HomeMy WebLinkAbout2022-01-24 e-packet@5:00Monday, January 24, 2022
5:00 PM
City of South San Francisco
P.O. Box 711 (City Hall, 400 Grand Avenue)
South San Francisco, CA
TELECONFERENCE MEETING
Zoom Link: https://ssf-net.zoom.us/j/84959605587
Special Housing Standing Committee of the City Council
and Planning Commission
Special Meeting Agenda
January 24, 2022Special Housing Standing
Committee of the City Council and
Planning Commission
Special Meeting Agenda
TELECONFERENCE MEETING NOTICE
The Housing Standing Committee may meet by teleconference, consistent with the Brown Act as
amended by AB 361 (2021). Under the amended rules, the City will not provide a physical location for
members of the public to participate in the teleconference meeting.
The purpose of conducting the meeting as described in this notice is to provide the safest environment for staff
and the public while allowing for public participation.
Mayor Nagales, Councilmember Addiego and essential City staff will participate via Teleconference.
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Page 2 City of South San Francisco Printed on 3/16/2022
January 24, 2022Special Housing Standing
Committee of the City Council and
Planning Commission
Special Meeting Agenda
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Page 3 City of South San Francisco Printed on 3/16/2022
January 24, 2022Special Housing Standing
Committee of the City Council and
Planning Commission
Special Meeting Agenda
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MATTERS FOR CONSIDERATION
Report regarding a proposed spending plan for the City’s affordable housing funds
(Julie Barnard, Acting Deputy Director of Economic and Community Development,
and Deanna Talavera, Management Analyst II)
1.
Report regarding an analysis of the City of South San Francisco’s Inclusionary
Housing Ordinance and incentives to provide additional affordable housing units. (Julie
Barnard, Acting Deputy Director of Economic and Community Development, and
Deanna Talavera, Management Analyst II)
2.
Adjournment.
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City of South San Francisco
Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:22-61 Agenda Date:1/24/2022
Version:1 Item #:1.
Report regarding a proposed spending plan for the City’s affordable housing funds (Julie Barnard,Acting
Deputy Director of Economic and Community Development, and Deanna Talavera, Management Analyst II)
Staff recommends that the Housing Standing Committee provide feedback on the proposed spending
plan for the City’s affordable housing funds and make a recommendation supporting the plan to the City
Council.
BACKGROUND
Staff is seeking the Housing Standing Committee’s feedback on the staff recommended plan to prioritize
spending of the City’s affordable housing funds.Below,staff summarizes the City’s housing policies and
programs,the current unencumbered cash balances of the City’s housing funds and the goals they serve,recent
direction received from Council, and recommendations for deploying the City’s housing funds.
I.CITY HOUSING GOALS
The policies and programs described below help serve the City’s housing goals, which include:
·Preventing displacement and homelessness prevention;
·Creating and preserving affordable housing units;
·Promoting housing production at all income levels;
·Leveraging local dollars by seeking and utilizing federal, state, and regional housing resources.
“Affordable housing”and “Below Market Rate (BMR)housing”refers to residential units made affordable to
low and moderate income households.Typically,affordable for-sale housing targets households earning 120%
or less of the Area Median Income (AMI).In San Mateo County,that is a family of four earning less than
$179,500 or an individual making less than $125,650.On the other hand,affordable rental housing typically
targets households earning less than 80%AMI.That is a family of four earning less than $146,350 or an
individual making under $102,450.Attachment 1 includes the San Mateo County income limits and rent
payments for 2021.
II.EXISTING HOUSING POLICIES & PROGRAMS
The City has implemented numerous policies that advance the above-mentioned housing goals,including those
briefly summarized below and described in greater detail in Attachment 2.
Inclusionary Housing Ordinance
The City’s inclusionary housing policies ensure that 15%of all new rental and for-sale housing units
constructed in South San Francisco are set aside for households earning under 120%of the area median
income.
Commercial Linkage Fee
In 2018,the City Council adopted a commercial linkage fee.This fee is charged on net,new commercial
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In 2018,the City Council adopted a commercial linkage fee.This fee is charged on net,new commercial
development to help offset the impact it has on the need for affordable housing.
Gap Financing for Affordable Housing Production
The City has traditionally provided "gap financing"to multi-family affordable housing developers in the form
of long-term low-interest loans.Typically,the loan amounts are $55,000,or less,per residential.For all loans
provided,the financing is secured by affordability covenants (i.e.,deed restriction)that ensures the property
remains affordable to lower-income tenants for a minimum of 55 years.Once terms have been negotiated staff
present a loan agreement to Council for consideration and approval.
City and Successor Agency Property Disposition
Until recently,a majority of the sites that the City sold were former Redevelopment Agency (RDA)properties.
Pursuant to redevelopment law,the City sold properties for the development of:Cadence Phase I and II,Grand
and Linden,432 Baden,200 Linden,the PUC Site,and the Rotary Terrace site.Developers were solicited using
a Request for Proposals (RFP)process.There is a greater opportunity to pivot to long term ground leases on
sites that are solely owned by the City.Attachment 3 outlines the former RDA and City-owned properties that
are currently held and have housing development potential,or have been sold in the last five or six years for
housing development.
Supporting Housing Nonprofits
Through its Community Development Block Grant (CDBG)program and housing funds,the City supports a
number of nonprofit community organizations that provide critical housing resources,including shelters,home
repairs, legal assistance, and referral services.
Rental Assistance Program
One of the most effective tools the City has in preventing homelessness and displacement is its rental assistance
program.The YMCA Community Resource Center administers the program,which provides rental assistance
to low-income South San Francisco residents experiencing an immediate financial hardship.
Accessory Dwelling Units
Accessory Dwelling Units (ADU)are another housing type that has contributed to housing affordability
citywide.The City has played an important role in supporting property owners by establishing the Bright in
Your Own Backyard program,administered by Hello Housing.Although ADUs are not deed-restricted or
subsidized,they are considered more naturally affordable than larger market rate units.The last few years have
seen an upward trend in ADU production due to recent efforts at the state and local level to facilitate ADU
production.
Preservation/Protection of Affordable Units
Preservation is a key tool in ensuring more equitable communities.The City has offered solutions to non-profit
developers seeking to renovate existing affordable housing through resyndication,where the developers seek a
new allocation of tax credits to ensure preservation of existing low-income housing properties.A new allocation
of credits can help to finance the refurbishment of properties,making them more sustainable while extending
their affordability covenants.
Program Administration
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Critical to the success of the City’s housing program is its administration. Staff monitor existing affordable
housing units, and negotiate affordable housing agreements for new developments, and manage all housing
grants and programs related to emergency housing assistance. Guidelines for administration of affordable rental
and for-sale housing are on the City’s website at www.ssf.net/bmr <http://www.ssf.net/bmr> under Procedures
and Guidelines for Inclusionary Units.
<https://www.ssf.net/home/showpublisheddocument/21887/637400981221130000>
Success of Existing Policies and Programs
Over the past four years, the City has partnered with affordable housing developers on 456 BMR units that will
be delivered in the coming years. In this time the City has provided $9.5 million in permanent financing and
roughly $3 million in land donations. Through partnering with affordable housing developers who have
established track records of securing financing and building housing, the City has been able to deliver these
units at a cost of roughly $27,000 per door. Partnering with affordable housing developers is therefore a very
low risk, cost-effective method of delivering affordable housing to the City without the encumbrance of
managing the properties in the long-term.
III.HOUSING FUND BALANCES
The City has three housing funds,which it can use to preserve affordable housing,fund the construction of new
affordable housing development,support housing programs,and administer these programs.These three
housing funds are summarized briefly below and discussed in greater detail in Attachment 4.
Low and Moderate Income Housing Asset Fund - Fund 241
Upon becoming the housing successor to the former RDA in February 2011,all former RDA housing assets
were transferred to the City.As part of that transfer of housing assets,the City established the Housing
Successor Fund (Fund 241).Revenues from rental housing properties,RDA funded loan repayments,and
interest are deposited into Fund 241.The use of these funds is governed by Senate Bill 341 and is limited to
households earning less than 80 percent of AMI.
Fund 241 has an unencumbered cash balance of $2,463,000 million as of January 1,2022.This fund will
eventually be expended, as there are no new significant revenues being deposited into it.
Housing Trust Fund - Fund 205
The City’s Affordable Housing Trust Fund (Fund 205)was created to hold funds received as a result of
developer agreements and in lieu payments from the City’s existing Inclusionary Housing Ordinance.
Permissible uses include,but are not limited to,land acquisition,debt service,parcel assemblage,gap
financing,housing rehabilitation,grants,unit acquisition,new construction,and other pursuits associated with
providing affordable housing.
Fund 205 has an unencumbered cash balance of $892,000 as of January 1,2022.This fund is unlikely to grow
significantly in the coming years.
Commercial Linkage Fees - Fund 823
Commercial linkage fees are a type of impact fee assessed on the construction or conversion of commercial
buildings to mitigate the increased demand created for affordable housing.The City Council may adopt
guidelines prioritizing how the money may be spent on renovating existing units,land purchase,or construction
funding for new units.The fees are subject to the Mitigation Fee Act reporting requirements.Fund 823,which
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funding for new units.The fees are subject to the Mitigation Fee Act reporting requirements.Fund 823,which
holds the City’s commercial linkage fee revenue,has an unencumbered cash balance of $5,568,000 as of
January 1,2022.As our biotech cluster continues to grow,this fund is expected to grow substantially in the
coming years.It is estimated that the Commercial Linkage Fee will generate at least $122,000,000 over the
next 15 years.
The graph below shows the fees collected annually and how they are expected to accumulate over the next 15
years. Attachment 4 includes a table of exact amounts expected per year.
DISCUSSION
IV.COUNCIL DIRECTION
At the November 2,2021 City Council study session to discuss the disposition of the City-owned Municipal
Services Building, Council relayed additional housing goals and priorities which included a desire to:
1.Explore the possibility of increasing the proportion of affordable to market-rate units in an inclusionary
housing development context;
2.Lease public land, rather than sell it;
3.Receive a return on the public investment,whether it be land and/or a loan or grant,that allows the City
to reinvest the funds in further housing development; and
4.Develop housing that serves the full range of incomes present in our community,from extremely low to
market rate.
Council directed staff to consider the feasibility of the City owning,constructing,and managing housing,
including affordable housing.Staff engaged a team of experienced housing consulting firms,BAE and Novin
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including affordable housing.Staff engaged a team of experienced housing consulting firms,BAE and Novin
Developments,to provide feasibility analysis and recommendations for meeting Council’s above-referenced
goals and considering a publicly owned and operated model. Initial findings include:
·Funding for public housing originates at the federal level,and typically the properties are owned and
operated by a local housing authority or experienced affordable housing developer.The financing,
development and construction of affordable housing is a long,legally complicated,and high-risk
investment of public funds under the best of circumstances.
·City-led public housing performs well and is necessary in regions where there is a lack of experienced
affordable housing developers.The Bay Area has a thriving affordable housing developer community
that the City has been able to develop partnerships with,rather than compete against for scarce funding
resources (like County Measure K funding,State grants such as Affordable Housing and Sustainable
Communities or the Infrastructure Infill Grant, and 4% and 9% low-income housing tax credits.
·Public agencies,like the City of South San Francisco,operate under more rigid rules and processes than
private sector and nonprofit affordable housing developers.For instance,the City is subject to
procurement and labor requirements that make construction substantially more difficult and more
expensive to construct.Recent cost estimates for the construction of multi-family housing in South San
Francisco are over $500,000 per door.By comparison,as mentioned earlier in this report,the City has
contributed an average of just $27,000 per unit for the delivery of 456 affordable units in the past four
years.
V.DEPLOYING HOUSING FUND RESOURCES
The estimated $122 million dollars in fees generated over the next 15 years are restricted to the following uses:
housing programs and projects serving extremely-,very low-,low-,and moderate-income households.These
programs and projects may include purchasing land,construction funding for new units,rental subsidies,
housing rehabilitation programs,extension of expiring affordability covenants,and other affordable housing
programs and projects.
The staff recommendations below utilize the City’s affordable housing funds over the next five years while
preserving maximum flexibility for the City to respond to emerging opportunities.Staff believe the path
outlined below will facilitate the production and preservation of housing efficiently and effectively.
Acquire Sites for Affordable Housing
One of the most significant barriers to affordable housing production is securing suitable land on which to build
the housing.With funding available,staff can work to identify properties that will support multifamily
development,are well-located,and which qualify for tax credit financing.Staff has the necessary expertise and
capacity to carry out such acquisitions.Given these factors,the best strategy for catalyzing affordable housing
development is for the City to use a portion of available housing funds to acquire sites as desirable properties
are identified and the resources to purchase them become available.The City can then determine if it should
sell the sites or ground-lease each site to a housing developer that will meet the City’s housing goals.
Staff reviewed recent sales comparisons and appraisals of properties in the City.At a minimum an acre of land
is roughly $5.6 million.The price of each site will ultimately be determined by several factors,including the
size,zoning,proximity to transportation,environmental clean-up needed,and so on.The City could expect to
pay $8 million per acre if a site is easily developable and can deliver more units.Any properties that the City
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pay $8 million per acre if a site is easily developable and can deliver more units.Any properties that the City
acquires should be with the intention of developing multi-family residential,with densities no less than 80
dwelling units/acre, in order to achieve economies of scale.
Assuming the projections of the commercial linkage fees come to fruition, staff propose allocating:
Short term (by FY 23-24)$16 million for the acquisition of a minimum of two acres
Medium term (by FY 26-27)$60 million (or roughly 70% of the total projected fee)
Disposition of City Owned Property
The City adopted a Housing Investment Plan in 2014.The plan recommended ending the City’s practice of
owning hard-to-manage,scattered affordable housing sites and instead focus on recapturing financial resources
by selling various sites and using others,like the Baden Firehouse property,to advance the development of
higher density housing in the downtown.Combined with cash assets,the sale of properties and/or the
contribution of land into projects gives the City funding with which to advance its affordable housing mission
and to potentially facilitate both market-rate and affordable housing through mixed-income projects.
Disposition of sites like the Firehouse,the Municipal Services Building (MSB),109 Longford,and 905 Linden
will eliminate the City’s cost and burden of managing and maintaining underutilized properties.The disposition
of sites is outlined in the plan,and governs the process by which the City sells,donates,or redevelops the
properties.
City ownership of property provides the opportunity to solicit proposals from developers through a competitive
process ensuring the City’s goals are met.For examples,in a mixed-income project,the City could issue a
Request for Proposals that contemplates a higher proportion of affordable units,with a wider range of income
levels,and specifying a long-term ground lease rather than disposition.Alternatively,a fully-affordable
development sought through an RFP requiring a ground-lease and a more financially advantageous loan
structure whereby the City receives more regular payments that can then be reinvested in affordable housing.
The City has a few opportunities to test these approaches through the disposition of the Municipal Services
Building, 905 Linden, and the Miller/Maple parking lot.
Rental Assistance
At the present time,Covid-related rental assistance is still available to landlords and eligible residents in San
Mateo County.This assistance is provided through the California State Rent Relief Program /Housing is Key.
However,when this assistance is no longer available,the Council may wish to consider providing some amount
of programmatic support for existing nonprofits that help lower-income residents with emergency housing
assistance.Currently,the YMCA located in South San Francisco manages the City’s rental assistance program.
This program has assisted the City’s lowest income households who were impacted by the effects of COVID,
and assisted landlords with collecting payment who also suffered economic impacts as a result.Continuing the
program over the next five years is recommended with funds coming from the City’s housing successor fund
and through the Permanent Local Housing Allocation grant from the State.The guidelines for spending these
funds will be the subject of consideration by the Renter Protection Task Force,which will make
recommendations for City Council consideration.
