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Study: California Upzoning Bill Will Not Encourage Mass Redevelopment

A bill put forward by the California legislature to allow the construction of denser homes in single-family areas would likely produce an increase in the state’s housing supply, but the so-called overzoning is unlikely to cause redevelopment. mass, according to a report released Wednesday.

UC Berkeley’s Terner Center for Housing Innovation study offers the most detailed analysis to date of the potential impact of Senate Bill 9, designed to allow up to four homes on most lots single-family homes and stimulate the construction of new housing units that are urgently needed. .

Because of the way unit development would unfold, the study found that “the large amount of single-family plots across the state would not see any new development,” said David Garcia, director of policy at the Terner Center, who supports the bill.

SB 9 has been passed by the State Senate and is expected to be considered by the Assembly’s Appropriations Committee by August 27. If approved, it will go to a final vote in the Assembly and Governor Gavin Newsom’s office. The Terner Center study found that under the law a total of 714,000 new homes would be financially reasonable to build, and that it would take years to build them – if ever, because not all homeowners will want sell or develop their own property.

If built, it would make financial sense for homeowners to add these homes to 5.4% of the state’s 7.5 million single-family lots – or 410,000 lots now zoned for a single, traditional single-family home. In LA County, a slightly higher proportion of single-family lots, 6.7% of the total there, would make sense to add units. Garcia called the bill “modest reform”.

“This will have a modest but important impact [on supply] over time, ”he said.

The Terner Center, which focuses its research on how to increase the supply of housing, reached its estimates by looking at construction costs, land values, plot sizes, market rents and house prices. , as well as other factors. He analyzed several potential scenarios, including converting an existing house to a duplex, keeping the house as is and installing a unit or two in the backyard, or demolishing the house and building a new one. up to four new homes.

The report’s findings add to the long-standing debate over the merits of allowing greater density on traditionally prized single-family land, an emblem of California’s dream of homeownership.

Supporters say SB 9 would add the supply needed to alleviate a decades-long housing shortage that has driven up house prices and rents in California, but do so in a gentle way that is largely compatible with the character of each neighborhood. They also argue that many units are likely to be smaller than the existing house and therefore more affordable, offering more doable options online in areas close to jobs and good schools.

But the bill has met strong opposition from many cities and single-family homeowner groups across the state, who fear it will destroy quiet neighborhoods with large, out-of-scale projects. And they say it will do so without providing housing to those who need it most and, in some cases, will accelerate gentrification.

The arguments are similar to those that have killed high-profile bills to erode single-family zoning in recent years, including the controversial SB 50 that would have allowed quads in most single-family areas and, in some cases, apartment buildings. larger apartments in these areas. .

California’s housing shortage is between 820,000 and 3.5 million – a huge gap that the Terner Center says is unlikely to be filled by SB 9 alone. Garcia has consistently called the bill useful, although it does not require that new units be limited to a certain level of affordability. This is in part because a large body of research shows that increasing the supply of housing, even at market rates, helps moderate housing costs regionally, he said.

Livable California, a statewide group that advocates for the preservation of the zoning of single-family homes, called SB 9 a “bulldozer bill” which is “the beginning of the end of home ownership. California ”.

In a letter of opposition submitted to the bill’s author, Senator Pro Tem Toni Atkins (D-San Diego), the organization said that overzoning of single-family lots would increase the property value of those homes and complicate the access for first buyers. their foothold in the American dream as they are forced to compete with deep-pocketed investors looking to build more units.

The group argued that the developers would likely target black and Latino communities who live in areas where land is cheaper and tear down homes to build high-cost rentals that would limit the ability of people of color to build wealth. .

“I see some really expensive rental units… coming from this bill,” said Isaiah Madison, a board member for Livable California who lives in South LA, adding that the homes will not be affordable for large. parts of the existing community. “If this happens in wealthy communities, affordability won’t be that far away. “

The group also claims that the wording of the bill would allow homeowners to build six units on what is now a single-family plot, as they could double between SB 9 and the secondary suite law, which already allows for a rear house. and a third small unit to be built. Atkins’ office said such a scenario was not possible and the senator has repeatedly stated that four units is the maximum allowed.

The Terner Center used the maximum of four units in its analysis and did not break down the potential impact on individual neighborhoods, meaning some areas may experience more intense development than the state or county.

Garcia said the center’s analysis suggests opponents’ fears are unfounded for several reasons.

Significantly, the bill does not ban single-family homes and does not mandate development. It will only make possible the construction of collective housing on certain lots, which is not possible under current law. Garcia said the costs of land and construction are so high that it is difficult to make money on many lots, and therefore fewer homeowners and developers are likely to try to build.

The way SB 9 is worded also limits its potential to stimulate significant new housing construction.

Under the bill, cities must approve up to two units on land currently zoned for a single-family home if a landlord requests it. Cities must also approve a batch split and authorize two additional units on the new batch, for a total of four.

But the bill exempts rural areas, historic neighborhoods and properties where a tenant has lived for at least the past three years. Cities can still impose design standards, including height limits, as long as those standards allow units of at least 800 feet; landowners cannot divide adjacent lots – all measures that limit the number of plots that make financial sense to redevelop.

Cities could also ban demolitions if they so choose, Atkins said.

The Terner Center did not consider this possibility in its analysis because Garcia said the bill does not explicitly say that it is possible. Regardless, nearly 97% of all single family homes would not make financial sense to demolish, either because no development made sense on the ground or because the more attractive option. was to convert the house to a duplex or just put one or two more units. in the garden.

Supporters say SB 9 builds on recent reforms the state has made to allow more accessory housing units, or ADUs, and highlights the opportunity the new bill offers homeowners rather than ‘to developers.

Under existing ADU law, most homeowners can now build a rear house of at least 800 square feet and convert part of their home to a third unit, as long as it is no larger than 500 square feet.

The SB 9 differs from it because it allows an additional unit, as well as different types of housing, including newly built duplexes or four single-family homes or townhouses. By allowing what’s called a divided lot, a homeowner can also easily sell a new single-family home, duplex, or even an ADU, rather than renting out what they’ve built – which supporters of the bill say. , will allow owners to immediately acquire new wealth, while at the same time providing an opportunity for wealth creation to others.

Dividing the lot also makes it easier for homeowners to finance ADU construction, the Terner Center said. This has been a barrier for low income homeowners.

Cities are also allowed to require a person applying for a divided lot to live in one of the units, which the Terner Center said would reduce the number of new feasible homes by 6%, or 40,000.

The analysis did not indicate at what price new homes under SB 9 must be sold or rented to be financially feasible, nor did it provide an analysis of whether homes for sale or for rent. would make the most sense.

Many developers like to maximize the scale of their project in order to generate more profit. And in some cases, Garcia said the developers will likely tear down a small bungalow and replace it with several larger houses. But he noted that the analysis showed that only about 3% of the houses made sense to demolish for new development if SB 9 passes.

In cases where a house is demolished, Garcia said various local design rules should mean many of the new units will still be smaller than the original house.

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