Lawmakers have updated California’s Density Bonus Law for 2022. What does this mean for you?
As many of you are aware, California enacted Government Code Section 65915 in 1979; most of us refer to it as, simply, the Density Bonus Law (DBL). That law has been guiding local government and local agency housing projects that include a wide range of amenities, home prices, and more.
Goals and Outcomes
The original goal of the law and the density bonus projects they permitted: a mechanism through which developers might be encouraged to help alleviate severe housing shortages in the state, specifically by incorporating affordable housing units into their designs.
Among other incentives, developers in Los Angeles and beyond have been eligible for a density bonus, permitting them to build more units than local zoning ordinances allow. There were also incentives and concessions related to “site development standards,” “modification of zoning code requirements,” and “architectural design requirements.”
In 2018, California legislators passed laws to provide density bonuses for developments that included student housing. That law was designed to help lower-income students. Critics, however, noted that the law failed to provide much in the way of incentives to assist developers through the entitlement process.
SB 290: CA Density Bonus Law
Enter SB 290, the aim of which is to, in part, correct the oversights of the 2018 law. As with the previous iteration of the law, SB 290 is championed by Sen. Nancy Skinner.
In the broadest terms, the law clarifies and revises multiple aspects of the DBL, including:
- States expressly that the DBL applies to both rental and for-sale housing developments
- Broadens the law to include projects that have units for sale but aren’t designated as “common interest developments”
- Changes how the CA Density Bonus Law applies to determinations and definitions of “total units”
- Aligns the DBL with California’s Housing Accountability Act — specifically by removing from consideration adverse impacts to the physical environment
- Creates a revised parking maximum relative to spaces per bedroom and proximity to public transit (specifically major transit stops)
Revisions to the CA Density Bonus Law brought about by SB 290 will likely affect developers’ plans as they relate to student housing units and lower-income households, and it reduces parking requirements in many cases. But the law’s breadth and reach extend beyond the outlines we’ve provided here.
Additional Density Bonus Updates
AB 571 (Limits on Impact Fees): Prohibits affordable housing impact fees, “including inclusionary zoning fees and in-lieu fees, from being imposed on a housing development’s affordable units.”
AB 634 (Affordability Periods): “The Density Bonus Law is not to be construed to prohibit a city, county, or city and county from requiring an affordability period that is longer than 55 years” for density bonus housing projects. These requirements, however, may not be imposed upon developments financed with low-income housing tax credits.
SB 728 (Nonprofit Housing Organizations): Requires developers and the city or county “to ensure that (1) a for-sale unit that qualified the developer for the award of the density bonus is initially occupied by a person or family of the required income, offered at an affordable housing cost, as defined, and includes an equity sharing agreement, as specified, or (2) a qualified nonprofit housing organization that is receiving the above-described welfare exemption purchases the unit pursuant to a specified recorded contract that includes an affordability restriction, an equity sharing agreement, as specified, and a repurchase option that requires a subsequent purchaser that desires to sell or convey the property to first offer the nonprofit corporation the opportunity to repurchase the property. By imposing these requirements on local agencies with respect to density bonuses, this bill would impose a state-mandated local program.” Furthermore, it provides for affordability restrictions “on the sale and conveyance of the property that ensure that the property will be preserved for lower-income housing for at least 45 years for owner-occupied housing units and will be sold or resold only to persons or families of very low, low, or moderate income.”
Appellate Court Ruling (from 2021): According to Meyers Nave, the ruling in Schreiber v. City of Los Angeles confirms that “local agencies cannot require density bonus applicants to submit pro formas or other documentation required to prove that requested incentives and concessions are necessary to make the housing development financially feasible.” The court ruled that a Los Angeles ordinance was preempted by state density bonus laws.
QES Inc.
If you have questions, get in touch with Eric Lieberman and the team at QES today, and we’ll begin a discussion about California housing development and how the DBL affects your real estate plans moving forward.
Additionally, our expert staff can help you navigate the complexities of land use entitlement applications for residential, mixed-use, affordable housing, commercial shopping centers, hotels, and more.
Finally, we can help you with compliance and compatibility issues. Specifically, QES Inc. coordinates entitlement submittal material and can present them on your behalf to neighborhood councils, public hearings, city councils, and planning commissions throughout Southern California.
Let us know how we can help. We’re here to assist you.