Density bonuses are State-required zoning provisions to incentivize affordable housing development. The density bonus law has been in place in one form or another in California for over 40 years. Density bonus provisions allow housing developers to avoid or modify selected zoning development standards (e.g., density, height, setback, parking) through incentives, concessions, waivers, and reductions to increase the number of affordable housing units than would otherwise be permitted. This serves as an additional incentive to developers as well as an overall cost savings, considering an increase in housing units lowers overall per unit construction costs. 

The law requires that applicants seeking to use a density bonus provide a specified number of affordable units within their project, consistent with Government Code Section 65915. Since 1979, the law has undergone several amendments that address shifts in real estate market conditions and trends, the overall demand for affordable housing products, and construction and housing cost increases leading to decreased access to affordable housing. 

In 2019, the Legislature enacted several new State laws addressing density bonuses that included major changes to the maximum bonus allotted to specific affordable housing projects.  In addition, the laws enabled housing project applicants to receive additional incentives and concessions to streamline affordable housing projects. These incentives and concessions are applied on a sliding scale based on the percentage of affordable units within each of the specific income/affordability thresholds. Every city and county must provide a minimum number of specific incentives or concessions but may provide additional incentives or concessions if desired.

In addition to incentives and concessions, cities and counties may be required to provide waivers and reductions for development standards that will impede a qualifying project. Cities and counties do have the authority to deny waivers and reductions, but only in limited circumstances. For example, a jurisdiction can deny a waiver or reduction if it can substantiate that the waiver or reduction would cause undo harm that cannot be mitigated and result in quality of life and safety impacts to the community and environment.

Parking ranks as one common development standard density bonus provisions affect. Like the sliding scale of incentives and concessions, eligible projects are allowed to reduce required parking, regardless of the parking requirements in a zoning code. Depending on the percentage of affordable units and specific location (e.g., one-half mile of a major transit stop), some projects may qualify to reduce parking requirements to less than one space per unit or be eliminated entirely.

Following a series of State laws referred to as the Housing Package of 2019, the State enacted additional revisions to the density bonus law in 2021. The new laws modify requirements to allow greater maximum density bonuses for certain income thresholds, expand incentives and concessions, and further reduce parking requirements. The intent of new law is to further reduce roadblocks to affordable housing statewide and expedite the project approval process for qualifying projects.

2020 versus 2021 Requirements. There are substantial differences between 2020 and 2021 laws that can easily be overlooked. Below are a series of comparative tables that highlight the primary differences between both assembly bills.

Survey Results

A survey conducted for the San Joaquin Valley Regional Early Action Planning (REAP) Report asked staff from the 70 cities and counties whether they have codified standards that comply with both AB 1763 (2019) and AB 2345 (2020). Of the 41 overall survey responses, 29 responded to this specific question. Only 24 percent of respondents said their jurisdiction had an updated compliant set of density bonus regulations consistent with both assembly bills.  Forty-one percent of respondents said they did not have updated regulations; 21 percent are updating their regulations, either through ordinance amendments or comprehensive zoning code updates. The final 14 percent declined to answer. Based on these survey results, approximately 50 percent of San Joaquin Valley communities are out of compliance with current density bonus regulations.  

Stakeholder Interviews

Stakeholders indicated the primary challenges regarding density bonuses is that few communities are structured to accommodate the more urbanized development the legislation envisions. Dense, multi-family developments are not common in the dozens of small agricultural-oriented communities where overall infrastructure and public transportation is limited. There also was broad consensus that development standards, specifically the parking regulations, mirrored those of more urban environments in the Bay Area, Sacramento, and Southern California regions, which does not accurately address Valley development patterns and lifestyles.

Relevant State Law

Government Code Section 65915. Local Housing Trust Fund Matching Grant Program: Housing and Emergency Shelter Trust Fund Act of 2002 Allocation: Local Housing Trust Eligibility. 

AB 1763. Local Housing Trust Fund Matching Grant Program: Housing and Emergency Shelter Trust Fund Act of 2002 Allocation: Local Housing Trust Eligibility. 

AB 2345. Local Housing Trust Fund Matching Grant Program: Housing and Emergency Shelter Trust Fund Act of 2002 Allocation: Local Housing Trust Eligibility.

Resources

California Legislative Information, Title 7. Planning and Land Use, Chapter 4.3 Density Bonuses and Other Incentives [65915 – 65918]. 

California Legislative Information, Assembly Bill No. 1763, Chapter 666 (October 10, 2019). 

California Legislative Information, Assembly Bill No. 2345, Chapter 197.

Gibson Dunn, California’s AB 2345 Expands and Enhances Density Bonus Law Development Incentives (January 26, 2021).

Reuben, Junius & Rose, LLP, Luper, Mark, California Increases Density Bonus to 50% (November 19, 2020).