Implementing State Density Bonus Law in Berkeley
November 13, 2014
City of BerkeleyPlanning & DevelopmentDepartment
State Density Bonus Law
Adopted in 1979, amended several times since
Main purpose is to promote production of affordable housing
Applies only to projects with 5 or more dwelling units (does not apply to group living)
State Density Bonus Law
Density Bonus = “a density increase over the otherwise maximum allowable residential density as of the date of [project] application.”
State Density Bonus Law
Maximum allowable residential density = “the density allowed under the zoning ordinance and land use element of the general plan, or if a range of density is permitted, the maximum allowable density for the specific zoning range and land use element of the general plan applicable to the project.”
State Density Bonus Law
Minimum affordability required (without bonus units):
>10% lower income (80% AMI)>5% VLI (50% AMI)Senior projectsCondo project with >10% moderate
income (120% AMI)
State Density Bonus LawRequired bonus for projects with VLI
units:
% VLI Units % Density Bonus5 206 22.57 258 27.59 3010 32.511 35
State Density Bonus Law
Required concessions/incentives for project with VLI units (without bonus units):
% VLI Units # of concessions/incentives 5 1 10 2 15 3
State Density Bonus Law Definition of “concession or incentive”:
“A reduction in site development standards or a modification of zoning code requirements… including, but not limited to, a reduction in setback and square footage requirements and in the ratio of vehicular parking spaces…”
“Approval of mixed-use zoning…”
“Other regulatory incentives or concessions proposed by the developer or the city… that result in identifiable, financially sufficient, and actual cost reductions.”
State Density Bonus Law
Examples of concessions awarded on previous projects in Berkeley
Additional ceiling heightReduced parkingReduced open spaceGround floor commercial space (in
what would otherwise be an all-residential building)
State Density Bonus Law Concessions must be granted unless City
finds that the requested concession:
Is not required to provide for affordable housing costs
Would have a specific adverse impact, as defined in 65589.5, upon public health and safety or the physical environment, or on any property listed on the California Register of Historical Resources, and for which there is no feasible mitigation without rendering the project unaffordable
Would be contrary to state or federal law
State Density Bonus LawWaivers or Reductions
Basis: 65915(e)(1): “In no case may a city… apply any development standard that will have the effect of physically precluding the construction of a development… at the densities or with the concessions or incentives permitted by this section. An applicant may submit to a city… a proposal for the waiver or reduction of development standards that will have the effect of physically precluding [a project with] the densities or concessions or incentives permitted under this section…”
State Density Bonus Law
Waivers or Reductions Waivers or reductions do not reduce or
increase the number of concessions/incentives – they implement the required concessions/incentives (and the density bonus)
State Density Bonus Law
Recent amendment (AB 2222): Affordability required for 55 years
(previously 30 years) Existing affordable units (or affordable
units demolished or vacated in last 5 years) must be replaced as part of new project, at same level of affordability as existing
Applies to applications submitted by January 1, 2015
Berkeley’s Density Bonus Procedures:
Affordable Housing Mitigation Fee
Based on nexus studyApplies to projects with 5 or more new
rental unitsRequires fee of $28K per market-rate unitFee waived if 10% of total market-rate
units (including density bonus units) are provided as VLI units – works out to 9.1% of total
Berkeley’s Density Bonus Procedures:
Density Bonus = a density increase over the otherwise maximum allowable residential density…[65915.(f)]
Dilemma: Most housing projects are located in district without density standards – what is “maximum allowable density” in Berkeley?
Berkeley’s Density Bonus Procedures:
General Plan Density Standards
The General Plan provides density ranges but states that these are “for general planning purposes” and “are not intended to be used as standards to determine the maximum allowable density on a specific parcel,” and that “allowable densities… are established in the more detailed and specific Zoning Ordinance.”
ZONING DISTRICTS WITH NO DENSITY STANDARDS
Types of Projects Allowed in these Zoning Districts:
Mixed-Use Projects• Commercial• Residential
Commercial Districts and MU-R
Multi-Family Residential Projects
Commercial Districts, R-3,R-4, R-S, R-SMU
Four Basic Steps
1) Calculate the “Base Project”2) Calculate Density Bonus3) Review Concessions4) Grant waivers/reductions of
development standards
Step 1: Define the Base Project
Project Site
STREET
ADJACENT LOT
ADJACENT LOT
Conditions:1. Comply with all codes
(zoning, building, fire, etc.)
2. Substantially consistent with “by-right” portion of proposed project (e.g. setbacks, commercial uses, etc.)
“Maximum Allowable Residential Density”
Site of Proposed Project
STEP 1B: DETERMINE PROPOSED PROJECT’S AVERAGE RESIDENTIAL UNIT SIZE
A. Proposed Residential Area (sq. ft.)
B. Proposed Number of Units
C. Average Unit Size
A / B = C
Results Thus Far:
STEPS ITEM VALUE
1.A Base Project Floor Area 40,000 sq. ft
1.B Average Unit Size 2,000 sq. ft
1.C Base Project Unit Count 20 units
2.A # of Affordable Units
% of Affordable Units
2.B % Granted for Density Bonus
2.C # of Density Bonus Units
Proposed Density Bonus Project
Step 2: Define the Density Bonus Project
4 Affordable Units = 20%
% Granted for Density
Bonus = 35%
Density Bonus Units
= 7
Total Possible Units:
27
Results:
STEP ITEM VALUE
1.A Base Project Floor Area 40,000 sq. ft
1.B Average Unit Size 2,000 sq. ft
1.C Base Project Unit Count 20 units
2.A # of Affordable Units 4 units
% of Affordable Units in Base Project
20%
2.B % Increase Granted for Density Bonus
35%
2.C # of Density Bonus Units 7 units
Proposed Density Bonus Project 27 units
Concession Analysis
Project Assumptions
Base Project (100% market rate)
10% Very Low Income units
35% Density Bonus
C. Density Bonus & Concessions
Units 20 MR 18 MR2 BMR
25 MR3 BMR
25 MR3 BMR
Ceiling height
8 ft. 8 ft. 8 ft. 9 ft.
Yield (NOI/ Costs)
5.2% 4.5% 4.9% 5.2%
Return on Equity (Cash Flow/ Cash Equity)
3.5% 3.0% 3.3% 3.4%