LAMC, or material and/or transparency requirements regulated by Specific Plans or Overlays.

In Los Angeles, the Los Angeles Department of Building and Safety (LADBS) oversees the processing of two-unit developments, while the City Planning Department is responsible for managing Urban Lot Splits.

If your project includes both a lot split and a two-unit development, it's essential to note that you'll need to submit individual applications to each agency. This ensures that both aspects of your project are reviewed simultaneously, and the departments get to coordinate with each other, so you can receive a non-contradictory answer.

What are the steps to get the permits?

1. One Stop: Conceptual design review and project scope guidance
2. Case Intake: Submittal of all required materials and fees by appointment. Schedule the appointment here.
3. Interdepartmental Subdivision Team: analysis of tentative design and SB9 requirements and ministerial Tentative Map approval.
4. Final Map: Department of Public Works (DPW) Clearance for final design and project requirements
5. Ministerial Site Plan Review: Review of Architectural plans for compliance before submitting to DPW. The lot split process requires a final map to be recorded before any construction. After the final map is recorded, a Ministerial Site Plan Review can approve the proposed development.

DPW issues the permits for construction.

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 using CityStructure Analysis

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

Entitlements and Building Permits: 6 to 9 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 an SB-9 project cost?

This analysis will examine two scenarios to evaluate expected expenses, property valuations, and potential profits for real estate projects.

Scenario 1

New 4,000 sq. ft 3-Story Duplex + 1,000 sq. ft ADU

In our initial scenario, we're exploring the potential development of a new 4,000-square-foot 3-story duplex with a 1,000-square-foot Accessory Dwelling Unit (ADU). The total project cost, including construction, permit costs, and professional fees without land acquisition, is estimated at $2,137,393. If the project is located in the Sycamore Square area, which is a good neighborhood in the LA area, the market value for such a building is approximately $4,950,000. Consequently, the projected Return on Investment (ROI) for an SB-9 project in the Los Angeles area, more specifically in this neighborhood is [($4,950,000 - $2,137,393)/$2,137,393]*100 = 131%

Scenario 2

Lot Split with 2 new 4,000 sq. ft 3-story Duplexes

For the second scenario, we're considering a lot split and the construction of two new 4,000 sq. ft 3-story duplexes. This project is anticipated to require an investment of $3,480,000, plus the acquisition costs if you don't own the land.

In the Sycamore Square area, a building this size has an estimated market value of $7,920,000. In this case, the ROI is 131%. Compared with investing in a different location in Los Angeles city, like the Sylmar neighborhood, a lower-end area, the market value of such a project is only $3,280,000 leading you to a negative ROI.

Conclusion:

The SB-9 projects in the Sycamore Square area show robust returns on investment, suggesting that it's worth your time and money to consider completing a real estate project in this area. On the other hand, an SB-9 project in the Sylmar neighborhood has the risk of a negative ROI, and you should take additional financially precarious or acquire the land at a very good price point. Therefore, while investments in Sycamore Square appear favorable, caution is warranted regarding real estate ventures in Sylmar.

See how much it will cost you to improve your property per SB-9

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