Legislation would maximize affordable housing funding by allowing developments to be denser and taller
San Francisco, CA—Assemblymember David Chiu (D-San Francisco) announced legislation today to boost affordable housing production in California and better utilize affordable housing funding. Assembly Bill 1763 will allow for taller and denser affordable housing developments on 100 percent affordable projects through the creation of an enhanced affordable housing density bonus.
“We need to make our scarce affordable housing funding stretch farther,” said Assemblymember Chiu. “By building denser and taller affordable housing projects, we can add more affordable units to housing struggling families and reduce our housing shortage.”
California’s housing crisis is felt most acutely by low-income renters due to a significant shortage of units affordable to the state’s lowest income earners. Over 2.2 million extremely low- and very low-income renter households are competing for just 664,000 affordable rental units. California would need to add 1.5 million affordable housing units to the housing market to adequately address this shortage.
Funding for affordable housing is always in short supply and is the main barrier to production. However, low-density zoning is also a barrier to developing affordable housing. Affordable housing projects often require added density in order to make the projects financially viable. By allowing more units to be built within a single project, developers are able to cut down on costs of each unit.
A density bonus is an exemption granted to affordable housing developers that allows for more units per acre beyond what local zoning rules allow. Existing law allows for a 35 percent increase in density for projects that contain 20 percent affordable housing. However, by not distinguishing between developments that have 20 percent affordable units and developments with a higher percentage of affordable units, projects with more affordable housing are put at a competitive disadvantage.
AB 1763 would allow 100 percent affordable housing projects to seek an 80 percent increase in density and request up to four incentives and concessions from local governments. Projects near transit would have no limit on density. Housing near major transit hubs could add up to three floors, and housing near less frequent transit could add two floors.
This new effort builds upon Assembly Bill 2162, passed in 2018, which granted by-right approval of supportive housing projects in California. Together, these two policies would stretch affordable housing dollars further by allowing developers to build more affordable units without costly approval delays.
The California Housing Consortium (CHC) is sponsoring AB 1763.
“CHC is proud to join Assemblymember Chiu in finding creative solutions to provide the affordable homes low-income families and seniors need in their communities,” said Ray Pearl, Executive Director of the California Housing Consortium. “By enhancing the density bonus for housing that is specifically intended for low-income families, as AB 1763 targets, we can build the homes needed statewide and reduce barriers affordable homebuilders face as they try to ensure more Californians have a safe, affordable place to live.”
The bill is expected to be heard in an Assembly policy committee in April.