Assuming the projections of the commercial linkage fees come to fruition, staff propose allocating:
Short term (by FY 23-24)$500,000
Medium term (by FY 26-27)no change, will revisit based on market conditions in a few years
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Accessory Dwelling Unit Support
Staff recommends the City evaluate continued funding the Bright in Your Backyard program to assist
homeowners with project management support for the construction of ADUs after Genentech’s initial two-year
funding for the program is exhausted.Accessory Dwelling Units are naturally occurring affordable housing
units and are counted toward the City’s Regional Housing Needs Allocation (RHNA) requirement.
Assuming the projections of the commercial linkage fees come to fruition, staff propose allocating:
Short term (by FY 23-24)$1,500,000
Medium term (by FY 26-27)$2,500,000
Issue a Notice of Funding Availability for Affordable Housing
Staff recommends that the City issue a Notice of Funding Availability (NOFA)to inform the development
community that funding is available for affordable housing production,rehabilitation,and preservation,and can
be requested through an application process.Staff recommends receiving applications and awarding funds -
with Council’s approval required for all awards -on a rolling basis.The NOFA process allows the City to
provide financial assistance on an as needed basis to affordable housing projects,and developers can combine
and leverage City funds to qualify for regional, state, and federal funding.
The NOFA process allows developers to competitively apply in a uniform manner with clear criteria.The
process and guidelines for the NOFA can be formulated and brought back to the City Council for approval.
Eligible activities funded through the NOFA would likely include land or property acquisition;predevelopment
(architecture,engineering/soil,environmental,financial analysis);construction (site preparation,construction,
materials);conversion of market rate housing,or non-residential buildings,to deed-restricted affordable
housing;and any other activity the City determines helps to address program goals and priorities of increasing
affordable housing as reflected by ordinances and resolutions established by the City Council.
Staff recommends committing $3 million per year by FY 23-24, scaling up to $5 million per year by FY 26-27.
Assuming the projections of the commercial linkage fees come to fruition, staff propose allocating:
Short term (by FY 23-24)$9,000,000
Medium term (by FY 26-27)$15,000,000
Budget Summary
Below is a summary of those spending priorities and the approximate budget for each over the next five years.
INVESTMENT RECOMMENDATIONS FY23-24 FY 26-27
CLF Anticipated Budget $30,000,000 $84,000,000
Acquisitions 16,000,000 60,000,000
NOFA (Gap Financing)9,000,000 15,000,000
Preservation 3,000,000 5,000,000
ADU Program 1,500,000 2,500,000
Rental Assistance/Emergency Housing 500,000 500,000
Unallocated -1,500,000
The above is a preliminary budget based on staff’s understanding of the future housing market needs.Should
any major shifts in market demands occur,the City has the flexibility to reconsider how the budget is
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any major shifts in market demands occur,the City has the flexibility to reconsider how the budget is
structured.
CONCLUSION
Staff recommends that the Housing Standing Committee review and provide feedback and recommendations on
the spending priorities outlined in the report to the City Council for approval.
Attachments:
1.SMC 2021 AMI limits and rent payments
2.Existing housing policies and programs
3.Map of City and former RDA owned properties
4.Housing fund detail
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For HUD-funded programs, use the Federal Income Schedule. For State or locally-funded programs, you may use
the State Income Schedule. For programs funded with both federal and state funds, use the more stringent income levels.
Please verify the income and rent figures in use for specific programs.
San Mateo County Income Limits (based on Federal Income Limits for SMC)
Effective 4/30/2021 - Area median Income $149,600 (based on household of 4)
Income Category 1 2 3 4 5 6 7 8
Extremely Low (30% AMI) *38,400$ 43,850$ 49,350$ 54,800$ 59,200$ 63,600$ 68,000$ 72,350$
Very Low (50% AMI) *63,950$ 73,100$ 82,250$ 91,350$ 98,700$ 106,000$ 113,300$ 120,600$
Low (80% AMI) *102,450$ 117,100$ 131,750$ 146,350$ 158,100$ 169,800$ 181,500$ 193,200$
Median (100% AMI)104,700$ 119,700$ 134,650$ 149,600$ 161,550$ 173,550$ 185,500$ 197,450$
Moderate (120% AMI)125,650$ 143,600$ 161,550$ 179,500$ 193,850$ 208,200$ 222,600$ 236,950$
NOTES
*2021 State Income limits provided by State of California Department of Housing and Community Development
2021 San Mateo County Income Limits
as determined by HUD - effective June 28, 2021
Income Limits by Family Size ($)
Income limits effective 04/01/2021.
Please verify the income and rent figures in use for specific programs.
NOTES
Income Category 1 2 3 4 5 6 7 8
Extremely Low (30% AMI) *38,400$ 43,850$ 49,350$ 54,800$ 59,200$ 63,600$ 68,000$ 72,350$
Very Low (50% AMI) *63,950$ 73,100$ 82,250$ 91,350$ 98,700$ 106,000$ 113,300$ 120,600$
HOME Limit (60% AMI) *76,740$ 87,720$ 98,700$ 109,620$ 118,440$ 127,200$ 135,960$ 144,720$
HERA Special VLI (50% AMI) ***63,950$ 73,100$ 82,250$ 91,350$ 98,700$ 106,000$ 113,300$ 120,600$ See Note regarding HERA for FY2021***
HERA Special Limit (60% AMI) ***76,740$ 87,720$ 98,700$ 109,620$ 118,440$ 127,200$ 135,960$ 144,720$ See Note regarding HERA for FY2021***
Low (80% AMI) *102,450$ 117,100$ 131,750$ 146,350$ 158,100$ 169,800$ 181,500$ 193,200$
State Median (100% AMI) 104,700$ 119,700$ 134,650$ 149,600$ 161,550$ 173,550$ 185,500$ 197,450$
Income CategorySRO *+Studio 1-BR 2-BR 3-BR 4-BR
Extremely Low *959$ 1,027$ 1,233$ 1,425$ 1,590$
Very Low *1,598$ 1,713$ 2,056$ 2,375$ 2,650$
Low HOME Limit*1,598$ 1,713$ 2,056$ 2,375$ 2,650$ effective 6/01/2021; 2021 HOME Limit
High HOME Limit (65%)*2,078$ 2,227$ 2,673$ 3,088$ 3,445$ effective 6/01/2021; 2021 HOME Limit
HERA Special VLI (50% AMI) ***1,598$ 1,713$ 2,056$ 2,375$ 2,650$
HERA Special Limit (60% AMI) ***1,918$ 2,055$ 2,467$ 2,850$ 3,180$
Low**2,558$ 2,741$ 3,290$ 3,801$ 4,240$ CA Tax Credit Rent limits: Low & Med Income Group
HUD Fair Market Rent (FMR)2,350$ 2,923$ 3,553$ 4,567$ 4,970$ HUD-published Fair Market Rents
Median **3,196$ 3,426$ 4,112$ 4,750$ 5,300$ CA Tax Credit Rent limits: Low & Med Income Group
NOTES
CA Tax Credit Rent Limits for Low and Median Income Group
Income figures provided by HUD for following San Mateo County federal entitlement programs: CDBG, HOME, ESG.
For San Mateo County, the Housing & Economic Recovery Act of 2008 (HERA) & the HUD 2010 HOME hold-harmless provision permit multifamily tax
SROs with -0- or 1 of the following - sanitary or food preparation facility in unit; if 5+ SRO HOME-assisted units, then at least 20% of units to be
2021 San Mateo County Income Limits
as determined by HUD, State of CA HCD, and County of San Mateo
HUD-defined Area Median Income $149,600 (based on householdof 4). State defined median $149,600 (household of 4) due to hold harmless policy.
Income Limits by Family Size ($)
Maximum Affordable Rent Payment ($)
OTHER NOTES (generic)
High HOME Limit rent set at lower of: (a) 30% of 60% AMI,or (b) FMR (HUD Fair Market Rent).
For 2011, the FMR for Studio is the lower rent.
Table below provides rent guidance on appropriate income schedule to use:
Rent schedules at https://www.huduser.gov/portal/pdrdatas_landing.html for additional information as well as the various income schedules. Please also refer to
4/01/2019 to 4/01/2020 2019
4/01/2020 to 4/01/2021 2020
4/01/2021 to present 2021
03/28/2016 - 4/14/2017 2016
04/14/2017 to 3/31/18 2017
4/01/2018 - 3/31/2019 to present 2018
12/01/2012 - 12/17/2013 2013
12/18/2013 - 03/05/2015 2014
03/06/2015 - 03/27/16 2015
5/14/2010 - 5/31/2011 2012
6/1/2011 - 11/30/2011 2012
12/01/2011 - 11/30/2012 2012
Placed in Service Date Maximum Inc. Limits Schedule
On or before 12/31/2008 2018 HERA Special
1/1/2009 to 5/13/2010 2009
Maximum affordable rent based on 30% of monthly income and all utlilites paid by landlord unless further adjusted by HUD. Utliity allowances for tenant-
Rent Calcuations - The following is the assumed family size for each unit: Studio:1 person 1-BR:1.5 persons 2-BR:3 3-BR: 4.5 4-BR:6
Page 1 of 3
ATTACHMENT 2
Existing Housing Policies and Programs
Inclusionary Housing Ordinance
For years, the City had an inclusionary housing ordinance requiring developers of market rate, for-
sale housing to include a set-aside of below market rate units. In 2018, following State legislation
allowing it, the City Council voted to expand the inclusionary housing ordinance to market rate,
rental housing developments. These inclusionary housing policies ensure that 15% of all new
rental and for-sale housing units constructed in South San Francisco are set aside for households
earning under 120% of the area median income.
Commercial Linkage Fee
Prior to 2012, the City, through the South San Francisco Redevelopment Agency (RDA), had a
direct and steady source for funding for affordable housing. After the State dissolved
redevelopment agencies in 2012, the City was left without this important source of funding to
support housing organizations and fund new affordable housing development. To help begin to
make up this shortfall, in 2018, the City Council adopted a commercial linkage fee. This fee is
charged on net, new commercial development to help offset the impact it has on the need for
affordable housing.
Gap Financing for Affordable Housing Production
South San Francisco has traditionally provided "gap financing" to multi-family affordable housing
developers in the form of long-term low-interest loans. Cities typically need to provide affordable
housing developers with funds in order for them to leverage other financing sources. A City’s
willingness to provide funds demonstrates a local commitment to the project which is favorable to
other funders. Land donations or long-term ground leases with no payments qualify as a financial
commitment.
Staff review developer requests and negotiate the terms of the loans which are determined on a
case-by-case basis. Typically, the loan amounts provided have been in the region of roughly
$55,000, or less, per door. For all loans provided, the financing is secured by affordability
covenants (i.e., deed restriction) that ensures the property remains affordable to lower-income
tenants for a minimum of 55 years. In the case of predevelopment loans, the City will hold any
permits and entitlements as collateral, this provides the City some leverage in determining the
future of the property should the project, as contemplated at the time the loan was conveyed, not
be constructed. Once terms have been negotiated staff present a loan agreement to Council for
consideration and approval. Presently, City efforts to assist developers from securing financing
quicker include consideration and approval of the loans on a timeline determined by the developer.
City and Successor Agency Property Disposition
Until recently, a majority of the sites that the City sold were former RDA properties. Pursuant to
redevelopment law, the City has been instructed to sell these parcels in order to distribute the
proceeds to the taxing entities. To this end, the City has sold the following parcels: Cadence Phase
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I and II, Grand and Linden, 432 Baden, 200 Linden, the PUC Site, and the Rotary Terrace site.
Developers were solicited using a Request for Proposals process (RFP) which allowed the City
greater control in determining the development, price, and terms.
There is a greater opportunity to pivot to long term ground leases on sites that are solely owned by
the City. Acquiring land for the development of affordable housing presents the opportunity to
retain site control under the terms of a long-term ground lease and, also, through an RFP process,
have greater control over the development.
Attachment 3 outlines the former RDA and City-owned properties that are currently held or have
been sold in the last five or six years, with housing development potential.
Supporting Housing Nonprofits
Through its Community Development Block Grant (CDBG) program and housing funds, the City
supports a number of nonprofit community organizations that provide critical housing resources,
including shelters, home repairs, legal assistance, and referral services. These nonprofits include:
HIP Housing, Legal Aid Society, Project Sentinel, ReBuilding Together, and others whose
missions align with the program goals to assist extremely low, very-low, and low income persons
by providing decent and affordable housing; providing a suitable living environment; and
expanding economic opportunities.
Rental Assistance Program
One of the most effective tools the City has in preventing homelessness and displacement is its
rental assistance program. The YMCA Community Resource Center located on Huntington
Avenue in South San Francisco administers the program, which provides rental assistance to low-
income South San Francisco residents experiencing an immediate financial hardship. More
recently, the program has been augmented significantly to provide assistance to residents impacted
by COVID-19. In Fiscal Years 2019-2021, the City Council appropriated $500,000 ($250,000 in
each fiscal year) from the City’s Low- and Moderate-Income Housing Asset Fund and
approximately $556,789 of the City’s Permanent Local Housing Allocation (PLHA) toward the
program.
Accessory Dwelling Units
Accessory Dwelling Units (ADU) are another housing type that has contributed to housing
affordability citywide. South San Francisco plays an important role in supporting property owners
by establishing the Bright in Your Own Backyard program, administered by Hello Housing, which
offers up to 100 hours of free feasibility and project management support to eligible homeowners
and small landlords who want to add an Accessory Dwelling Unit (ADU) or a Junior Accessory
Dwelling Unit (JADU) to their property.
Although ADUs are not deed-restricted or subsidized, they may be affordable to moderate income
households. Nearly 65 ADUs were produced or legalized citywide, equivalent to about 65 ADUs
produced or legalized annually. The last few years have seen an upward trend in ADU production
due to recent efforts at the state and local level to facilitate ADU production and legalization from
a regulatory and financial perspective.
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Preservation/Protection of Affordable Units
Preservation is a key tool in ensuring more equitable communities. In South San Francisco, it is
accomplished through collaboration with developers and property owners, sound policy, and a
range of financing tools. To support healthy and equitable communities, our preservation methods
are intended to keep rents low and keep existing housing stock well maintained. The City has
offered solutions to non-profit developers seeking to renovate existing affordable housing through
resyndication, where the developers seek a new allocation of tax credits to ensure preservation of
existing low-income housing properties. A new allocation of credits can help to finance the
refurbishment of properties, making them more sustainable while extending their affordability
covenants.
Program Administration
Critical to the success of the City’s housing program is its administration. City staff monitor
existing affordable housing units – reviewing annual rent increases for rental units and ensuring
for-sale units are occupied according to their deed restrictions – and negotiate affordable housing
agreements for new developments. Central to the administration of the housing program is having
transparent guidelines, which are available on the City’s website at www.ssf.net/bmr under
Procedures and Guidelines for Inclusionary Units. In addition to managing the inclusionary and
affordable units, staff manage all housing grants and programs related to emergency housing
assistance including the City’s rental assistance program which has assisted approximately 210
household's since it was established.
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ATTACHMENT 4
Housing Fund Details
Low and Moderate Income Housing Asset Fund – Fund 241
Purpose: Upon becoming the housing successor to the former RDA in February 2011, all former
RDA housing assets were transferred to the City. As part of that transfer of housing assets, the
City established the Housing Successor Fund (Fund 241). Revenues from rental housing
properties, RDA funded loan repayments, and interest are deposited into Fund 241.
Use: The Fund can be used to develop housing or for any other purposes that advances the creation
or preservation of affordable units, including new construction, rehabilitation, first time
homebuyer loans, and staffing, as long as the uses are consistent with RDA law and Dissolution
law. Currently, these funds are being used for housing related expenses, including staffing, rental
assistance, maintenance, and other incidental expenses. The use of these funds is governed by
Senate Bill 341 and is limited to households earning less than 80 percent of AMI.
Revenue and Projections: Fund 241 has an unencumbered cash balance of $2,463,000 million as
of January 1, 2022. This fund will eventually be expended, as there are no new significant revenues
being deposited into it. What little revenues it derives are from loan repayments and earned
interest.
