AB 1763: Legislature allows affordable housing to be built denser and taller

Assembly Bill 1763 permits 100% affordable housing projects to be built denser and taller through its adoption of three game-changing modifications to current law that significantly reduce some of the often prohibitive costs associated with the development of affordable housing. AB 1763 is one of over twenty housing bills approved by the Legislature in 2019, each one taking a different approach to easing the state's housing crisis.

Higher Density Bonus

For housing projects where all units are affordable to low and very low income residents, AB 1763 more than doubles the density bonus to 80%. Before AB 1763, California's density bonus law (California Government Code Sections 65915 -- 65918) focused primarily on projects with a mix of affordable and market rate housing. Existing law provides developers up to a 35% increase in project densities, set on a sliding scale based on the amount of affordable housing provided.

The 80% density bonus is the largest ever provided by state law and is the first time the Legislature has specifically tailored a density bonus to completely affordable housing projects. The 80% density bonus improves the economics of housing projects financed with low income housing tax credits or other affordable housing subsidy programs commonly used in 100% affordable housing projects. If the project is located within a half mile of a major transit stop, AB 1763 goes even further by eliminating all restrictions on density, and allowing a height increase of up to three stories or 33 feet.

More Incentives and Concessions

In addition to the density bonus, California's density bonus law provides developers with "incentives" and "concessions" to help make the development of affordable and senior housing more economically feasible, such as reduced setback and minimum square footage requirements as requested by the developer, and financial benefits at the option of the local government. Projects qualifying for a density bonus are currently entitled to one to three incentives and concessions, depending on the amount of affordable units provided. AB 1763 provides a fourth incentive and concession to 100% affordable projects. The local government is required to grant the applicant's proposed concession or incentive unless it would not reduce project costs, would cause public health or safety or environmental problems, would harm historical property, or would be otherwise contrary to law. Qualifying developers are entitled to incentives and concessions even without a request for density bonus units.

Better Parking Options

California's density bonus law also sets special parking ratio requirements for qualifying projects, ranging from one space for one bedroom units to two and one-half spaces for four bedroom units, which can be much lower than local parking standards require. Lower parking standards apply for density bonus projects adjacent to transit. For housing projects that qualify as a special needs or supportive housing development, AB 1763 completely eliminates all local parking requirements. Reductions in required parking can often be controversial for proposed housing projects, but they can lead to large savings in land costs for those projects.

Jon E. Goetz is a principal at Meyers Nave. You can reach him at (213) 626-2906 or jgoetz@meyersnave.com.