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

What is SB-9?

California Senate Bill 9, or SB-9, also known as the California Housing Opportunity and More Efficiency (HOME) Act, allows homeowners in San Diego to subdivide their property into two separate lots and construct up to two dwelling units on each lot. This effectively permits the creation of fourplexes in areas previously zoned for single-family homes. However, specific requirements and limitations depend on the property's location and characteristics.

How does SB-9 affect properties within San Diego?

SB-9 influences properties in San Diego City by simplifying the development of housing units. It allows property owners to split single-family lots into two, which could lead to more housing options. This change may help alleviate housing shortages and create opportunities for property owners or developers to increase the value of their properties.

What can homeowners build under SB-9 or San Diego’s HOME Act?

Urban Lot Splits (ULS)

An Urban Lot Split (ULS) is a process that involves dividing a single lot into no more than two individual lots that can be sold separately.

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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Multi-Dwelling Unit Developments (MDUD)

A Multiple Dwelling Unit Development (MDUD) refers to a project that involves creating up to two residential units on one property, which can include both newly constructed buildings and existing structures.

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

How large can each new unit be, and how many can you have per lot?

If the property does not fully meet the zoning rules for building size (like floor area ratio), new dwelling units are limited to 800 square feet. However, under California States' SB-9, there are no specific size limits for the units, providing more flexibility in determining their size.

What are the setbacks?

When converting an existing structure into a new dwelling unit, no setbacks are needed. If a new dwelling unit is built in the same location as an existing structure, it can follow the same setback requirements. However, newly constructed units should meet the street side yard and front yard setbacks set by the zoning regulations.

Additionally, one-story units that are 16 feet tall or less can be built along the interior side or rear property line.

For new dwelling units 16 feet or more, a 4-foot setback is needed on the interior side or rear if the unit is next to a residential zone or a property used only for residential purposes.

What is the parking requirement under SB-9?

No off-street parking is required if the unit is in a Transit Priority Area (TPA). For parcels outside a TPA, one off-street parking space is required for each of the third and fourth units built on the original lot.

In the Beach Impact Area of the Parking Overlay Zone, one off-street parking space is also necessary for each dwelling unit, unless the applicant can show there’s a car share or shared vehicle available within one block that meets the City Manager's approval.

What are the lot constraints under SB-9?

For a lot split (Urban Lot Split or ULS) under SB-9, the lot cannot have been previously split, and the new lots should be roughly the same size, each between 40% and 60% of the original lot's area. Each new lot also needs to be at least 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?

Which zoning designations are eligible for SB-9?

ULS and MDUD are allowed on properties zoned for single-family homes, but not in areas designated for multi-family residences. In San Diego City, eligible zoning areas include RS, RE, RX, and RT zones, along with Planned District Zones.

Can you disregard the environmental restrictions on the lot?

No, following environmental restrictions is important. This ensures compliance with regulations about prime farmland, wetlands, hazardous waste sites, floodways, and conservation areas.

Can you bypass the Historical Preservation limitations?

No, Historical Preservation limitations cannot be bypassed. Following these rules is important for properties that are designated as historical resources or contain such resources.

Is it allowed to demolish an affordable unit?

No, a development that involves demolishing or altering a dwelling unit with a recorded covenant, ordinance, or law that limits rents for moderate, low, or very low-income individuals and families is not allowed.

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

Yes, building is allowed in Coastal Zones, but a Coastal Development Permit (CDP) is required. Properties in the Coastal Overlay Zone should follow Coastal Development procedures.

Is it allowed to build in High-Risk Areas?

Possibly. Building in high-risk areas, such as Very High Fire Hazard Severity Zones, Special Flood Hazard Areas, earthquake fault zones, and regulatory floodways, is not always allowed. However, under certain conditions outlined in SB-9, it might still be possible if the development meets strict requirements to reduce risks associated with each hazard.

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

Does the homeowner need to reside on the property?

Yes, the homeowner (or a designated representative) needs to live on the property for at least 3 years if they are completing an Urban Lot Split (ULS). This requirement does not apply if the property owner is a community land trust or a nonprofit corporation, as specified by the legislation.

What are the rental regulations?

The rental rules under SB-9 state that any unit created through a lot split cannot be rented for less than 31 days.

Are existing tenants’ rights protected?

Yes. Developments that require the demolition or alteration of a dwelling unit occupied by a tenant within the last three years are not allowed. Properties that previously had SRO hotel rooms or dwelling units removed from the rental market in the 15 years before applying also cannot be developed. This protects tenants from being displaced due to development.

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

No, condominiums cannot be proposed as part of your Urban Lot Split application. Condominiums are a type of co-ownership, meaning the building is considered a single unit even if it contains multiple residences. This does not meet the regulations for Urban Lot Splits, which require the creation of separate dwelling units.