Housing Trust Fund – Fund 205
Purpose: The City’s Affordable Housing Trust Fund (Fund 205) was created to hold funds
received as a result of developer agreements and in lieu payments from the City’s existing
Inclusionary Housing Ordinance. If developers were unable to incorporate affordable unit s into
their housing developments, the City in limited cases, accepted in-lieu fees (e.g. Terrabay). In other
cases, the City required a housing fee in addition to the affordable units (e.g. Oak Farms).
Use: The fund monies shall be used in accordance with the city’s housing element, or subsequent
plans adopted by the city council to maintain or increase the quantity, quality, and variety of
affordable housing units or assist other governmental entities, private organizations or individuals
to do so. Permissible uses include, but are not limited to, land acquisition, debt service, parcel
assemblage, gap financing, housing rehabilitation, grants, unit acquisition, new construction, and
other pursuits associated with providing affordable housing. The Fund may be used for the benefit
of both rental and owner-occupied housing.
Revenue and Projections: Fund 205 has an unencumbered cash balance of $892,000 as of January
1, 2022. This fund derives revenue from developer in lieu fees and community benefit payments.
If a developer has an inclusionary housing requirement (a below market rate unit set-aside) and is
able to pay an in lieu fee, this is where those funds are deposited. City Council set the in lieu fee
for affordable housing units quite high – $308,000 per required below market rate unit – so it is
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unlikely that many developers will pay the fee rather than build the affordable units. As a result,
this fund is unlikely to grow significantly in the coming years.
Commercial Linkage Fees – Fund 823
Purpose: Commercial linkage fees are a type of impact fee assessed on the construction or
conversion of commercial buildings to mitigate the increased demand created for affordable
housing. New commercial development creates new jobs and attracting new workers to the City.
Workers employed and providing services to this new commercial development need housing, and
many of them work in jobs that pay wages too low to afford market rate housing. New commercial
development creates a need for housing for new, lower income workers, but does not directly
contribute to addressing this need. Based on a nexus study that examines the relationship between
affordable housing and new development, a fee is established that requires developers of new
commercial development to contribute to a dedicated fund to offset the demand for affordable
housing in the City.
Use: The City Council may adopt guidelines prioritizing how the money may be spent on
renovating existing units, land purchase, or construction funding for new units. The fees are subject
to the Mitigation Fee Act reporting requirements, which require annual updates on collection and
expenditure of fees, as well as identification of projects for funding. Every five years, specific
findings must be made regarding unspent fees with estimates for future funding commitments.
Revenue and Projections: Fund 823 has an unencumbered cash balance of $5,568,000 as of
January 1, 2022. As our biotech cluster continues to grow, this fund is expected to grow
substantially in the coming years. Currently, the charge on biotech and office development is
$16.55 per square foot. Hotel and retail uses pay a lower fee. It is estimated that the Commercial
Linkage Fee will generate at least $122,000,000 over the next 15 years.
The graph and table on the following page show the expected fees collected in each fiscal year, as
well as the cumulative total over the next 15 years.
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Fiscal Year Fees Per Year Fees Cumulative
20-21 $ 32,649 $ 32,649
21-22 $ 5,460,120 $ 5,492,769
22-23 $ 3,522,637 $ 9,015,406
23-24 $ 21,397,100 $ 30,412,506
24-25 $ 20,260,992 $ 50,673,498
25-26 $ 25,487,565 $ 76,161,062
26-27 $ 8,442,500 $ 84,603,562
27-28 $ 17,664,250 $ 102,267,812
28-29 $ 6,296,750 $ 108,564,562
29-30 $ 1,500,000 $ 110,064,562
30-31 $ 1,500,000 $ 111,564,562
31-32 $ 4,500,000 $ 116,064,562
32-33 $ 1,500,000 $ 117,564,562
33-34 $ 1,500,000 $ 119,064,562
34-35 $ 1,500,000 $ 120,564,562
35-36 $ 1,500,000 $ 122,064,562
$-
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
$120,000,000
$140,000,000
Projected Commercial Linkage Fee Revenue
Fees Per Year Fees Cumulative
City of South San Francisco
Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:22-64 Agenda Date:1/24/2022
Version:1 Item #:
Report regarding an analysis of the City of South San Francisco’s Inclusionary Housing Ordinance and
incentives to provide additional affordable housing units.(Julie Barnard,Acting Deputy Director of Economic
and Community Development, and Deanna Talavera, Management Analyst II)
Staff recommends that the Housing Standing Committee receive a report regarding the analysis of the
City’s Inclusionary Housing Ordinance and incentives to provide additional affordable housing units.
BACKGROUND
Recently,City Council expressed an interest in updating the City’s inclusionary housing ordinance to
incentivize developers to provide a higher number of inclusionary units with a wider range of affordability
levels.Inextricably linked to the City’s inclusionary housing ordinance is the State density bonus,which affords
developers bonus market rate units in exchange for providing certain levels of affordable housing.While the
State Density Bonus is effective in delivering a greater number of housing units,its application results in a
development having a lower proportion of affordable units than the City’s inclusionary requirement of 15%.
Council asked for staff to explore incentives that may encourage developers to achieve a higher proportion of
affordable units than is currently required.Specifically,Council requested reducing parking requirements and
waiving fees be explored.Staff retained a consultant,BAE Urban Economics,to provide the City with insight
into the advantages and disadvantages of providing incentives or concessions to increase the overall number of
inclusionary units.The final report is due at the end of January,however staff is providing the Housing
Standing Committee with an update on preliminary findings to obtain feedback for the final recommendations
which will be presented to City Council at a future study session.
Council has also expressed interest in an affordable housing overlay as a policy intervention to consider.
Affordable housing overlays essentially allow developers to more easily develop multi-family housing in
certain areas in exchange for providing a certain level of affordability.Given South San Francisco permits
medium and high-density housing in highly desirable locations -namely,near transit and job centers -and
already requires a base level of affordability in all residential developments over five units,a housing overlay
district would not substantially change how housing is currently permitted in South San Francisco.
Additionally,by creating exemptions that streamline project approvals,South San Francisco has encouraged the
development of affordable homes without additional costs to developers.South San Francisco,through its
General Plan update,has already identified housing opportunity sites throughout the City and is taking steps to
encourage affordable housing through its land use regulations.Maximum densities without required community
benefit contributions,reduced parking ratios,and fewer discretionary processes are all envisioned for new
housing to ensure consistency with state law requiring streamlined approval of housing projects.
While staff do not believe a traditional overlay is necessary in South San Francisco,the above-referenced
consultant analysis of incentives that could induce a developer to provide more affordable units as a percentage
of their total development citywide is,in essence,a type of affordable housing overlay.The intention of these
incentives is to maximize affordable housing,while providing developers flexibility to make housing
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development more feasible.
State Density Bonus
The State Density Bonus is a valuable tool to developers seeking to maximize residential density.In exchange
for providing a base level of affordable units,the developer gets a bonus percentage of market rate units.State
law has been clarified to prevent cities from requiring their inclusionary housing ordinances be met prior to the
base level of affordability that’s required to trigger the State Density Bonus.As a result,if a developer meets
the City’s inclusionary housing ordinance,in many instances they meet the requirements of the State Density
Bonus and are entitled to additional market rate units,parking reductions,and consideration of waivers of
development standards and incentives and concessions,as defined in the Density Bonus law.Attachment 1 is a
white paper produced by Meyers Nave that details the State Density Bonus.Page 4 of Attachment 1 is a chart
of the percentages of affordable housing required to trigger bonus market rate units.
Existing Inclusionary Ordinance
Under the City’s existing Inclusionary Housing Ordinance, housing developers must provide the following:
·Rental:15%of all units affordable,with two-thirds designated for lower income households and
one-third designated for very low-income households.
·For Sale:15%percent of all units affordable,with 50 %designated for moderate income
households and 50 % designated for lower income households.
·In-Lieu Fee: $308,000 per required affordable unit.
·Developers may voluntarily elect to provide a deeper level of affordability,provided the overall
number of units required is satisfied.
The in-lieu fee was set at the breakeven point,whereby a developer is no better off producing the market rate
unit instead of the required affordable unit.As a result,under the existing Ordinance adopted in 2018,
developers have only paid the in-lieu fee when a fractional unit of housing is required in smaller developments.
No multi-family developments have opted to use the in-lieu fee.Instead,they have proposed to build the
affordable units.
The State Density Bonus also makes providing the affordable units rather than paying the in-lieu fee even more
attractive.For example,if a 100-unit rental development provides 15 affordable units,11 at very low income
and 4 at low income,the project can utilize a 35%density bonus,meaning they can build 35 additional market
rate units.The base project,100 units including 15 affordable units had an effective inclusionary housing rate
of 15%affordable units.After utilizing the State Density Bonus,the effective rate of inclusionary housing units
fell to 11%(135 total units,with 15 affordable units).This effective rate would fall even more if the developer
elected to provide 15 very low-income units, triggering a 50% density bonus.
In reevaluating the City’s Inclusionary Housing Ordinance,staff and the City’s consultant have endeavored to
find ways to increase the effective rate of affordable housing being built,understanding that most developers
that meet the City’s Ordinance will also invoke the benefits of the State Density Bonus.
DISCUSSION
BAE Urban Economics has prepared a draft financial feasibility analysis to evaluate the ability of market rate
housing developments to incorporate inclusionary requirements that are greater than those currently required.
Their analysis also considered how State Density Bonus law interacts with local inclusionary requirements.The
goal of the study is to establish what changes the City could allow that may generate additional affordable units
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in a development, without making the development less feasible.
BAE tested the impact of different types of incentives on the ability of prototype projects to incorporate higher
inclusionary percentages in exchange for receiving certain types of incentives,discussed below.However,their
research has so far proved that the incentives considered do little to move the needle in regards to the overall
percentage of affordable housing that can be provided.
Prototypes Used
BAE worked with City staff to define four residential project prototypes that are representative of the types of
market rate housing development that the City anticipates within the coming years. These include:
a.Rental apartments -wood framed over podium parking,with an approximate project size of 150
units (100 units base density with 50% density bonus).
b.For-sale condominiums -stacked units,wood framed over podium parking,with an approximate
project size of 150 units (100 units base density with 50% density bonus).
c.For-sale townhouses - rowhouses, wood framed with built-in garage/tuck-under parking.
d.Rental townhouses - rowhouses, wood framed with built-in garage/tuck-under parking.
Financial Feasibility Pro-Formas
After defining the project prototypes,BAE prepared a development feasibility pro-forma for each project
prototype,estimating development costs by component (e.g.,land,site improvements,vertical construction,
fees and other soft costs,financing,etc.)along with an appropriate level of developer profit and potential
developer returns based on net sales revenues or net rental income,as appropriate.BAE set the baseline
feasibility models up to estimate the financial feasibility of prototype projects under current regulations,
factoring in current inclusionary requirements and the effects of State Density Bonuses on overall project unit
counts and the split between affordable and market rate units.The pro-formas included a variable for
inclusionary percentages by income level,to enable testing of the impacts on feasibility from changes in
inclusionary requirements.
Evaluation of Incentives to Increase Inclusionary Percentages
Once the baseline feasibility models were complete,BAE utilized the models to test potential changes in
inclusionary requirements on development feasibility,with the goal of identifying how the inclusionary
requirements for each project prototype could be adjusted to simultaneously achieve higher percentages of
affordable units while still allowing developers to achieve a reasonable market-based rate of return on the
developments.
BAE tested the following types of incentives that may encourage developers to provide a higher proportion of
affordable units in a development, with a higher range of affordability levels:
1.Reduction in parking
2.Fee waivers
a.for affordable units only and
b.for all units
3.Adding alternative inclusionary requirement options
4.Utilizing an up to 80% increase density bonus
Feasibility Findings and Conclusions
BAE found that the City’s existing Inclusionary Housing Ordinance -without any alterations -still produces an
infeasible project in a prototype pro forma.This is the same finding that staff shared with Council when the
Ordinance was considered for adoption in 2018.Despite this,some projects have moved forward.This is due to
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Ordinance was considered for adoption in 2018.Despite this,some projects have moved forward.This is due to
a variety of factors, including:
·Some projects recently entitled were deemed complete prior to the effective date of the
Inclusionary Ordinance,including the recently approved PS Office Parks,410 Noor,and 200
Airport.These projects have all provided some amount of affordable housing,but none have met the
specific requirements of the Ordinance.
·Some projects that recently completed or are currently under construction likely locked in
construction costs and financing when market conditions were more favorable.This results in
feasible projects,whereas similar projects today are subject to higher construction costs due to labor
shortages and high cost of materials.
·Some projects in review now are likely assuming construction costs will stabilize and even
decline slightly, while rents and/or sale prices will fully rebound and continue to grow.
As in 2018,townhomes typically are more feasible than multi-family developments at the outset.The parking
reduction and density incentives considered had minimal impact on the models.
The following incentives were tested and the results were similar or the same for the rental and for-sale
prototypes. These are explained in detail below:
1.Reduction in Parking Requirements
Feedback from the development community was that parking reductions beyond one parking space per unit
are not realistic or preferred in developments along the Peninsula.Therefore,reducing parking ratios from
1.2 spaces per unit to 1.0 spaces per unit decreases development costs by only 2.3%for rentals or 1.7%for
for-sale,or about $2 million dollars .This cost savings is not sufficient to yield a feasible project today.
However,given developers are progressing with similar projects assuming increases in rental rates and sale
prices,this incentive could support an additional 3 to 7 percentage point increase in inclusionary units,
depending on the prototype and affordability level of the affordable units. |
2.Impact Fee Waivers on total development or BMR units only.
The City Council may waive all City impact fees with the exception of Sewer and School District Fees.In a
rental project,the estimated fee burden is around $30,000 per unit.However,if a project were to pay only
sewer and school fees,the fee burden would be around $6,000 per unit,resulting in an 80%reduction of fee
payment.If the City waives impact fees on the affordable units within a project,the project can only
support a 1 to 2 percentage point increase in the number of inclusionary units,while the fee waiver would
result in roughly $500,000 in lost potential revenue to the City per prototype project.Waiving the impact
fees for all units in a project,including both market rate and affordable units,allows the project to support
roughly ten percentage points more inclusionary units,reaching a base of 25%affordable;however,the
City would lose roughly $4.5 million in funds per prototype project that are used to support necessary
infrastructure and city services,such as parks,childcare,library,public safety,and transportation
improvements.
3.Add Alternative Inclusionary Requirement Options
BAE’s preliminary findings align with the State Density Bonus provisions.That is that providing a greater
proportion of affordable units may be feasible at higher affordability levels (60%AMI and above),but the
provision of deeper affordability levels (50%AMI and below)requires a smaller proportion of affordable
units in order to be feasible.More specifically,BAE found that developers meet the City’s ordinance and
leverage the State Density Bonus by providing the 15%inclusionary at very low-income levels (50%AMI).
These units require a larger subsidy,so it is unlikely that developers would exceed the 15%inclusionary
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These units require a larger subsidy,so it is unlikely that developers would exceed the 15%inclusionary
requirement at this affordability level
Allowing developers to meet the inclusionary ordinance by delivering all low to moderate-income units
(priced at 60%AMI and above),developments could likely support an inclusionary percentage of between
20 and 25%.While the affordability level of these units would not be as deep as very low-income units,the
City would receive a larger number of units and would diversify the mix of affordable units within the city.
4.Density Bonus Increase
To further increase the number of affordable units delivered within developments,the City could provide up
to an 80%Density Bonus in return for a 15%affordable requirement on all units in the development,rather
than just the base density.Similar to the finding above,this does require that the units be for low-income
households (priced at 60%AMI),rather than including some number of very low-income units.Under this
scenario,seen below,the affordable units would comprise 15 percent of the total project,which is well
above the number of units delivered under the baseline case which does not use a density bonus.
