Purchasing land according to law, dividing it, renovating it and selling it is unconstitutional

Sam Andreano, a resident of Whittier, California, is in the final stages of his lot-splitting project. He was among the first to take advantage of Senate Bill 9, officially called the California Housing Opportunity and More Efficiency Act (HOME), which not only permits the division of residential lots but also allows the construction of up to three additional homes on a single-family lot.

At 59 years old, Andreano saw the potential of the HOME act early on. After its passage in 2021, he purchased a house that was only 1,200 square feet in size but sat on a 6,242-square-foot lot for $790,000. Just three months later, he applied to split the lot. He sold one half of the original property in 2023 for $777,777, reducing the cost of the other half to a mere $12,223—essentially a price point from the 1970s.

He then invested $400,000 into building a new home, which is now completed and valued at around $850,000. Although Andreano intends to live in this new home, he sees it as an extremely worthwhile development project that not only gives him property but also leaves him with a substantial cash reserve. Therefore, he was shocked when he heard that the Los Angeles County Superior Court declared SB 9 unconstitutional. While the ruling was based on the assertion that it does not aid low-income residents, Andreano believes the judge missed the mark.

Regardless of how the legal disputes play out, residents in five cities—including Whittier, Redondo Beach, Carson, Torrance, and Del Mar—are currently unable to apply for lot-splitting or additional construction under SB 9. Furthermore, the ruling could potentially render SB 9 completely invalid.

According to a KQED-FM investigation, only 75 lot-splitting applications and 112 additional construction applications were approved across 16 California cities, including San Jose, San Francisco, and Sacramento, between 2022 and 2023. In contrast, the number of approved accessory dwelling units (ADUs) reached 8,800. Andreano attributes this discrepancy to the fact that many homeowners hesitate to apply, fearing that SB 9 might be overturned, which ultimately leads to missed opportunities.

He explains, “Many homeowners wait because they worry that SB 9 may be struck down. But those who act quickly, like I did, won’t be affected even if it becomes invalid.” He adds that those already in the application process are likely to face significant losses, stating that spending even $50,000 on a plan feels akin to throwing money into water.

How did Andreano manage to move at such a rapid pace? When he purchased the house in December 2021, he already mapped out his plan to split the lot. Within four months, he submitted applications to both the Los Angeles County Department of Regional Planning and the Whittier Public Works Department.

However, the bureaucratic process proved to be exhausting. “My first submission had the city asking me to make changes A, B, and C. After revisions, they came back requesting changes D, E, and F,” he shared.

He navigated additional costs too: $20,000 for the architect, $15,000 for the civil engineer, $8,000 for soil remediation, and $5,000 for survey work. The Los Angeles County Fire Department conducted three tests that cost him an additional $4,500, plus a $3,000 application fee.

The HOME Act has specific requirements: the split must not exceed a 60/40 ratio, and each lot must be no smaller than 1,200 square feet. This means the ideal situation occurs when a small house sits on a large lot, and Andreano successfully achieved a final split of 3,349 square feet and 2,893 square feet—53.65% to 46.35%, perfectly meeting the six-to-four ratio requirement.

After two years of effort, he announced that the second house would soon be completed, adding that the entire project has turned out to be a remarkable value. “Everyone wants to buy a home, and my approach is a solution for increasing housing density.”

For the construction of the new home, Andreano hired Dennis Robinson, the owner of Custom ADU Builder. Robinson has completed seven SB 9 projects and has another seven in the pipeline. While he also builds ADUs, he draws a distinction: “ADUs are quick and affordable; you can save about $20,000 just in the application process. But if you’re looking to build several homes, SB 9 is more suitable.”

When the court ruled SB 9 unconstitutional, Robinson was taken aback. A project in Long Beach was just about to break ground, where the family intended to convert their garage into a 1,000-square-foot living space. Now, they find themselves in a difficult situation. If the ruling stands after an appeal, it could impact 121 charter cities, including Long Beach, Los Angeles, and San Francisco.

Regarding the court’s rationale for declaring SB 9 unconstitutional—stating it does not assist low-income residents—Andreano argues that if he were required to sell or rent to low-income residents, he would incur a financial loss. He explains that while developers of large multi-unit buildings can allocate some units for low-income residents, it doesn’t make sense for individual homes, as the goal of the law is to make overall housing prices more reasonable.