SB 10 to Facilitate Upzonings, But Does Not Include CEQA Exemption for Corresponding Projects

California Senate Bill (SB) 10, which Gov. Gavin Newsom signed into law on Sept. 16, 2021, and will take effect on Jan. 1, 2022, provides that local agencies may adopt an ordinance to allow up to 10 dwelling units on any parcel, at a height specified in the ordinance, if the parcel is located within a transit-rich area or urban infill site. Pursuant to SB 10, adoption of such an ordinance would not be subject to the California Environmental Quality Act (CEQA).

Overview and Limitations of the New Law

The law provides some increased ability for pro-housing cities to move forward potentially substantial upzonings without being held up by CEQA processing delays and litigation. However, since SB 10 exempts only the rezoning process – without providing any CEQA exemption, ministerial approval or by-right approval process for the actual housing itself – the law will have a limited effect in significantly advancing housing approvals. Approval of an actual housing development would remain subject to CEQA in the many jurisdictions that require discretionary permits for new housing, and so SB 10's process is likely to have its greatest effect in localities that choose through their own codes to adopt by-right or ministerial permitting of code-compliant housing developments.

Significant provisions of SB 10 include the following:

• In adopting an ordinance pursuant to SB 10, a local agency must declare that the zoning ordinance is adopted pursuant to SB 10, clearly demarcate the areas that are zoned pursuant to this section and make findings that the increased density supports the agency's duty to affirmatively further fair housing.
• A local agency that approves a zoning ordinance pursuant to SB 10 shall not subsequently reduce the density of any parcel subject to the ordinance.
• Up to two accessory dwelling units (ADUs) or junior ADUs (JADUs) would be permitted on each parcel, and these would not count toward the 10-unit threshold.
• An ordinance enacted pursuant to this legislation may override a local initiative restricting zoning, if the ordinance is adopted by two-thirds of the legislative body approving the ordinance.

Significant limitations of SB 10 include the following:

• It does not apply to parcels in a very high fire severity zone, nor would it apply to parcels in open space, park or recreational lands approved by the voters.
• A project may not be divided into smaller projects to avoid limitations in SB 10.
• The authorization extends until Jan. 1, 2029.

Conclusion and Considerations

Under SB 10, the local agency's approval of an ordinance to allow 10 units in any qualifying site would be exempt from CEQA, but the approval of actual projects that conform to the newly adopted zoning may still be subject to CEQA unless the local ordinance provides for ministerial processing or the project is exempted by another law or local ordinance. Some projects may be able to qualify for the Class 3 "small structures" CEQA exemption, the Class 32 urban infill exemption or another CEQA exemption – but the projects may be unable to use the commonly applied General Plan or Community Plan exemption since it requires that an Environmental Impact Report (EIR) has been prepared for the applicable plan, and SB 10 exempts the rezoning from CEQA.

Moreover, if an applicant seeks to build more than 10 units on a parcel that has been rezoned through SB 10 (such as through the density bonus law), SB 10 prohibits the project from qualifying for any other CEQA exemption, ministerial or by-right process that would otherwise apply.

Applicants and local governments should carefully analyze whether and under what circumstances SB 10 is the proper vehicle to advance planning for housing and to advance project approvals.