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New law signals change in how California legislators are attacking the housing crisis

California Gov. Gavin Newsom (D) signed legislation that will allow for upzoning within traditionally single-family neighborhoods, such as this one in Hercules, allowing for the creation of more housing units. (David Paul Morris/Bloomberg News)

SAN JOSE — A few years ago, buying a home in California seemed like an unattainable dream for Larry Marshall.

In 2018, the Ohio native and his family moved from the outskirts of Cincinnati to the Golden State, renting in the suburbs of Orange County, where the median home price now eclipses $890,000.

With the statewide shortage of housing units estimated to be in the millions and a deepening affordability crisis, Marshall and his wife thought they’d never be able to save enough money to buy a home.

“We figured if we ever owned anything, we would tiptoe up the ladder, meaning we buy [a] townhome and live there, and then we’d sell that for a modest profit,” said Marshall, 34. “Then maybe we could go to a starter home and sell that one and go up from there and just keep riding that, which would take a while.”

A few months ago, circumstances changed when his parents decided they needed to be closer to their son. So Marshall, his wife and his parents pooled their money together to buy a four-bedroom, two-bathroom house in Brea, 30 miles southeast of Los Angeles, for a little more than $1 million.

In a state where the homeownership rate is about 55.8 percent — among the lowest in the nation, in part because of skyrocketing housing prices — many first-time home buyers struggle to scrape together enough for a down payment. And for many more, purchasing a home remains out of reach.

But a bill that Gov. Gavin Newsom (D) signed recently could be transformative, according to housing advocates and state legislators who say that it could increase homeownership opportunities for thousands of Californians.

Senate Bill 9, the California Housing Opportunity and More Efficiency (HOME) Act, will allow property owners to split their single-family lots into two parcels and build up to four units on a property originally zoned for one home. Each lot could have two duplexes, a single home with a backyard cottage or a combination of the two.

A report by the University of California at Berkeley’s Terner Center for Housing Innovation estimates that the legislation could spur the construction of 700,000 homes that weren’t previously feasible. And although it could take years to see the results of the measure, it signals a more aggressive approach by state legislators in tackling California’s housing crisis.

The bill’s passage is a “recognition that a majority of lawmakers are willing to make hard votes on things that had previously been held as sacrosanct,” said David Garcia, the Terner Center’s policy director.

“Single-family zoning was always assumed to be a staple of the California dream,” he added. “Not to say it’s going away, but reforming that was always seen as a third-rail issue.”

The idea of upzoning, or rezoning a parcel or neighborhood to allow more housing than previously allotted, has been a contentious issue in California housing policy in recent years, with numerous zoning reform bills dying in committee.

Although residents who oppose new development — known as NIMBYs, which stands for “Not in My Backyard” — are against many of these bills, pro-housing legislators also have been met with resistance from key stakeholders, such as environmental groups and tenant’s rights groups that say upzoning will increase displacement.

Proponents of the concept — including state Senate President Pro Tempore Toni G. Atkins (D-San Diego), who sponsored S.B. 9 — argue that upzoning will create more housing and stop the sprawl that has led to long commutes and gridlocked roads.

“This is a game-changer in terms of being able to talk about where we build, how we build and where the density needs to be so we can bring down the cost of housing,” Atkins said of the measure.

One of the critical mechanisms of the law is that it blocks local jurisdictions, namely in slow-growth communities, from denying projects that fall within its guidelines. It’s part of a recent push by the state to try to expedite housing development through ministerial approval. But the concept has received pushback from people who say that an onslaught of legislation from Sacramento in recent years has taken away local control.

John Heath, who serves as president of the United Homeowners’ Association, a nonprofit organization that represents residents in South Los Angeles, calls S.B. 9 a “land grab” for people who want to “make money buying and selling real estate.” Heath is part of a group called Californians for Community Planning, which recently filed paperwork for a ballot initiative that seeks to regain local control.

“The goal of the initiative is to restore the ability of local government, folks that are in the cities and counties across the state, to decide on their own that if we want to increase density or change zoning then we can do that, but we are not going to allow the folks in Sacramento with a sweep of a pen decide for us how our single-family lots should be zoned or built out,” he said.

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Matthew Lewis, who works for the pro-housing advocacy organization California YIMBY, which stands for “Yes in My Backyard,” said that S.B. 9 sends a clear message to cities that continue to impede the development of new housing: “It’s over.”

“You cannot keep justifying your opposition to housing on the basis of bogus claims like neighborhood character, the notion that single-family zoning is sacrosanct or that there’s some special legal right to live in a single-unit neighborhood — as if when you buy your home that gives you the ability to have control over what everyone else builds on their property in your neighborhood,” he said.

Although the law won’t take effect until Jan. 1, Ryan O’Connell, an educator at the architectural firm Inspired ADUs, says he has already seen an influx of inquiries from homeowners like Marshall.

He says he views the new law as a way to “prevent displacement and move the burden of new development into more affluent neighborhoods.”

“A lot of homeowners are seeing the benefit of using some of their large existing assets or pulling equity out of their house to build a backyard unit that they can use for family,” he added. “When that family member is moving into that backyard unit, they’re not going to be taking up the limited affordable housing that [a city] is building, and they’re going to create a little bit of an opening one unit at a time.”

When Marshall and his family bought their new home in August, the original goal was to build a backyard unit where his parents could live. But through working with Inspired ADUs, he has realized the possibilities for his 17,000-square foot lot, where they plan to build a second home for his parents. It also means the ability for his family to generate wealth.

And in a way, that’s how Atkins intended it.

“This one is really about homeowners being able to maximize the use of their lot to create more units of housing — which is needed — but also for them to be able to potentially pay the mortgage or maybe have family members live there as aging parents downsize or as college students try to get a start and get underway and are able to live with family,” she said.

Still, the longtime lawmaker acknowledges that this isn’t the end of aggressive housing legislation.

“We can’t nibble around the edges anymore,” she said. “The next galaxy that we have to tackle is truly the development issues related to zoning and what’s allowable.”