SB9 vs ADU Comparison: Weighing Your Options

Learn about how lot splits and two unit development with SB9 compare to adding accessory dwelling units (ADUs), what are the key points of SB9, what is required to use the law to split your property or add multiple units, and if you can also build an ADU once you split a lot.

In a nutshell, SB9 is uncharted territory and has unfortunately had limited traction in San Diego, likely due to lack of financing options among other reasons. As of October 2024, just 23 SB9 projects have ever been submitted to the City of San Diego, and just seven have been approved. The regulations of course will also vary depending on your local jurisdiction. Continue reading for the full data set.

What is SB9 and how does it work?

In an effort to combat the housing crisis, The State of California passed Senate Bill 9, more commonly known as SB9 or the HOME Act. SB9 allows for two different kinds of actions with lots zoned as single family residential:

1. SB9 allows for converting a single family home to a duplex or adding another single family home to the lot, without requiring a lot split. This provision offers a potentially more cost-effective and less complex alternative for homeowners who wish to add another unit but prefer not to go through the process of splitting their lot.
2. SB9 also allows for splitting a lot into two parcels, which can be developed and/or sold independently. Lots created must be roughly equally sized lots of a minimum of 1,200 square feet each. Once split, the new separate lots allow the development of a second home or the sale of the second lot.

Previously, lot split approvals would have been “discretionary” by the local jurisdiction, whereas now such action is “ministerial,” requiring no discretionary hearing or review, including compliance with the California Environmental Quality Act (CEQA).

As with many recent accessory dwelling unit (ADU) laws passed in 2017 and 2020, the goal of SB9 is to create more housing stock.

What are SB9 requirements (that could be dealbreakers)?

There are several important restrictions that might immediately disqualify your property from using SB9. Understanding these limitations is crucial for determining whether SB9 is a viable option for your development plans.

High-Risk Areas: Properties located in areas with high risks, such as fire zones, flood plains, earthquake zones, and hazardous waste sites, are not eligible for SB9 development. This also includes historic zones, prime farmland, conservation zones, and habitats for endangered species.

Rental Housing: SB9 housing cannot involve the demolition or alteration of housing that currently has a tenant or has had a tenant in the last three years.

Even Lot Split: The split cannot result in one very large lot and one very small lot (e.g., the split cannot be greater than 60/40).

Owner Occupancy: SB9 requires the property owner to sign an agreement that they will live on one of the lots for at least 3 years. Also, lot splits on adjacent parcels by the same individual or another party acting on their behalf are prohibited.

Lending Complications: With SB9 being so new (and unique to California), you will find most financial institutions do not have clear guidelines for dealing with SB9 lot splits. So it is unlikely that SB9 deals are easily financed, which is likely a key reason there has not been much activity in this space.

What is the timeline and cost for an SB9 project?

Navigating the complexities of SB-9 legislation involves a multi-phase process, from feasibility assessments to application preparation and title recording. Property owners should expect total costs to range between ~$40-70K and a timeline of approximately 4-6 months to complete all steps. Below is a detailed breakdown of the costs, services included, and timelines for each phase to help you plan effectively:

• Initiation Services: This phase focuses on assessing the parcel’s eligibility and providing a preliminary conceptual plan.
  • Estimated Cost: $3,500
  • Timeline: 2 weeks
• Preparation of Application Materials: The application preparation process is tailored to the city’s specific requirements and involves a detailed compilation of technical and regulatory documentation such as surveying, title review, and FAR calculations.
  • Estimated Cost: $20,000 to $30,000
  • Timeline: 6 to 8 weeks
•  SB-9 Application Processing: Once all required documents are compiled, the formal application process begins, including submission as the owner representative, city follow-up & revisions, and final approval.
  • Estimated Cost: $10,000 to $20,000
  • Timeline: 60 days (Per State Mandate)
• Title Recording with County: The final phase includes preparing and recording the subdivision map and registering the new title with the county. Key steps include subdivision map preparation, site monumentation, and title registration.
  • Estimated Cost: $10,000 to $15,000
  • Timeline: 4 weeks

Challenges & Considerations for SB9 Projects

SB9 projects carry a higher risk due to the lack of precedent. SB9 is uncharted territory, with few examples of how two-unit developments or lot splits will actually play out. This situation mirrors the early days of ADU law, where ambiguity and evolving regulations presented similar challenges.

