City of Santa Monica
All You Need to Know About Building on Properties in Santa Monica Under SB-9
Using SB-9 for real estate projects in Santa Monica City is an effective strategy for homeowners to secure funds for paying down a significant part of their loan. With extra resources, you can also construct additional units to generate rental income or accommodate extended family while residing in your primary home. To ensure the success of your SB-9 project, start by understanding the eligibility requirements, how the regulations affect your property, and determining which SB-9 option is the most financially viable for properties in Santa Monica City.
What is SB-9 and how does it apply to the properties in Santa Monica City?
What is SB-9?
SB-9, also known as the California Housing Opportunity and More Efficiency Act (HOME Act), is designed to streamline the approval process for specific housing developments in California. It mandates that local governments expedite project approvals without requiring lengthy environmental assessments (CEQA), Conditional Use Permits, or approvals from entities such as the Planning Commission or Historic Preservation Commission. Participation in this initiative is optional and contingent upon fulfilling certain criteria.
How does SB-9 apply to properties in Santa Monica?
SB-9 in Santa Monica allows property owners in single-unit dwelling zones to either construct two units on an existing parcel (Duplex option) or split the parcel into two lots and build on each (Lot Split option). This aims to increase housing options while following state, local, and zoning regulations.
What can homeowners build under SB-9 or Santa Monica’s HOME Act?
Lot Split under SB-9
A lot split involves dividing an existing, legally subdivided lot into two separate lots.
Under this option, you could have the following unit configurations:
Not sure if your property is located in a Single-family zoned area?
Duplex under SB-9
The duplex allows the addition of two separate residential units to a property that was originally designated for single-family use.
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?
Under Santa Monica's SB-9, new units are limited to 800 square feet. However, California's SB-9 provides more flexibility without size restrictions, allowing developers to plan residential spaces as long as they comply with the law.
Each new lot can have up to two units. Also, each lot can have either a single-unit home or a duplex, and the two units can include both ADUs and JADUs.
What are the setbacks?
For new construction, there is a maximum setback of 4 feet from the side and rear lot lines. Existing structures and those rebuilt to the same size do not require setbacks.
What is the parking requirement under SB-9?
In High-Quality Transit Areas (HQTAs), cities cannot set a minimum parking requirement for SB-9 projects. Outside these areas, cities can require 1 parking space for each dwelling unit.
What are the lot constraints under SB-9?
The new lots need to be at least 1,200 square feet and similar in size, with neither being less than 40% of the original lot size. Importantly, a property can only undergo a lot split once.
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?
In Santa Monica, properties eligible for SB-9 are located within the R1 and OP1 zoning districts.
Can you disregard the environmental restrictions on the lot?
Environmental restrictions cannot be disregarded when determining if properties meet SB-9 criteria in Santa Monica. These rules protect properties in sensitive areas, including wetlands, hazardous waste sites, flood zones, conservation areas, and habitats for protected species. These protections aim to preserve important ecological areas from potential harm caused by development.
Can you bypass the Historical Preservation limitations?
No, Historical Preservation limitations cannot be bypassed. This applies to properties within a historic district or those designated as historic resources according to the Santa Monica Municipal Code and the Landmark and Historic District Ordinance.
Is it allowed to demolish an affordable unit?
No, the legislation includes measures to prevent tenant displacement. SB-9 projects cannot involve the demolition of housing units with an affordable housing deed restriction.
Is it allowed to build on a property in Coastal Zones?
Yes, construction is allowed in Coastal Zones, but a Coastal Development Permit is needed.
Is it allowed to build in High-Risk Areas?
Yes, building in high-risk areas is allowed, but it usually comes with conditions and may be discouraged due to safety concerns. Properties in high fire hazard zones, earthquake fault zones (unless they comply with seismic building codes), and 100-year flood zones or floodways (unless meeting FEMA requirements) often face restrictions aimed at minimizing risk and ensuring safety for occupants.
What are the limitations after completing a project using SB-9?
What are the rental regulations?
Under SB-9, the city requires that any unit created be rented for more than 30 days.
Are existing tenants’ rights protected?
Yes, existing tenants' rights are protected under SB-9's anti-displacement measures. The rules prevent SB-9 projects from demolishing rent-controlled housing or any housing with price controls. Additionally, units occupied by a tenant in the last 3 years cannot be demolished, and the parcel should not have undergone Ellis Act removal within 15 years of the application date.
Can condominiums be proposed as part of my Urban Lot Split application?
Proposing condominiums under SB-9 in Santa Monica is impractical. Analysis indicated that replacing single-unit homes with market-rate condos isn't feasible, as it would require at least 6-7 units to support an affordable on-site unit in R1 zones. Since SB-9 allows mainly two-unit projects, which are likely rentals due to residency rules, on-site affordable housing in these projects seems unlikely.
What is the difference between SB-9 and SB-684?
SB-684 is a more recent regulation that streamlines the construction of up to 10 units on urban lots smaller than 5 acres. In contrast to SB-9, which primarily targets single-family homes, SB-684 is applicable to multi-family zones and vacant lots located in single-family zones. Additionally, it does not enforce the ownership restrictions associated with the development criteria of 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 can qualify for ministerial approval, simplifying the development process with clear guidelines. This approach minimizes administrative obstacles, allowing for quicker approvals without extensive environmental assessments (CEQA) or public hearings. However, even with this faster route, obtaining approval for a lot split may still take as long as 1.5 years.
What are objective standards?
“Objective zoning standards," “objective subdivision standards," and “objective design review standards” are fixed rules set by the city. These standards are based on measurable criteria rather than opinions or personal judgment. They are available to both developers and city officials before any application is submitted. These standards cover various requirements, including land use zones, specific plans, inclusionary zoning, and density bonuses.
What types of objective standards qualify for a waiver under SB-9?
SB-9 allows the waiver of certain standards, such as:
- Requirements for setbacks related to existing structures that obstruct the construction of two units.
- Setback rules more than 4 feet from side and rear property lines that restrict the development of two units.
What are the steps to get the permits?
1. Understand SB-9 Rules:
Get familiar with SB-9's guidelines to make sure your project fits within its boundaries.
2. Assess the Property:
Check if your property qualifies for the "Duplex" or "Lot Split" option by looking at zoning, lot size, and current structures.
3. Prepare and Submit Application:
Gather all required documents and submit your SB-9 application to the city, making sure everything is accurate and meets the guidelines.
4. Check for Compliance:
Ensure your project follows all local and state rules, including setbacks and other standards, to avoid delays in the review process.
5. Get Permits and Build:
Once approved, get the necessary permits and start building according to the approved plans while following all regulations throughout the construction process.
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 the first scenario, we propose constructing a 4,000-square-foot, three-story duplex along with a 1,000-square-foot Accessory Dwelling Unit (ADU). The total estimated cost, covering construction, permits, and professional fees (excluding land costs), is $2,185,813. In Santa Monica, the anticipated market value of the completed property is around $3,000,000, leading to an ROI of [($3,000,000 - $2,185,813)/$2,185,813]*100 = 37%
Scenario 2
Lot Split with 2 new 4,000 sq. ft 3-story Duplexes
In the second scenario, we plan to subdivide a lot and build two new 4,000-square-foot, three-story duplexes. The total projected investment for this development is $3,486,057, excluding land acquisition costs.
In Santa Monica, the estimated market value for these duplexes is $4,800,000, resulting in an ROI of 38%.
Conclusion:
Investing in SB-9 projects in Santa Monica can result in an ROI below 50%. To reduce this risk, it's essential to take extra financial measures or purchase the land at a significantly advantageous price.
See how much it will cost you to improve your property per SB-9
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