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California’s Density Bonus Law: 2021 Update

Legislative Change Increases Density Bonus Amount and Parking Benefits

California’s Density Bonus Law provides housing developers with tools to encourage the development of much needed affordable and senior housing. New legislation that took effect on January 1 of this year provides for up to a 50% density bonus to be granted to housing projects consisting of a mix of affordable and market-rate homes, up from the previous maximum 35% density bonus for mixed income developments. The legislation, Assembly Bill 2345, also reduces parking requirements for many projects qualifying for a density bonus, lowers some thresholds for obtaining incentives and concessions from local jurisdictions, and adopts density bonus reporting requirements.

These legislative changes are outlined below and incorporated into the 2021 update of our Guide to the California Density Bonus Law. Please click here to read or print the 2021 Guide. If you have questions about the Density Bonus Law or information in the Guide, please contact the author of the Guide, Meyers Nave Senior Of Counsel Jon Goetz, at 800.464.3559 or jgoetz@meyersnave.com.

Bigger Density Bonus. The amount of density bonus required to be given under California’s Density Bonus Law is set on a sliding scale based on the percentage of affordable units provided. Before 2021, the maximum density bonus was 35% for housing projects which included either 11% very low income units, 20% lower income units, or 40% moderate income units. AB 2345 increased the top range of the density bonus to 50% for housing projects with 15% very low income units, 24% lower income units, or 44% moderate income units. The legislation does not modify the 80% density bonus required to be provided to completely affordable projects.

Parking Reductions. The Density Bonus Law allows qualifying developers, as a matter of right, to obtain lower parking space requirements than what would otherwise be required by local government standards. Before 2021, developers of density bonus projects were automatically entitled to obtain parking requirements of two spaces for two and three bedroom homes by requesting that standard, but AB 2345 lowers this standard to one and one-half spaces for two and three bedroom homes. AB 2345 also reduces the parking requirements for many projects located near accessible major transit stops. Local governments may no longer impose any parking requirements for (1) 100% affordable housing projects located within ½ mile from an accessible major transit stop and (2) 100% affordable senior housing projects that either offer paratransit service or are located within ½ mile from an accessible major transit stop. Parking requirements for projects with at least 11% very low income or at least 20% lower income units, which are located within ½ mile from an accessible major transit stop, are reduced from ½ space per bedroom to ½ space per unit. This change results in a significant reduction in required parking for transit-adjacent density bonus housing projects that include units with two or more bedrooms.

Incentives and Concessions. In addition to the density bonus, developers of affordable projects are entitled to one or more “incentives” or “concessions” from the local jurisdiction to assist in the construction of the project, with the number based on the percentage of affordable units in the project. AB 2345 lowers the required percentage of lower income units required to obtain multiple incentives and concessions.

Reporting Requirements. AB 2345, together with AB 168 which was also approved in 2020, expands the annual housing reporting requirements for local governments to now include information on density bonus projects (Government Code Section 65400).