It is difficult to get clear answers from the jurisdiction in advance, and any SB9 project will require much more trial and error than an ADU project. While a jurisdiction may offer initial guidance, it’s not binding until the actual plan check process begins. To reach that point, you’ll need a full set of plans—though a few exceptions exist where cities offer preliminary review processes, not all jurisdictions do. As with any new law, there will also be many gray areas for interpretation, especially since it may be the first time the city faces some of these decisions.

This uncertainty can lead to long approval times, unexpected increases in scope and costs, and potential legal challenges. Homeowners considering SB9 for their property development should proceed with caution and be prepared for a potentially complex and prolonged process.

While we typically build ADUs and not primary residences, SB9 is an area we are willing to explore with homeowners who understand these considerations and are comfortable with the uncertainty. We are accustomed to having a high level of confidence in how each ADU project will turn out. Simply by building nearly 100 ADUs, we’ve learned much about what the process and requirements will look like. Unfortunately, it’s not possible to have that same certainty with SB9 with so few examples.

What about the LA law suit with SB9? Is SB9 illegal now?

In April of 2024, a Los Angeles County Superior Court ruled that Senate Bill 9’s mandate is not reasonably related to the production of affordable housing, interferes with local government, and is unconstitutional. This was in response to a 2022 lawsuit brought about by the cities of Del Mar, Redondo Beach, Carson, Torrance, and Whittier.

So what does this mean for SB9 in your area? For now, the state is ordered to cease enforcement of SB 9. This could lead to further headwinds on an SB9 project if your municipality is already less supportive of this kind of development.

Anecdotally, we have seen more stringent interpretations of SB9 rules. In Oceanside, we had previously been advised in writing in July 2023 that some exceptions would be granted as it relates to SB9 – for instance, allowing a pre-existing non-conforming garage to be rebuilt below an SB9 unit. We designed plans based on this information, to be told during the formal plan check process that this would not be allowed. The city apologized, citing that a more narrow interpretation of SB9 was due to pushback from citizens.

How many SB9 projects have been approved in San Diego?

For the City of San Diego as of February 2024, zero projects have been approved using SB9. The city publishes development permit data, which we have analyzed and summarized in the table below for your reference.

So how many units can I build on my property with two unit development?

You could have a total of four dwelling units on a property, including two primary units and one ADU for each unit. So you would have your original primary home, an ADU for that home, a new primary dwelling unit (PDU), and an ADU for that new PDU. You may also be able to first split your lot, meaning you could create a total of 8 units, though restrictions on this vary by city.fire

What is the owner occupancy requirement to use SB9?

SB9 includes an owner occupancy requirement, whereby a homeowner must live in one of the units on the lots for three years from the time they get approval for a lot split or two unit development.

Additionally, the bill prohibits ministerial (over the counter approval) lot splits on adjacent parcels by the same individual to reduce potential investor speculation.

Also, SB9 prevents homeowners from evicting or displacing tenants by excluding properties where a tenant has resided for at least the past three years.

What kind of residence can you build after a lot split with SB9?

Once the lot split has occurred “by right,” homeowners must comply with local zoning requirements when developing another single family residence or duplex (height, floor area ratios, lot coverage, etc.) so long as those local laws do not physically preclude a duplex.

Additionally, in order for a property to be eligible for the streamlining provided by the legislation, the homeowner must create a new unit that is the character with the neighborhood. This may lead to some gray areas when these regulations are interpreted locally.

