Density Bonuses and You

Last week we announced that the Business Council would be working with other community partners, including Affordable Housing Now, MBEP, and the Chamber, to advocate in favor of a model density bonus program to be adopted at the County level. As part of that discussion we promised to provide a deeper dive into what a density bonus actually is, and then point to another local program that we think has been successful.

First off, what is a Density Bonus; and why is it important?

Density Bonus programs in California have been around for decades now, but have only been gaining serious traction in the past 20 years or so, and mainly in Southern California. Essentially this state level policy tool provides incremental increases in the level of zoning for a given housing project per incremental inclusion of more affordable housing units. The California wide program for 2018 states that for every 1 percent increase in the amount of affordable housing provided in project, the total density of the project can increase by 2 percent over the existing density allowed for in the local zoning scheme. The program goes even further for providing “very low” income units, which are defined as units restricted to those earning between 30-50% of Area Median Income (AMI). For every additional percentage of units restricted to those earning “very low incomes” you get a 4 percent increase in maximum density.

Beyond the increases in density, development projects that choose to build more affordable housing than what is required by local plans can also pick from a menu of “zoning concessions”. These concessions vary from having reduced parking requirements, to not having to adhere to property setbacks, to even increases in building height. The amount of concessions a developer gets is dependent upon how much affordable housing they build.

The maximum bonus available under state law is a 35 percent increase in density with 3 concessions, which can be achieved through a combination of additional low income and very low income units. However, State law allows for local jurisdictions to go above and beyond this minimum and offer even more incentives for more affordable housing.

This is exactly what San Diego decided to do with their program. Rather than just relying on incremental increases in density, San Diego decided to go above and beyond the state minimum and provide a windfall incentive to those who maxed out their affordable housing provisions. For instance, if a developer restricted 15 percent of their base number of units allowed under local zoning for those earning “very low incomes”, they would get a 50 percent increase in available density and up to 5 zoning concessions! The key here is that developers were properly incentivized to build as much affordable housing as possible. This not only makes it easier to build more housing generally because it’s easier from a financial perspective with more units, but it has also led to a 500 percent increase in the number of affordable units built in San Diego since it’s adoption.

So why is this so important in Santa Cruz County? Well beyond the fact that we have only built 1 new unit of housing for every 10 new people that have come here over the last 25 years, we also haven’t rezoned much land. Also, the latest effort to rezone more land for higher densities, the Sustainable Santa Cruz County Plan, has been delayed for 3 years and is only now beginning environmental review. That means that any new zoning changes aren’t likely to be adopted for at least 2 more years, and then projects could theoretically follow in about 2 years after that–hardly an appropriately timed solution.

Adopting a forward thinking, enhanced Density Bonus Program now could help get around these zoning limitations–if only for marginal increases–but short term increases nonetheless. In looking at the policy options available at this moment, it’s probably the best shot we have at any meaningful progress at the County level in the near term.

So what’s next?

The Business Council is going to continue working with our partners to develop a local version of this model to hopefully be adopted within the next 6 months. Our first step: the Housing Advisory Commission special meeting on May 2nd, 7-9pm in the County Board of Supervisors chambers. We will be there, and with a concrete example of the policy we want to see adopted. Our goal is to dramatically increase the amount of housing, both affordable and market rate, being built in the unincorporated area of the County.

Hopefully you can join us.