With the new year comes the enaction of hundreds of new state laws. Four of them may be of particular interest to developers and housing advocates.
In September 2016, Governor Jerry Brown signed AB 2501, AB 2556, AB 2442 and AB 134 to amend the State Density Bonus Law, which permits developers to exceed certain local zoning restrictions in exchange for providing subsidized affordable housing within their projects. All four laws went into effect on January 1, 2017, and the Los Angeles Department of City Planning has now issued a memo detailing the policy changes that have been implemented as a result.
This law expands the types of housing which can qualify a project for a density bonus, assuming the specialized units are set aside for very-low income households over a period of 55 years.
- 10 percent of units for transitional foster youth;
- 10 percent of total units reserved for disabled veterans;
- 10 percent of total units reserved for homeless persons.
Units designated for these populations will qualify a project for an additional density bonus of 20 percent of the total number of specialized units. Since they are income restricted, they also qualify projects for the standard density bonus.
For example, a site that allows 100 residential units with 10 units set aside for transitional foster youth at the very low income level can qualify for an additional 35 units. That figure is determined by granting an additional 33 units for providing very low income housing, plus an additional 2 units for targeting transitional foster youth.
The law attempts to streamline the density bonus process by requiring municipalities to provide applicants with a clear timeline and list of all information required to complete a density bonus application. Per the memo, the City of Los Angeles is already in compliance with this component of the law.
Additionally, AB 2501 further amends and clarifies the density bonus law as follows:
1. Density calculations resulting in a fractional number will be rounded up to the next whole number. This applies to:
- Base density;
- Number of bonus units;
- Number of affordable units required to be eligible for the density bonus;
- Number of replacement unitsNumber of required parking spaces.
2. The ability of local jurisdictions to require special studies is eliminated, unless they meet the provisions of state law
- Financial pro-formas and third-party reviews are no longer required for entitlement cases pending with the Planning Department or any new density bonus case filings.
3. “Density bonus” is defined as a density increase over the maximum allowable gross residential density at the time of the application.
4. Requested density bonus incentives or concessions will be granted unless the City makes a written finding – with substantial evidence – of any of the following:
- The incentive or concession does not provide cost reductions necessary for providing affordable housing.
- The incentive or concession has an adverse impact on the public health, safety, the physical environment, or any property listed on the California Register of Historical Resources and for which there is no means of mitigating said impact without making the project unaffordable.
- The incentive or concession goes against state or federal law.
The law clarifies the implementation of required replacement units in density bonus projects, a concept first touched by by AB 2222 in 2014. It stipulates that any replacement units must contain at least the same number of total bedrooms as the units being replaced, thus preventing developers from swapping multi-bedroom dwellings for smaller apartments.
- For any dwelling units occupied at the date of application, if the income category is not known, it is presumed that they were occupied by lower income families. This is definied as a household earning less than 80 percent of the Los Angeles area median income, a designation that would apply to an estimated 67.5 percent of Los Angeles family units.
- For any dwelling units vacated or demolished within a five-year period preceding the application, if the income category is unknown, it is presumed that they were occupied by low- or very-low income households in the same proportions seen citywide. Low-income houlseholds are definied as those making between 51 and 80 percent of the L.A. area median income, which accounts for 18.8 percent of L.A. households. Very low income households earn less than 50 percent of the area median income, and account for 48.7 percent of local renters.
The law grants development bonsues for non-residential developers who partner with affordable housing developers in their commercial projects. It remains in effect until January 1, 2022, unless repealed before then.
Commercial developers who enter into such an agreement to provide affordable housing either on-site or off-site may be granted any of the following incentives, with approval by the Planning Department:
- Up to a 20-percent increase in maximum allowable density;
- Up to a 20-percent increase in maximum allowable floor area ratio;
- Up to a 20-percent increase in maximum height requirements;
- Up to a 20-percent reduction in minimum parking requirements;
- Use of limited-use or limited-application elevator for upper floor accessibility;
- An exception to a zoning ordinance or other land use regulation.
To qualify for these bonuses, the affordable housing provided through the project must meet the following criteria:
- The partnering housing developer shall provide 30 percent of total units for low income households or at least 15 percent of total units for very low income households.
- The agreement between the housing and commercial developers will make clear how the commercial developer will contribute to affordable housing, and requires approval from both the Planning Department and Housing and Community Investment Department.
- The commercial developer can build the units, provide land to an affordable housing developer either on-site or off-site, or make a payment to an affordable housing developer that can be used towards the cost of an affordable housing project.
- The development bonus will only be granted if the housing replacement provisions of the California Health and Safety Section 65915 (c)(3)(A) are met.
- The developer of the affordable units will begin and completion construction of the housing units according to an agreed upon timeline or the city may withold a certificate of occupancy for the commercial component of the project until said units are completed.
- A development bonus will not include a reduction or waiver of payment of a fee for affordable housing.
- Off-site affordable units must be located within Los Angeles city limits, in close proximity to public amenities and within a half-mile of a major transit stop.