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

SB-684 is a newer legislation that allows the building of up to 10 units on urban lots under 5 acres in size. In contrast to SB-9, which mainly focuses on single-family homes, SB-684 applies to multi-family zones and vacant lots within single-family areas. Additionally, SB-684 does not enforce the ownership limitations found in SB-9's regulations.

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

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

Does SB-9 projects qualify for a ministerial approval process and what does it mean?

Yes, projects under SB-9 can qualify for ministerial approval, which speeds up the development process by following established criteria. This approach minimizes administrative delays and enables quicker approvals without requiring extensive environmental evaluations (CEQA) or public meetings. Nonetheless, even with this faster process, obtaining approval for a lot split can still take as long as 1.5 years.

What are objective standards?

“Objective zoning standards," “objective subdivision standards," and “objective design review standards” are criteria or guidelines established by regulatory authorities that provide clear and specific rules for evaluating proposed developments or projects. These standards are typically based on measurable and verifiable factors such as zoning regulations, building codes, and environmental requirements.

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

Examples of objective standards that might be eligible for waiver if their denial would effectively prevent an SB 9 project:

• Zoning designations: Waivers may be considered for parcels located in zones where multi-dwelling unit development and lot splits are not typically allowed.
• Eligibility requirements: Some properties may have restrictions due to environmental factors or other conditions listed in SB-9, but waivers could be granted based on specific circumstances or mitigation measures.
• Development regulations: Standards like floor area ratio (FAR), setbacks, parking requirements, and landscaping can be waived if they hinder SB-9 implementation.

What are the steps to get the permits?

The requirements and processing time for SB-9 permits can vary based on the project's specifics and the completeness of the submitted documents.

Multi-Dwelling Unit (MDUD) Permit:

1. Check Property Eligibility: Ensure your property meets SB-9 criteria, including zoning and any restrictions.

2. Prepare and Submit Plans: Submit building plans for up to two residential units, including:

• Site plan and vicinity map
• Floor and roof plans
• Elevations and sections (if needed)
• Structural plans and calculations (if applicable)
• Title 24 Energy calculations

3. Complete Forms:

• General Application (DS0-3032)
• Declaration: Eligibility and Acknowledgement of Restrictions (DS-3063)
• Water Meter Data Card (DS-16)
• Storm Water Applicability Checklist (DS-560)

City planners will review your application and may request compliance changes. Once approved, the building permit is issued, allowing construction to begin.

Urban Lot Splits (ULS) Permit:

1. Check Property Eligibility: Verify if your property meets SB-9 eligibility criteria.

2. Apply for SB-9 Tentative Parcel Map (TPM): Start the division process by applying for an SB-9 TPM.

3. Owner Signatures Required: The property owner must sign:

• Affidavit: Owner Occupancy Declaration (Form DS-3062)
• Declaration: Eligibility and Acknowledgement of Restrictions (Form DS-3063)

Note: This requirement is waived for eligible community land trusts or nonprofit corporations.

City staff will review all documents and may request revisions. After approval of the SB-9 TPM application, any conditions must be met before the Parcel Map is approved by the Department of Public Works and recorded in the County Recorder's Office.

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: 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 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 considering the development of a new 4,000 square feet, 3-story duplex with a 1,000 square feet Accessory Dwelling Unit (ADU). The estimated total project cost, including construction, permit costs, and professional fees (excluding land acquisition), is $1,830,381. If this project were located in the San Ysidro area, a desirable neighborhood in the San Diego area, the market value of such a building would be approximately $3,945,000. As a result, the projected Return on Investment (ROI) for an SB-9 project in this neighborhood of the San Diego area is calculated as [($3,945,000 - $1,830,381)/$1,830,381]*100 = 115%

Scenario 2

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

In the second scenario, we're considering subdividing a lot and constructing two new 4,000-square-foot, 3-story duplexes. This project is expected to require an investment of $2,958,451, plus land acquisition costs if you don't already own the land.

In the San Ysidro area, a building of this size has an estimated market value of $6,312,000, resulting in an ROI of 113%. In contrast, if you invest in a different location in San Diego, such as the lower-end Tierrasanta neighborhood, the market value of such a project is only $3,008,000, leading to a lower ROI.

Conclusion:

SB-9 projects in the San Ysidro area demonstrate strong returns on investment, indicating that it is worthwhile to consider undertaking a real estate project in this location. Conversely, a SB-9 project in the Tierrasanta neighborhood carries the risk of an ROI below 50%. To mitigate this risk, you would need to take additional financial precautions or acquire the land at a very favorable price. Thus, while investments in San Ysidro seem promising, caution is advised for real estate ventures in Tierrasanta.

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

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