Settlement Restores Ability to Build Up to Four Homes on Eligible Properties
Property owners rebuilding after the devastating 2025 wildfires in Malibu and Pasadena will once again have access to California’s SB 9 development provisions after both cities agreed to settle lawsuits challenging their post-fire zoning restrictions. The agreements reopen opportunities for higher-density residential development in some of the region’s most supply-constrained markets.
Cities Agree to Remove Local Restrictions
Following legal challenges from housing advocates, Malibu and Pasadena have agreed to repeal local ordinances that blocked duplex and small-scale multifamily development in fire-affected neighborhoods. Both cities will also process pending and future applications submitted under SB 9, California’s lot-split and duplex law. Pasadena has already approved the change, while Malibu has until late September to formally repeal its ordinance.
The lawsuits argued that local governments lacked the authority to suspend state housing law after executive orders allowed jurisdictions impacted by the 2025 wildfires to restrict SB 9 projects within burn areas. Rather than continue litigation, both cities chose to settle and restore the law’s application.
What SB 9 Allows
SB 9 gives qualifying single-family property owners the ability to split lots and construct duplexes, creating the potential for up to four residential units on a parcel that previously permitted only one home. By reinstating these development rights, the settlements expand rebuilding options for homeowners while increasing the potential housing supply in communities where land remains scarce.
Broader Implications for Housing Policy
Although the majority of wildfire destruction occurred within the City of LA and unincorporated Los Angeles County, the Malibu and Pasadena settlements could influence similar legal disputes involving other jurisdictions that adopted comparable restrictions following the fires. Housing advocates view the agreements as reinforcing the state’s authority over local housing policy, particularly when state legislation is designed to encourage additional residential development.
The issue remains controversial. Some residents have expressed concerns that allowing additional housing density in wildfire-prone neighborhoods could complicate future evacuations, increase traffic congestion, and alter community character. At the same time, supporters argue that restoring SB 9 provides property owners with greater flexibility as they rebuild and could help address California’s ongoing housing shortage.
Investor Takeaway
While SB 9 primarily applies to qualifying residential parcels rather than traditional apartment properties, the settlements underscore California’s continued emphasis on increasing housing supply through higher-density development. Investors and landowners should continue monitoring post-fire rebuilding policies, as additional jurisdictions could face similar legal challenges and policy changes that create new redevelopment opportunities.
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