Why this article is important: Density bonus laws enable developers to increase density beyond what local zoning regulations allow, while increasing the number of subsidy-free housing for low- and moderate-income households.
More density, less subsidy
Legislators use numerous strategies to tackle California’s shortage of housing accessible to low- and moderate-income households. For example, government housing subsidies reduce developer investment in projects with a portion of the units set aside for “affordable housing.”
Another such strategy, called density bonus law (DBL), allows local governments to reduce or eliminate housing subsidies when the developer includes a greater number of units than permitted under zoning regulations. In exchange for allowing great density (more units), the developer dedicates a portion of the units to low- and moderate-income households.
For the local government, DBL reduces their cost of providing subsidies. For the developer, the greater density makes an unsubsidized project on the parcel profitable through the sale of more units.
However, some developers have abused the DBL system, and California’s legislature has stepped in by tightening non-residential loopholes.
Under the new law, passed by Senate Bill 92, local governments are no longer required to approve incentives, concessions, or waivers for hotel or other transient lodging components located in mixed-use projects requesting use of DBL. [Calif. Government Code §65915(l)(2)]
Further, a concession or incentive is limited to proposed DBL projects with a commercial floor area ratio no greater than 2.5 times the ratio allowed under current zoning. [Gov C §65915(l)(1)(A)]
The new law makes DBL developments primarily residential — not commercial developments with a handful of residential units on the premise primarily for developers to access DBL benefits.
Related article:
New Bill Provides Additional Incentives for Affordable Housing Developers
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