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Changes to California’s Housing

Described as a critical piece of housing legislation, SB 9 which was signed into law by Governor Newsom this September will no doubt change the future of housing investments and opportunities.  The ripples will also extend into property tax issues at a local level.


According to U.S. Census records there are over 6 million detached single-family dwellings in the State of California. Allowing units to be built adjacent to or within existing single family homes might resolve the housing crisis. “The intent of SB 9 is clear – to streamline the process so homeowners can create a duplex or subdivide their existing property up to four units…” said SB 9 CA State Senator Toni Atkins. She introduced the bill. And as she noted in statement to the press on Sept. 16, “SB 9 aims to set California’s housing availability on a path of inclusion so that more families can attain the California dream.”

Critics of the new legislation say that “These changes in the rules would be imposed on local governments but would not provide true solutions to the state’s affordable housing crisis.”


What’s most important is that SB9 ends single-family dwelling zoning statewide, overriding local city powers. Some see SB9 as a revised version of SB 1120 which died on the California State Senate floor last year. Some analysis observers note that SB9 is not a “duplex” bill. It is a radical density experiment, aimed at increasing density.


The scoop is that SB 9 effectively lets developers choose from three up-zoning scenarios, without public hearing or public review. SB 9 works hand-in-hand with the existing ADU law, or Accessory Dwelling Unit law, to quickly multiply upward from a simple “duplex” to 6 units, and even 8 units.  In doing so, SB 9 allows speculators/contractors to create this density on lots as small as 1,200 sq. feet.


In trying to discern if SB9 would have an impact upon the taxes of homeowners, the State California Franchise Tax Board had this comment. “There is nothing specific in Senate Bill 9 related to income tax incentives or deductions, and the bill does not specify special rules for home-based businesses or for renters who work out of their homes, said Victoria Ramirez, speaking on behalf of the Franchise Tax Board. “Therefore, the normal income tax rules would apply,” she added.


This leaves open the question of how SB9 will impact property taxation issues.  Why?  Well, SB9 modifies the distinction between commercial and residential property.  The team at HVP will be monitoring to see what happens with respect to property tax allocations on this dynamic and evolving issue.

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