Density Bonus Law

What is California's Density Bonus Law? 

California Government Code Sections 65915 – 65918 contain the Density Bonus Law.  It provides developers with tools to encourage the development of affordable and senior housing.  Starting this year, it includes up to a 50% increase in project densities for most projects,  depending on the amount of affordable housing provided, and an 80% increase in density for projects which are 100% affordable. The Law also contains regulations intended to help make the development of affordable and senior housing economically feasible.  These regulations include reduced parking requirements and concessions and waivers to development standards and other City requirements.   The Law is a state mandate.  Projects that are 100% affordable to lower incomes get the maximum density bonus and concessions under the Law.  A developer who meets state law requirements is entitled to receive the density bonus and other benefits as a matter of right.  

What kind of housing projects get to use the Density Bonus Law?

Cities are required to grant a density bonus and other incentives or concessions to housing projects which contain one of the following: 

  • At least 5% of the housing units are restricted to very low-income residents. 
  • At least 10% of the housing units are restricted to lower income residents. 
  • At least 10% of the housing units in a for-sale common interest development are restricted to moderate income residents. 
  • 100% of the housing units (other than manager's units) are restricted to very low, lower, and moderate income residents (with a maximum of 20% moderate).
  • At least 10% of the housing units are for transitional foster youth, disabled veterans, or homeless persons, with rents restricted at the very low-income level.
  • At least 20% of the housing units are for low-income college students in housing dedicated to full-time students at accredited colleges.
  • The project donates at least one acre of land to the City for very low-income units. The land has the appropriate general plan designation, zoning, permits and approvals, and access to public facilities needed for such housing. 
  • The project is a senior citizen housing development (no affordable units required). 
  • The project is a mobile home park age-restricted to senior citizens (no affordable units required).

When you say "Density Bonus" what does that mean?  

A density bonus is the percentage increase in the number of units allowed on a site.  The amount of the density bonus is set on a sliding scale, based upon the percentage of affordable units at each income level, as shown in the chart on the following page.  Maximum density bonus amounts for very low, lower, and moderate income housing were increased by legislation approved in 2019.  The maximum density bonus prior to 2020 was 35%.  Starting in 2020, it is now up to 50% for most lower income projects and 80% for 100% affordable projects.  If the housing development is located within one-half mile of a major transit stop, the density bonus is unlimited. 

A major transit stop is defined as follows: 

  1. An existing rail or bus rapid transit station.
  2. A ferry terminal served by either a bus or rail transit service.
  3. The intersection of two or more major bus routes with a frequency of service interval of 15 minutes or less during the morning and afternoon peak commute periods.

In Morgan Hill, only the train station qualifies as a major transit stop.

DENSITY BONUS CHART

% OF AFFORDABLE UNITS IN PROJECT

VERY LOW INCOME     DENSITY BONUS

LOW INCOME  DENSITY BONUS

MODERATE INCOME     DENSITY BONUS

(for sale only)

LAND DONATION     DENSITY BONUS

SENIOR (no affordable units required)

