Legislative Update – December 2004

Q & A on Density Bonus Law Available on CEQA Website

Got questions on how to implement SB 1818? CCAPA will provide the answers. CCAPA published a Q & A on implementation of SB 1818 on its website at www.calapa.org by January 1, 2005.

  1. A reduction in site development standards.
  2. A modification of zoning code requirements (including a reduction in setbacks, square footage requirements, or parking spaces, or architectural design requirements that exceed the minimum building standards)
  3. Approval of mixed use zoning in conjunction with the housing project if commercial, office, industrial, or other land uses will reduce the cost of the housing development, and if such nonresidential uses are compatible with the project.
  4. Other regulatory incentives or concessions proposed by the developer or the city or county that result in identifiable cost reductions.

If the developer is not granted the incentive he or she prefers to help the project pencil out, or if development standards do not allow the developer to achieve the density bonus granted, he or she can take the city or county to court.

SB 1818 makes a number of key changes in the current density bonus law, but does not appear to make it any easier to use. And, it is certainly not any easier to understand.

First, it lowers the number of housing units required to be provided at below market rate in order to qualify for a density bonus as follows:

  1. From 20 percent to 10 percent of the total units of a housing development, for lower income households.
  2. From 10 percent to 5 percent of the total units of a housing development, for very low income households.
  3. From 50 percent of the total units for seniors to any senior citizen housing development as allowed under existing law.
  4. From 20 percent to 10 percent of the units in a condominium development, for moderate-income households.

Second, it lowers the density increase from 25 percent to 20 percent for low, very low, or senior housing and lowers to 5 percent for moderate income, with respect to the number of extra units that may be ncluded over the otherwise maximum allowable residential density under the local zoning ordinance.

Third, it requires that the density bonus increase incrementally, up to a new maximum of 35%, according to the following:

  1. For each one percent increase above 10 percent for lower income households, the density bonus will increase by 1.5 percent to a maximum of 35 percent.
  2. For each one percent increase above five percent for very low income households, the density bonus will increase by 2.5 percent to a maximum of 35 percent.
  3. For each one percent increase above 10 percent for moderate-income households, the density bonus will increase by one percent to a maximum of 35 percent.

And it requires local governments to provide a developer the following number of incentives or concessions if below market rate units are included within the project:

  1. One incentive or concession if the project includes at least 10% of the total units for low-income, or 5 percent very low-income, or 10 percent for moderate-income households.
  2. Two incentives or concessions if the project includes at least 20 percent of the total units for low-income, or 10 percent very low-income, or 20 percent for moderate-income households.
  3. Three incentives or concessions if the project includes at least 30 percent of the total units for low-income, or 15 percent very low-income, or 30 percent for moderate-income households.

units are actually moderate income. But, upon sale of the unit, it allows the seller to keep the value of any improvements, the down payment, and the seller’s proportionate share of appreciation. It also requires the local government to recapture its proportionate share of appreciation, which must be used within three years for promotion of affordable homeownership.

Sixth, it provides a 15 percent density bonus to the developer of any market rate housing project who donates land to a local government that could accommodate housing for very low income households equal to at least 10 percent of the number of units in the market rate development. For each one percent increase above the 10 percent, the density bonus must increase by one percent up to a maximum combined mandated density increase of 35 percent. To be eligible for the bonus for donated land, all of the following conditions must be met:

  1. The applicant must donate and transfer the land no later than the approval of the final subdivision map, parcel map, or development application.
  2. The land being donated must be suitable to accommodate at least 10% of the number of residential units of the proposed development.
  3. The transferred land is at least one acre or can accommodate 40 units, has the appropriate general plan designation, is appropriately zoned for affordable housing, can be served by infrastructure, and the land has all the necessary permits and approvals.
  4. The land is subject to deed restrictions ensuring continued affordability.
  5. The land is donated to the local agency or to a housing developer approved by the local agency.
  6. The transferred land shall be either within the boundary or close to the proposed development.

Seventh, the bill expands the definition of “housing development” to include a subdivision, or a planned unit development, or condominium project; requires that incentives or concessions offered by the local government result in identifiable, financially sufficient, and actual cost reductions; and, clarifies that local governments may still grant density bonuses greater or lower than what is provided under these provisions.

