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Unintended consequences of SB 9 - RHNA quotas fulfilled without local rezoning?

In September, Newsom signed Senate Bill 9 into law. Among other things, SB 9

“would require a local agency to ministerially approve a parcel map for an urban lot split that meets certain requirements, including, but not limited to, that the urban lot split would not require the demolition or alteration of housing that is subject to a recorded covenant, ordinance, or law that restricts rents to levels affordable to persons and families of moderate, low, or very low income.”

And that provides that local agencies cannot impose

“standards [that] would have the effect of physically precluding the construction of 2 units, as defined, on either of the resulting parcels or physically precluding either of the 2 units from being at least 800 square feet in floor area”

Put simply, the ability of a homeowner to split their lot into two lots (of at least 1200 square feet in area, each) is “by right,” meaning that they cannot be denied unless the lot split would result in violations of the conditions of SB 9 or there are extraordinary circumstances that would negatively impact the health, safety, and general welfare of other residents, which are usually very rare. Approval is ministerial without any public hearings or review.

Similarly, a series of recently passed laws allow owners of single-family properties to build up to 2 accessory dwelling units (ADUs). This development is also by right and ministerial, without any requirements for public hearings.

When you look at a typical California city or county and count the amount of its single-family zoned land, it’s not hard to estimate that these two legislative rezoning actions are going to have a major impact on the number of housing units that will be created in the coming decade.

The Housing Element

The new 2023 to 2031 Housing Element cycle has begun. Cities and counties are required to submit a certifiable housing element to the Department of Housing and Community Development (HCD) in Sacramento. These plans, which are a part of a city’s General Plan, need to demonstrate that enough zoned property exists for the development of higher density housing and that sufficient incentives for private market developers to do so are in place.

The Regional Housing Needs Assessment (RHNA) housing quotas handed down from state and regional agencies (e.g., the Association of Bay Area Governments – ABAG) specify the number of housing units that need to be built in the coming Housing Element cycle and how many of each type of housing is needed by levels of affordability; e.g., 80% median income, low income, very low income, etc.

Apropos all this, a month ago, I received an email from an ex-city council member from Sausalito asking a very simple and almost too obvious question. She asked,

‘Since SB 9 allows the splitting of single-family zoned parcels and allows a homeowner to construct up to two units on each of those two, newly created lots, for a total of 4 units on an existing single-family zoned lot, and since the ability to do this “by right,” why can't a city now claim that it already has sufficient zoning in place to satisfy its RHNA housing quota, without doing any additional multifamily rezoning?’ [1]

In other words, the state has now rezoned all single-family lots into higher density to accommodate lot splits and duplex construction (by right). So, how can the state simultaneously require cities and counties to meet their enormous RHNA quotas by rezoning more and more commercial, retail, industrial, and existing multifamily zoned land for higher density housing but at the same time say that all the newly zoned development under SB 9 is not “countable” toward a city’s RHNA quota fulfillment requirements?

The laws involved here are exceedingly clear and "by right" is "by right." There’s nothing vague about what it means. That’s the whole purpose of these new laws. To remove all possible obstacles to development. So, it turns out that ex-council member’s question is one of the most important questions facing cities and counties.

The answer to it is a very big deal.

I ran all this by our legal counsel, who specializes in land use and state housing legislation, and the unequivocal, legalese response was “No one has a clue.”

It turns out that many cities have already begun asking this same question, officially. Consider for a moment that in Los Angeles, for example, the number of parcels currently zoned for single-family homes that have now been entitled to build multifamily is enormous. The city and county of Los Angeles and spreading out to its south, east, and west has single-family neighborhoods for as far as the eye can see. Does this mean that L.A.’s RHNA quota is now fulfilled for the next 50 years?

All eyes on HCD

At this time, cities and counties are in the process of submitting comments to HCD about their requirement to conform to SB 9 by the beginning of next year. They should include in their comments that the additional development potential that resulted from rezoning under SB 9 (and the ADU laws) must count toward a city's RHNA quota. I would urge anyone reading this to immediately ask their city or county to do this as soon as possible.

