Aug 11, 2020
Last month, we covered an impressive new study from UCLA showing the market potential for over 1 million new homes in California simply by allowing fourplexes as the minimum density for every residential lot statewide. Now UC Berkeley’s Terner Center takes it a step further by analyzing SB1120, a new bill that would allow every single-family parcel in the state to be split in two and permit two dwellings each.
- The overall impact of the bill varies by region, but millions of parcels could be eligible for subdivision
- Local design guidelines and land use restrictions could hinder the bill’s applicability
- Financial feasibility is still highly uncertain for many two-unit projects and ADUs, making the development potential under the bill even more murky.
When we analyze legislation, we always start with one simple question: is this an improvement over the status quo? Based on this study by Garcia, Tucker and Schmidt (2020), the answer is a resounding Yes. But the extent of this improvement is less clear.
First, if 1120 were law today, it could allow up to four homes on millions of current, single-family residential lots. That’s accounting for parcels exempt either due to anti-displacement restrictions, historical significance, or lots that are already too small to be eligible for splitting (the bill requires lots of at least 2400 square feet). The Terner Center has also found that 66.8% of jurisdictions in California (incorporated and unincorporated) zone over half their residential land for single-family homes, so this bill could spur major new homebuilding if implemented effectively.
“SB 1120 could function as one tool to create more housing opportunities for renters and homebuyers in single-family zones,” the Terner Center says, “which are both widespread and typically enjoy higher levels of social and economic opportunity.” According to their analysis, nearly 6 million residential lots, representing 92% of the state’s single-family lots, could be subdivided and densified.
But just as our state is a heterogeneous place, this will also vary regionally. Indeed, the bill’s development potential ranges from applying to 98% of Los Angeles County’s single-family lots, to just 75% of San Francisco’s. “The difference in San Francisco is driven by larger shares of parcels that are under 2,400 square feet in size and therefore ineligible for a lot split,” the authors note.
However, a combination of local regulations and the bill’s own standards may hinder its applicability on eligible lots. The requirement to separate one lot into two of “equal size,” each at a minimum of 1200 square feet, presents some issues. The Terner center cautions us about “the difficulty of creating two equally-sized parcels when the primary structure is located in the middle of a parcel, which is common given local front, rear, and side setback requirements.” Further, the bill’s maximum of one parking space per unit may also make some lots infeasible unless the local parking minimum is zero.
Local restrictions on building height, floor area ratios, and lot coverage may also make two units impossible to build on newly subdivided lots. “While the bill does include language on maximum allowable setbacks (4 feet),” our intrepid researchers observe, “it is silent on nearly all other design issues. The Terner Center recommends setting limits on local regulations so that these lots permit a minimum amount of buildable square feet to effectively increase dwelling capacity.
Finally, while UCLA’s market analysis of fourplexes was fairly robust, the market for ADUs is trickier, particularly due to financing constraints. The bill currently assumes “that mortgage holders will require owners who wish to subdivide their lots to refinance given that a homeowner’s mortgage entails the entire existing lot,” but the researchers caution, “it is not clear to what extent valuations might shift for the original home-owner in the context of a smaller lot.”