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All You Need to Know About Building on Properties in San Marcos Under SB-9
Using SB-9 for real estate projects in San Marcos City offers homeowners a chance to generate cash, either to pay off a substantial part of their loan or, if they have additional funds, to construct more units. These additional units can provide rental income or create living space for extended families while the homeowner remains in the main house. For a successful SB-9 project, it is important to understand the eligibility requirements, how the rules apply to the property, and which SB-9 option is financially advantageous for properties in San Marcos City.
What is SB-9 and how does it apply to the properties in San Marcos City?
What is SB-9?
Senate Bill 9 (SB-9) aims to streamline the approval process for specific housing developments in California. It encourages local authorities to expedite project approvals by utilizing a simplified approach that bypasses lengthy environmental assessments (CEQA) and additional approvals from bodies like the Planning Commission or Historic Preservation Commission. Participation is voluntary, and certain criteria must be fulfilled.
How does SB-9 apply to properties in San Marcos?
In San Marcos, SB-9 simplifies the division of urban lots and the development of housing. Homeowners can split single-family residential lots into two, provided they adhere to certain requirements, including being located within designated single-family residential areas.
What can homeowners build under SB-9 or San Marcos’s HOME Act?
Urban Lot Split under SB-9
An urban lot split is when a single property is divided into two separate lots in a developed area.
Under this option, you could have the following unit configurations:
Not sure if your property is located in a Single-family zoned area?
Two-Unit Developments under SB-9
A two-unit development allows homeowners to build two separate residential units on a single lot. This can take different forms, such as duplexes, where the units share a common wall, or as a single-family dwelling.
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 a single-family home exists on the lot, one additional unit up to 800 square feet can be built. If there is no existing home or if the current home is demolished, two new units, each up to 800 square feet, can be constructed. However, SB-9 does not impose strict size limits on new units, providing flexibility for design and construction options.
An urban lot split allows the development of two units on a property, which may include ADUs and JADUs.
What are the setbacks?
For new units, a minimum setback of 4 feet or the zoning setback, whichever is less, is required from the rear and side property lines. No setbacks are needed for units built in the same location and size as existing structures.
What is the parking requirement under SB-9?
SB-9 requires at least one off-street parking space per unit unless the property is within half a mile 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 constraints under SB-9?
In San Marcos, each lot should be at least 1,200 square feet, and the two lots should be similar in size, with neither being smaller than 40% of the original lot’s area.
Development Analysis calculates the max size under SB-9 for the highest return.
Who and which properties are eligible for SB-9 or the HOME Act?
Which zoning designations are eligible for SB-9?
Properties eligible for SB-9 are located in single-family residential zones.
Can you disregard the environmental restrictions on the lot?
No. While San Marcos’ SB-9 does not specifically mention environmental restrictions, California’s SB-9 (HOME Act) excludes properties in sensitive areas like wetlands, hazardous waste sites, floodplains, conservation zones, and habitats for protected species. This is to protect these important ecological regions from development impacts.
Can you bypass the Historical Preservation limitations?
No. SB-9 project is not allowed on properties within a designated historic district or listed on the State Historic Resources Inventory, or on sites that are city- or county-designated landmarks or historic properties.
Is it allowed to demolish an affordable unit?
No. SB-9 does not allow the demolition or modification of affordable housing units that are protected by covenants, ordinances, or laws keeping rents affordable for moderate, low, or very low-income families.
Is it allowed to build in High-Risk Areas?
It is possible, but there are restrictions in high-risk areas, such as wildfire zones, earthquake fault zones, 100-year flood zones, or floodways. These limits are in place to ensure safety and protect sensitive regions. Local authorities ultimately decide if building in a high-risk area is allowed, based on safety and compliance with local regulations.
What are the limitations after completing a project using SB-9?
Does the homeowner need to reside on the property?
Yes. For an urban lot split, the homeowner should provide an affidavit stating they will live in one of the units as their primary residence for at least 3 years from the approval date. This affidavit has to be filed with the San Diego County Recorder. However, this requirement doesn’t apply to community land trusts or qualified nonprofit corporations.
What are the rental regulations?
