SB 9 vs. TOC Incentives: Choosing the Right Path for Your LA Infill Project

For Los Angeles developers, the path from a single lot to a completed multi-unit project is paved with strategic decisions. Two of the most powerful—and often misunderstood—tools at your disposal are Senate Bill 9 (SB 9) and the Transit Oriented Communities (TOC) Affordable Housing Incentive Program.

While both are designed to increase housing density, they offer fundamentally different pathways. Choosing the right one is not just a matter of preference; it’s a critical strategic decision that will define your project’s scale, cost, and ultimate return on investment.

At Xtraunit, we guide our clients through this decision every day. Here’s how to determine which path is right for you.

## What is Senate Bill 9 (SB 9)?

Think of SB 9 as the “gentle density” tool. Its primary purpose was to effectively end exclusive single-family zoning in California.

What it allows: On a lot that is zoned for a single-family home, SB 9 allows you to do one of two things:

Build a Duplex: You can build a second unit on the lot.
Split the Lot: You can split your lot into two separate parcels, and then potentially build a duplex on each, for a total of up to four units.

Who it’s for: SB 9 is ideal for homeowners or small-scale developers looking to maximize the value of a single-family property. It’s a powerful tool for creating duplexes, triplexes, and fourplexes in neighborhoods previously off-limits to multi-unit construction.

Key Limitations:

It only applies to single-family residential zones.
It generally requires the owner to live in one of the units for at least three years (owner-occupancy affidavit).
It cannot be used to demolish existing affordable or rent-controlled housing.

## What are the TOC Incentives?

Think of the TOC program as the “high-density” tool. Its purpose is to encourage the construction of larger apartment buildings with affordable housing components near public transit.

What it allows: If your property is zoned for multi-family housing and is located near a major transit stop, the TOC program grants you a menu of powerful incentives in exchange for dedicating a certain percentage of your units as affordable.

Who it’s for: The TOC program is designed for developers building apartment buildings (typically 5+ units). It’s the primary tool for achieving significant density increases on multi-family zoned lots.

Key Benefits (based on Tiers):

Massive Density Bonus: You can often build 50-80% more units than the base zoning allows.
Parking Reduction/Elimination: Depending on the tier, parking requirements can be drastically reduced or, in many cases, eliminated entirely—a huge cost saving.
Zoning Waivers: You can get relief from other zoning requirements, such as height limits, floor-area ratio (FAR), and setbacks.

## Head-to-Head: The Key Differences

Feature	Senate Bill 9 (SB 9)	Transit Oriented Communities (TOC)
Applies To	Single-Family Zoned Lots	Multi-Family Zoned Lots Near Transit
Max Units	Typically 2 to 4 Units	Can be 50+ Units (based on tier/lot size)
Affordability	Not Required	Required (e.g., 10-25% of units)
Parking	Often Reduced to 1 space/unit or less	Often Eliminated entirely
Primary Goal	Add a few units to SFH lots	Build large apartment buildings
Best For	Small Developers, Homeowners	Professional Developers, Investors

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## Making the Strategic Choice: Which Path for Your Project?

You should strongly consider the SB 9 path if:

You own a property zoned R1 (Single-Family).
Your goal is to build a duplex, triplex, or fourplex.
You want to avoid the long-term compliance and reporting associated with covenanted affordable units.
Your investment strategy is focused on smaller-scale, high-value rental properties.

You should strongly consider the TOC path if:

You own a property zoned R3, R4, or similar multi-family zoning near a bus or rail line.
Your goal is to maximize density and build a larger apartment building (10, 20, 50+ units).
You are prepared to incorporate affordable units into your pro forma in exchange for significant development advantages.
Your primary goal is to achieve the highest and best use of a valuable piece of multi-family land.

## The Xtraunit Advantage: No More Guesswork

Choosing between SB 9 and TOC isn’t always straightforward. Some properties might technically qualify for one but be better suited for the other. This is where our expertise becomes your advantage.

The Xtraunit team conducts a comprehensive Feasibility Analysis for every potential project. We model the potential outcomes for every available development path—showing you the unit count, projected costs, and potential ROI for an SB 9 project versus a TOC project on the same lot. We turn a complex regulatory choice into a clear, data-driven business decision.

Ready to find the right path for your property?

Don’t leave value on the table. Contact us for a professional analysis and let our experts chart the most profitable course for your next infill development.