Law will maximize affordable housing funding by allowing developments to be denser and taller
Los Angeles, CA—A bill authored by Assemblymember David Chiu (D-San Francisco) to boost affordable housing production in California was signed by Governor Gavin Newsom today. Assembly Bill 1763 will allow for taller and denser 100 percent affordable housing developments 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 will add more affordable units to help house 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 the costs of each unit.
Housing developers can get an increase in density, more units per acre beyond what local zoning rules allow, if they include a percentage of affordable units. Developers that restrict 20 percent of the units in a development for affordable housing get a 35 percent increase in density. However, under previous law, housing developments where 100 percent of the units are affordable were also only entitled to a 35 percent density bonus.
AB 1763 will 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 will have no limit on density. Housing near major transit hubs can add up to three additional floors. Additional density and height will give affordable housing developers a competitive advantage over developments with fewer affordable units.
This effort to increase density in affordable housing projects builds upon Assembly Bill 2162, signed into law in 2018, which granted by-right approval of supportive housing projects in California. Together, these two policies will stretch affordable housing dollars further by allowing developers to build more affordable units without costly approval delays.
The California Housing Consortium (CHC) sponsored AB 1763.
“As the sponsor of AB 1763, the California Housing Consortium worked closely with Assemblymember Chiu on this legislation, and we want to thank the Assemblymember for his leadership and support in championing the cause of affordable housing," said Ray Pearl, Executive Director of the California Housing Consortium. “This legislation is one of the most significant policy changes the state has ever made to increase the production of affordable housing. It will allow every single new affordable housing development in California to include 80% more units than it can today—with options for even more density for housing within ½ mile of transit. Every one of these units represents an opportunity to house a California family that can’t afford to pay rising rents. Paired with new funding and the recent expansion of the state's housing tax credit program, this bill will ensure tens of thousands of lower-income Californians have a safe, affordable place to call home."
AB 1763 will take effect on January 1, 2020.