“For many years, the perceived barrier to entry for aspiring homeowners in California was that there were not enough homes being built and the law of supply and demand has kept these prospective – or hopeful – buyers sidelined. Politicians on both sides of the aisle have pointed the proverbial finger at their opposing colleagues in an effort to shift blame where they believe it should reside. Those on the right of the political spectrum have long touted that environmental regulations and municipal/county approvals are far too onerous and time-consuming.”

Thus, inhibiting the growth of single-family suburbs. Politicians who are left-leaning – who make up the majority – have blamed the existence of pricey single-family suburbs as one of the prime barriers to entry for prospective homeowners. These diametrically opposing viewpoints have been intensely debated among politicians over the years.

Despite feverish opposition from Democrat and Republican homeowners alike, both SB 9 and SB 10 have passed through the legislature and have been signed into law by Governor Gavin Newsom. Given how little publicity these two new sweeping pieces of legislation have received, the attorneys at Attorneys Real Estate Group, APC wanted to pierce through the veneer of legislative benevolence and untangle some of the pointlessly complicated language in these controversial bills.

 

SB 9

Senate Bill 9 is arguably the most controversial of the two new laws. It allows property owners to split a single-family lot into two lots. They can add a second home to their lot. Or, they can split their lot into two and place duplexes on each. This creates up to 4 housing units. Before, the lots only allowed for a single-family home.

The new law will change from current policies. These policies allow only two large units on single-family lots: a stand-alone house and an accessory dwelling unit. The policies also allow an attached junior unit no larger than 500 square feet. Under this new law, cities and counties in California must approve development proposals. The proposals must meet specified size and design standards. But just as with most complex legislation, what’s not in the Bill is equally as important as what’s in it. Let me explain…

On the surface, the legislation should increase the affordable housing supply to meet the exceeding demands of an ever-increasing population. It gives the impression that homeowners can use it. But, it ignores the big catch. Homeowners must own their property free and clear to subdivide it.

For obvious reasons, most homes have a mortgage.

So, you will not be able to subdivide your home because it and the land under it are the collateral for your mortgage. You can’t split your property in half. This is because you still have a mortgage secured by it. So, the operative question should be: If this doesn’t particularly benefit many homeowners, who stand to benefit? And given that this is likely a zero-sum game, who stands to lose?

First, it should be safe to assume that neither current homeowners nor prospective home buyers stand to gain. The unintended (or maybe intended) consequence is likely. It is that corporations, large investors, hedge funds, and powerful land developers will gain…full stop. However, someone needs to start peeling back the layers. They will see that this bill was not passed for anyone but homeowners.

Only the wealthy will be able to participate. At best, the legislation aims are misguided and at worst, intentionally deceptive. The California legislature has tried to pass sweeping reform across the state. They acted as if all cities and counties were equal.

This approach assumes we should treat Loomis, CA (population 6,200) like San Jose, CA. San Jose is the heart of Silicon Valley. To curb urban sprawl and save resources, major developers will be able to make dense cities even denser. But, this will strain resources in major urban centres.

 

SB 10

Senate Bill 10 makes it easier for local governments to rezone neighbourhoods near mass transit or urban areas. The rezoning would increase density with apartment complexes of up to 10 units per property. A new legislation also allows cities to skip long reviews under the California Environmental Quality Act (CEQA). It is allegedly to reduce costs and approval times.

SB 10

Critics of SB 10 cite many issues. They say the law erodes due process and allows local governments to override voters. Local officials can achieve this with a supermajority vote. Before SB 10, zoning changes and variance applications faced public scrutiny. They were within a city or county and subject to rebuttal from local residents.

With SB 10, some counties and cities will lose the opportunity to oppose a proposed development. SB 10 says jurisdictions can opt in or not. If they opt in, there are no safeguards for historic resources. It will allow municipalities to up-zone parcels. They can override existing zoning with little public input or review.

Essentially, SB 10 severely weakens.

Essentially, SB 10 severely weakens existing protections for historic areas. It allows communities to skip CEQA review in redevelopment. This will surely result in the demolition and loss of historic resources. Is there anything we can do now that the Bill has passed? Yes!

As of the date of this article, the AIDS Healthcare Foundation is a non-profit in Southern California. They sued California on 9/22/21 to stop the new housing law. The AIDS Healthcare Foundation alleges in its Los Angeles Superior Court lawsuit that SB 10 is unconstitutional. This is because of a part of the law. With a two-thirds vote, local governments can override some land use policies that voters approve.

In a statement, Michael Weinstein, the foundation’s president, called that law “a blatant overreach of the Constitution.” Mr. Weinstein astutely says that “[t]his provision ignores the intent and will of voters. It totally disrespects voters’ rights.” At a press conference to announce the lawsuit, Los Angeles Urban League President Michael Lawson added that SB 10 would do little to fix homelessness. It would also do little to help communities needing affordable housing.

“It is a birthday present to the developers,” Lawson said. “This will decimate our communities.” Attorneys Real Estate Group, APC will continue to monitor the above-mentioned lawsuit, and we will keep the recipients of our newsletters updated as they develop. The information provided in this article is strictly informative.

Do not use or take it as legal advice. Each case is unique. Consider nuances before conducting a full legal analysis. If you need such analysis or analysis on other real property matters, the attorneys at Attorneys Real Estate Group, APC, are here to help. The attorneys in the firm have over 50 years of practice together. We can handle a wide range of issues. These range from transactions to litigation and everything in between.