California’s Density Bonus Law: 2020 Update

California’s Density Bonus Law provides housing developers with tools to encourage the development of much needed affordable and senior housing. In 2019, the California Legislature passed new legislation that provides for an 80% density bonus to be granted to 100% affordable housing projects, the largest density bonus ever required under California law. That legislation, Assembly Bill 1763, also requires other benefits to be provided to 100% affordable projects which allows them to be built denser and taller than under prior law. The changes will be particularly helpful to affordable housing projects that qualify for federal and state low income housing tax credits, which are the types of housing projects most often developed as 100% affordable. Effective January 1, 2020, the new legislation reflects the Legislature’s commitment to maintaining and fortifying the Density Bonus Law as a critical tool for incentivizing affordable housing development in California.

These legislative changes are outlined below and incorporated into the 2020 update of our Guide to the California Density Bonus Law. Please click here to read or print out the 2020 Guide. If you have questions about the Density Bonus Law or information in the Guide, please contact the author of the Guide, Meyers Nave attorney Jon Goetz, at 800.464.3559 or jgoetz@meyersnave.com.

Bigger Density Bonus. For housing projects where all of the units are affordable to low, very low and moderate income residents, AB 1763 more than doubles the state-required density bonus to 80%. Before AB 1763, California’s density bonus law provided developers up to a 35% increase in project densities, set on a sliding scale based on the amount of affordable housing provided. The 80% density bonus represents the first time the Legislature has specifically tailored a density bonus to completely affordable housing projects, and has allowed owners to meet affordable rent requirements with the maximum rents allowed under the low income housing tax credit program. If the project is located within a half mile of a major transit stop, AB 1763 goes even further by eliminating all local government limits on density, and allowing a height increase of up to three stories or 33 feet.

More Incentives and Concessions. Prior to the passage of AB 1763, projects qualifying for a density bonus were entitled to one to three “incentives” and “concessions” to help make the development of affordable and senior housing more economically feasible, such as reduced setback and minimum square footage requirements as requested by the developer. AB 1763 provides a fourth incentive and concession to 100% affordable projects. Local governments are required to grant the applicant’s proposed concession or incentive unless it would not reduce project costs, would cause public health or safety or environmental problems, would harm historical property, or would be otherwise contrary to law. Qualifying developers are entitled to incentives and concessions even without a request for density bonus units.

Further Parking Reductions. For 100% affordable housing projects that qualify as a special needs or supportive housing development, AB 1763 completely eliminates all local parking requirements for the project. To qualify for the elimination of parking requirements, special needs projects must offer paratransit service or be located within ½ mile from an accessible bus route.