Legislation Sets Deadline for Cities to Create Procedures for Processing Density Bonus Applications

Many around the state reacted strongly to the Governor’s May 2016 proposal for a by-right affordable housing production program, which was ultimately abandoned following pressure from special interests. Affordable housing advocates may find some solace during this legislative session in the form of three bills related to density bonus projects, as well as an added incentive to pursue infill development on City-owned property.

Assembly Bill (“AB”) 2501: Action Required by Cities to Create Procedures and Streamline Process

The most extensive of the three density bonus bills is AB 2501 (Bloom) which, among other things, eliminates requirements for developers to perform supplemental feasibility studies when requesting “off-menu” incentives for density bonus projects. Density bonus law previously provided up to three “by-right” or “on-menu” incentives, depending on the extent of affordability. Local agencies often allowed for additional incentives provided these could be justified, commonly in the form of feasibility studies prepared by the applicant. AB 2501 cuts out all of this, and instead compels the public agency to grant the concessions unless the agency itself can demonstrate that they are not required to make the project feasible.

While not all agencies are currently out of compliance with this provision, all will need to adopt procedures and timelines to process density bonus applications to comply with AB 2501’s provisions. RSG is assisting our clients in implementing these changes by drafting these procedures. Other changes under AB 2501 include the rounding up of any “fractional unit” computed from the density bonus calculation – effectively increasing affordable units by a nominal number.

AB 2442 and AB 2556: Additional Broadening of Density Bonus Law

AB 2442 (Holden) provides developers a 20% density bonus if the project includes at least 10% of units affordable at very low income levels to transitional foster youth, disabled veterans, and homeless persons. The affordability of the units must be maintained for 55 years.

AB 2556 (Nazarian) addresses how density bonus projects can be used to replace existing affordable units on the site, even if the income category of the households occupying the property is unknown.

AB 2208: More Future Housing Sites Designated in Housing Element

Current law provides that fulfillment of a community’s regional housing needs can be met through the production of residential property designated in the Housing Element Update. AB 2208 (Santiago) expands this by including airspace above sites owned or leased by a city or county. This nicely aligns with the increased desire of cities to leverage publicly held property to stimulate investment, and it provides more motivation to redevelop these sites with parking and residential uses.

Written by Jim Simon, a Principal at RSG