How to Develop 28,500 Lots in San Diego County in 2022
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How to Develop 28,500 Lots in San Diego County in 2022
Want to learn how to develop 28,500 lots in San Diego County in 2022?
Starting on January 1, 2022, two new California laws go into effect: SB 9 and SB10. They allow the development of single-family lots by splitting them into two and adding up to three more housing units.
This means homeowners can split 28,500 single-family lots into two and add three more housing units in San Diego County.
KEY TAKEAWAYS
- Starting January 1, 2022, California homeowners can split their single-family zoned lots into two lots. Then, they can develop the lots to add up to three more housing units for a total of four..
- Only residential usage is allowed.
- Owner occupancy of one unit is required for at least three years.
- In San Diego County, 398.500 eligible lots exist, but only 28,500 lots are market feasible for developing 54,500 new housing units.
- The City of San Diego has 133,000 eligible lots, but, only 7,000 lots are market feasible for developing 13,000 new housing units.
- Local governments must provide fast approval of these projects without hearings and reviews.
- Questions to ask your real estate attorney about SB 9 developments.
What are California SB 9 and SB 10 New Laws?
These two new laws were signed by California’s governor last September. San Diego’s FOX 5 News story on September 17, 2021, proclaimed:
“California Governor Newsom signed two new laws increasing new housing”.
Fox 5 published a follow-up story about how the new laws will increase San Diego’s available housing after the new permitting process gets implemented.
California’s SB 9 and SB 10 laws offer homeowners an opportunity to develop their properties by splitting their single-family lots into two to add more housing units.
Specifically, when two new California laws come into effect on January 1, 2022 homeowners can split their single-family zoned lots into two and develop up to three more units.
What is Senate Bill 9?
According to Neil Collins, CEO of the Santa Clara County Association of Realtors:
Senate Bill 9 gives property owners the right to split their single-family lots into two lots, or add a second home to the existing lot, or split the lot into two and add a duplex on each one. Thus, the last option allows four housing units on the original lot after being split in two.
In essence, Senate Bill 9 shifts from the current policy allowing an accessory dwelling unit (ADU) near a stand-alone single-family home on the same lot.
This new law requires all California cities and counties “to approve development proposals meeting specified size and design standards”.
According to the San Diego Union-Tribune, the options to develop a single-family lot under Senate Bill 9 includes:
Source: Licensed to reprint under the Fair Use Doctrine
What SB 9 Allows
The prestigious national law firm Gibson & Dunn with 10 American offices recently published a summary of SB 9 and SB 10. Here is a summary.
The SB 9, California Housing Opportunity and More Efficiency (“HOME”) Act allows homeowners to subdivide their current residential lot or build a duplex.
Split lots: A housing project under SB 9 qualifies to split a lot under these requirements:
- Lot size minimum: Each parcel cannot be lesser than 40% of the original lot size; Each parcel must be no less than 1,200 square feet unless a local ordinance permits a smaller size;
- Residential use: The parcel can only be used as a residence;
- Prior subdivision: The homeowner didn’t subdivide an adjacent lot into a lot split under SB 9; and
- Applicants must sign an affidavit stating the intention to live in one of the units as the principal residence for at least three years after approval of the split.
Faster project process: Administrative approval of duplex residential development on a single-family lot without discretionary review or hearings.
Senate Bill 9 Limits
Size: When splitting a lot in two, the new lot must consist of at least 1,200 square feet.
Short-term rentals: Newly created units cannot be short-term rentals. The minimum rental term is longer than 30 days.
Preservation: This new law creates additional housing while preserving low-income affordable units. Therefore, new projects can’t demolish or alter affordable or rent-controlled housing or market-rate housing occupied by the same tenant for the past three years.
Historic landmarks and those located inside a historic district can’t be redeveloped. Also, Farmland, wetlands, and properties at high risk of flooding or fires are exempt.
Who Can Use SB 9?
Only homeowners or landlords can apply for an “upzoning” with their local jurisdiction. Also, the applicant must plan to live on the property.
An affidavit signed by the property owners is required. It must state they will occupy one of the housing units as the primary residence for at least three years after splitting the property or adding more units.
Only housing units are allowed. No offices or commercial use units are allowed.
Cities and counties must abide by SB 9. The only exception allows local officials to deny a development application if the project would:
- Create a specific, adverse impact; on
- Public health and safety or the physical environment; and
- No satisfactory mitigation options exist.
How Does SB 9 Affect Local Zoning Rules?
Development proposals under SB 9 must adhere to objective local design standards and zoning rules. These include structure height and yard size requirements.
Parking: However, no extra parking is required for the additional units if the property is within a half-mile of a major public transit stop. Yet, a local agency can require one parking space per unit when no nearby major public transit stops exist.
What is Senate Bill 10?
The California State Senate website explains:
Environment: Senate Bill 10 also lets developers bypass the California Environmental Quality Act (CEQA). Plus, developers can stop environmental reviews from delaying projects for years.
Local zoning laws: The San Diego Union-Tribune story states that Senate Bill 10 does not change local zoning laws but lets cities “streamline the process to allow housing developments of single-family lots up to 10 units in areas near public transit.”
Voluntary rezoning: SB 10 authorizes local governments to rezone neighborhoods to increase housing density if they want to.
What SB 10 Allows
According to the Gibson & Dunn law firm:
Additional units: Creating two Accessory Dwelling Units (“ADUs”) or junior ADUs (“JADUs”) per parcel is allowed and will not count towards the ten units.