Inclusionary Housing Gap Financing
Not contemplated in BAE’s report is a possibility of providing gap financing to developers to fund the
construction of a number of affordable units that exceeds the current inclusionary requirement of 15%.Gap
funding could instead providie a suggested minimum of 40%of the total number of units as affordable.This
gap financing would have to come from the City’s affordable housing funds.At the Housing Standing
Committee’s recommendation,staff can explore a scenario where the City may provide gap financing for
developments that vastly exceed the inclusionary requirement.The amount provided would be less than or
equal to the amount of financing the City provides to affordable housing developers,typically $55,000 per unit,
at most.
CONCLUSION
BAE’s preliminary findings establish that the parking reduction and fee waiver scenarios contemplated are not
likely to substantially incentivize developers to build multi-family housing with an increased proportion of
affordable housing.And while the density bonus increase scenario may be appealing for some projects,others
with significant site constraints will not be able to utilize the bonus density and therefore the benefits of the
incentive may not be realized.However,with the exception of waiving all impact fees for a project,which are
needed to fund the infrastructure necessary for new development,there is no disadvantage to making these
options available to the development community should they determine that any of them fit their project.
Staff request the Housing Standing Committee provide preliminary feedback on the direction of the study.Staff
and BAE will continue to refine the study and report the final findings to Council for review and feedback,
before returning with any requisite amendments to the Inclusionary Housing Ordinance.
Attachments:
1.State Density Bonus Primer
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REVISED JANUARY 2021
Guide to the California Density Bonus Law
BY JON GOETZ AND TOM SAKAI
Table of Contents
INTRODUCTION AND OVERVIEW........................................................................................................
HOW THE DENSITY BONUS WORKS...................................................................................................
DENSITY BONUS CHART...........................................................................................................
HOW THE DENSITY BONUS CAN HELP IN A FRIENDLY JURISDICTION.......................................
HOW THE DENSITY BONUS CAN HELP IN A HOSTILE JURISDICTION..........................................
CEQA ISSUES IN DENSITY BONUS PROJECTS.................................................................................
USING THE DENSITY BONUS TO SATISFY INCLUSIONARY HOUSING REQUIREMENTS............
DENSITY BONUS AND REPLACEMENT HOUSING...........................................................................
DENSITY BONUS IN THE COASTAL ZONE........................................................................................
DENSITY BONUS - A FLEXIBLE TOOL...............................................................................................
DENSITY BONUS STATUTES..............................................................................................................
MEYERS NAVE A professional law corporation | CALIFORNIA DENSITY BONUS LAW 2021 1
JON GOETZ
E-mail: [email protected]
Direct: 800.464.3559
Jon Goetz is an attorney at Meyers Nave. He has over 30 years of experience in real estate, land
use, environmental, redevelopment, housing and municipal law. Jon represents private and public
entities in complex real estate development transactions, land use planning, public-private
development, infrastructure financing and affordable housing. He has advised on acquiring,
financing, leasing and disposing of all forms of improved and unimproved property.
ABOUT THE AUTHORS
TOM SAKAI
E-mail: [email protected]
Direct: 949.833.2599
Tom Sakai is the Principal of Springbrook Realty Advisors, Inc., a real estate consulting practice
located in Newport Beach. His practice specializes in consulting to land developers and
homebuilders, focusing on pro formas and feasibilities for master-planned communities, school
negotiations, assessment district and Mello-Roos financing, affordable housing issues, and other
services to the real estate industry.
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Introduction and Overview
Savvy housing developers are taking advantage of California’s Density Bonus Law, a mechanism which
allows them to obtain more favorable local development requirements in exchange for offering to build or
donate land for affordable or senior units. The Density Bonus Law (found in California Government Code
Sections 65915 – 65918) provides developers with powerful tools to encourage the development of
affordable and senior housing, including up to a 50% increase in project densities for most projects,
depending on the amount of affordable housing provided, and an 80% increase in density for projects which
are completely affordable. The Density Bonus Law is about more than the density bonus itself, however. It
is actually a larger package of incentives intended to help make the development of affordable and senior
housing economically feasible. Other tools include reduced parking requirements, and incentives and
concessions such as reduced setback and minimum square footage requirements. Often these other tools
are even more helpful to project economics than the density bonus itself, particularly the special parking
benefits. Sometimes these incentives are sufficient to make the project pencil out, but for other projects
financial assistance is necessary to make the project feasible.
In determining whether a development project would benefit from becoming a density bonus project,
developers also need to be aware that:
• The Density Bonus is a state mandate. A developer who meets the requirements of the state law is
entitled to receive the density bonus and other benefits as a matter of right. As with any state mandate,
some local governments will resist complying with the state requirement. But many local governments
favor the density bonus as a helpful tool to cut through their own land use requirements and local
political issues.
• Use of a density bonus may be particularly helpful in those jurisdictions that impose inclusionary
housing requirements for new developments.
• Special development bonuses are available for developers of commercial projects who partner with
affordable housing developers to provide onsite or offsite affordable housing. Special bonuses are also
available for condominium conversion projects and projects that include childcare facilities.
• The Legislature has recently added density bonuses for housing developments for foster youth, disabled
veterans, homeless persons and college students.
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How the Density Bonus 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.
• 100% of the housing units (other than manager’s units) are restricted to very low, lower and moderate
income residents (with a maximum of 20% moderate).
• At least 10% of the housing units are for transitional foster youth, disabled veterans or homeless
persons, with rents restricted at the very low income level.
• At least 20% of the housing units are for low income college students in housing dedicated for full-time
students at accredited colleges.
• The project donates 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).
DENSITY BONUS AMOUNT
The amount of the density bonus is set on a sliding scale, based upon the percentage of affordable units at
each income level, as shown in the chart on the following page. (Note that maximum density bonus amounts
for very low, lower and moderate income housing were increased by legislation approved in 2020.)
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DENSITY BONUS CHART*
*All density bonus calculations resulting in fractions are rounded up to the next whole number.
**Affordable unit percentage is calculated excluding units added by a density bonus.
***Moderate income density bonus applies to for sale units, not to rental units.
****No affordable units are required for senior units.
***** Applies when 100% of the total units (other than manager’s units) are restricted to very low, lower and moderate income (maximum 20% moderate).
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5%20%---20%--
6%22.5%---20% --
7%25%---20%--
8%27.5%---20%--
9%30%---20%--
10%32.5%20%5%15%20%20%-
11%35%21.5%6%16%20%20%-
12%38.75%23%7%17%20%20%-
13%42.5%24.5%8%18%20%20%-
14%46.25%26%9%19%20%20%-
15%50%27.5%10%20%20%20%-
16%50%29%11%21%20%20%-
17%50%30.5%12%22%20%20%-
18%50%32%13%23%20%20%-
19%50%33.5%14%24%20% 20% -
20%50%35%15%25%20%20%35%
21%50%38.75%16%26%20%20%35%
22%50%42.5%17%27%20%20%35%
23%50%46.25%18%28%20%20%35%
24%50%50%19%29%20%20%35%
25%50%50%20%30%20%20%35%
26%50%50%21%31%20%20%35%
27%50%50%22%32%20%20%35%
28%50%50%23%33%20%20%35%
29%50%50%24%34%20%20%35%
30%50%50%25%35%20%20%35%
31%50%50%26%35%20%20%35%
32%50%50%27%35%20%20%35%
33%50%50%28%35%20%20%35%
34%50%50%29%35%20%20%35%
35%50%50%30%35%20%20%35%
36%50%50%31%35%20%20%35%
37%50%50%32%35%20%20%35%
38%50%50%33%35%20%20%35%
39%50%50%34%35%20%20%35%
40%50%50%35%35%20%20%35%
41%50%50%38.75%35%20%20%35%
42%50%50%42.5%35%20%20%35%
43%50%50%46.25%35%20%20%35%
44%50%50%50%35%20%20%35%
100%*****80%80%80%35%20%20%35%
AFFORDABLE UNIT
PERCENTAGE**
VERY LOW INCOME
DENSITY BONUS
LOW INCOME
DENSITY BONUS
MODERATE INCOME
DENSITY BONUS***
LAND DONATION
DENSITY BONUS SENIOR****
FOSTER YOUTH/
DISABLED VETS/
HOMELESS
COLLEGE
STUDENTS
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 is defined as:
• A reduction 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; or
• Approval of mixed use zoning; or
• Other regulatory incentives or concessions which actually result in identifiable and actual cost
reductions.
The number of required incentives or concessions is based on the percentage of affordable units in the
project:
1 5%10%10%
2 10%17%20%
3 15%24%30%
4 100% Low/Very
Low/Mod
(20% Moderate allowed)
100% Low/Very
Low/Mod
(20% Moderate allowed)
100% Low/Very
Low/Mod
(20% Moderate allowed)
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 does not result in identifiable and actual cost reductions,
would cause a public health or safety problem, would cause an environmental problem, would harm
historical property, or would be contrary to law. The Density Bonus Law restricts the types of
information and reports that a developer may be required to provide to the local jurisdiction in order to
obtain the requested incentive or concession. The local jurisdiction has the burden of proof in the event it
declines to grant a requested incentive or concession. Financial incentives, fee waivers and reductions in
dedication requirements may be, but are not required to be, provided by the city or county. The developer
may be entitled to the incentives and concessions even without a request for a density bonus.
OTHER FORMS OF ASSISTANCE
A development qualifying for a density bonus also receives two additional forms of assistance which have
important benefits for a housing project:
• Waiver or Reduction of Development Standards. If any other city or county development standard
would physically prevent the project from being built at the permitted density and with the granted
concessions/incentives, the developer may propose to have those standards waived or reduced. The city
or county is not permitted to apply any development standard which physically precludes the
construction of the project at its permitted density and with the granted concessions/incentives. The
city or county is not required to waive or reduce development standards that would cause a public health
or safety problem, cause an environmental problem, harm historical property, or would be contrary to
law. The waiver or reduction of a development standard does not count as an incentive or concession,
and there is no limit on the number of development standard waivers that may be requested or granted.
Development standards which have been waived or reduced utilizing this section include setback, lot
coverage and open space requirements, and should apply to building height limits as well. This ability to
force the locality to modify its normal development standards is sometimes the most compelling reason
for the developer to structure a project to qualify for the density bonus.
NO. OF INCENTIVES/
CONCESSIONS
VERY LOW INCOME
PERCENTAGE
LOWER INCOME
PERCENTAGE
MODERATE INCOME
PERCENTAGE
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• Maximum Parking Requirements. Upon the developer’s request, the city or county may not require
more than the following parking ratios for a density bonus project (inclusive of parking for persons
with disabilities):
Studio 1 space
1 Bedroom 1 space
2 Bedroom 1.5 spaces
3 Bedroom 1.5 spaces
4 Bedroom 2.5 spaces
• Special Parking Requirements. Lower parking ratios apply to specified projects (although local
jurisdictions can require higher parking ratios if supported by a specified parking study):
Rental/for sale projects with at least 11% very low income or 20% lower
income units, within 1/2 mile of accessible major transit stop
0.5 spaces per unit
Rental projects 100% affordable to lower income, within 1/2 mile of
accessible major transit stop
0 spaces per unit
Rental senior projects 100% affordable to lower income, either with
paratransit service or within 1/2-half mile of accessible bus route
(operating at least eight times per day)
0 spaces per unit
Rental special needs projects 100% affordable to lower income households,
either with paratransit service or within 1/2-half mile of accessible bus route
(operating at least eight times per day)
0 spaces per unit
Rental supportive housing developments 100% affordable to lower income
households
0 spaces per unit
Onsite spaces may be provided through tandem or uncovered
parking, but not onstreet parking. Requesting these parking
standards does not count as an incentive or concession, but
the developer may request further parking standard reductions
as an incentive or concession. This is one of the most important
benefits of the density bonus statute. In many cases, achieving
a reduction in parking requirements may be more valuable
than the additional permitted units. In higher density
developments requiring the use of structured parking, the
construction cost of structured parking is very expensive,
costing upwards of $20,000 per parking space. While this
provision of the density bonus statute can be used to reduce
excessive parking requirements, care must be taken not to
impact the project’s marketability by reducing parking to
minimum requirements which lead to parking shortages.
AFFORDABLE HOUSING RESTRICTIONS
• Rental Units. Affordable rental units must be restricted by an
agreement which sets maximum incomes and rents for those
units. As of January 1, 2015, the income and rent restrictions
must remain in place for a 55 year term for very low or lower
income units (formerly only a 30 year term was required).
Rents must be restricted as follows (continue to page 7):
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• For very low income units, rents may not exceed 30% x 50% of the area median income for a
household size suitable for the unit.
• For lower income units, rents may not exceed 30% x 60% of the area median income for a household
size suitable for the unit.
• In 100% affordable housing developments, the rent for at least 20% of the units must meet the rent
standards of Health and Safety Code Section 50053, and the remaining units may instead meet Low
Income Housing Tax Credit rent standards.
• Area median income is determined annually by regulation of the California Department of Housing
and Community Development, based upon median income regulations adopted by the U.S.
Department of Housing and Urban Development.
• Rents must include a reasonable utility allowance.
• Household size appropriate to the unit means 1 for a studio unit, 2 for a one bedroom unit, 3 for a two
bedroom unit, 4 for a three bedroom unit, etc.
• For Sale Units. Affordable for sale units must be sold to the initial buyer at an affordable housing cost.
Housing related costs include mortgage loan payments, mortgage insurance payments, property taxes
and assessments, homeowner association fees, reasonable utilities allowance, insurance premiums,
maintenance costs, and space rent.
• For very low income units, housing costs may not exceed 30% x 50% of the area median income for
a household size suitable for the unit.
• For lower income units, housing costs may not exceed 30% x 70% of the area median income for a
household size suitable for the unit.
• For moderate income units, housing costs may not exceed 35% x 110% of the area median income
for a household size suitable for the unit.
• Buyers must enter into an equity sharing agreement with the city or county, unless the equity
sharing requirements conflict with the requirements of another public funding source or law. The
equity sharing agreement does not restrict the resale price, but requires the original owner to pay
the city or county a portion of any appreciation received on resale.
• The city/county percentage of appreciation is the purchase price discount received by the original
buyer, plus any down payment assistance provided by the city/county. (For example, if the original
sales price is $300,000, and the original fair market value is $400,000, and there is no city/county
down payment assistance, the city/county subsidy is $100,000, and the city/county’s share of
appreciation is 25%).
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• The seller is permitted to retain its original down payment, the value of any improvements made to
the home, and the remaining share of the appreciation.
• The income and affordability requirements are not binding on resale purchasers (but if other public
funding sources or programs are used, the requirements may apply to resales for a fixed number of
years).
LOCAL GOVERNMENT PROCESSING OF DENSITY BONUS APPLICATIONS
Under new legislation effective in 2019, local governments are now required to notify developers what
information must be submitted for a complete density bonus application. Once a development application
is determined to be complete, the local government must notify the developer the level of density bonus
and parking ratio the development is eligible to receive. If the developer requests incentives, concessions,
waivers or reductions of development standards, the local jurisdiction is required to notify the developer if it
has submitted sufficient information necessary for the local government to make a determination on those
issues.
HOW THE DENSITY BONUS WORKS FOR 100% AFFORDABLE PROJECTS
2019 legislation requires local governments to grant an 80% density bonus to housing projects in which all
of the units (other than manager’s units) are restricted to very low, low and moderate income residents, with
a maximum of 20% restricted to moderate income units. If a 100% affordable project is located within a half
mile of a major transit stop, the local government may not impose any maximum density limits at all, and the
project is further entitled to receive a maximum height increase of up to three additional stories or 33 feet.
However, if the project receives a waiver from maximum controls on density, it is not eligible for the waiver or
reduction of any development standards which would otherwise be available. 100% affordable projects are
also entitled to a fourth incentive or concession.
HOW THE DENSITY BONUS WORKS FOR SENIOR PROJECTS
As shown in the Density Bonus Chart on page 4, a senior citizen housing development of at least 35 units
meeting the requirements of Section 51.3 or 51.12 of the Civil Code qualifies for a 20% density bonus. This
is a very desirable option for senior housing developments. In jurisdictions where the local ordinances do not
reduce the parking requirements for senior housing developments, the reduced parking requirements alone
may justify applying for a density bonus.
