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Density Bonus For Idiots

The California Real Estate Journal does a clarification piece to explain California's Density Bonus Law, as amended by SB435, which is expected to receive Governor Schwarzenegger's The Governator's signature fairly soon. Reading like an "if...then" statement out of Freshman year computer science, the Bill tags onto SB1818 which required cities to provide density bonuses as well as one to three incentives for developers who include affordable units in their projects.

All of this is of course is meant to encourage developers to include affordable units in their projects, while making it more economically feasible to do so. Critics from both side are unhappy, claiming the law does too little to help the poor and puts to high of a burden on the developer. Read more after the jump.

The Journal does a snappy job of explaining what the Bill does.

If at least 5 percent of units are set aside for very low-income households, or if at least 10 percent of the units are set aside for low-income households then the project is eligible for a 20 percent density bonus.

The maximum density bonus of 35 percent is available for projects providing 11 percent very low-income units, 20 percent low income units or 40 percent moderate income units.

The incentives for developers can include reductions in zoning standards, design or parking requirements, and other regulatory incentives "that will result in identifiable, financially sufficient and actual cost reductions for the developer." A developer can receive up to three incentives based upon the number of affordable units included in his project.

One of the more confusing elements of the Law (and there are a lot of them) clarified by SB435, is how to calculate the number of affordable units in a project.

... the bill clarifies that the percentage of affordability for purposes of determining the applicable density bonus is calculated by dividing the number of affordable units by the total number of units before any density bonus is applied. If a project of 100 units includes 10 lower-income units, SB435 has clarified that the developer would be entitled to a 20 percent density bonus for a total of 120 units, 10 of which are affordable.

Got that. Good.
· Bill Clarifies California's Density-Bonus Law [California Real Estate Journal Online]