But as obvious as this issue appears to be, we can be sure the answers to their comments will be muddled to the point of being unintelligible.

HCD will be the first arbiter of this issue, sometime in the beginning of next year when they provide “guidance” on how SB 9 should be interpreted. But, regardless of how HCD responds, this looks like it will be headed for the courts. The current disconnect between these new rezoning laws and the mandatory Housing Element submission process is too blatant to ignore. And the stakes are too high.

The state is staring down what appears to be an unintended consequence of their zoning over-reach that they surely never saw coming.

Arguments and Counterarguments

It will be fairly easy for cities and counties to do analysis and studies that demonstrate what percentage of their existing single-family zoned land parcels have the potential for increased redevelopment, adding duplexes and ADUs. All that takes is the county plat maps and parcel data, and Google maps.

In Mill Valley, where I live, there are approximately 10,000+ single-family homes. If even half of those qualify for one ADU and a duplex lot split, that would produce 20,000 new residential units, by right. That is approximately 24 times the city's RHNA quota (825 units total) for the next 8 years. In other words, Mill Valley is good for the next 190 years.

Okay, so what if I'm wrong by half? Mill Valley has only fulfilled its RHNA quota for 80 years. Or perhaps I'm still too optimistic so we cut that in half again and we only considered 1/8th of the sites as viable. That still gets us to 40 years of compliance.

What I do know is that I live in a relatively flat, single-family neighborhood with approximately 1,200 homes on lots that vary in size from 5,000 square feet to 7,000 square feet. On my block, which is fairly typical, 7 out of 16 homes have the capacity to split their lots and add at least one if not two new units. And 100% of the homes on my block qualify to add at least one internal ADU.

The combined effect of this needs to be consider when prognosticating about future development and qualified units for RHNA quotas.

Cities and counties should be arguing this outcome. They can also rightfully argue that there is nothing in the law that HCD can point to in order to deny their ability to count these newly zoned, developable parcels toward their respective RHNA quotas.

The state will probably counter that this fails to address the “affordable” component of each city/county's RHNA quota requirement. This, of course, would be brazenly ironic since the state and its housing advocate supporters argued vehemently that the reason we needed both the ADU laws and SB 9 was that the resultant units would be de-facto “affordable” due to their smaller size.

But the state will likely prevail to some extent in continuing to demand high-density, multifamily development and the types of units that type of housing provides. But there do not appear to be any legal arguments that say cities and counties can’t count this potential development against the market rate portion of their RHNA quota.

Again, in Mill Valley, the required market-rate RHNA units equal 37.7% of the city’s total quota. That should be considered already satisfied. For the state to argue otherwise will be an absurd attempt to have its cake and eat it too.

But another thing we can count on is that unless cities and counties band together and get loud and litigious about this as soon as possible, nothing will change. And considering the costs of litigation these days, major cities such as San Francisco, Oakland, San Jose, Sacramento, San Diego, and Los Angeles, who have the most to lose by not contesting this, need to lead the fight.

Critics of this capacity assessment will undoubtedly point to a July 2021 study done by the Terner Center for Housing Innovation, an organization founded and funded by bankers, developers, and large tech company private foundations: pretty much the same groups that influenced the writing of SB 9. Unsurprisingly, the study basically says that SB9's impacts will be negligible (translation: It's not enough. We need more laws eliminating local control of zoning) As such, it's a study based on questionable assumptions.

But that aside, SB 9 requires owner occupancy of the existing home of the property for a minimum of three years. So, what's the play for hit-and-run developers?


"SB 9's unintended consequences: To a hammer, everything's a nail"

[1] Similarly, the new ADU laws allow the construction of up to two new ADUs (one attached and one detached) on any single-family zoned parcel, “by right.” That considered, why can't a city now claim that it already has sufficient zoning in place to satisfy its RHNA housing quota without doing any additional multifamily rezoning?

Bob Silvestri is a Marin County resident and the founder and president of Community Venture Partners, a 501(c)(3) nonprofit community organization funded by individuals and nonprofit donors. Please consider DONATING TO CVP to enable us to continue to work on behalf of California residents.