Newsom Signs Law Expanding Starter Home Rules

California Governor Gavin Newsom signed a new bill on October 7, 2023, aimed at increasing the supply of starter homes across the state by removing regulatory barriers. The legislation, SB 423, specifically targets the development of "starter homes," defined as housing units that are affordable to low- and moderate-income households. A key provision of the bill eliminates the previous 5-acre cap on the size of qualifying projects. This means that larger developments can now be considered for streamlined approval processes, potentially leading to a significant increase in the number of housing units built.

Furthermore, the new law curbs local government rules that have historically reduced housing yield on qualifying projects. These local ordinances often include stringent zoning requirements, parking mandates, or design standards that can make it difficult or impossible to build denser housing, particularly smaller, more affordable units. By limiting the ability of local jurisdictions to impose such restrictive rules on starter home developments, SB 423 seeks to ensure that more housing units can be constructed on a given parcel of land. The bill aims to address California's persistent housing shortage and affordability crisis by encouraging the construction of more entry-level housing options.

The expansion of starter home rules is part of a broader effort by the state to tackle housing affordability. Prior legislative efforts have focused on various aspects of housing production, including accessory dwelling units (ADUs) and streamlining approvals for affordable housing projects. The removal of the 5-acre cap is particularly significant, as it allows for the development of more substantial housing complexes that can accommodate a greater number of residents. This change is expected to encourage developers to undertake larger projects that might have been previously unfeasible due to the acreage limitation.

SB 423 also empowers the state to override certain local zoning ordinances that hinder the development of starter homes. This intervention aims to create a more consistent and predictable regulatory environment for builders, reducing the uncertainty and delays often associated with local permitting processes. The legislation is designed to foster a more efficient housing market by making it easier and faster to build the types of homes that are most needed by working families and individuals seeking to enter the housing market. The ultimate goal is to increase the overall housing supply and make homeownership more attainable for a wider range of Californians.