City and County Update Local Density Bonuses

Both the City and County of Los Angeles have updated their local ordinances to reflect the changes SB 1818 and SB 435 made in the state density bonus law.

What is a density bonus?
The basic idea is simple: local governments allow a developer to build at a higher density than the zoning permits in exchange for the developer including some affordable residences. For over 25 years California state law has required local governments to give builders who include affordable residences in their new developments a 25% density bonus. For example, if the zoning for the parcel allows 40 apartments to be built, then a developer could build an extra ten apartments (40 x 25% = 10), bringing the total to 50 apartments, on the condition that at least four of the residences were affordable. The density bonus is really for apartments rather than single family zones.

In 1995, the City of Los Angeles adopted the Affordable Housing Incentives Ordinance to carry out the state density bonus at the local level. This local ordinance also allowed developers to reduce parking for affordable units because the residents qualifying for the affordable residences own fewer cars. In four and a half years between 1999 and 2003, almost 1,400 affordable residences were built in 88 developments throughout the City of Los Angeles using the state density bonus. Los Angeles' experience has been positive. In 2002, in an effort to ease traffic congestion by directing new housing to areas that are well-served by public transportation, the City began allowing 35% density bonuses in designated transit zones.

Where did SB 1818 come from?
As the housing crisis across the state heated up, state legislators, housing advocates and builders have been grappling with how to encourage more housing construction. With rising land and construction costs driving up the costs of new homes, they looked closely at how to encourage building of new homes that are within the reach of regular working people. Not surprisingly, they turned to the State Density Bonus law (Government Code Section 65915). SB 1818 was introduced to make the density bonus more appealing to builders, resulting in a few affordable residences in more new housing developments.

How has SB 1818 changed the state density bonus?
SB 1818 made several changes the state density bonus law, including:

• Putting the density bonus on a sliding scale from 20% to 35% for apartments, and 5% to 35% for condominiums (see SCANPH fact sheet for tables)

• Reducing required parking

• Requiring local governments to grant developers flexibility on one to three land use rules depending on how many affordable residences will be included in the proposed developments

• Requiring local governments to approve requested flexibility in land use rules except for three relatively narrow reasons (not needed by developer, adverse impact that can't be mitigated on either a Historic-Cultural monument or public health and safety).

City of Los Angeles
In most respects, the City of Los Angeles ordinance to carry out the changes made in the state density bonus law by SB 1818 closely follows state law, often using the exact same words. However, the state law is very general in the area of flexibility on land use rules – also called concessions or incentives. The City ordinance sets up a two-tiered approach.

The first tier would be for flexibility for items on a menu, and the second tier would be for flexibility for items not on the menu. The idea is to set City policy on what are generally acceptable concessions without resorting to a case-by-case review. The proposed menu allows 20% reduction from current zoning requirements for yards, setbacks, lot coverage, lot width, floor area, height and on-site open space.

Since state law gives builders the right to ask for any flexibility on any planning rule, the City is proposing a second tier of off-menu items. These off-menu requests would trigger a case-by-case review process similar to a Conditional Use Permit, except the grounds for denying would be very narrow, as described above.

The text of the city's ordinance adopted is available at the city website.

What do affordable housing developers think of the City ordinance?
The Southern California Association of Non-Profit Housing (SCANPH) studied the proposal closely and expressed concern about unintended consequences for affordable housing developments and for urban design.

The purpose of the state density bonus is to encourage more affordable residences, and the law is clear about the by-right nature of the density bonus. SCANPH argues that City should treat density bonus applications in a “ministerial” fashion, because the City doesn't have discretion to deny applications that meet the criteria in state law. In terms of concessions, SCANPH is arguing for a more tailored approach than a flat 20% reduction in a number of zoning rules. Finally, SCANPH is concerned that the ordinance does not make transit areas more appealing enough to effectively attract development there.

Read Livable Places’ memo to the PLUM Committee.