Implementing State Density
Bonus Law in Berkeley
November 13, 2014
City of Berkeley
Planning & Development
Department
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
3
main concepts:
Density Bonus
Concessions/Incentives
Waivers/Reductions
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 projects
 Condo project with >10% moderate
income (120% AMI)

State Density Bonus Law
Required bonus for projects with VLI units:
% VLI Units
 5
 6
 7
 8
 9
 10
 11
% Density Bonus
20
22.5
25
27.5
30
32.5
35
State Density Bonus Law
Required concessions/incentives for project
with VLI units (without bonus units):
% VLI Units

5

10

15
# of concessions/incentives
1
2
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 height
 Reduced parking
 Reduced open space
 Ground 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 Law
Waivers 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 study
Applies to projects with 5 or more new
rental units
 Requires fee of $28K per market-rate
unit
 Fee 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 Bonus
3) Review Concessions
4) Grant waivers/reductions of
development standards
Step 1: Define the Base Project
“Maximum Allowable Residential Density”
Project
Site
Site of Proposed
Project
Conditions:
1. Comply with all codes
(zoning, building,
fire, etc.)
2. Substantially
consistent with “byright” portion of
proposed project
(e.g. setbacks,
commercial uses,
etc.)
Step 1A Result: Square Footage, Residential Use
Green = Residential
Blue = Commercial
STEP 1B: DETERMINE PROPOSED PROJECT’S
AVERAGE RESIDENTIAL UNIT SIZE
A/B=C
A. Proposed Residential Area (sq. ft.)
B. Proposed Number of Units
C. Average Unit Size
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%
Total Possible
Units:
% Granted
27 for
Density Bonus
= 35%
Density Bonus
Units = 7
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
Base
Assumptions Project
(100%
market
rate)
10%
35%
C. Density
Very
Density Bonus &
Low
Bonus
Concessions
Income
units
Units
20 MR
18 MR
2 BMR
25 MR
3 BMR
25 MR
3 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%
Step 4: Waivers/Reductions granted
(option 1)
Step 4: Waivers/Reductions granted
(option 2)