Eighth, SB 1818 provides that, upon the developer’s request, the local government may not require parking standards greater than the following (the developer may, however, request additional parking incentives or concessions):

  1. Zero to one bedroom: one onsite parking space.
  2. Two to three bedrooms: two onsite parking spaces.
  3. Four or more bedrooms: two and one-half parking spaces.

Finally, according to the sponsors of the bill, nothing in this bill affects or otherwise seeks to preempt local ordinances which may require the inclusion of affordable (low, very low, or moderate-income) units within a housing development.

Got all of that? Still have a few questions? CCAPA will provide some answers. We’ve already received quite a few confused e-mails from CCAPA members asking for help. Some of the questions we will answer include:

  1. What are the major provisions of the new law?
  2. Does this law apply to charter cities and charter counties?
  3. Should a local government agency adopt an ordinance complying with the new law by reference or should the agency adopt a separate ordinance customized for the jurisdiction?
  4. Does a local government agency need to conduct a CEQA analysis prior to adopting changes to the local ordinances in order to comply with the new law?
  5. How does the new law impact existing inclusionary housing requirements that local government agencies may have?
  6. Can a local government agency create an administrative procedure to grant the density bonus?
  7. Can a local government agency modify its zoning ordinance or adopt guidelines to help define the concessions required under the new law?
  8. Can a local government agency require design review for affordable housing projects, even if it renders the project unaffordable?
  9. If a developer is proposing a mixture of the types of affordable housing (e.g., 5% very low plus 10% low income units) how is the density bonus calculated?
  10. If the density bonus for an affordable project exceeds the density in the general plan and the new law states that there is not a requirement to amend the general plan to accommodate the project, how does a local government agency make the finding that the project is consistent with the general plan?
  11. Is there a requirement for continued affordability for moderate-income condominium and planned developments?
  12. Can a local government agency place additional resale restrictions on moderate-income condominium and planned developments?
  13. Does the new reduced parking requirements apply to the affordable units only, or to the entire project?
  14. Can local government agencies require guest parking for affordable projects?
  15. Can a developer request concessions or reduced parking without requesting a density bonus?
  16. Are affordable projects exempt from CEQA, or can a local government agency require negative declarations or environmental impact reports for affordable projects with inadequate parking?
  17. Does the new law allow for protection of existing historic structures that have local historic designations and not state or federal designations?

CEQA Guidelines Up for Review Again

The Resources Agency is starting a new three-year process to revise the CEQA Guidelines again. The first step is a request by Resources for suggested revisions to the Guidelines. Those suggestions are due January 14, 2005 to Sharon Broderick at the Resources Agency.

To review the most recent CEQA Guidelines as adopted September 7, 2004, go to ceres.ca.gov to the Guidelines.

If you have any suggested revisions to the Guidelines, please send them to me at [email protected] by January 7, 2005. I will then put them together and send the finalist of revision suggestions to Resources by January 14. We appreciate your help.

The legislative analysis of this bill sounds straight forward. But, as any of you who have reviewed this law can see, its language is cloudy at best. There is no clear picture of how this bill should be implemented, or how it will work with other local ordinances already on the books. The bill is effective on January 1.

According to the Senate floor analysis of the bill, existing density bonus law is designed to allow public subsidies to be reduced or even eliminated by allowing a developer to include more total units in a project than would otherwise be allowed by the zoning in order to spread the cost of the affordable units over the project as a whole. The idea is to give developers regulatory incentives in place of additional subsidy for providing affordable housing.

But in reality, even existing density bonus law is difficult to understand and navigate and is not used widely. As a result, to-date it has not been a major factor in most cities and counties. It remains to be seen whether this bill changes that.

Under existing law, cities and counties are required to grant a density bonus and at least one other specified incentive, or other housing incentives of equivalent value, to a developer who agrees to construct an affordable housing development of five or more units unless the local government makes a finding that the bonus and incentives are not needed to achieve affordability. To qualify for the benefits of this provision, a proposed housing development must contain at least 10 percent of the units affordable to very low income households, 20 percent of the units affordable to low income households, 20 percent of the units in a condominium development affordable to moderate income households, or 50 percent of the units reserved for seniors.

The density bonus must be at least 25 percent over the existing maximum density for the site, except that the density bonus for condominium projects with 20 percent of the units affordable to moderate income households is 10 percent. The additional incentive the local government must provide may include any of the following