HOW THE DENSITY BONUS WORKS FOR STUDENT HOUSING PROJECTS
New legislation taking effect in 2019 requires cities and counties to grant a 35% density bonus for housing
developments that will include at least 20% of the units for low income college students. The housing must
be used exclusively for full-time students at accredited colleges, and must be subject to an operating
agreement or master lease with one or more colleges. Unlike the maximum income requirements for other
forms of affordable housing, resident income levels are determined through the student’s eligibility for the
state’s Cal Grant financial aid program. Affordable rent levels are also specially tailored for a student
population, with maximum rents established per bed for individual residents, rather than for the entire
apartment unit. Homeless students receive priority for affordable units.
HOW THE DENSITY BONUS WORKS FOR COMMERCIAL PROJECTS
The Density Bonus Law requires that cities and counties provide a “development bonus” to commercial
developers who partner with affordable housing developers for the construction of affordable housing on
the commercial project site, or offsite within the jurisdiction located near schools, employment and a major
transit stop. The commercial developer may participate through the donation of land or funds for the
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affordable housing, or direct construction of the housing units. The partnership between the commercial
developer and the affordable developer can occur through a newly formed legal entity such as a corporation,
LLC or partnership, or can take the shape of a contractual agreement between the parties. To be eligible for
the development bonus, at least 30% of the housing units must be restricted to lower income residents or
15% of the housing units must be restricted to very low income residents. Unlike the primary Density Bonus
Law, there is no fixed amount of increased density awarded to the developer. Instead, the development
bonus can be any mutually agreeable incentive, including up to a 20% increase in development intensity,
floor area ratio, or height limits, up to a 20% reduction in parking requirements, use of a limited use
elevator, or an exception to a zoning ordinance or land use requirement. Commercial developers who need
extra leverage to obtain more favorable development standards for their project may want to consider
providing affordable housing in order to take advantage of the benefits of the development bonus.
HOW THE DENSITY BONUS WORKS FOR CONDOMINIUM CONVERSION PROJECTS
The density bonus statute provides for a density bonus of up to 25% for condominium conversion projects
providing at least 33% for the total units to low or moderate income households or 15% of the units to lower
income households. Many condominium conversion projects are not designed in a manner that allows them
to take advantage of the opportunity to construct additional units, but some projects may find this helpful.
HOW THE DENSITY BONUS WORKS FOR CHILDCARE
Housing projects that provide childcare are eligible for a separate density bonus equal to the size of the
childcare facility. The childcare facility must remain in operation for at least the length of the affordability
covenants. A percentage of the childcare spaces must also be made available to low and moderate income
families. A separate statute permits cities and counties to grant density bonuses to commercial and
industrial projects of at least 50,000 square feet, when the developer sets aside at least 2,000 square feet
in the building and 3,000 square feet of outside space for a childcare facility.
HOW TO OBTAIN A DENSITY BONUS THROUGH LAND DONATION
Many market rate housing developers are uncomfortable with building and marketing affordable units
themselves, whether due to their lack of experience with the affordable housing process or because of their
desire to concentrate on their core market rate homes. Other developers may have sites that are
underutilized in terms of project density. The Density Bonus Law contains a special sliding scale bonus for
land donation which allows those developers to turn over the actual development of the affordable units to
local agencies or experienced low income developers. The density bonus is available for the donation of at
least an acre of fully entitled land, with all needed public facilities and infrastructure, and large enough for
the construction of a high density very low income project containing 10% of the total homes in the
development. The parcel must be located within the boundary of the proposed development or, subject to
the approval of the jurisdiction, within one-fourth mile of the boundary of the proposed development. The
more units that can be built on the donated land, the larger the density bonus. Because of the parcel size
requirements, this option is only practical for larger developments. The land donation density bonus can be
combined with the regular density bonus provided for the development of affordable units, up to a maximum
35% density bonus. A master planned community developer needs to carefully evaluate the land donation
option as opposed to engaging an affordable housing developer to fulfill the project’s affordable housing
obligations. In many cases the master developer will prefer to control the affordable component of the
project through a direct agreement with the affordable housing developer, rather than allowing the local
government to control the project.
FLOOR AREA RATIO BONUSES
Under new legislation effective in 2019, a local jurisdiction is permitted to grant a floor area ratio bonus
rather than a traditional density bonus to certain high density affordable housing projects adjacent to public
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transit. Eligible projects are also entitled to special parking ratios of one-tenth of a parking space per
affordable unit and one-half space per market rate unit. To be eligible for the floor area ratio bonus, the
project must restrict at least 20 percent of the units to very low income tenants, must be located within a
transit priority area or near a major transit stop, and must be in compliance with local height limits.
How the Density Bonus Can Help in a Friendly Jurisdiction
While the Density Bonus Law is often used by developers to obtain more housing than the local jurisdiction
would ordinarily permit, it can also be a helpful land use tool in jurisdictions which favor the proposed project
and want to provide support. Planners in many cities and counties may be disposed by personal ideology
or local policy to encourage the construction of higher density housing and mixed use developments near
transit stops and downtown areas, but are hampered by existing general plan standards and zoning from
approving these sorts of projects. Elected officials often support these projects too, but may find it politically
difficult to oppose neighborhood and environmental groups over the necessary general plan amendments,
zoning changes and CEQA approvals.
The density bonus can provide a useful mechanism for increasing allowable density without requiring
local officials to approve general plan amendments and zoning changes. A project that satisfies the
requirements of the Density Bonus Law often can obtain the necessary land use approvals through the
award of the density bonus units and requested concessions and incentives, without having to amend the
underlying land use requirements. Friendly local officials may encourage the use of the density bonus to
“force” the jurisdiction to approve a desired project.
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How the Density Bonus Law Can Help in a Hostile Jurisdiction
It is important to know that the density bonus is a state law requirement which is mandatory on cities and
counties, even charter cities which are free from many other state requirements. A developer who meets
the law’s requirements for affordable or senior units is entitled to the density bonus and other assistance
as of right, regardless of the locality’s desires (subject to limited health and safety exceptions). The density
bonus statute can be used to achieve reductions in development standards or the granting of concessions
or incentives from jurisdictions that otherwise would not be inclined to grant those items. Examples might
include a reduction in parking standards if those standards are deemed excessive by the developer, or other
reductions in development standards if needed to achieve the total density permitted by the density bonus.
Developers who nonetheless encounter hostility from local jurisdictions are provided several tools to ensure
that a required density bonus is actually granted. Developers are entitled to an informal meeting with a local
jurisdiction which fails to modify a requested development standard. If a developer successfully sues the
locality to enforce the density bonus requirements, it is entitled to an award of its attorneys’ fees. The
obligation to pay a developer’s attorneys’ fees is a powerful incentive for local jurisdictions to voluntarily
comply with the state law density bonus requirements, even when the jurisdiction is not in favor of its effects
on the project.
CEQA Issues in Density Bonus Projects
Although there is no specific density bonus exemption from the California Environmental Quality Act
(CEQA), many density bonus projects are likely candidates for urban infill and affordable housing
exemptions from CEQA. One commonly invoked exemption is the Class 32 urban infill exemption found in
CEQA Guidelines Section 15332. That exemption is available if the project is consistent with applicable
general plan designation and zoning, the site is five acres or less and surrounded by urban uses, is not
habitat for endangered, rare or threatened species, does not have any significant effects relating to traffic,
noise, air quality or water quality, and is adequately served by utilities and public services. Other exemptions
are available for high density housing projects near major transit stops (CEQA Guidelines Section 15195)
and affordable housing projects of up to 100 units (CEQA Guidelines Section 15194).
A 2011 case, Wollmer v. City of Berkeley, clarified the use of the CEQA infill exemption for density bonus
projects. In that case, an opponent of a Berkeley density bonus project challenged the City’s use of the
urban infill exemption on the grounds that the City’s modifications and waivers of development standards,
as required under the Density Bonus Law, meant that the project was not consistent with existing zoning.
The court rejected that argument, finding that the modifications required by the Density Bonus Law did not
disqualify the project from claiming the exemption.
Not all density bonus projects will qualify for one of these CEQA exemptions, however. Sometimes the
additional density provided to non-exempt projects may bring the project out of the coverage of an existing
CEQA approval for a general plan, specific plan or other larger project. For instance, if a previously approved
environmental impact report analyzed a 100 unit project as the largest allowed under existing zoning, but
the developer is able to qualify for 120 units with a density bonus, the existing EIR may not cover the larger
project. The larger density bonus project may require additional CEQA analysis for approval.
Using the Density Bonus to Satisfy Inclusionary Housing Requirements
Many of California’s cities and counties have adopted inclusionary housing ordinances, which typically
require that a specified percentage of units in a new housing development be restricted as affordable units.
The inclusionary requirements significantly reduce income from rental units and sales prices of for-sale
homes. In today’s tight housing market, compliance with local inclusionary requirements may make many
projects economically infeasible. The density bonus provides one method for developers to improve the
economics of their project while still complying with the inclusionary A 2013 case, Latinos Unidos del Valle de
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Napa y Solano v. County of Napa, held that inclusionary units qualify as affordable units for purposes of the
Density Bonus Law. The case confirmed that the density bonus is a financial tool available to help developers
achieve city and county inclusionary housing requirements.
Density Bonus and Replacement Housing
Developers obtaining a density bonus are required to replace existing units which were previously occupied
by very low or lower income households or subject to rent control, when those units have been demolished
or vacated prior to the density bonus application. The housing development must also meet the applicable
affordable housing standards, including the replacement units. As a result of uncertainty about how to apply
these standards when the income levels of prior residents is unknown. The Density Bonus Law establishes
a rebuttable presumption for the income level of the replacement unit when the income level of the actual
prior resident is unknown.
Density Bonus in the Coastal Zone
When affordable housing is proposed in the coastal zone, the Density Bonus Law’s focus on encouraging the
development of affordable housing could clash with the California Coastal Act’s focus on environmental
protection. Legislation effective in 2019 now requires the density bonus to be administered in the Coastal
Zone in a manner that is consistent and harmonized with the California Coastal Act. This legislation
overturns a 2016 appellate court ruling, Kalnel Gardens, LLC v. City of Los Angeles, which found that a
proposed housing project that violates the Coastal Act as a result of a density bonus could be denied on that
basis. The court in Kalnel Gardens held that the Density Bonus Law is subordinate to the Coastal Act, but the
new language attempts to strike a balance between the state goals of promoting housing and protecting the
coast.
Density Bonus – A Flexible Tool
The Density Bonus Law can be a powerful tool for different types of development projects, whether they
are traditional affordable housing projects, predominantly market rate housing developments, or senior
projects. Obtaining greater density can help the developer of any project bring costs and financing sources
into line by putting more homes on the land, reducing the per unit land costs. Use of the favorable parking
requirements can reduce the amount of costly land needed for parking. The incentives and concessions to
be provided by the local government can provide a helpful way to modify development requirements which
may stand in the way of a successful project. Of course there is a price to pay for these benefits—the
affordable units needed to earn the density bonus. Developers need to make a cost-benefit determination
whether the cost of compliance is worth the benefits. But the Density Bonus Law is unquestionably a useful
option for housing developers trying to make financial sense of projects in today’s economy.
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Density Bonus Statutes
Government Code Sections 65915 – 65918.
Effective as of January 1, 2021
65915. (a) (1) When an applicant seeks a density
bonus for a housing development within, or for the
donation of land for housing within, the jurisdiction of a
city, county, or city and county, that local government
shall comply with this section. A city, county, or city
and county shall adopt an ordinance that specifies
how compliance with this section will be implemented.
Except as otherwise provided in subdivision (s), failure
to adopt an ordinance shall not relieve a city, county, or
city and county from complying with this section.
(2) A local government shall not condition the
submission, review, or approval of an application
pursuant to this chapter on the preparation of an
additional report or study that is not otherwise required
by state law, including this section. This subdivision
does not prohibit a local government from requiring
an applicant to provide reasonable documentation
to establish eligibility for a requested density bonus,
incentives or concessions, as described in subdivision
(d), waivers or reductions of development standards,
as described in subdivision (e), and parking ratios, as
described in subdivision (p).
(3) In order to provide for the expeditious processing of
a density bonus application, the local government shall
do all of the following:
(A) Adopt procedures and timelines for processing a
density bonus application.
(B) Provide a list of all documents and information
required to be submitted with the density bonus
application in order for the density bonus application to
be deemed complete. This list shall be consistent with
this chapter.
(C) Notify the applicant for a density bonus whether
the application is complete in a manner consistent with
the timelines specified in Section 65943.
(D) (i) If the local government notifies the applicant
that the application is deemed complete pursuant to
subparagraph (C), provide the applicant with a
determination as to the following matters:
(I) The amount of density bonus, calculated pursuant
to subdivision (f), for which the applicant is eligible.
(II) If the applicant requests a parking ratio pursuant
to subdivision (p), the parking ratio for which the
applicant is eligible.
(III) If the applicant requests incentives or concessions
pursuant to subdivision (d) or waivers or reductions of
development standards pursuant to subdivision (e),
whether the applicant has provided adequate
information for the local government to make a
determination as to those incentives, concessions, or
waivers or reductions of development standards.
(ii) Any determination required by this subparagraph
shall be based on the development project at the time
the application is deemed complete. The local
government shall adjust the amount of density bonus
and parking ratios awarded pursuant to this section
based on any changes to the project during the course
of development.
(b) (1) A city, county, or city and county shall grant one
density bonus, the amount of which shall be as
specified in subdivision (f), and, if requested by the
applicant and consistent with the applicable
requirements of this section, incentives or concessions,
as described in subdivision (d), waivers or reductions
of development standards, as described in
subdivision (e), and parking ratios, as described in
subdivision (p), when an applicant for a housing
development seeks and agrees to construct a
housing development, excluding any units permitted
by the density bonus awarded pursuant to this section,
that will contain at least any one of the following:
(A) Ten percent of the total units of a housing
development for lower income households, as defined
in Section 50079.5 of the Health and Safety Code.
(B) Five percent of the total units of a housing
development for very low income households, as
defined in Section 50105 of the Health and Safety
Code.
(C) A senior citizen housing development, as defined
in Sections 51.3 and 51.12 of the Civil Code, or a
mobilehome park that limits residency based on age
requirements for housing for older persons pursuant
to Section 798.76 or 799.5 of the Civil Code.
(D) Ten percent of the total dwelling units in a common
interest development, as defined in Section 4100 of
the Civil Code, for persons and families of moderate
income, as defined in Section 50093 of the Health and
Safety Code, provided that all units in the development
are offered to the public for purchase.
(E) Ten percent of the total units of a housing
development for transitional foster youth, as defined in
Section 66025.9 of the Education Code, disabled
veterans, as defined in Section 18541, or homeless
persons, as defined in the federal McKinney-Vento
Homeless Assistance Act (42 U.S.C. Sec. 11301 et seq.).
The units described in this subparagraph shall be
subject to a recorded affordability restriction of 55
years and shall be provided at the same affordability
level as very low income units.
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14 MEYERS NAVE A professional law corporation | CALIFORNIA DENSITY BONUS LAW 2021
(F) (i) Twenty percent of the total units for lower income
students in a student housing development that meets
the following requirements:
(I) All units in the student housing development will be
used exclusively for undergraduate, graduate, or
professional students enrolled full time at an institution
of higher education accredited by the Western
Association of Schools and Colleges or the
Accrediting Commission for Community and Junior
Colleges. In order to be eligible under this subclause,
the developer shall, as a condition of receiving a
certificate of occupancy, provide evidence to the city,
county, or city and county that the developer has
entered into an operating agreement or master lease
with one or more institutions of higher education for
the institution or institutions to occupy all units of the
student housing development with students from that
institution or institutions. An operating agreement or
master lease entered into pursuant to this subclause
is not violated or breached if, in any subsequent year,
there are not sufficient students enrolled in an
institution of higher education to fill all units in the
student housing development.
