The Arroyo Grande City Council will soon scrutinize changes to the city’s municipal code thanks to a series of housing bills signed into law by Gov. Gavin Newsom.
During the Oct. 14 meeting, council members were supposed to review and vote on proposed development code amendments regarding urban lot splits and two-unit developments recommended by the Planning Commission. But that changed when Newsom signed SB 79 on Oct. 10, which allows more multi-story, multi-family housing to be built near major transit stops.
“This Friday, after our agenda was published, the governor signed five housing bills that impact tonight’s item and require some additional municipal code amendments, so that includes a new bill, AB 1601, that changes ministerial approval for these urban lot splits and two-unit projects when there are relevant historical resources at issue as defined,” Arroyo Grande City Attorney Isaac Rosen said at the meeting. “The governor also signed four new ADU [accessory dwelling units] and JADU [junior accessory dwelling unit] bills.”
The city hasn’t said how the new bills will impact its municipal code. The proposed municipal code amendments originally slated for discussion on Oct. 14 were based on Senate Bill 450 that took effect on Jan. 1 this year.
The bill removes a local agency’s ability to deny a proposed housing development associated with an urban lot split on the basis that it would have a specific adverse impact on the physical environment. An urban lot split refers to the subdivision of a single-family zoned lot into two.
SB 450 also specifies that a local agency must consider and decide on a proposed housing development project associated with an urban lot split within 60 days of receiving a completed application. The local agency must provide reasons for denial and a description of how the applicant can resolve the issues if it rejects an application.
Lawmakers passed SB 450 to strengthen SB 9, which allows urban lot splits and construction of up to two primary units on a single-family zoned property. The combination of the two senate bills is expected to deliver a one-two punch to the state’s housing shortage.
According to groups like California YIMBY and builder Homestead, many cities enacted highly subjective standards that make it impossible to use the provisions of SB 9 to actually build housing.
“Some of these standards, such as onerous design reviews, create prohibitive costs; others, such as building setbacks and low height limits, make it physically impossible for homeowners to proceed with SB 9 projects,” California YIMBY wrote in support of SB 450. “SB 450 addresses some of the most egregious examples of bad-faith SB 9 implementation.”
For Arroyo Grande, the implementation of SB 450 means it needs to update its local SB 9 ordinance.
Currently, the city municipal code contains objective design standards that regulate the massing, articulation, colors, materials, and screening of two-unit developments. But the proposed amendment removes those standards since they don’t apply to other development types in the city’s zones where two-unit developments are allowed.
The proposed changes don’t require setbacks if a development is being rebuilt in the same footprint as the old structure. Projects must still follow front setbacks, but they can be reduced if two units that are at least 800 square feet each are approved.
Typically, an urban lot split allows for two units per lot. Arroyo Grande’s proposed municipal code amendments allow parcels larger than 10,000 square feet to have accessory dwelling units. An ADU can be added even if a parcel wasn’t created by lot split.
“The city’s current ordinance requires an applicant to submit a building permit application to develop a newly proposed parcel in conjunction with an application for an urban lot split,” the staff report said. “SB 450 prohibits the city imposing this requirement, and therefore it has been removed from the [municipal code].”
The city didn’t respond to New Times’ requests for comment. With the latest signed housing bills in mind, city staff will bring back the revised version of the municipal code amendments to the Planning Commission and City Council for a first reading. ∆
This article appears in Oct 16-26, 2025.