More for the Missing-Middle: SB 1116 Expands Starter Home Revitalization Act (SB 684/1123)

On September 29, 2026, Governor Newsom signed Senate Bill 1116 (Caballero), strengthening the Starter Home Revitalization Act (SHRA), which provides a ministerial, CEQA-exempt pathway for small lot subdivisions. The law was established by SB 684 (2023) and expanded by SB 1123 (2024), as described in our previous alerts here and here. SB 1116 becomes operative January 1, 2027, for applications received on or after that date. The bill expands site eligibility and limits local objective standards while retaining the SHRA’s 60-day ministerial timeline and strict health-and-safety denial thresholds. Key statutory amendments and practical impacts for housing developers and lenders are analyzed below.

SITE ELIGIBILITY AND SUBDIVISION FLEXIBILITY

SB 1116 makes more properties eligible for Starter Home subdivisions by relaxing several requirements. Key changes include:

• Simplified Base Zoning Thresholds: SB 1116 replaces the complex 66% minimum-density rules of SB 684 and SB 1123. Under the new regime, base zoning must allow no more than 15 units or 26,250 square feet of residential floor area, excluding density bonuses, ADUs, and overlays. This screen may exclude denser urban parcels. Sites identified in a compliant Housing Element must provide proportional low- or very low-income units subject to 45-year deed restrictions.
• Expanded Vacancy Definition: For single-family-zoned sites, SB 1116 redefines “vacant” to include parcels with structures that are abandoned or uninhabitable under Civil Code Section 1941.1. Anti-displacement protections remain: Sites with tenant occupancy in the prior five years, rent-controlled units, or Ellis Act withdrawals within 15 years remain ineligible.
• Expanded Infill Eligibility: SB 1116 replaces the “substantially surrounded by qualified urban uses” test with broader infill criteria under Public Resources Code Section 21080.66(a)(3). Multifamily sites of any size and vacant single-family sites up to 1.5 acres may qualify, subject to the base-zoning caps and vacancy rules above.
• Lot Size Averaging: SB 1116 retains minimum parcel sizes of 600 square feet for multifamily sites and 1,200 square feet for single-family sites, but permits lots as small as 480 and 960 square feet, respectively, if the subdivision overall maintains the required average. No new parcel may exceed 50% of the original lot, excluding remainders.
• Net Habitable Floor Area Calculation: The average unit size remains capped at 1,750 net habitable square feet, but internal stairs and enclosed bicycle parking do not count toward that cap. This supports multistory designs without reducing living area.

Limits on Local Objective Standards

SB 1116 prevents cities and counties from using local zoning or design rules to reduce the number of homes a developer can build. Local standards cannot block the maximum units allowed, and courts must interpret the law in favor of housing production. Notable limits include:

• Physical Height vs. Story Limits: Local agencies may impose a height limit no lower than the height permitted by the underlying zoning on single-family infill sites, but height limits apply exclusively to the physical height of the building in feet and may not limit the number of stories. This permits three-story townhomes within typical 30- to 35-foot height envelopes.
• Floor Area Ratio (FAR) Baseline: SB 1116 replaces the prior two-tier FAR rules with a uniform rule barring local agencies from imposing an FAR below 1.25 on SHRA projects.
• Setback Restrictions: SB 1116 caps setbacks as follows:
  • Prohibits front setbacks from the original parcel boundary greater than 10 feet.
  • Prohibits internal setbacks between newly created parcels, except as required by the Title 24 Building Code.
  • Prohibits unit-to-unit building separation beyond Title 24 Building Code fire-safety requirements.
  • Restricts exterior side and rear setbacks to no more than four feet.
• Parking Mandates: Local agencies may not require covered or enclosed parking or more than one off-street space per unit. Transit-proximate parcels are exempt from parking requirements.

Invalidation of Private Restrictive Covenants

SB 1116 renders unenforceable private deed restrictions and CC&Rs that prohibit or would physically preclude an eligible Starter Home project — meaning neighbors generally cannot use recorded covenants to stop an eligible development. Two exceptions apply:

• CID Carve-Out: This override does not apply to property within a Davis-Stirling common interest development (CID). Outside formal CIDs, however, recorded subdivision restrictions cannot be used to block an SHRA project.
• Permissible Private Restrictions: CC&Rs may still impose uniformly applied objective design or use standards and health-and-safety requirements, so long as they do not conflict with the SHRA or preclude the statutory density.

Streamlined Approvals, Concurrent Processing, and Post-Subdivision Conveyance

SB 1116 retains the SHRA’s fast-track approval process and adds options for parallel processing:

• 60-Day Shot Clocks: Local agencies must approve or deny an SHRA parcel map, tentative map, or final map within 60 days after receiving a complete application. If an agency misses the deadline, the application is deemed approved. A denial requires written findings, supported by a preponderance of the evidence, that the project would cause a specific adverse impact on public health and safety that cannot be mitigated or avoided under the Housing Accountability Act.
• Concurrent Map and Building Permit Processing: Subdivision maps may be processed concurrently with architectural or site applications and building permits. A city may condition permit issuance or a certificate of occupancy on recordation of the map.
• Sale and Financing Restrictions: Newly created parcels generally may not be sold, leased, or financed separately until they contain a code-compliant residence. Exceptions apply to common areas, existing permitted residences, the last undeveloped lot in the subdivision, or a local waiver by ordinance or map condition. Remainder parcels are excluded.

Altadena Wildfire Exemption

SB 1116 applications submitted on or after October 1, 2026, for sites in ZIP Codes 91001 and 91003 are exempt from SHRA streamlining. An application submitted before that date may qualify for grandfathering only if the applicant submits a complete application within 180 days after October 1, 2026; if the agency finds it incomplete, the applicant has 90 days after written notice to provide the missing information. The exemption does not apply to 100% affordable projects sponsored by a qualifying community land trust or nonprofit, subject to the bill’s affordability and deed-restriction conditions.

Annual Progress Reporting & State Oversight

Beginning with the report due April 1, 2028, cities and counties must report SHRA applications, approvals, denials, building permits, and completed units by income category to HCD. Local ordinances implementing the SHRA are not CEQA projects.

The applicability of SB 1116 to a particular project will depend on site-specific facts and circumstances. Please contact our Land Use team for questions regarding how SB 1116 impacts your site acquisition, parcel layout, or pending entitlement pipeline.