No circumvention: In addition, a project can’t be divided into smaller projects to circumvent the 10 residential unit’s maximum allowed.
Faster up zoning: This allows cities to upzone properties for housing without delays in processing and litigation risks under the CEQA.
“Transit rich area” is a parcel within a half-mile of a major transit stop.
“Urban infill” means urban development of vacant or undeveloped lands.
Overriding public initiatives: SB 10 allows a local ordinance to override local ballot initiatives restricting developments if two-thirds of the local legislative body approved the ordinance.
Exceptions to SB 10 include parcels located in high fire zones, open-space lands, and land used for parks and recreational usage.
How Do SB 9 and SB 10 Affect San Diego Housing in 2022?
On January 1, 2022, homeowners can develop thousands of single-family lots in San Diego County and the City of San Diego.
A Newsbreak story on September 25, 2021, declared:
The UC Berkeley Terner Center claims that “398,500 lots in San Diego County are eligible for splits under Senate Bill 9”. However, not all these lots are economically feasible for a split and development. Feasibility includes:
- Sufficient rents to recoup the investment or by a sale;
- Geographical challenges of the lot;
- Market conditions may make converting the lot financially unattractive; and
- An existing granny flat.
Reading the entire Terner Center report, it found 398.500 eligible lots with only 28,500 lots as market feasible for developing 54,500 new housing units.
Source: Licensed to reprint under the Fair Use Doctrine
The Terner Center report also evaluated the City of San Diego and found 133,000 eligible lots qualifying under SB 9. Yet, only 7,000 lots are market feasible for developing 13,000 new housing units.
Source: Licensed to reprint under the Fair Use Doctrine
Note: The Terner Center report’s methodology assumed subdividing and building costs along with a rental market forecast. However, these are estimates and forecasting assumptions. In reality, the costs can be lower depending on materials and labor with the new laws requiring faster project approvals with no hearings or reviews to save costs.
Questions about SB 9 to Ask Your Real Estate Attorney
Typical of new laws, lawyers need to analyze and explain tricky language and loopholes for their clients. Since WeLease can’t provide legal advice, we urge you to consult with your real estate lawyer to ask questions like:
- Can I contract with a homeowner to create a joint venture or partnership to develop the single-family lot into two and build housing units?;
- Can a homeowner sell the second lot after development while residing in the original house within three years?;
- Do new buyers of single-family residences have the same rights to split and develop?; and
- Could a new buyer demolish the original home and split the lot and build two duplexes?
How to Develop 28,500 Lots in San Diego County in 2022 – Conclusion
Let’s summarize the highlights of SB 9 and SB 10 to know how to develop 28,500 lots in San Diego County in 2022.
Split and Develop Lots: Starting January 1, 2022 homeowners can split their single-family zoned lots into two lots. Then, they can develop the lots to create up to four housing units.
SB 9 allows homeowners to divide their single-family lot into two lots and:
- Add another single-family home on the new lot (two units); or
- Add a duplex on the new lot (three units); or
- Build a new single-family home and a granny flat in the back of each home (four units); or
- Demolish the original home and build two duplexes (four units).
In addition, the two new laws allow:
Faster approval: The new laws require faster local administrative approval of these projects. This includes exemption from reviews under the California Environmental Quality Act (“CEQA”);
Overriding public ballot initiatives limiting developments if two-thirds of the local legislative body approved the ordinance allowing the development.
Voluntary local ordinances allow up to 10 housing units in an urban parcel within a half-mile of a major public transit stop.
The new laws require:
- Owner occupancy of one unit as the primary residence for three years after lot split approval or addition of new units. This prevents developers from buying and splitting a lot and developing it without living in one unit.
- 1,200 square foot lots minimum after the split unless local zoning allows smaller lots; and
- Only residential usage on the split lots.
Developing 28,500 Lots in San Diego County
The Terner Center report identified 28,500 lots in San Diego County that qualify and are economically feasible for splitting and development. This includes 7,000 lots in the City of San Diego.
Developers can’t buy and split single-family lots without living for at least three years in one of the units.
Developers and builders can offer their services to homeowners.
Exceptions and loopholes may exist. Consult with your real estate lawyer to find out what they are.
Need Property Management Services in San Diego County?
WeLease offers experienced property management services for all types of residential housing rentals in San Diego County.
Contact us to learn more about our services and how we can help you after you develop new housing units in San Diego.
Steven Rich, MBA – Guest Blogger
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Reviewed and Approved by Billy Colestock & Yesenia Nogales
WeLease Co-Founders & Licensed REALTORS®
This article was written by a WeLease Guest Blogger and reviewed by industry experts Billy Colestock (DRE# 01771188) and Yesenia Nogales (DRE# 01487100), Co-Founders of WeLease Property Management. Both are licensed REALTORS® and active members of the National Association of REALTORS®, California Association of REALTORS®, and San Diego Association of REALTORS®, where they are regularly invited to educate the real estate community on proactive property management, legal compliance, and rental best practices. Every article reviewed reflects WeLease’s ongoing commitment to quality, accuracy, and trusted guidance for homeowners and investors. WeLease Credentials: NARPM® Member, BBB Accredited, MLS Participant, Equal Housing Opportunity. Recognized as San Diego’s Best Property Management Company – Union-Tribune Winner (2022, 2024); Finalist (2023, 2025). DRE: 02047533