Note that many cities will have requirements related to parking for new primary dwelling units, which may not be waived like many parking requirements are for ADUs. Often the parking requirements include adding a garage for parking.

What are the key differences if I split my lot with SB9 vs. add an ADU?

You may be weighing your options and wondering what is a better option for your property potential: using SB9 or adding an ADU. Check out a quick summary of the main differences when using SB9 vs adding ADUs, some of which carry significant cost implications (e.g. utility connections for new properties must be connected to a city sewer and city water on the curb’s street side… this kind of “right of way” work is extremely expensive). You’ll also want to consider the different restrictions on owner occupancy and how you can or cannot individually sell the units.

Can you use SB9 to split a lot and also build an ADU?

Essentially, ADUs are permitted on SB9 split lots UNLESS a city specifically prohibits the development of ADUs on a SB9 lot split. Per the wording of SB9, “a local agency shall not be required to permit an accessory dwelling unit or junior accessory dwelling unit on parcels.”

Whether you can use SB9 and new ADU laws will vary from city to city. As such, depending on local ordinances, a homeowner could have a maximum of 8 total units (duplex + 2 ADUs on each lot) if the local jurisdiction allows up to 2 ADUs on lots with multifamily units. However, this is not the case in the ADU code for each city.

For example, the City of San Diego approved an ordinance in February 2022 that rolled back ADU laws on properties that have taken advantage of SB9. Homeowners who split their lots under SB9 are now prohibited from using any of the city’s ADU incentives. As such, if a homeowner is allowed to develop an ADU on a SB9 lot split property, the homeowner will also have to follow all accompanying ADU laws approved in that jurisdiction. So if you do a lot split, you may be able to also add an ADU, but only if it meets the underlying zoning in place.

And for Oceanside, revisions adopted in February 2022 state that the owner could split the lot and build two new SB 9 units on the new lot or a primary with an ADU or JADU, as long as the combined total on both lots doesn’t exceed 4 dwelling units.

Can I just split the lot first and then figure it out later? I don’t want to miss the opportunity in case things change.

Proceeding with an SB9 lot split before finalizing your overall development plan may not be advisable for several reasons:

Regulatory Restrictions and Compliance: Under SB9, there are specific requirements and conditions that need to be met for a lot split to be approved. This includes limitations on the size and dimensions of the split lots. Without a comprehensive plan, you might end up with a lot configuration that restricts your ability to build according to your later plans.

Financial Considerations: Lot splits and the subsequent development involve significant financial investment. Without a clear plan for development, you may face unforeseen costs or find that the lot split does not align financially with your long-term goals.

Design and Infrastructure Challenges: Planning the design and infrastructure for a split lot without a clear vision for the overall development can lead to logistical and design challenges. This could affect everything from utility connections to the practicality of construction on each individual lot.

Potential Legal Implications: SB9 has specific rules regarding owner occupancy and rental restrictions. Without a clear plan, you might inadvertently create a lot configuration that complicates compliance with these rules.

So how to assess options?

Our integrated approach, which combines in-house permitting and design with our general contracting expertise, uniquely equips us to navigate the complexities of SB 9 projects. This holistic model streamlines the process, making it more accessible for homeowners to consider SB 9 as a viable option for their property development plans.

Want to discuss your ADU options in more detail? Set up an appointment with us to chat about your property.

The insights shared in this technical blog stem from our profound expertise in the industry, derived from our hands-on involvement in design, development, and implementation. While our utmost effort is dedicated to offering accurate and current information, it is crucial to recognize that the ADU space is continually evolving, potentially affecting the specifics discussed herein.

SnapADU aims to empower our readers with valuable insights and practical knowledge to navigate the dynamic landscape of accessory dwelling units. We encourage you to connect with our experts for personalized guidance and to remain informed about the latest advancements in the field. By staying engaged, you can adapt to the ever-changing nature of ADUs and make informed decisions aligned with your goals.