The state desperately needs changes to its housing laws. But did a recent fix create more problems than it solved?
By Chris Elmendorf
Updated Nov 20, 2023 8:48 a.m.
A construction crew works at the site for a 316-unit housing development in West Oakland on Nov. 9. A change to the California Density Bonus Law could make housing easier to build in the state. Stephen Lam/The Chronicle
Last month, Gov. Gavin Newsom signed into law a package of more than 50 housing bills. Most seemed inconspicuous, but sometimes changing just a few words in a statute makes a world of difference.
AB1287 is a case in point. It makes a small tweak to a state law that gives developers “bonuses” for building low-income housing.
On the books since the 1970s, the Density Bonus Law has a simple idea at its core: If a developer agrees to dedicate some units in a project to affordable housing, it should be allowed to make its project a little larger than a city’s rules otherwise allow. For example, if a builder dedicates 10% of the units to low-income housing, it receives a size bonus of 20%. This allows a site zoned for 40 units to be developed with 48.
AB1287 makes a seemingly minor change allowing developers to base their number-of-units calculation on what is allowed by a city’s general plan for land use rather than a city’s zoning.
This might sound like a hair-splitting distinction. It is not.
As a lawsuit in Los Angeles shows, parcels restricted to single-family homes by a city’s zoning may be eligible for everything from agricultural uses to large apartment buildings under the terms of the general plan.
Land-use lawyers will tell you this kind of arrangement — restrictive zoning coupled with a permissive plan — became popular in the 1970s after courts started enforcing a requirement that zoning ordinances be “consistent” with a local government’s general plan. Consistency is lawyer-speak for “allowed by,” so if the general plan says “anything from agricultural uses to apartment towers is OK” on a parcel, then a city council can put the parcel in any zoning category without fear of judicial reversal.
The new Density Bonus Law turns the old relationship between the general plan and zoning on its head. The maximum allowable density for a parcel under the general plan, which formerly operated as an upper bound on what a city council could authorize by rezoning legislation, is now the density floor that city planners must approve — plus a bonus! — if the developer of the project agrees to set aside 5% to 10% of the units as low-income housing.
Even wilder, judicial precedent dictates the city must also waive virtually any development or design standard that would interfere with a project “amenity.”
Want big views? Try submitting a design 400 feet taller than the applicable height limit, as the owner of 2700 Sloat Boulevard near San Francisco’s Ocean Beach proposed. Want more parking? That’s an amenity, too — local parking maximums be damned.
The Density Bonus Law has no safeguards for basic good-urbanism requirements. Street grids, bike lanes, pedestrian improvements, mid-block alleys, greenways, you name it — they’re all potentially waivable.
That all said, the Density Bonus Law meat cleaver is also absolutely necessary. Across California, local development standards that might have seemed sensible in isolation have accumulated into an intractable morass. City planners don’t understand how their various requirements interact and thwart development — and they freely admit it.
In a recent self-study, here’s what San Francisco planners told state regulators about housing development in the city:
“What we hear repeatedly is that it isn’t one or two or even 10 things, that constrain the process, instead it is the accumulation of the many hundreds of requirements … the ‘death by a thousand cuts.’ ”
Meanwhile, a few years earlier, Los Angeles’s self-study concluded:
“Los Angeles’ Zoning Code was last comprehensively updated in 1946. Since then, every time a complex issue arose the only practical way to address the problem was to create new zones, entitlements or overlays. … the code has grown to over 600 standard-format pages, with more than 70 types of discretionary entitlements … the Code is not living up to the needs of the City.”
Without a powerful state law to chop through this red tape, little can be built in California’s big cities except by developers who finagle a discretionary dispensation from a city council. That approach has not only failed to solve our crisis-level shortage of housing, it’s been a recipe for corruption.
While a meat cleaver is necessary, California’s Density Bonus Law is a flawed tool, in several key respects.
It’s too broad because it allows developers to waive even basic forms of land-use regulation required for urban connectivity. Sidewalks, bike paths and street grids don’t work if there are big gaps in the network.
It also makes no distinction between urban areas and rural areas, high-price markets and low-price markets, or fire- and flood-prone places and places well suited to dense development. (Oddly, environmentalists had nothing to say as the Legislature bulked up the Density Bonus Law.)
Simultaneously, it’s too narrow, because the Legislature has said it cannot be used to waive “fees or dedication requirements” — which drastically escalate the cost of building in many cities.
The law also rests on a deeply wrongheaded assumption: that the way to solve California’s affordability crisis is to force new market-rate developments to subsidize affordable housing.
Requiring developers to provide money-losing affordable housing as a condition of building approvals drives up the effective cost of construction and keeps the price of market-rate housing unnecessarily high. That makes almost everyone worse off, including the vast majority of lower-income households that must compete in the private market for housing.
California should provide generous housing subsidies to the poor, but not with a de facto tax on the very thing we need more of: housing.
In the near term, any fixes to the Density Bonus Law should be undertaken with great caution, lest NIMBY interests use the opening to blunt it.
Reporting requirements are a reasonable place to start.
Local governments already have to submit data annually to the state Department of Housing and Community Development on proposed and approved housing projects. These reports must include the number of waivers, incentives and concessions requested by and issued to density bonus projects. However, the nature of the waivers isn’t included in the data. Accordingly, we have no idea how many projects threaten reasonable, good-urbanism standards. That needs fixing.
Meanwhile, the Governor’s Office of Planning and Research should use annual reporting data to map density-bonus applications and approved projects. This will help clarify whether the law is being used to further “sprawl” projects in environmentally sensitive areas. (Don’t be confused by the name: Density-bonus projects don’t actually need to be dense.)
More ambitiously, the Legislature may wish to limit waivers of height restrictions and urban-connectivity requirements. Further down the road, the Legislature should consider prescribing allowable densities rather than piggybacking on local general plans that may or may not set appropriate densities in places that are well suited — or poorly suited — for development.
But any fix must honor the Density Bonus Law’s original insight: that city planners, like city councils, are basically in the dark about how all their rules affect the viability of housing projects. The Density Bonus Law solves this problem. It may merit some refinement around the edges, but its core function is absolutely essential.
Chris Elmendorf is a law professor at UC Davis and a resident of San Francisco.