(II) The applicable 20-percent units will be used for
lower income students. For purposes of this clause,
“lower income students” means students who have a
household income and asset level that does not exceed
the level for Cal Grant A or Cal Grant B award recipients
as set forth in paragraph (1) of subdivision (k) of
Section 69432.7 of the Education Code. The eligibility
of a student under this clause shall be verified by an
affidavit, award letter, or letter of eligibility provided by
the institution of higher education that the student is
enrolled in, as described in subclause (I), or by the
California Student Aid Commission that the student
receives or is eligible for financial aid, including an
institutional grant or fee waiver, from the college or
university, the California Student Aid Commission, or
the federal government shall be sufficient to satisfy this
subclause.
(III) The rent provided in the applicable units of the
development for lower income students shall be
calculated at 30 percent of 65 percent of the area
median income for a single-room occupancy unit type.
(IV) The development will provide priority for the
applicable affordable units for lower income students
experiencing homelessness. A homeless service
provider, as defined in paragraph (3) of subdivision (e)
of Section 103577 of the Health and Safety Code, or
institution of higher education that has knowledge of a
person’s homeless status may verify a person’s status
as homeless for purposes of this subclause.
(ii) For purposes of calculating a density bonus granted
pursuant to this subparagraph, the term “unit” as used
in this section means one rental bed and its pro rata
share of associated common area facilities. The units
described in this subparagraph shall be subject to a
recorded affordability restriction of 55 years.
(G) One hundred percent of all units in the
development, including total units and density bonus
units, but exclusive of a manager’s unit or units, are
for lower income households, as defined by Section
50079.5 of the Health and Safety Code, except that up
to 20 percent of the units in the development, including
total units and density bonus units, may be for
moderate-income households, as defined in Section
50053 of the Health and Safety Code.
(2) For purposes of calculating the amount of the
density bonus pursuant to subdivision (f), an applicant
who requests a density bonus pursuant to this
subdivision shall elect whether the bonus shall be
awarded on the basis of subparagraph (A), (B), (C), (D),
(E), (F), or (G) of paragraph (1).
(3) For the purposes of this section, “total units,” “total
dwelling units,” or “total rental beds” does not include
units added by a density bonus awarded pursuant to
this section or any local law granting a greater density
bonus.
(c) (1) (A) An applicant shall agree to, and the city,
county, or city and county shall ensure, the continued
affordability of all very low and low-income rental units
that qualified the applicant for the award of the density
bonus for 55 years or a longer period of time if required
by the construction or mortgage financing assistance
program, mortgage insurance program, or rental
subsidy program.
(B) (i) Except as otherwise provided in clause (ii), rents
for the lower income density bonus units shall be set at
an affordable rent, as defined in Section 50053 of the
Health and Safety Code.
(ii) For housing developments meeting the criteria of
subparagraph (G) of paragraph (1) of subdivision (b),
rents for all units in the development, including both
base density and density bonus units, shall be as fol-
lows:
(I) The rent for at least 20 percent of the units in the
development shall be set at an affordable rent, as
defined in Section 50053 of the Health and Safety
Code.
(II) The rent for the remaining units in the development
shall be set at an amount consistent with the maximum
rent levels for a housing development that receives an
allocation of state or federal low-income housing tax
credits from the California Tax Credit Allocation
Committee.
(2) An applicant shall agree to, and the city, county, or
MEYERS NAVE A professional law corporation | CALIFORNIA DENSITY BONUS LAW 2021 15
city and county shall ensure that, the initial occupant
of all for-sale units that qualified the applicant for the
award of the density bonus are persons and families
of very low, low, or moderate income, as required, and
that the units are offered at an affordable housing cost,
as that cost is defined in Section 50052.5 of the Health
and Safety Code. The local government shall enforce
an equity sharing agreement, unless it is in conflict with
the requirements of another public funding source or
law. The following apply to the equity sharing
agreement:
(A) Upon resale, the seller of the unit shall retain the
value of any improvements, the downpayment, and
the seller’s proportionate share of appreciation. The
local government shall recapture any initial subsidy,
as defined in subparagraph (B), and its proportionate
share of appreciation, as defined in subparagraph (C),
which amount shall be used within five years for any of
the purposes described in subdivision (e) of Section
33334.2 of the Health and Safety Code that promote
home ownership.
(B) For purposes of this subdivision, the local
government’s initial subsidy shall be equal to the fair
market value of the home at the time of initial sale
minus the initial sale price to the moderate-income
household, plus the amount of any downpayment
assistance or mortgage assistance. If upon resale the
market value is lower than the initial market value, then
the value at the time of the resale shall be used as the
initial market value.
(C) For purposes of this subdivision, the local
government’s proportionate share of appreciation shall
be equal to the ratio of the local government’s initial
subsidy to the fair market value of the home at the time
of initial sale.
(3) (A) An applicant shall be ineligible for a density
bonus or any other incentives or concessions under
this section if the housing development is proposed on
any property that includes a parcel or parcels on which
rental dwelling units are or, if the dwelling units have
been vacated or demolished in the five-year period
preceding the application, have been subject to a
recorded covenant, ordinance, or law that restricts
rents to levels affordable to persons and families of
lower or very low income; subject to any other form of
rent or price control through a public entity’s valid
exercise of its police power; or occupied by lower or
very low income households, unless the proposed
housing development replaces those units, and either
of the following applies:
(i) The proposed housing development, inclusive of the
units replaced pursuant to this paragraph, contains
affordable units at the percentages set forth in
subdivision (b).
(ii) Each unit in the development, exclusive of a
manager’s unit or units, is affordable to, and occupied
by, either a lower or very low income household.
(B) For the purposes of this paragraph, “replace” shall
mean either of the following:
(i) If any dwelling units described in subparagraph (A)
are occupied on the date of application, the proposed
housing development shall provide at least the same
number of units of equivalent size to be made available
at affordable rent or affordable housing cost to, and
occupied by, persons and families in the same or lower
income category as those households in occupancy. If
the income category of the household in occupancy is
not known, it shall be rebuttably presumed that lower
income renter households occupied these units in the
same proportion of lower income renter households to
all renter households within the jurisdiction, as
determined by the most recently available data from
the United States Department of Housing and Urban
Development’s Comprehensive Housing Affordability
Strategy database. For unoccupied dwelling units
described in subparagraph (A) in a development with
occupied units, the proposed housing development
shall provide units of equivalent size to be made
available at affordable rent or affordable housing cost
to, and occupied by, persons and families in the same
or lower income category as the last household in
occupancy. If the income category of the last
household in occupancy is not known, it shall be
rebuttably presumed that lower income renter
households occupied these units in the same
proportion of lower income renter households to all
renter households within the jurisdiction, as
determined by the most recently available data from
the United States Department of Housing and Urban
Development’s Comprehensive Housing
Affordability Strategy database. All replacement
calculations resulting in fractional units shall be
rounded up to the next whole number. If the
replacement units will be rental dwelling units, these
units shall be subject to a recorded affordability
restriction for at least 55 years. If the proposed
development is for-sale units, the units replaced shall
be subject to paragraph (2).
(ii) If all dwelling units described in subparagraph (A)
have been vacated or demolished within the five-year
period preceding the application, the proposed housing
development shall provide at least the same number
of units of equivalent size as existed at the highpoint
of those units in the five-year period preceding the
application to be made available at affordable rent or
affordable housing cost to, and occupied by, persons
and families in the same or lower income category as
those persons and families in occupancy at that time, if
known. If the incomes of the persons and families in
occupancy at the highpoint is not known, it shall be
rebuttably presumed that low-income and very low
16 MEYERS NAVE A professional law corporation | CALIFORNIA DENSITY BONUS LAW 2021
income renter households occupied these units in the
same proportion of low-income and very low income
renter households to all renter households within the
jurisdiction, as determined by the most recently
available data from the United States Department of
Housing and Urban Development’s Comprehensive
Housing Affordability Strategy database. All
replacement calculations resulting in fractional units
shall be rounded up to the next whole number. If the
replacement units will be rental dwelling units, these
units shall be subject to a recorded affordability
restriction for at least 55 years. If the proposed
development is for-sale units, the units replaced shall
be subject to paragraph (2).
(C) Notwithstanding subparagraph (B), for any
dwelling unit described in subparagraph (A) that is or
was, within the five-year period preceding the
application, subject to a form of rent or price control
through a local government’s valid exercise of its police
power and that is or was occupied by persons or
families above lower income, the city, county, or city
and county may do either of the following:
(i) Require that the replacement units be made
available at affordable rent or affordable housing cost
to, and occupied by, low-income persons or families.
If the replacement units will be rental dwelling units,
these units shall be subject to a recorded affordability
restriction for at least 55 years. If the proposed
development is for-sale units, the units replaced shall
be subject to paragraph (2).
(ii) Require that the units be replaced in compliance
with the jurisdiction’s rent or price control ordinance,
provided that each unit described in subparagraph (A)
is replaced. Unless otherwise required by the
jurisdiction’s rent or price control ordinance, these
units shall not be subject to a recorded affordability
restriction.
(D) For purposes of this paragraph, “equivalent size”
means that the replacement units contain at least the
same total number of bedrooms as the units being
replaced.
(E) Subparagraph (A) does not apply to an applicant
seeking a density bonus for a proposed housing
development if the applicant’s application was
submitted to, or processed by, a city, county, or city and
county before January 1, 2015.
(d) (1) An applicant for a density bonus pursuant to
subdivision (b) may submit to a city, county, or city
and county a proposal for the specific incentives or
concessions that the applicant requests pursuant to
this section, and may request a meeting with the city,
county, or city and county. The city, county, or city and
county shall grant the concession or incentive
requested by the applicant unless the city, county, or
city and county makes a written finding, based upon
substantial evidence, of any of the following:
(A) The concession or incentive does not result in
identifiable and actual cost reductions, consistent with
subdivision (k), to provide for affordable housing costs,
as defined in Section 50052.5 of the Health and Safety
Code, or for rents for the targeted units to be set as
specified in subdivision (c).
(B) The concession or incentive would have a specific,
adverse impact, as defined in paragraph (2) of
subdivision (d) of Section 65589.5, upon public health
and safety or the physical environment or on any real
property that is listed in the California Register of
Historical Resources and for which there is no feasible
method to satisfactorily mitigate or avoid the specific,
adverse impact without rendering the development
unaffordable to low-income and moderate-income
households.
(C) The concession or incentive would be contrary to
state or federal law.
(2) The applicant shall receive the following number of
incentives or concessions:
(A) One incentive or concession for projects that
include at least 10 percent of the total units for lower
income households, at least 5 percent for very low
income households, or at least 10 percent for persons
and families of moderate income in a common interest
development.
(B) Two incentives or concessions for projects that
include at least 17 percent of the total units for lower
income households, at least 10 percent for very low
income households, or at least 20 percent for persons
and families of moderate income in a common interest
development.
(C) Three incentives or concessions for projects that
include at least 24 percent of the total units for lower
income households, at least 15 percent for very low
income households, or at least 30 percent for persons
and families of moderate income in a common interest
development.
(D) Four incentives or concessions for projects
meeting the criteria of subparagraph (G) of paragraph
(1) of subdivision (b). If the project is located within
one-half mile of a major transit stop, the applicant shall
also receive a height increase of up to three additional
stories, or 33 feet.
(3) The applicant may initiate judicial proceedings if
the city, county, or city and county refuses to grant a
requested density bonus, incentive, or concession. If a
court finds that the refusal to grant a requested density
bonus, incentive, or concession is in violation of this
MEYERS NAVE A professional law corporation | CALIFORNIA DENSITY BONUS LAW 2021 17
section, the court shall award the plaintiff reasonable
attorney’s fees and costs of suit. Nothing in this
subdivision shall be interpreted to require a local
government to grant an incentive or concession that
has a specific, adverse impact, as defined in paragraph
(2) of subdivision (d) of Section 65589.5, upon health,
safety, or the physical environment, and for which there
is no feasible method to satisfactorily mitigate or avoid
the specific adverse impact. Nothing in this
subdivision shall be interpreted to require a local
government to grant an incentive or concession that
would have an adverse impact on any real property
that is listed in the California Register of Historical
Resources. The city, county, or city and county shall
establish procedures for carrying out this section that
shall include legislative body approval of the means of
compliance with this section.
(4) The city, county, or city and county shall bear
the burden of proof for the denial of a requested
concession or incentive.
(e) (1) In no case may a city, county, or city and county
apply any development standard that will have the
effect of physically precluding the construction of a
development meeting the criteria of subdivision (b) at
the densities or with the concessions or incentives
permitted by this section. Subject to paragraph (3),
an applicant may submit to a city, county, or city and
county a proposal for the waiver or reduction of
development standards that will have the effect of
physically precluding the construction of a
development meeting the criteria of subdivision (b)
at the densities or with the concessions or incentives
permitted under this section, and may request a
meeting with the city, county, or city and county. If a
court finds that the refusal to grant a waiver or
reduction of development standards is in violation
of this section, the court shall award the plaintiff
reasonable attorney’s fees and costs of suit. Nothing in
this subdivision shall be interpreted to require a local
government to waive or reduce development standards
if the waiver or reduction would have a specific, adverse
impact, as defined in paragraph (2) of subdivision (d)
of Section 65589.5, upon health, safety, or the physical
environment, and for which there is no feasible method
to satisfactorily mitigate or avoid the specific adverse
impact. Nothing in this subdivision shall be interpreted
to require a local government to waive or reduce
development standards that would have an adverse
impact on any real property that is listed in the
California Register of Historical Resources, or to grant
any waiver or reduction that would be contrary to state
or federal law.
(2) A proposal for the waiver or reduction of
development standards pursuant to this subdivision
shall neither reduce nor increase the number of
incentives or concessions to which the applicant is
entitled pursuant to subdivision (d).
(3) A housing development that receives a waiver from
any maximum controls on density pursuant to clause
(ii) of subparagraph (D) of paragraph (3) of
subdivision (f) shall only be eligible for a waiver or
reduction of development standards as provided in
subparagraph (D) of paragraph (2) of subdivision (d)
and clause (ii) of subparagraph (D) of paragraph (3)
of subdivision (f), unless the city, county, or city and
county agrees to additional waivers or reductions of
development standards.
(f) For the purposes of this chapter, “density bonus”
means a density increase over the otherwise maximum
allowable gross residential density as of the date of
application by the applicant to the city, county, or city
and county, or, if elected by the applicant, a lesser
percentage of density increase, including, but not
limited to, no increase in density. The amount of density
increase to which the applicant is entitled shall vary
according to the amount by which the percentage of
affordable housing units exceeds the percentage
established in subdivision (b).
(1) For housing developments meeting the criteria of
subparagraph (A) of paragraph (1) of subdivision (b),
the density bonus shall be calculated as follows:
10 20
11 21.5
12 23
13 24.5
14 26
15 27.5
16 29
17 30.5
18 32
19 33.5
20 35
21 38.75
22 42.5
23 46.25
24 50
(2) For housing developments meeting the criteria of
subparagraph (B) of paragraph (1) of subdivision (b),
the density bonus shall be calculated as follows:
5 20
6 22.5
PERCENTAGE
LOW-INCOME
UNITS
PERCENTAGE
DENSITY
BONUS
PERCENTAGE
VERY LOW-INCOME
UNITS
PERCENTAGE
DENSITY
BONUS
18 MEYERS NAVE A professional law corporation | CALIFORNIA DENSITY BONUS LAW 2021
7 25
8 27.5
9 30
10 32.5
11 35
12 38.75
13 42.5
14 46.25
15 50
(3) (A) For housing developments meeting the criteria
of subparagraph (C) of paragraph (1) of subdivision (b),
the density bonus shall be 20 percent of the number of
senior housing units.
