San José Jumps to Apply California’s New Housing Density Provisions

Image of high density housing in San Jose California.

New Year; New Law

In the heart of Silicon Valley, San José is working to attract new residents and new businesses. To most of the city’s council members, California’s pro-density bill looks like it could be just the ticket. It went into effect on Jan. 1, 2022.

San José Adopts the State’s New Law

In September 2021, Gov. Gavin Newsom signed Senate Bill 9, the California Housing Opportunity and More Efficiency (HOME) Act. Its mission? To override low-density residential zoning throughout the state. In a nutshell, S.B. 9 allows the creation of up to four units on what are now single-unit lots.

Traditionally, California cities have permitted just two units — a single house and an in-law cottage (A.K.A. accessory dwelling unit) on single residential lots, plus attached “junior units” sized no more than 500 square feet. But starting in 2022, duplexes will be cropping up on properties where they used to be off-limits. And owners can now split lots into two halves — with two units on each.

In late 2021, the San José council adopted an “urgency ordinance” to implement S.B. 9, essentially allowing up to four new units on a single-home property.

Safeguards to Preserve the Residential Character of the Lots

Will the new law mean big businesses will swoop in and buy up land? The structure of the law deliberately rules out big commercial actors, and strives to keep the new developments from taking on a commercial look or feel. Among other specifications:

  • San José and other cities can keep their existing, single-home design standards, including minimum yard areas. San José will require the new buildings to adhere to the current height limits applicable to homes and accessory dwelling units.  
  • New homes built under the law can’t be commercial, and they can’t be short-term rentals.
  • Individual homeowners must live in one of their units for at least three years after dividing or building new units on their properties.

Thus, the owner of a primary residence on a lot of a certain size can request a development permit either to add a new unit onto a property, or divide the lot in half and create a new one- or two-unit property. Owners may sell their divided properties separately if they wish. Under the new state law, the city’s planning department must approve applicants who follow their city’s version of the law.

Big Changes for Small San José Property Holders

Image of the San Jose skyline at dawn.

For San José, Senate Bill 9 lets property owners augment the amount of high-density housing available downtown. So far, 94% of the city’s residential land is single-unit-only. That’s a big issue for San José, located just south of San Francisco in the heart of the Santa Clara Valley. There’s a serious need for more housing, and S.B. 9 will be one of the available tools to create it.

Rent control can’t be applied to new units, so owners will have a free hand when pricing new units. There’s an important financial reason for this. Creating new units on a property would mean a big investment for downtown San José residents.

These homeowners would go from holding single residences to running small apartment buildings. They’d need to pay the permit fees, finance the construction, and cover management costs for their multi-unit rental properties. Plus, local governments can direct owners to add a parking space for a new unit unless it’s near a transit stop. All things considered, it could take the average San José homeowner up to a decade to recoup the expenses of creating a new housing unit.

Going Beyond the Minimum

The city isn’t satisfied with S.B. 9 alone. And that’s fine. The state law only sets the floor; cities can go further.

So, San José is now looking at allowing more units in that 6% of the city that’s already zoned for duplexes. And it’s looking at relaxing density limits in historic neighborhoods, as long as the participating homeowners follow the design standards that allow only minimal impact to the current structure of existing homes.

The question for the city council is how to make the S.B. 9 regime inclusive. Will S.B. 9 units actually be within the financial reach of people living in downtown San José? To acquire a new unit developed under the law, a buyer would need an annual income of over $200,000, according to the city’s research. Granted, that’s less than half of the salary needed to acquire the average home currently for sale in Santa Clara County.  But if there are no limits to the costs of rents, and if there is no assistance for the homeowner who creates new units, how can the city ensure that people of modest income are better off because of S.B. 9?

Given all of these concerns, the city is under pressure to present ideas that could support owners, renters, and buyers of S.B. 9 units.

Not Unanimously Welcomed

All cities in California must implement S.B. 9. But some cities — Cupertino and Los Altos Hills among them — aren’t enthused. Cupertino plans to prohibit basements. And Los Altos Hills plans to limit development approvals to low-income households. But for reasons we’ve already discussed, very few low-income homeowners will be able to handle the costs of S.B. 9 housing development.

All of this raises the question: Is S.B. 9 really enforceable? Evidently, it will be truly effective only in cities that wanted to create higher density before its enactment.

San José itself had one vote against implementation of the ordinance. As zoning modification plans were already under way at the city level when the state enacted S.B. 9, council member Dev Davis slammed the state for “negating our entire general plan in one fell swoop.”

On the other side are those who welcome the change. Even if the new law isn’t perfect, its supporters consider S.B. 9 just one move in the direction of healing the injuries inflicted by zoning policies that have excluded minorities and working-class people from places with the most jobs, the best schools, and some of the most sought-after social opportunities.

Looking Forward: Density in a Dynamic Context

Some residents who agree with the need for higher density have concerns about the new law too — because higher density without better public transit can cause frustration. And that brings us to the matter of creating housing in a way that works with the infrastructure.

Whether San José can create more walkability and a better public transit system remains to be seen. Perhaps S.B. 9 will turn out to be the perfect impetus. City planners across the country will, no doubt, be watching San José to see how California’s new approach to density plays out.

Supporting References

Chelsea Nguyen-Fleige for the Silicon Valley Business Journal: San José City Council Sets Terms for More Housing in Single-Family Neighborhoods (Dec. 14, 2021).

Omar Pérez for KRON4 News: San José Adopts New Initiative to Build Denser Throughout the City (Nexstar Media Inc.; Dec. 20, 2021).

Maggie Angst, for The San José Mercury News: Here’s How San José Will Apply S.B. 9 Across the City (Bay Area News Group; updated Dec. 15, 2021).

Maggie Angst, for the Daily Democrat: What California’s New S.B. 9 Housing Law Means for Single-Family Zoning in Your Neighborhood (Bay Area News Group; updated Sep. 20, 2021). High-Density Politics and Trends – In the Bay Area and Beyond, Housing Shortages Make Higher Densities Inevitable (Oct. 6, 2021).

Photo credits: Ben Loomis (CC 2.0) and Cristiano Tomás (CC 4.0 Int’l), via Wikimedia Commons.