A Stepback Is a Setback: HCD Holds Santa Monica to SB 684's 4-Foot Cap

You drew the side yard at four feet, right on the SB 684 line. Then you added a second story, and the city's code pushed the upper wall back again — an extra stepback "provided at each story." Your four-foot setback just became six or eight on the floors that matter most.

Here's the thing: HCD's position is that a stepback is a setback wearing a different name, and the four-foot cap has no height exception.

What Santa Monica asked, and what HCD said

On June 17, 2026, HCD sent the City of Santa Monica a Letter of Technical Assistance on two starter-home projects under the Starter Home Revitalization Act — SB 684 of 2023, codified at Government Code sections 65852.28 and 66499.41. The Stewart Street Project proposes three multifamily units behind an existing single-family house in the R2 zone. The Delaware Avenue Project proposes four units in the R1 zone.

Both ran into the city's building-modulation rules. The R2 zone required "an additional 2-foot average side stepback" from the existing side setback, "provided at each story." The R1 zone required upper stories to be set back by "at least 1% of total parcel area." The question everyone wanted answered: is a stepback a setback?

A stepback is still a setback

HCD's answer was yes. The modulation rules don't recess the whole building face, but HCD found they "still require portions of the building to be recessed beyond the SHRA's maximum allowable four-foot setback" — especially in the R2 zone, where the stepback repeats on every story.

HCD had already made the same call for Riverside under SB 9, telling that city to drop an upper-floor setback because the statute "makes no exception above any heights or floors." Here is the line that carries the letter:

"any modulation, step back, or similar design requirement that effectively pushes portions of the building beyond four feet still constitutes a setback requirement for the purposes of complying with the SHRA's four-foot limit."

Unit size is part of density

The city also asked whether it could allow the proposed number of units but not the proposed unit size. HCD said no. A qualifying SB 684 project is protected from standards that would physically preclude it "at its proposed size and density." HCD found the Delaware Avenue Project met the default density of 30 dwelling units per acre and the statute's limits — lot sizes of at least 600 square feet and average unit size no larger than 1,750 square feet. In HCD's view, standards that block that project have to yield.

You don't have to shrink your own project first

Santa Monica's sharpest question: can it hold a 30-foot front setback if the applicant hasn't maximized the buildable area and voluntarily added off-street parking the city never required? HCD said no again, pointing to density-bonus case law. Quoting Bankers Hill 150 v. City of San Diego (2022), HCD noted that "a city may not apply any development standard that would physically preclude construction of that project as designed, even if the building includes 'amenities' beyond the bare minimum of building components." HCD's conclusion for Santa Monica:

"The applicant does not need to maximize the developable area of the site nor remove off-street parking in order to justify the reduction."

Covina got the same reasoning under ADU law

Two weeks earlier, HCD told Covina the same thing about its ADU ordinance (No. 25-15, adopted December 2, 2025). Finding 6 flagged a rule handing two-story ADUs "the underlying development standards" instead of the four-foot cap. HCD's response: "State ADU Law does not provide alternative setback requirements for ADUs built to two stories," and "Setbacks above the first floor, often referred to as 'stepbacks,' must not exceed the maximum allowable side and rear setbacks of four feet in State ADU Law."

Verified against HCD's Letter of Technical Assistance to the City of Santa Monica, dated June 17, 2026 (Stewart Street and Delaware Avenue Projects), and HCD's ADU ordinance findings to the City of Covina, dated June 2, 2026.

What this means if you're the one building

A Letter of Technical Assistance is HCD's interpretation, not settled law — courts remain the final word. But if your two-story SB 684 or ADU project is getting a second setback bolted on above the first floor, HCD has now told two cities in writing that the four-foot cap doesn't stop at the ground. Lock down your qualifying facts — unit count, lot size, average unit size — and confirm how each modulation or stepback rule squares with Gov. Code sections 65852.28 and 66499.41 (or § 66314 for ADUs) with your jurisdiction and counsel before conceding a single foot.

What CrossBeam does with it

When the letter lands on your desk, CrossBeam turns it around the same day: what each item is actually asking, the code or law behind it, and a written response you can hand to your team or your attorney — the back-and-forth that used to eat weeks, done in a couple of hours.