(B) For housing developments meeting the criteria of
subparagraph (E) of paragraph (1) of subdivision (b),
the density bonus shall be 20 percent of the number
of the type of units giving rise to a density bonus under
that subparagraph.
(C) For housing developments meeting the criteria of
subparagraph (F) of paragraph (1) of subdivision (b),
the density bonus shall be 35 percent of the student
housing units.
(D) For housing developments meeting the criteria of
subparagraph (G) of paragraph (1) of subdivision (b),
the following shall apply:
(i) Except as otherwise provided in clause (ii), the
density bonus shall be 80 percent of the number of
units for lower income households.
(ii) If the housing development is located within
one-half mile of a major transit stop, the city, county, or
city and county shall not impose any maximum controls
on density.
(4) For housing developments meeting the criteria of
subparagraph (D) of paragraph (1) of subdivision (b),
the density bonus shall be calculated as follows:
10 5
11 6
12 7
13 8
14 9
15 10
16 11
17 12
18 13
19 14
20 15
21 16
22 17
23 18
24 19
25 20
26 21
27 22
28 23
29 24
30 25
31 26
32 27
33 28
34 29
35 30
36 31
37 32
38 33
39 34
40 35
41 38.75
42 42.5
43 46.25
44 50
(5) All density calculations resulting in fractional units
shall be rounded up to the next whole number. The
granting of a density bonus shall not require, or be
interpreted, in and of itself, to require a general plan
amendment, local coastal plan amendment, zoning
change, or other discretionary approval.
(g) (1) When an applicant for a tentative subdivision
map, parcel map, or other residential development
approval donates land to a city, county, or city and
county in accordance with this subdivision, the
applicant shall be entitled to a 15-percent increase
above the otherwise maximum allowable residential
density for the entire development, as follows:
10 15
11 16
12 17
13 18
14 19
PERCENTAGE
MODERATE-INCOME
UNITS
PERCENTAGE
DENSITY
BONUS
PERCENTAGE
VERY LOW-INCOME
PERCENTAGE
DENSITY
BONUS
MEYERS NAVE A professional law corporation | CALIFORNIA DENSITY BONUS LAW 2021 19
15 20
16 21
17 22
18 23
19 24
20 25
21 26
22 27
23 28
24 29
25 30
26 31
27 32
28 33
29 34
30 35
(2) This increase shall be in addition to any increase in
density mandated by subdivision (b), up to a maximum
combined mandated density increase of 35 percent if
an applicant seeks an increase pursuant to both this
subdivision and subdivision (b). All density calculations
resulting in fractional units shall be rounded up to the
next whole number. Nothing in this subdivision shall
be construed to enlarge or diminish the authority of a
city, county, or city and county to require a developer to
donate land as a condition of development. An
applicant shall be eligible for the increased density
bonus described in this subdivision if all of the following
conditions are met:
(A) The applicant donates and transfers the land no
later than the date of approval of the final subdivision
map, parcel map, or residential development
application.
(B) The developable acreage and zoning classification
of the land being transferred are sufficient to permit
construction of units affordable to very low income
households in an amount not less than 10 percent of
the number of residential units of the proposed
development.
(C) The transferred land is at least one acre in size or
of sufficient size to permit development of at least 40
units, has the appropriate general plan designation,
is appropriately zoned with appropriate development
standards for development at the density described
in paragraph (3) of subdivision (c) of Section 65583.2,
and is or will be served by adequate public facilities and
infrastructure.
(D) The transferred land shall have all of the permits
and approvals, other than building permits, necessary
for the development of the very low income housing
units on the transferred land, not later than the date of
approval of the final subdivision map, parcel map, or
residential development application, except that the
local government may subject the proposed
development to subsequent design review to the extent
authorized by subdivision (i) of Section 65583.2 if the
design is not reviewed by the local government before
the time of transfer.
(E) The transferred land and the affordable units shall
be subject to a deed restriction ensuring continued
affordability of the units consistent with paragraphs (1)
and (2) of subdivision (c), which shall be recorded on
the property at the time of the transfer.
(F) The land is transferred to the local agency or to a
housing developer approved by the local agency. The
local agency may require the applicant to identify and
transfer the land to the developer.
(G) The transferred land shall be within the boundary
of the proposed development or, if the local agency
agrees, within one-quarter mile of the boundary of the
proposed development.
(H) A proposed source of funding for the very low
income units shall be identified not later than the date
of approval of the final subdivision map, parcel map, or
residential development application.
(h) (1) When an applicant proposes to construct a
housing development that conforms to the
requirements of subdivision (b) and includes a
childcare facility that will be located on the premises of,
as part of, or adjacent to, the project, the city, county, or
city and county shall grant either of the following:
(A) An additional density bonus that is an amount
of square feet of residential space that is equal to or
greater than the amount of square feet in the childcare
facility.
(B) An additional concession or incentive that
contributes significantly to the economic feasibility of
the construction of the childcare facility.
(2) The city, county, or city and county shall require, as
a condition of approving the housing development, that
the following occur:
(A) The childcare facility shall remain in operation for
a period of time that is as long as or longer than the
period of time during which the density bonus units are
required to remain affordable pursuant to subdivision
(c).
(B) Of the children who attend the childcare facility, the
children of very low income households, lower income
households, or families of moderate income shall equal
a percentage that is equal to or greater than the
20 MEYERS NAVE A professional law corporation | CALIFORNIA DENSITY BONUS LAW 2021
percentage of dwelling units that are required for very
low income households, lower income households, or
families of moderate income pursuant to subdivision
(b).
(3) Notwithstanding any requirement of this
subdivision, a city, county, or city and county shall not
be required to provide a density bonus or concession
for a childcare facility if it finds, based upon substantial
evidence, that the community has adequate childcare
facilities.
(4) “Childcare facility,” as used in this section, means a
child daycare facility other than a family daycare home,
including, but not limited to, infant centers, preschools,
extended daycare facilities, and schoolage childcare
centers.
(i) “Housing development,” as used in this section,
means a development project for five or more
residential units, including mixed-use developments.
For the purposes of this section, “housing
development” also includes a subdivision or common
interest development, as defined in Section 4100 of
the Civil Code, approved by a city, county, or city and
county and consists of residential units or unimproved
residential lots and either a project to substantially
rehabilitate and convert an existing commercial
building to residential use or the substantial
rehabilitation of an existing multifamily dwelling, as
defined in subdivision (d) of Section 65863.4, where
the result of the rehabilitation would be a net increase
in available residential units. For the purpose of
calculating a density bonus, the residential units shall
be on contiguous sites that are the subject of one
development application, but do not have to be based
upon individual subdivision maps or parcels. The
density bonus shall be permitted in geographic areas of
the housing development other than the areas where
the units for the lower income households are located.
(j) (1) The granting of a concession or incentive shall
not require or be interpreted, in and of itself, to require
a general plan amendment, local coastal plan
amendment, zoning change, study, or other
discretionary approval. For purposes of this
subdivision, “study” does not include reasonable
documentation to establish eligibility for the
concession or incentive or to demonstrate that the
incentive or concession meets the definition set forth in
subdivision (k). This provision is declaratory of existing
law.
(2) Except as provided in subdivisions (d) and (e), the
granting of a density bonus shall not require or be
interpreted to require the waiver of a local ordinance or
provisions of a local ordinance unrelated to
development standards.
(k) For the purposes of this chapter, concession or
incentive means any of the following:
(1) A reduction in site development standards or a
modification of zoning code requirements or
architectural design requirements that exceed the
minimum building standards approved by the California
Building Standards Commission as provided in Part 2.5
(commencing with Section 18901) of Division 13 of the
Health and Safety Code, including, but not limited to, a
reduction in setback and square footage requirements
and in the ratio of vehicular parking spaces that would
otherwise be required that results in identifiable and
actual cost reductions, to provide for affordable
housing costs, as defined in Section 50052.5 of the
Health and Safety Code, or for rents for the targeted
units to be set as specified in subdivision (c).
(2) Approval of mixed-use zoning in conjunction with
the housing project if commercial, office, industrial,
or other land uses will reduce the cost of the housing
development and if the commercial, office, industrial, or
other land uses are compatible with the housing project
and the existing or planned development in the area
where the proposed housing project will be located.
(3) Other regulatory incentives or concessions
proposed by the developer or the city, county, or city
and county that result in identifiable and actual cost
reductions to provide for affordable housing costs, as
defined in Section 50052.5 of the Health and Safety
Code, or for rents for the targeted units to be set as
specified in subdivision (c).
(l) Subdivision (k) does not limit or require the
provision of direct financial incentives for the housing
development, including the provision of publicly owned
land, by the city, county, or city and county, or the
waiver of fees or dedication requirements.
(m) This section does not supersede or in any way
alter or lessen the effect or application of the California
Coastal Act of 1976 (Division 20 (commencing with
Section 30000) of the Public Resources Code). Any
density bonus, concessions, incentives, waivers or
reductions of development standards, and parking
ratios to which the applicant is entitled under this
section shall be permitted in a manner that is
consistent with this section and Division 20
(commencing with Section 30000) of the Public
Resources Code.
(n) If permitted by local ordinance, nothing in this
section shall be construed to prohibit a city, county,
or city and county from granting a density bonus
greater than what is described in this section for a
development that meets the requirements of this
section or from granting a proportionately lower
density bonus than what is required by this section for
developments that do not meet the requirements of
this section.
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(o) For purposes of this section, the following
definitions shall apply:
(1) “Development standard” includes a site or
construction condition, including, but not limited to, a
height limitation, a setback requirement, a floor area
ratio, an onsite open-space requirement, or a parking
ratio that applies to a residential development pursuant
to any ordinance, general plan element, specific plan,
charter, or other local condition, law, policy, resolution,
or regulation.
(2) “Located within one-half mile of a major transit
stop” means that any point on a proposed
development, for which an applicant seeks a density
bonus, other incentives or concessions, waivers or
reductions of development standards, or a vehicular
parking ratio pursuant to this section, is within one-half
mile of any point on the property on which a major
transit stop is located, including any parking lot owned
by the transit authority or other local agency operating
the major transit stop.
(3) “Major transit stop” has the same meaning as
defined in subdivision (b) of Section 21155 of the Public
Resources Code.
(4) “Maximum allowable residential density” means the
density allowed under the zoning ordinance and land
use element of the general plan, or, if a range of density
is permitted, means the maximum allowable density
for the specific zoning range and land use element of
the general plan applicable to the project. If the density
allowed under the zoning ordinance is inconsistent with
the density allowed under the land use element of the
general plan, the general plan density shall prevail.
(p) (1) Except as provided in paragraphs (2), (3), and
(4), upon the request of the developer, a city, county, or
city and county shall not require a vehicular parking
ratio, inclusive of parking for persons with a disability
and guests, of a development meeting the criteria of
subdivisions (b) and (c), that exceeds the following
ratios:
(A) Zero to one bedroom: one onsite parking space.
(B) Two to three bedrooms: one and one-half onsite
parking spaces.
(C) Four and more bedrooms: two and one-half parking
spaces.
(2) (A) Notwithstanding paragraph (1), if a
development includes at least 20 percent low-income
units for housing developments meeting the criteria of
subparagraph (A) of paragraph (1) of subdivision (b)
or at least 11 percent very low income units for housing
developments meeting the criteria of subparagraph
(B) of paragraph (1) of subdivision (b), is located within
one-half mile of a major transit stop, and there is
unobstructed access to the major transit stop from the
development, then, upon the request of the developer,
a city, county, or city and county shall not impose a
vehicular parking ratio, inclusive of parking for persons
with a disability and guests, that exceeds 0.5 spaces
per unit.
(B) For purposes of this subdivision, a development
shall have unobstructed access to a major transit stop
if a resident is able to access the major transit stop
without encountering natural or constructed
impediments. For purposes of this subparagraph,
“natural or constructed impediments” includes, but is
not limited to, freeways, rivers, mountains, and bodies
of water, but does not include residential structures,
shopping centers, parking lots, or rails used for transit.
(3) Notwithstanding paragraph (1), if a development
consists solely of rental units, exclusive of a manager’s
unit or units, with an affordable housing cost to lower
income families, as provided in Section 50052.5 of the
Health and Safety Code, then, upon the request of the
developer, a city, county, or city and county shall not
impose vehicular parking standards if the development
meets either of the following criteria:
(A) The development is located within one-half mile of a
major transit stop and there is unobstructed access to
the major transit stop from the development.
(B) The development is a for-rent housing development
for individuals who are 62 years of age or older that
complies with Sections 51.2 and 51.3 of the Civil Code
and the development has either paratransit service or
unobstructed access, within one-half mile, to fixed bus
route service that operates at least eight times per day.
(4) Notwithstanding paragraphs (1) and (8), if a
development consists solely of rental units, exclusive
of a manager’s unit or units, with an affordable housing
cost to lower income families, as provided in Section
50052.5 of the Health and Safety Code, and the
development is either a special needs housing
development, as defined in Section 51312 of the Health
and Safety Code, or a supportive housing
development, as defined in Section 50675.14 of the
Health and Safety Code, then, upon the request of the
developer, a city, county, or city and county shall not
impose any minimum vehicular parking requirement. A
development that is a special needs housing
development shall have either paratransit service or
unobstructed access, within one-half mile, to fixed bus
route service that operates at least eight times per day.
(5) If the total number of parking spaces required for a
development is other than a whole number, the number
shall be rounded up to the next whole number. For
purposes of this subdivision, a development may
provide onsite parking through tandem parking or
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uncovered parking, but not through onstreet parking.
(6) This subdivision shall apply to a development that
meets the requirements of subdivisions (b) and (c),
but only at the request of the applicant. An applicant
may request parking incentives or concessions beyond
those provided in this subdivision pursuant to
subdivision (d).
(7) This subdivision does not preclude a city, county, or
city and county from reducing or eliminating a parking
requirement for development projects of any type in
any location.
(8) Notwithstanding paragraphs (2) and (3), if a city,
county, city and county, or an independent consultant
has conducted an areawide or jurisdictionwide parking
study in the last seven years, then the city, county, or
city and county may impose a higher vehicular parking
ratio not to exceed the ratio described in paragraph (1),
based upon substantial evidence found in the parking
study, that includes, but is not limited to, an analysis
of parking availability, differing levels of transit access,
walkability access to transit services, the potential for
shared parking, the effect of parking requirements on
the cost of market-rate and subsidized developments,
and the lower rates of car ownership for low-income
and very low income individuals, including seniors and
special needs individuals. The city, county, or city and
county shall pay the costs of any new study. The city,
county, or city and county shall make findings, based
on a parking study completed in conformity with this
paragraph, supporting the need for the higher parking
ratio.
(9) A request pursuant to this subdivision shall neither
reduce nor increase the number of incentives or
concessions to which the applicant is entitled pursuant
to subdivision (d).
(q) Each component of any density calculation,
including base density and bonus density, resulting in
fractional units shall be separately rounded up to the
next whole number. The Legislature finds and declares
that this provision is declaratory of existing law.
(r) This chapter shall be interpreted liberally in favor of
producing the maximum number of total housing units.
(s) Notwithstanding any other law, if a city, including a
charter city, county, or city and county has adopted an
ordinance or a housing program, or both an ordinance
and a housing program, that incentivizes the
development of affordable housing that allows for
density bonuses that exceed the density bonuses
required by the version of this section effective through
December 31, 2020, that city, county, or city and county
is not required to amend or otherwise update its
ordinance or corresponding affordable housing
incentive program to comply with the amendments
made to this section by the act adding this
subdivision, and is exempt from complying with the
incentive and concession calculation amendments
made to this section by the act adding this subdivision
as set forth in subdivision (d), particularly
subparagraphs (C) and (D) of paragraph (2) of that
subdivision, and the amendments made to the density
tables under subdivision (f).
65915.5.
