Missing Middle: California Governor Signs Bill to Bolster Middle-Income Housing
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Missing Middle: California Governor Signs Bill to Bolster Middle-Income Housing

Brownstein Client Alert, Oct. 20, 2023

On Oct. 11, 2023, Gov. Gavin Newsom signed this year’s slate of housing bills to “incentivize and reduce barriers to housing and support the development of more affordable homes.” Among the 56 bills signed is AB 1287, the most recent attempt to put further weight behind the state’s Density Bonus Law—the law aimed at incentivizing affordable housing through the use of density bonuses, incentives and concessions and waiver of development standards. The bill was authored by Assemblymember David Alvarez (D-San Diego), a relative newcomer following in the footsteps of other pro-housing lawmakers from the region such as Speaker Pro Tempore Toni Atkins and San Diego Mayor Todd Gloria.

The amendments to the Density Bonus Law are summarized below, but perhaps most significant is the addition of another incentive and concession for middle-income housing, which is often left off the table due to lack of incentives for development.

Changes from AB 1287 include:

  • The bill amends the Density Bonus Law to grant five incentives and concessions, instead of four, to projects that are 100% affordable to lower-income households, except that up to 20% of the units may be for moderate-income households.
  • The bill also adds a provision granting four concessions and incentives to projects that include at least 16% of the units for very low-income households or at least 45% for moderate-income in a development in which the units are for sale.
  • Existing Density Bonus Law allows up to a 50% bonus for the number of homes a developer can build, if they agree to deed restrict either 15% very low-income units, 24% low-income units or 44% moderate-income (for sale) units. The bill grants an additional density bonus up to 100% of base density for those projects that meet and exceed the production of very low-, low-, or moderate-income units, as allowed by current Density Bonus Law.
    • For example, as noted above, under current law, if a developer provides 15% of the units affordable to very low-income units, they receive a max density bonus of 35%. Under current law, if a developer includes 20% of the units affordable to very low-income families (i.e., 5% over the current maximum percentage), they’d still only receive a 35% density bonus. With this bill, however, because the developer provided an additional 5% of the units affordable to very low-income households, the developer is entitled to another 20% density bonus for a total of 55% density bonus (i.e., 35% under current law + 20% under this bill).

The bill was signed alongside and incorporates provisions from companion bills AB 323 and SB 713 which also amend Density Bonus Law:

  • AB 323 prohibits developers from offering affordable housing units built in accordance with a density bonus project or under an inclusionary zoning ordinance for sale to a non-income eligible buyer or to a non-owner occupant, unless the developer can demonstrate no such qualified buyer exists.
  • SB 713 clarifies that Density Bonus Law prohibits a local government from applying any development standard, regardless of how it was adopted, if the standard will have the effect of physically precluding the construction of a development permitted by Density Bonus Law. SB 713 clarifies the definition of “development standards” to include those standards adopted by the local government or enacted by the local government’s electorate exercising its local initiative or referendum power.

As a parting note, when AB 1287 was first introduced, it included a provision clarifying that the Density Bonus Law applies “notwithstanding the California Coastal Act of 1976.” This change would have limited the California Coastal Commission’s authority over a Density Bonus Law project in the coastal zone, which has been the source of much debate over the past several years. However, AB 1287 was amended in the State Assembly on April 26, 2023, to revert back to existing law, which provides that the state’s Density Bonus Law “does not supersede or in any way alter or lessen the effect or application of the California Coastal Act of 1976.” The amendment reflects a longstanding, and apparently ongoing, debate between lawmakers and the Coastal Commission over who will hold ultimate authority to determine the future of housing development in some of the most desirable, and underbuilt, areas in California.

We anticipate the conflict between state housing laws and the Coastal Act will rear its head again in the next legislative session.

This document is intended to provide you with general information regarding AB 1287 and related bills in California. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed.

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