Sacramento, CA – California YIMBY this week applauded Governor Newsom signing into law legislation that could re-kindle the dream of homeownership for tens of thousands of Californians. SB 1123, a bill by Senator Anna Caballero (Merced) that was strongly supported by California YIMBY, updates SB 684 (passed in 2023) to make it easier to build multiple, small starter homes on residential lots currently zoned for just one house.
“By signing SB 1123 into law, Governor Newsom took a giant step toward reviving the California dream of affordable home ownership,” said Brian Hanlon, CEO of California YIMBY. “The lack of affordable starter homes has forced many hard-working Californians to delay or even give up on their dream of homeownership. SB 1123 is designed to spur the construction of affordable starter-homes, and give working-class Californians a shot at homeownership in the neighborhoods where they want to live. Sen. Anna Caballero has been a true champion of affordable home ownership in the legislature, and I want to thank her for her leadership on this issue.”
UC Davis Law Professor Chris Elmendorf noted SB 1123, signed into law on Thursday, is a step toward allowing “Houston style” infill throughout California.
However, he warned, “Unfortunately, due to vestigial CA-brain thinking, it’s unlikely to unleash a Houston-style infill boom w/o further legislative tweaks.”
Elmendorf noted that the bill “[r]equires ministerial approval of ‘small lot subdivision projects’ of up to 10 unit on infill sites. This includes both condo projects (‘vertical subdivision’) and fee-simple projects (‘horizontal subdivision’).”
The site must be zoned for multifamily housing or zoned single-family and be vacant.
He said, “So far so good. But here are the California-brain catches.”
First, he said, “you can’t use the bill to add density to any site where a tenant lived in the last 5 years or where a unit was subject to price controls.”
He said it doesn’t matter if the tenant actually wants the project—they would get “a new, nicer unit,” arguing, “CA treats tenants like children rather than protecting them as adults. In the process, it locks existing low-density uses into place, screwing over tenants who have to find a NEW place to live.”
A second problem is that, under SB 1123, the project must “comply with any local IZ [Inclusionary Zoning] requirement, no matter how high or whether it renders (the) project infeasible.”
He said, “This despite recent studies showing that IZ requirements are putting breaks on housing development, and fact that even in IZ-on-steroids places like SF, projects of 10 or fewer units have traditionally been exempt from IZ.”
Here he cites research from the Terner Center.
He argues, “The ‘any local IZ is fine’ rule is a recipe for local evasion of SB 1123.”
A third problem, “If the project is on a site that the city’s housing element said could ‘accommodate’ a portion of city’s lower-income housing target, the project must have at least the number of ‘low’ & ‘very low’ income units specified in (the Housing Element).”