(a) When an applicant for approval to convert
apartments to a condominium project agrees to
provide at least 33 percent of the total units of the
proposed condominium project to persons and families
of low or moderate income as defined in Section 50093
of the Health and Safety Code, or 15 percent of the total
units of the proposed condominium project to lower
income households as defined in Section 50079.5 of
the Health and Safety Code, and agrees to pay for the
reasonably necessary administrative costs incurred by
a city, county, or city and county pursuant to this
section, the city, county, or city and county shall either
(1) grant a density bonus or (2) provide other
incentives of equivalent financial value. A city, county,
or city and county may place such reasonable
conditions on the granting of a density bonus or other
incentives of equivalent financial value as it finds
appropriate, including, but not limited to, conditions
which assure continued affordability of units to
subsequent purchasers who are persons and families
of low and moderate income or lower income
households.
(b) For purposes of this section, “density bonus” means
an increase in units of 25 percent over the number of
apartments, to be provided within the existing structure
or structures proposed for conversion.
(c) For purposes of this section, “other incentives of
equivalent financial value” shall not be construed to
require a city, county, or city and county to provide cash
transfer payments or other monetary compensation
but may include the reduction or waiver of
requirements which the city, county, or city and county
might otherwise apply as conditions of conversion
approval.
(d) An applicant for approval to convert apartments to
a condominium project may submit to a city, county, or
city and county a preliminary proposal pursuant to this
section prior to the submittal of any formal requests for
subdivision map approvals. The city, county, or city and
county shall, within 90 days of receipt of a written
proposal, notify the applicant in writing of the
manner in which it will comply with this section. The
city, county, or city and county shall establish
procedures for carrying out this section, which shall
include legislative body approval of the means of
compliance with this section.
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(e) Nothing in this section shall be construed to require
a city, county, or city and county to approve a proposal
to convert apartments to condominiums.
(f) An applicant shall be ineligible for a density bonus
or other incentives under this section if the apartments
proposed for conversion constitute a housing
development for which a density bonus or other
incentives were provided under Section 65915.
(g) An applicant shall be ineligible for a density bonus
or any other incentives or concessions under this
section if the condominium project is proposed on any
property that includes a parcel or parcels on which
rental dwelling units are or, if the dwelling units have
been vacated or demolished in the five-year period
preceding the application, have been subject to a
recorded covenant, ordinance, or law that restricts
rents to levels affordable to persons and families of
lower or very low income; subject to any other form of
rent or price control through a public entity’s valid ex-
ercise of its police power; or occupied by lower or very
low income households, unless the proposed
condominium project replaces those units, as defined
in subparagraph (B) of paragraph (3) of subdivision (c)
of Section 65915, and either of the following applies:
(1) The proposed condominium project, inclusive of the
units replaced pursuant to subparagraph (B) of
paragraph (3) of subdivision (c) of Section 65915,
contains affordable units at the percentages set forth in
subdivision (a).
(2) Each unit in the development, exclusive of a
manager’s unit or units, is affordable to, and occupied
by, either a lower or very low income household.
(h) Subdivision (g) does not apply to an applicant
seeking a density bonus for a proposed housing
development if their application was submitted to, or
processed by, a city, county, or city and county before
January 1, 2015.
65915.7.
(a) When an applicant for approval of a commercial
development has entered into an agreement for
partnered housing described in subdivision (c) to
contribute affordable housing through a joint project or
two separate projects encompassing affordable
housing, the city, county, or city and county shall grant
to the commercial developer a development bonus as
prescribed in subdivision (b).Housing shall be
constructed on the site of the commercial development
or on a site that is all of the following:
(1) Within the boundaries of the local government.
(2) In close proximity to public amenities including
schools and employment centers.
(3) Located within one-half mile of a major transit stop,
as defined in subdivision (b) of Section 21155 of the
Public Resources Code.
(b) The development bonus granted to the commercial
developer shall mean incentives, mutually agreed upon
by the developer and the jurisdiction, that may include,
but are not limited to, any of the following:
(1) Up to a 20-percent increase in maximum allowable
intensity in the General Plan.
(2) Up to a 20-percent increase in maximum allowable
floor area ratio.
(3) Up to a 20-percent increase in maximum height
requirements.
(4) Up to a 20-percent reduction in minimum parking
requirements.
(5) Use of a limited-use/limited-application elevator for
upper floor accessibility.
(6) An exception to a zoning ordinance or other land
use regulation.
(c) For the purposes of this section, the agreement for
partnered housing shall be between the commercial
developer and the housing developer, shall identify how
the commercial developer will contribute affordable
housing, and shall be approved by the city, county, or
city and county.
(d) For the purposes of this section, affordable housing
may be contributed by the commercial developer in
one of the following manners:
(1) The commercial developer may directly build the
units.
(2) The commercial developer may donate a portion
of the site or property elsewhere to the affordable
housing developer for use as a site for affordable
housing.
(3) The commercial developer may make a cash
payment to the affordable housing developer that shall
be used towards the costs of constructing the
affordable housing project.
(e) For the purposes of this section, subparagraph (A)
of paragraph (3) of subdivision (c) of Section 65915
shall apply.
(f) Nothing in this section shall preclude any additional
allowances or incentives offered to developers by local
governments pursuant to law or regulation.
(g) If the developer of the affordable units does not
24 MEYERS NAVE A professional law corporation | CALIFORNIA DENSITY BONUS LAW 2021
commence with construction of those units in
accordance with timelines ascribed by the agreement
described in subdivision (c), the local government may
withhold certificates of occupancy for the commercial
development under construction until the developer
has completed construction of the affordable units.
(h) In order to qualify for a development bonus under
this section, a commercial developer shall partner with
a housing developer that provides at least 30 percent
of the total units for low-income households or at least
15 percent of the total units for very low-income
households.
(i) Nothing in this section shall preclude an
affordable housing developer from seeking a density
bonus, concessions or incentives, waivers or reductions
of development standards, or parking ratios under
Section 65915.
(j) A development bonus pursuant to this section shall
not include a reduction or waiver of the requirements
within an ordinance that requires the payment of a fee
by a commercial developer for the promotion or
provision of affordable housing.
(k) A city or county shall submit to the Department of
Housing and Community Development, as part of the
annual report required by Section 65400, information
describing a commercial development bonus approved
pursuant to this section, including the terms of the
agreements between the commercial developer and
the affordable housing developer, and the developers
and the local jurisdiction, and the number of affordable
units constructed as part of the agreements.
(l) For purposes of this section, “partner” shall mean
formation of a partnership, limited liability company,
corporation, or other entity recognized by the state in
which the commercial development applicant and the
affordable housing developer are each partners,
members, shareholders or other participants, or a
contract or agreement between a commercial
development applicant and affordable housing
developer for the development of both the commercial
and the affordable housing properties.
(m) This section shall remain in effect only until
January 1, 2022, and as of that date is repealed.
65916.
Where there is a direct financial contribution to a
housing development pursuant to Section 65915
through participation in cost of infrastructure,
write-down of land costs, or subsidizing the cost of
construction, the city, county, or city and county shall
assure continued availability for low- and moderate-
income units for 30 years. When appropriate, the
agreement provided for in Section 65915 shall specify
the mechanisms and procedures necessary to carry
out this section.
65917.
In enacting this chapter it is the intent of the
Legislature that the density bonus or other incentives
offered by the city, county, or city and county pursuant
to this chapter shall contribute significantly to the
economic feasibility of lower income housing in
proposed housing developments. In the absence of an
agreement by a developer in accordance with Section
65915, a locality shall not offer a density bonus or any
other incentive that would undermine the intent of this
chapter.
65917.2.
(a) As used in this section, the following terms shall
have the following meanings:
(1) “Eligible housing development” means a
development that satisfies all of the following criteria:
(A) The development is a multifamily housing
development that contains five or more residential
units, exclusive of any other floor area ratio bonus
or incentive or concession awarded pursuant to this
chapter.
(B) The development is located within one of the
following:
(i) An urban infill site that is within a transit priority
area.
(ii) One-half mile of a major transit stop.
(C) The site of the development is zoned to allow
residential use or mixed-use with a minimum planned
density of at least 20 dwelling units per acre and does
not include any land zoned for low density residential
use or for exclusive nonresidential use.
(D) The applicant and the development satisfy the
replacement requirements specified in subdivision (c)
of Section 65915.
(E) The development includes at least 20 percent of the
units, excluding any additional units allowed under a
floor area ratio bonus or other incentives or
concessions provided pursuant to this chapter, with an
affordable housing cost or affordable rent to, and
occupied by, persons with a household income equal to
or less than 50 percent of the area median income, as
determined pursuant to Section 50093 of the Health
and Safety Code, and subject to an affordability
restriction for a minimum of 55 years.
(F) The development complies with the height
requirements applicable to the underlying zone. A
development shall not be eligible to use a floor area
ratio bonus or other incentives or concessions provided
pursuant to this chapter to relieve the development
from a maximum height limitation.
(2) “Floor area ratio” means the ratio of gross
building area of the eligible housing development,
excluding structured parking areas, proposed for the
project divided by the net lot area. For purposes of this
paragraph, “gross building area” means the sum of all
finished areas of all floors of a building included within
the outside faces of its exterior walls.
(3) “Floor area ratio bonus” means an allowance for an
eligible housing development to utilize a floor area ratio
over the otherwise maximum allowable density
permitted under the applicable zoning ordinance
and land use elements of the general plan of a city or
county, calculated pursuant to paragraph (2) of
subdivision (b).
(4) “Major transit stop” has the same meaning as
defined in Section 21155 of the Public Resources Code.
(5) “Transit priority area” has the same meaning as
defined in Section 21099 of the Public Resources Code.
(b) (1) A city council, including a charter city council or
the board of supervisors of a city and county, or county
board of supervisors may establish a procedure by
ordinance to grant a developer of an eligible housing
development, upon the request of the developer, a floor
area ratio bonus, calculated as provided in paragraph
(2), in lieu of a density bonus awarded on the basis of
dwelling units per acre.
(2) In calculating the floor area ratio bonus pursuant to
this section, the allowable gross residential floor area
in square feet shall be the product of all of the following
amounts:
(A) The allowable residential base density in dwelling
units per acre.
(B) The site area in square feet, divided by 43,560.
(C) 2,250.
(c) The city council or county board of supervisors
shall not impose any parking requirement on an eligible
housing development in excess of 0.1 parking spaces
per unit that is affordable to persons and families with
a household income equal to or less than 120 percent
of the area median income and 0.5 parking spaces per
unit that is offered at market rate.
(d) A city or county that adopts a floor area ratio bonus
ordinance pursuant to this section shall allow an
applicant seeking to develop an eligible residential
development to calculate impact fees based on square
feet, instead of on a per unit basis.
(e) In the case of an eligible housing development that
is zoned for mixed-use purposes, any floor area ratio
requirement under a zoning ordinance or land use
element of the general plan of the city or county
applicable to the nonresidential portion of the eligible
housing development shall continue to apply
notwithstanding the award of a floor area ratio bonus in
accordance with this section.
(f) An applicant for a floor area ratio bonus pursuant to
this section may also submit to the city, county, or city
and county a proposal for specific incentives or
concessions pursuant to subdivision (d) of Section
65915.
(g) (1) This section shall not be interpreted to do either
of the following:
(A) Supersede or preempt any other section within this
chapter.
(B) Prohibit a city, county, or city and county from
providing a floor area ratio bonus under terms that are
different from those set forth in this section.
(2) The adoption of an ordinance pursuant to this
section shall not be interpreted to relieve a city, county,
or city and county from complying with Section 65915.
65917.5.
(a) As used in this section, the following terms shall
have the following meanings:
(1) “Child care facility” means a facility installed,
operated, and maintained under this section for the
nonresidential care of children as defined under
applicable state licensing requirements for the facility.
(2) “Density bonus” means a floor area ratio bonus over
the otherwise maximum allowable density permitted
under the applicable zoning ordinance and land use
elements of the general plan of a city, including a
charter city, city and county, or county of:
(A) A maximum of five square feet of floor area for each
one square foot of floor area contained in the child care
facility for existing structures.
(B) A maximum of 10 square feet of floor area for each
one square foot of floor area contained in the child care
facility for new structures.
For purposes of calculating the density bonus under
this section, both indoor and outdoor square footage
requirements for the child care facility as set forth in
applicable state child care licensing requirements shall
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be included in the floor area of the child care facility.
(3) “Developer” means the owner or other person,
including a lessee, having the right under the applicable
zoning ordinance of a city council, including a charter
city council, city and county board of supervisors, or
county board of supervisors to make an application for
development approvals for the development or
redevelopment of a commercial or industrial project.
(4) “Floor area” means as to a commercial or industrial
project, the floor area as calculated under the
applicable zoning ordinance of a city council, including
a charter city council, city and county board of
supervisors, or county board of supervisors and as to a
child care facility, the total area contained within the
exterior walls of the facility and all outdoor areas
devoted to the use of the facility in accordance with
applicable state child care licensing requirements.
(b) A city council, including a charter city council, city
and county board of supervisors, or county board of
supervisors may establish a procedure by ordinance to
grant a developer of a commercial or industrial project,
containing at least 50,000 square feet of floor area,
a density bonus when that developer has set aside at
least 2,000 square feet of floor area and 3,000
outdoor square feet to be used for a child care
facility. The granting of a bonus shall not preclude a city
council, including a charter city council, city and county
board of supervisors, or county board of supervisors
from imposing necessary conditions on the project or
on the additional square footage. Projects constructed
under this section shall conform to height, setback, lot
coverage, architectural review, site plan review, fees,
charges, and other health, safety, and zoning
requirements generally applicable to construction in
the zone in which the property is located. A consortium
with more than one developer may be permitted to
achieve the threshold amount for the available density
bonus with each developer’s density bonus equal to the
percentage participation of the developer. This facility
may be located on the project site or may be located
offsite as agreed upon by the developer and local
agency. If the child care facility is not located on the site
of the project, the local agency shall determine whether
the location of the child care facility is appropriate and
whether it conforms with the intent of this section. The
child care facility shall be of a size to comply with all
state licensing requirements in order to accommodate
at least 40 children.
(c) The developer may operate the child care facility
itself or may contract with a licensed child care
provider to operate the facility. In all cases, the
developer shall show ongoing coordination with a local
child care resource and referral network or local
governmental child care coordinator in order to qualify
for the density bonus.
(d) If the developer uses space allocated for child care
facility purposes, in accordance with subdivision (b), for
purposes other than for a child care facility, an
assessment based on the square footage of the
project may be levied and collected by the city council,
including a charter city council, city and county board
of supervisors, or county board of supervisors. The
assessment shall be consistent with the market value
of the space. If the developer fails to have the space
allocated for the child care facility within three years,
from the date upon which the first temporary
certificate of occupancy is granted, an assessment
based on the square footage of the project may be
levied and collected by the city council, including a
charter city council, city and county board of
supervisors, or county board of supervisors in
accordance with procedures to be developed by the
legislative body of the city council, including a charter
city council, city and county board of supervisors, or
county board of supervisors. The assessment shall
be consistent with the market value of the space. A
penalty levied against a consortium of developers shall
be charged to each developer in an amount equal to
the developer’s percentage square feet participation.
Funds collected pursuant to this subdivision shall be
deposited by the city council, including a charter city
council, city and county board of supervisors, or county
board of supervisors into a special account to be used
for child care services or child care facilities.
(e) Once the child care facility has been established,
prior to the closure, change in use, or reduction in the
physical size of, the facility, the city, city council,
including a charter city council, city and county board
of supervisors, or county board of supervisors shall be
required to make a finding that the need for child care
is no longer present, or is not present to the same
degree as it was at the time the facility was established.
(f) The requirements of Chapter 5 (commencing with
Section 66000) and of the amendments made to
Sections 53077, 54997, and 54998 by Chapter 1002 of
the Statutes of 1987 shall not apply to actions taken in
accordance with this section.
(g) This section shall not apply to a voter-approved
ordinance adopted by referendum or initiative.
65918.
The provisions of this chapter shall apply to charter
cities.
26 MEYERS NAVE A professional law corporation | CALIFORNIA DENSITY BONUS LAW 2021