Obtaining Affordable Housing With Density, Not Dollars—a Guide to the California Density Bonus Law

• Jurisdiction: California,United States
• Author: By Jon E. Goetz*
• Publication year: 2014
• Citation: Vol. 37 No. 2

Obtaining Affordable Housing with Density, Not Dollars—A Guide to the California Density Bonus Law

By Jon E. Goetz*

I. INTRODUCTION

Even after the elimination of redevelopment agencies in California, cities and counties still have the means to stimulate the development of affordable housing in their jurisdictions. One mechanism receiving more attention today is California's Density Bonus Law (Government Code Sections 65915 - 65918), which gives housing developers more favorable development requirements in exchange for the construction of affordable or senior units. And all this without pledging scarce taxpayer dollars to a development.

The Density Bonus Law provides developers with powerful incentives to construct affordable and senior housing. As its name suggests, the law allows developers to build more units per acre of land than would normally be permitted under local city or county zoning codes. This additional allowance or "density bonus" can be as high as a 35% increase in the permitted number of residences or units in a project, depending on the amount of affordable housing provided. Such bonuses are significant in a state like California where land costs are relatively high and increases in unit density can provide great financial and environmental benefits to both developers and communities.

But there is more to the Density Bonus Law than just an increased residential unit count. The Density Bonus Law actually provides a suite of incentives to help make the development of affordable and senior housing economically feasible. Provisions include lower parking requirements and reduced setback and minimum square footage requirements. Often these other components of the Density Bonus Law are even more helpful to project economics than the density bonus itself.

As a state mandate applicable to counties, general law cities and even to charter cities,¹ the Density Bonus Law sometimes generates resistance from local governments who would prefer that the State stay out of community development matters. But many local governments now embrace the Density Bonus Law as a helpful tool to cut through their own land use requirements and local political constraints. Use of the Density Bonus Law may be particularly helpful in those jurisdictions that impose inclusionary housing requirements on new developments, helping to offset the additional costs of inclusionary housing compliance.

II. HOW THE DENSITY BONUS LAW WORKS

Projects Entitled to a Density Bonus. Cities and counties are required to grant a density bonus and other incentives or concessions to housing projects which contain one of the following:

• At least 5% of the housing units are restricted to very low income residents.
• At least 10% of the housing units are restricted to lower income residents.
• At least 10% of the housing units in a for-sale common interest development are restricted to moderate income residents.
• The donation of at least one acre of land to the city or county for very low income units, and the land has the appropriate general plan designation, zoning, permits and approvals, and access to public facilities needed for such housing.
• The project is a senior citizen housing development (no affordable units required).
• The project is a mobilehome park age-restricted to senior citizens (no affordable units required).²

[Page 22]

Density Bonus Amount. The amount of the density bonus is set on a sliding scale, based upon the percentage of affordable units provided at each income level. For projects with very low income units, the scale ranges from a 20% density bonus when 5% of the units in the project are affordable, up to a 35% density bonus when 11% of the units in the project are affordable. For projects with lower income units, the scale ranges from a 20% density bonus when 10% of the units in the project are affordable, up to a 35% density bonus when 20% of the units in the project are affordable. And for projects with moderate income units, the scale ranges from a 5% density bonus when 10% of the units in the project are affordable, up to a 35% density bonus when 40% of the units in the project are affordable.³

Cities and counties are required to adopt their own density bonus ordinances that implement the statutory requirements. Those ordinances may provide higher density bonuses than required by state law, and may also provide density bonuses to developments that wouldn't qualify for a density bonus under state law.⁴

Required Incentives and Concessions. In addition to the density bonus, the city or county is also required to provide one or more "incentives" or "concessions" to each project which qualifies for a density bonus (except that market rate senior citizen projects with no affordable units, and land donated for very low income housing, do not appear to be entitled to incentives or concessions). A concession or incentive includes reductions in site development standards or a modification of zoning code or architectural design requirements, such as a reduction in setback or minimum square footage requirements, approval of mixed use zoning, or other regulatory incentives which reduce project costs. From one to three incentives or concessions are provided based on the percentage of affordable units in the project.⁵

The city or county is required to grant the concession or incentive proposed by the developer unless it finds that the proposed concession or incentive is not required in order to achieve the required affordable housing costs or rents, would cause a public health or safety problem, cause an environmental problem, harm historical property, or would be contrary to law. Financial incentives, fee waivers and reductions in dedication requirements are permitted but are not required to be offered.⁶

Other Forms of Assistance. A development qualifying for a density bonus also receives two additional...