Any new unit developed under SB-9 has to be rented out for more than 30 days.
Are existing tenants’ rights protected?
Yes. SB-9 protects tenants' rights. The law prevents the demolition or alteration of homes subject to rent control or similar regulations. Also, properties where rental units were withdrawn in the last 15 years and any home occupied by a tenant in the past three years cannot be demolished or altered.
Can condominiums be proposed as part of my Urban Lot Split application?
No. SB-9 allows for dividing a single-family lot to build up to four units, but it does not apply to condominium projects. Condominiums involve a different ownership structure and require a more complex process, including fees, environmental reviews, public hearings, and appeals, which is not part of the SB-9 streamlined lot split.
What is the difference between SB-9 and SB-684?
SB-684 is a more recent law that streamlines the process for constructing up to 10 units on urban lots smaller than 5 acres. In contrast to SB-9, which targets single-family residences, SB-684 is relevant to multi-family areas and empty lots in single-family neighborhoods. Additionally, it does not impose the same ownership restrictions that follow development under SB-9.
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 may qualify for ministerial approval, which simplifies the development process by adhering to clear standards. This approach minimizes bureaucratic obstacles, allowing permits to be granted without extensive environmental assessments (CEQA) or the need for public meetings. Nonetheless, even with this faster process, obtaining approval for a lot split could still take as long as 1.5 years.
What are objective standards?
“Objective zoning standards”, “objective subdivision standards”, and “objective design review standards” are clear rules set by local authorities for development, land division, and design. These standards are applied the same way for everyone and don’t rely on personal judgment. They cover things like setbacks, building heights, and lot sizes.
What types of objective standards qualify for a waiver under SB-9?
Under SB-9, certain standards can be waived, such as:
- Setback rules for current structures that hinder the building of two units.
- Setback guidelines greater than 4 feet from the side and rear property lines that restrict the construction of two units.
What are the steps to get the permits?
1. Prepare the Urban Lot Split Map or Development Plan: A licensed civil engineer or land surveyor creates the lot split map showing property lines and streets for a lot split. It follows relevant rules. For a two-unit development, a development plan is created, detailing unit size, setbacks, parking, and other necessary features.
2. Submit Application: The subdivider submits the urban lot split map or development plan along with the application to the City Engineer or relevant authority.
3. File a Preliminary Title Report: A recent preliminary title report of the property being divided or developed is submitted with the lot split map or development plan.
4. Decision: Within around 50 calendar days, the City Engineer will either approve or disapprove the map or plan. If disapproved, reasons are given, and the applicant can revise and submit again.
5. Final Approval and Permits: Once all conditions are met, and approvals are secured, final permits are issued, allowing the project to move forward.
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 the first scenario, we are considering developing a new 4,000-square-foot, three-story duplex with a 1,000-square-foot Accessory Dwelling Unit (ADU). The total estimated project cost, including construction, permit fees, and professional expenses (excluding land acquisition), is $1,823,030. In the desirable B/D neighborhood of San Marcos, the market value of this property would be around $3,030,000. Therefore, the projected Return on Investment (ROI) for an SB-9 project in this area is calculated as [($3,030,000 - $1,823,030)/$1,823,030]*100 = 66%
Scenario 2
Lot Split with 2 new 4,000 sq. ft 3-story Duplexes
In the second scenario, we propose subdividing a lot to construct two new 4,000-square-foot, three-story duplexes. This project is estimated to require an investment of $2,900,000, excluding land acquisition costs.
In the B/D neighborhood, these duplexes would have an estimated market value of $2,949,964, resulting in an ROI of 63%. However, if you choose to invest in a different area of San Marcos, such as the less expensive TOV neighborhood, the market value of this project would be around $4,336,000, leading to a lower ROI.
Conclusion:
SB-9 projects in the B/D neighborhood offer strong returns on investment, making it a valuable consideration for real estate development. In contrast, an SB-9 project in the TOV neighborhood has the risk of an ROI below 50%. To mitigate this risk, additional financial precautions or acquiring the land at a very favorable price would be necessary. Therefore, while investments in B/D are promising, caution is recommended for projects in TOV.