All your SB 9 occupancy questions, answered.

Introduction

Senate Bill 9 is an exciting new law that allows many California homeowners more freedom to subdivide and develop their property. Between the complex legalese of the law itself and the abundance of misinformation circulating around it, one can easily become confused.

In the following blog post, we’ll address the residency requirements and restrictions outlined in Senate Bill 9 and how they apply to various properties and projects. We’ll also examine affordability requirements in the context of SB 9, and why they may not be as altruistic and well-intentioned as they seem.

Property Usage Requirements

Overview:

• Properties must be zoned single-family residential
• Any lots created via SB 9 urban lot split must be limited to residential uses only.

Context:

The goal of SB 9 is to create more housing by slightly densifying neighborhoods that, up until now, have only allowed one single-family home per lot. Therefore, only properties in single-family residential zones are eligible, and the resulting units must be for residential purposes only.

SB 9 and Rental Properties

Rental history

Overview:

• SB 9 development is allowed on current and former rental properties
• Project may not require demolition or alteration (>25%) of current or former rental unit, rent controlled unit, or low-income rental housing
• SB 9 development is prohibited on properties with eviction history (within 15 years)

Context:

Protections for rental units help to ensure that renters—particularly those with limited income—can stay in their homes. These provisions also intend to keep rental units intact, so that much-needed rental stock says on the market. The prohibition on properties with a history of eviction is to prevent landlords from evicting tenants to develop their property under SB 9.

Rental requirements for future units

Overview:

• Rental periods must be at least 30 days (no short-term or vacation rentals)
• Cities may place additional rental requirements and restrictions via local ordinance

Context:

The minimum rental period is intended to prevent SB 9 units from being used as short-term vacation rentals (like Air BnB). Although short-term rentals can generate higher income for landlords and property owners, they only exacerbate the affordable housing crisis. By taking viable units out of the rental market, vacation rentals increase housing demand, competition, and costs for renters.

Owner Occupancy Requirements

Overview:

• SB 9 requires owner occupancy for all lot split developments; cities may not place additional owner occupancy requirements on lot splits
• Cities may require owner occupancy for duplex/second unit SB 9 projects via local ordinance

Context:

The owner occupancy requirement for lot splits is intended to prevent developers from taking advantage of SB 9. Without owner occupancy requirements, investors could be incentivized to buy up and subdivide larger lots. As Senate Bill 9 is intended to create opportunities for homeowners rather than real estate investors, the owner occupancy requirement helps reinforce this goal.

Cities may choose to expand upon this by adopting owner occupancy requirements for all SB 9 developments.

Further details:

Exceptions must be made for community land trusts or qualified nonprofit corporations applying for SB 9 urban lot splits.

Some critics of SB 9 argue that the provision will be difficult to enforce and there are no real consequences for noncompliance. However, violating an affidavit can lead to a felony perjury conviction, which can carry a prison sentence of up to four years.

Affordability Requirements

Overview:

• No affordability requirements in SB 9 state law
• Cities may impose affordability requirements via local ordinance

Context:

Although affordability requirements seem well-intentioned, they are often used as a method of obstructing development. Income restrictions prevent small-scale development from being financially feasible, which is why they were not included in SB 9. Many local governments included affordability requirements in their ordinances, but the intention was not to increase affordable housing stock in their cities. The goal of these affordability requirements is to discourage SB 9 development altogether, not to ensure that more affordable units are built.

Conclusion

Senate Bill 9 is complex legislation, and local ordinances can add additional layers of complexity and nuance.  For more information on SB 9 requirements and restrictions, read our articles on 5 Myths About SB 9 and HOAs and SB 9.

If you are interested in pursuing SB 9, use Homestead’s free SB 9 Eligibility Search Tool to see if your property meets the legal requirements.