Density Bonus Law: Why Affordable Housing is Badly Needed in California

As the single-family home market continues to struggle, the focus on the multifamily sector has intensified. In order to make these projects financially feasible, California developers often rely on Government Code Section 65915, also known as the Density Bonus Law.

As the single-family home market continues to struggle, the focus on the multifamily sector has intensified. In order to make these projects financially feasible, California developers often rely on Government Code Section 65915, also known as the Density Bonus Law, which is one of many California statutes reflecting “an important state policy to promote the construction of low income housing and to remove impediments to the same.” (Building Industry Assn. v. City of Oceanside (1994) 27 Cal.App.4th 744, 770; Gov. Code § 65582.1(f).)

Density bonus ordinances, either planned or adopted, are found throughout the U.S. and Canada, including: Austin, Texas; St. Petersburg, Florida; Portland, Oregon; Clarkstown, New York; Salt Lake City, Utah; and Lehigh Valley, Pennsylvania.  Most of these local density bonus awards are tied to the provision of certain thresholds of affordable units, while other jurisdictions provide density bonuses for projects meeting certain green building or sustainability targets.

“The purpose of [California’s] Density Bonus Law is to encourage and provide incentives to developers to include low- and moderate-income housing units in their developments.” (Wollmer v. City of Berkeley (2009) 179 Cal.App.4th 933, 940.) It does so through a mechanism of awarding certain affordable housing projects with “one or more itemized concessions and a ‘density bonus,’ which allows the developer to increase the density of the development by a certain percentage above the maximum allowable limit under local zoning law.” (Id. at 941.)

When the legislature adopted the Density Bonus Law in 1979, it declared that a housing shortage crisis must be addressed and that the state should rely on local governments to provide the necessary increased housing stock, “provided that such local discretion and powers not be exercised in a manner to frustrate the purposes of this act.” (Notes to Stats. 1979, c. 1207, p. 4738, sec. 3.) Despite these legislative mandates, many cities resist such projects, in part due to neighborhood opposition that often arises from multifamily projects, particularly those including affordable units. As a result, some cities argue that the Density Bonus Law doesn’t affect their broad decision-making discretion under their police powers, which is summarized in Richeson v. Helal (2007) 158 Cal.App.4th 268, 277.

The police power is an exercise of the sovereign right of the government to protect the lives, health, morals, comfort and general welfare of the people. A city’s police power under this constitutional provision is as broad as that of the state legislature.

Although the police power is broad, it must not “conflict with the general laws.” (Cal. Const. Art. XI, § 7.) A local regulation conflicts with the “general laws,” including state statutes such as the Density Bonus Law, if it “duplicates, contradicts or enters an area fully occupied by general law, either expressly or by legislative implication.” (Viacom Outdoor, Inc. v. City of Arcata (2006) 140 Cal.App.4th 230, 236.) A local measure facially conflicts with, and is preempted by, the Density Bonus Law when it impedes the latter’s promotion of the construction of low-income housing. (Building Industry, 27 Cal.App.4th at 770, 772.) In Friends of Lagoon Valley v. City of Vacaville (2007) 154 Cal.App.4th 807, 830, the court examined the Density Bonus Law and its relationship to the city’s police powers, and held that a local ordinance’s imposition of a higher threshold for a project to qualify for a density bonus would be preempted by the Density Bonus Law and void.

Recent appellate decisions, including a second case involving Mr. Wollmer—Wollmer v. City of Berkeley (2011) 122 Cal.Rptr.3d 781—decided in March, reaffirms a city’s ability to apply broadly the Density Bonus Law in order to promote its goals through the award of excess density bonus units, extra incentives or concessions, and by providing flexibility in granting development standard waivers. (Id. at 791-793 [“Wollmer II”]; Wollmer, 179 Cal.App.4th at 943, 948.)

An area not yet explored by the appellate courts involves a city’s claim that it may exercise its police powers, often through its conditional use permit process, to deny an affordable housing developer’s requests for density bonuses, incentives/concessions, or development standard waivers. By its express terms, however, the Density Bonus Law imposes strict conditions upon such denials. For example, a city’s ability to deny an applicant’s request for an incentive/concession must be based on written findings supported by substantial evidence in the record that the incentive/concession: (1) is not required to provide for affordable housing costs; (2) would have a specific, adverse impact on the public health, safety or physical environment and that there is no feasible mitigation; or (3) would violate state or federal law. (Gov. Code § 65015(d)(1).)

A denial of a request for a development standard waiver is similarly restricted (§ 65915(e)(1)), and the Density Bonus Law does not provide a city with any grounds upon which it can deny a density bonus request.

Therefore, the legislature recognizes that more affordable housing is badly needed in California, and local agencies should not impose roadblocks to thwart such development unless they can make one of the statutory findings above.