Highlights
- A recently amended California statute, commonly referred to as the Starter Home Revitalization Act (SHRA), offers a significant and often overlooked streamlining opportunity for developers working at a smaller scale and seeking to provide affordable-by-design housing to the "missing middle" housing market.
- SHRA allows for subdivisions of up to 10 parcels for a residential development of up to 10 residential units in an urbanized area. Additionally, projects proposed under the SHRA are subject to only "ministerial" (nondiscretionary) review and avoid California Environmental Quality Act review, among other benefits.
- This Holland & Knight alert reviews other key SHRA benefits, along with requirements that projects must meet to qualify under the statute.
Though highly touted recent legislative enactments addressing California's housing crisis have focused on streamlining high-density, multifamily infill development (see Holland & Knight's previous alert, "California's 2025 Housing Laws: What You Need to Know," Nov. 5, 2024), another recently amended statute offers a significant and often overlooked streamlining opportunity for developers working at a smaller scale and seeking to provide affordable-by-design housing to the "missing middle" housing market. The statute, commonly referred to as the Starter Home Revitalization Act (SHRA),1 allows for subdivisions of up to 10 parcels for a residential development of up to 10 residential units in an urbanized area. Projects proposed under the SHRA are subject to only "ministerial" (nondiscretionary) review, avoid California Environmental Quality Act (CEQA) review, avoid the imposition of unique labor requirements found in other state housing laws, and are afforded specific preemptions of certain local standards and an expedited decision-making timeline.
Expanding upon the foundation of other recent legislative amendments to the SHRA,2 the most recent amendment, which went into effect as of July 1, 2025, further bolsters this streamlining opportunity. California Assembly Bill (AB 130) (Chapter 22, Statutes of 2025) expanded the candidacy for projects to qualify as starter home projects by providing that the proposed subdivision may designate a "remainder parcel" that will not be counted against the 10-parcel maximum.
The SHRA, as recently amended, offers a niche that is ripe for innovation, allowing savvy developers to move quickly and creatively and maximize the development potential of smaller and underutilized sites. Below are easy-to-navigate charts summarizing some of the key benefits and requirements of any project pursuant to the amended SHRA.
Some Key Benefits of SHRA Projects
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Streamlining Now Available for More Residential Sites |
SHRA approvals are available for multifamily residential zoned lots up to 5 acres and vacant single-family zoned lots up to 1.5 acres, in each instance substantially surrounded by qualified urban uses. This means that practically all residentially zoned lots that meet the maximum site size and other requirements of the SHRA can qualify for fast-track approval under the SHRA, which requires local agency approval or denial within 60 days following a complete application and "deemed approval" if action is not taken within that time. Any denial must be based upon a written finding based upon a preponderance of the evidence that the project would have a specific adverse impact upon public health and safety and for which there is no feasible method to satisfactorily mitigate or avoid such impact. |
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Smarter Parcel and Unit Size Rules |
Minimum newly created parcel sizes are 600 square feet for multifamily sites and 1,200 square feet for single-family sites, but local agencies can allow even smaller parcels. The SHRA retains the maximum average housing unit size of 1,750 net habitable square feet, but now provides a new, helpful definition of "net habitable square feet" that is similar to the statutory definition of "habitable space" in the California Building Code and will eliminate ambiguity and offer a greater degree of regulatory certainty.3 |
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Flexible Subdivision Design |
The amended SHRA now incorporates a "remainder parcel"4 into the SHRA's streamlining framework. A leftover parcel with existing buildings or uses not exclusively serving the project will not count against the SHRA's 10-parcel limit and is excluded from the density calculation requirements otherwise applicable to starter home projects.5 This permits the continuation of valuable structures and uses while maximizing new housing potential on the balance of the project site. The SHRA project remains exempt from additional minimum requirements on parcel size, width, depth, dimensions and now frontage as well, beyond the minimum lot sizes required by the SHRA. SHRA also places curbs on local imposition of FAR standards. Although not prohibited by the SHRA, it remains unclear whether SHRA projects may also take advantage of any density bonus, concessions or waivers under the State Density Bonus Law. |
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Accessory Dwelling Units |
Under the SHRA, local agencies may – but are not required to – permit accessory dwelling units (ADUs) and junior ADUs (JADUs) on SHRA parcels. If a local agency does permit such ADUs/JADUs, they are not counted against the 10-dwelling-unit limit. Therefore, in addition to 10 total dwelling units on 10 parcels and one remainder parcel, the SHRA project could potentially include as many ADUs and/or JADUs as would otherwise be permissible under applicable law. |
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Flexible Ownership Structures |
In addition to permissible parcel ownership structures of fee simple, part of a common interest development or ownership by a community land trust, qualifying ownership now includes a tenancy in common (TIC). The use of TIC has seen increasing popularity among younger and first-time homeowners in other housing contexts. |
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No Special Labor Requirements |
Unlike streamlining provisions in some other housing laws, the SHRA does not impose any specialized labor or prevailing wage requirements. |
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No Special Affordability Requirements |
Unlike streamlining provisions in some other housing laws, the SHRA does not impose any special affordable housing requirements beyond compliance with any local inclusionary housing ordinance. |
