Sacramento: Missing Middle Housing Ordinance (2040 Plan)

Sacramento spent years building toward one of the most far-reaching housing changes in the United States, and the timeline slipped along the way. The city's blueprint for growth, the 2040 General Plan, was originally meant to be finished early in the decade, but it was not adopted by the City Council until February 27, 2024. That plan made Sacramento the first jurisdiction in the nation to remove the cap on how many homes can be built on a single lot in single-family zones, replacing the old unit limit with a rule based on building size instead.

A general plan is only a statement of intent. To actually change what people could build, the city needed a zoning law to carry it out. The City Council unanimously approved that law, the Missing Middle Housing Interim Ordinance, on September 17, 2024. With that vote, Sacramento became the first city in California to allow multi-unit housing in every single-family neighborhood. No neighborhood in the city is now zoned only for detached houses.

The ambition was deliberate. City leaders did not stop at duplexes or triplexes. The new rules let owners build all the way up to ten homes on what used to be single-house lots, in the right locations. The framing mattered as much as the math: Sacramento wanted to be the city that proved a large American capital could open all of its residential land to gentle density at once, rather than rezoning a few corridors and calling it reform.

The Missing Middle Housing Ordinance applies to the city's lower-density residential zones, specifically the R-1, R-1A, R-1B, and R-2 zones that had been reserved for single houses and duplexes. Inside those zones, the law permits a wide menu of building types by right, meaning no special council vote is needed for each project: four-plexes, six-plexes, eight-plexes, ten-plexes, cottage and bungalow courts, and small homes on small lots.

The most important design move is that Sacramento dropped density caps entirely and replaced them with a maximum floor area limit. Instead of telling owners how many units they may build, the city tells them how much total floor space they may build, and lets them divide that space into as many homes as they like, up to ten. The size of the allowed building depends on the lot's dimensions and how close it sits to public transit.

Buildings are limited to 2.5 stories on former single-family lots, which keeps new multiplexes roughly the height of the houses around them. To make the smaller, more affordable building types the most attractive option, the city built in a sliding scale: the allowed floor area grows with each additional home an owner builds. In other words, splitting a building into more units earns more buildable space. The intent was to make a four-plex pencil out as well as, or better than, a single large house. The city's own test designs found that a fourplex could deliver homes affordable to a four-person household earning the 2022 area median income of $102,200.

The ordinance also loosened street-facing rules. Owners can build into the front setback, cut from 20 feet down to 10 to 15 feet, in exchange for porches, street trees, and other streetscape features. The law passed as an interim measure, meaning the city always planned to watch it for about a year and then bring a permanent version back to the council.

This is where Sacramento's experiment gets honest, and where it matters most to anyone watching from British Columbia. The right to build multiplexes is now spread across the entire city. The buildings themselves have not followed.

As of late March 2026, roughly 18 months after the rules took effect, the city had received 34 total applications, of which 22 had been approved. Those are not large numbers for a city of half a million people that just unlocked every residential lot. More striking is what is missing inside them. As one housing advocate put it plainly: "We're a year and a half in, and we haven't seen a single project between 3 and 20 units."

That is the heart of the story. The ordinance was designed to produce four-plexes through ten-plexes, the very buildings that fill the gap between a single house and a large apartment block. None of them have been built. The activity that has happened skews toward the smallest, simplest changes, the kind owners were already making, rather than the mid-size multiplexes the law was written to encourage. The lesson is direct: making a building legal is not the same as making it get built. Sacramento removed the legal barrier and discovered that a second barrier, the basic economics of construction, was still standing.

When a project does not get built even though it is allowed, builders say it "does not pencil," meaning the numbers do not add up to a profit once costs, financing, and rules are all counted. Several forces push Sacramento's mid-size multiplexes into that category.

The first is cost and financing. A four-plex through ten-plex is a real construction project with engineered foundations, fire separation between homes, and full utility connections, but it is too small to spread those fixed costs across many units the way a large apartment building can. Small builders also struggle to find lenders comfortable with this in-between size. A local housing advocate noted that elements of the current ordinance make it "difficult for projects to pencil out for small developers looking to build middle housing."