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No Requirement for Local Implementing Ordinance |
Although a local agency may adopt a local ordinance to implement the SHRA (and such ordinance is not considered a project under CEQA), the SHRA does not mandate any such ordinance, so a qualifying project must be reviewed by local agencies even in the absence of any local ordinance. Because the SHRA is part of the Subdivision Map Act, any local implementing ordinance cannot conflict with the provisions of the SHRA. |
Some Key Requirements for SHRA Projects
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Urban Location |
Eligible sites must be located in urban areas and be "substantially surrounded"6 by "qualified urban uses"7 |
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Environmental Exclusions |
Properties in prime farmland or farmland of statewide importance, very high fire hazard zones, special flood hazard areas or wetlands, earthquake fault zones, hazardous waste sites, protected species habitat, or other specified unique and sensitive environmental areas are ineligible. |
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Infrastructure |
Newly created SHRA parcels must be served by public water and municipal sewer systems. |
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No "Double Dipping" |
Sites previously subdivided under the SHRA or SB 9 (urban lot split) are ineligible. However, properties that were previously subdivided pursuant to the broader Subdivision Map Act remain eligible for further subdivision under the SHRA. |
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No Displacement |
Development of the SHRA project cannot entail the demolition or alteration of 1) housing subject to recorded covenants, ordinances or laws restricting rent to affordable levels, 2) housing subject to rent or price control through local public entity's police power, 3) housing occupied by tenants within five years preceding application, including demolished housing or units vacated prior to application, or 4) property where the owner exercised Ellis Act withdrawal rights within 15 years before application. |
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Minimum Density Requirements |
Minimum density requirements are dependent upon whether or not the site is listed in the local Housing Element. The proposed subdivision must satisfy the residential density identified in the Housing Element or, if not listed, the greater of 1) 66 percent of the density specified in the local zoning code or 2) 66 percent of the identified "Mullin" density. In most metropolitan jurisdictions, the Mullin density is 30 du/ac, which results in a minimum density requirement of 19.8 du/ac. |
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Other Applicable Development Standards |
For vacant single-family lots, height limits equal to existing zoning may be imposed. For projects of three to seven units, local agencies shall not impose a floor area ratio (FAR) standard of less than 1.0 and for projects of eight to 10 units, local agency shall not impose a FAR standard of less than 1.25. The proposed subdivision must conform to all applicable objective requirements of the Subdivision Map Act that do not conflict with the SHRA and approval of the subdivision may be conditioned upon completion of a residential structure in compliance with applicable provisions of the California Building Standards Code. |
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Sale and Lease Restrictions |
To prevent speculative land banking, subdivided parcels can be sold, leased or financed separately only if they contain a completed or existing residential structure, are reserved for common areas or are the last undeveloped parcel. Local agencies may grant exceptions to these rules by ordinance or map condition. |
What's Next?
It remains to be seen how many housing development projects will be proposed and built utilizing the streamlining provisions of the SHRA. As of the date of this Holland & Knight alert, the authors have not discerned the existence of any applications for such projects. However, in anticipation of such applications, at least two cities, Santa Monica and Campbell (see, e.g., City of Campbell Interim Ordinance) have already adopted "emergency" interim ordinances to further guide such development. Some ordinances may possibly incorporate additional "incentives" for SHRA projects, such as exemption from certain development impact fees. Though the proposal and passage of such ordinances may meet with divided response at the local level, the provisions of the SHRA will ultimately govern in any instance.
The attorneys in Holland & Knight's West Coast Land Use and Environmental Group are highly experienced in helping its clients successfully navigate through the maze of California's evolving and increasingly complex housing and land use laws, and can help you in any consideration of the benefits and requirements of projects pursuant to the Starter Home Revitalization Act.
Footnotes
1 The provisions discussed in this alert are found in the California Subdivision Map Act at Gov't. Code §66499.41.
2 SB 684 (Chapter 783, Statutes of 2023) and SB 1123 (Chapter 294, Statutes of 2024).
3 "Net habitable square feet" means "the finished and heated floor area fully enclosed by the inside surface of walls, windows, doors, and partitions, and having a headroom of at least six and one-half feet, including working, living, eating, cooking, sleeping, stair, hall, service, and storage areas, but excluding garages, carports, parking spaces, cellars, half-stories, and unfinished attics and basements." Gov. Code § 66499.41(a)(6).
4 As defined elsewhere in the Subdivision Map Act at Gov't Code §66424.6.
5 Gov. Code §§ 66499.41(a)(1)(B), 66499.41(a)(5)(b)(iii).
6 "Substantially surrounded" means at least 75 percent of the perimeter of the project site adjoins, or is separated only by an improved public right-of-way from, parcels that are developed with qualified urban uses. The remainder of the perimeter of the site adjoins, or is separated only by an improved public right-of-way from, parcels that have been designated for qualified urban uses in a zoning, community plan or general plan for which an environmental impact report was certified. Pub. Res. Code §21159.25.
7 "Qualified urban use" means any residential, commercial, public institutional, transit or transportation passenger facility, or retail use, or any combination of those uses. Pub. Res. Code §21072.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