The second is design rules that quietly raise costs. The city's own review has focused on "bulk controls," including aesthetic requirements such as roof shape, as a factor limiting what gets built. A consultant recommended that three-story buildings only be approved if they add features like sloped roofs, which adds expense to exactly the taller, more efficient designs that help a multiplex pay for itself. Some council members pushed back, with one urging the city to "be bold and go a little further" rather than load the rules with appearance requirements.

Put together, these forces mean the math for a four-plex or six-plex is tight before a shovel hits the ground. A small builder weighing one against a single large house, or against the easier path of a backyard suite, often finds the multiplex carries more risk for a thinner margin. The right to build it does nothing to change that arithmetic.

Sacramento always treated the 2024 law as a first draft. Because it passed as an interim ordinance, the city committed to studying how it performed and returning with a more permanent version. With so few mid-size projects breaking ground, that review has become a chance to fix the parts that stalled.

City staff have been working toward finalizing a permanent version, with the timeline pointing to the end of 2025 or early 2026, and the broader expectation is that a more permanent framework lands by the end of 2026. The revision is expected to loosen the aesthetic restrictions and bulk controls that the city now believes are holding projects back. In effect, Sacramento is moving from "is it legal?" to "does it pencil?", trying to strip out the rules that make a permitted building uneconomic. Whether the changes go far enough to actually produce four-plexes through ten-plexes is the open question the next version has to answer.

British Columbia ran a parallel experiment, and the comparison is instructive. The province passed its Small-Scale Multi-Unit Housing law, known as Bill 44, which received royal assent on November 30, 2023. Like Sacramento's ordinance, it overrides single-family-only zoning, but it does so province-wide in one stroke rather than city by city. In most communities with populations over 5,000, Bill 44 requires local governments to allow at least three to four homes on a single-family lot depending on lot size, and at least six units on larger lots within 400 metres of frequent transit. Local governments had to update their bylaws to comply by June 30, 2024.

The two reforms share the same core idea: replace a ban with a right, and let the smaller building types appear across whole neighborhoods. Sacramento reaches higher, permitting up to ten homes per lot against BC's general baseline of three to four, with six near transit. But Sacramento's experience delivers the warning that matters more than the ceiling. Allowing ten homes on a lot means nothing if not one mid-size building gets built. The number of units a law permits is a headline; the number that actually get financed and constructed is the result. Sacramento legalized a great deal and, eighteen months on, had no three-to-twenty-unit projects to show for it.

For BC, that is the central lesson: a higher unit allowance is not the finish line. If the design rules, fees, and financing conditions make a four-plex uneconomic, owners will keep building the simplest thing they can, just as they have in Sacramento. The reform that produces housing is the one that makes the permitted building pencil, not merely the one that makes it legal.

If you own or plan to build a small multiplex in British Columbia, Sacramento offers a practical caution rather than a discouragement. Bill 44 has given you the legal right to add homes to your lot. That is a genuine and valuable change. But the right on paper is only the first of two hurdles. The second hurdle, whether the project actually makes financial sense, is the one that decided Sacramento's outcome, and it will decide yours.

The takeaway is to test the economics early and honestly. Before assuming a four-plex or six-plex is worth pursuing because it is now allowed, run the real numbers: construction cost per unit, what lenders will finance for a project of that size, the cost added by local design and bulk rules, and what the finished homes will sell or rent for. Sacramento's mid-size projects stalled precisely because that arithmetic came out negative for small builders, even with the legal door wide open. A backyard suite or a duplex may pencil where a six-plex does not, and that is a real and often sensible choice, not a failure.

It also pays to watch the rules that sit on top of the headline allowance. In Sacramento, appearance requirements like mandated roof shapes and bulk limits did quiet but real damage to project feasibility, and the city is now rolling them back. In BC, the equivalent levers are local bylaw details, parking and setback requirements, development fees, and how quickly a municipality processes permits. Those details, more than the top-line unit count, will determine whether your project moves forward. The honest summary from Sacramento is simple: legality opened the door, but only feasibility lets anyone walk through it.