FOSTER YOUTH/ 

DISABLED VETS/ HOMELESS

COLLEGE  STUDENTS

5%

20%

-

-

-

20%

-

-

6%

22.5%

-

-

-

20% 

-

-

7%

25%

-

-

-

20%

-

-

8%

27.5%

-

-

-

20%

-

-

9%

30%

-

-

-

20%

-

-

10%

32.5%

20%

5%

15%

20%

20%

-

11%

35%

21.5%

6%

16%

20%

20%

-

12%

38.75%

23%

7%

17%

20%

20%

-

13%

42.5%

24.5%

8%

18%

20%

20%

-

14%

46.25%

26%

9%

19%

20%

20%

-

15%

50%

27.5%

10%

20%

20%

20%

-

16%

50%

29%

11%

21%

20%

20%

-

17%

50%

30.5%

12%

22%

20%

20%

-

18%

50%

32%

13%

23%

20%

20%

-

19%

50%

33.5%

14%

24%

20% 

20% 

-

20%

50%

35%

15%

25%

20%

20%

35%

21%

50%

38.75%

16%

26%

20%

20%

35%

22%

50%

42.5%

17%

27%

20%

20%

35%

23%

50%

46.25%

18%

28%

20%

20%

35%

24%

50%

50%

19%

29%

20%

20%

35%

25%

50%

50%

20%

30%

20%

20%

35%

26%

50%

50%

21%

31%

20%

20%

35%

27%

50%

50%

22%

32%

20%

20%

35%

28%

50%

50%

23%

33%

20%

20%

35%

29%

50%

50%

24%

34%

20%

20%

35%

30%

50%

50%

25%

35%

20%

20%

35%

31%

50%

50%

26%

35%

20%

20%

35%

32%

50%

50%

27%

35%

20%

20%

35%

33%

50%

50%

28%

35%

20%

20%

35%

34%

50%

50%

29%

35%

20%

20%

35%

35%

50%

50%

30%

35%

20%

20%

35%

36%

50%

50%

31%

35%

20%

20%

35%

37%

50%

50%

32%

35%

20%

20%

35%

38%

50%

50%

33%

35%

20%

20%

35%

39%

50%

50%

34%

35%

20%

20%

35%

40%

50%

50%

35%

35%

20%

20%

35%

41%

50%

50%

38.75%

35%

20%

20%

35%

42%

50%

50%

42.5%

35%

20%

20%

35%

43%

50%

50%

46.25%

35%

20%

20%

35%

44%

50%

50%

50%

35%

20%

20%

35%

100%

80%

80%

80%

35%

20%

20%

35%

Source:  https://www.meyersnave.com/wp-content/uploads/California-Density-Bonus-Law_2021.pdf

What are concessions?

In addition to the density bonus, the City is also required to provide one or more concessions (also referred to as incentives in the Law) to each project which qualifies for a density bonus.

A concession is defined as:  

  • A reduction in site development standards or a modification of zoning code or architectural design  requirements, such as a reduction in setback or minimum square footage requirements; or 
  • Approval of mixed-use zoning; or 
  • Other regulatory incentives or concessions which actually result in identifiable and actual cost reductions. 

The number of required incentives or concessions is based on the percentage of affordable units in the project.  Starting in 2021, the maximum number of concessions that can be requested by a project was raised from 3 to 4:  

CONCESSIONS

VERY LOW-INCOME PERCENTAGE

LOW INCOME PERCENTAGE

MODERATE INCOME PERCENTAGE

1

5%

10%

10%

2

10%

17%

20%

3

15%

24%

30%

4

100% Low/Very  

Low/Mod  

(20% Moderate allowed)

100% Low/Very  

Low/Mod  

(20% Moderate allowed)

100% Low/Very  

Low/Mod  

(20% Moderate allowed)






The City is required to grant the concession or incentive proposed by the developer unless it can find that the proposed concession or incentive does not result in identifiable and actual cost reductions, would cause a public health or safety problem, would cause an environmental problem, would harm historical property, or would be contrary to Law.   Concessions may be obtained by an affordable project even if the project does not request a density bonus.

What other advantages does affordable housing have under the Density Bonus Law?

Waiver of Development Standards   

If any City development standard would physically prevent the project from being built at the permitted density and with the granted concessions, the developer may propose to have those standards waived or reduced. The City or county is not permitted to apply any development standard that physically precludes the project's construction at its permitted density and with the granted concessions. The City is not required to waive or reduce development standards that would cause a public health or safety problem, cause an environmental problem, harm historical property, or would be contrary to Law. The waiver or reduction of a development standard does not count as a concession, and there is no limit on the number of development standard waivers that may be requested or granted.

Maximum Parking Requirements 

The City may not require more than the following parking ratios for a density bonus project: 

Studio

1 space

1 Bedroom

1 space

2 Bedroom

1.5 spaces

3 Bedroom

1.5 spaces

4 Bedroom

2.5 spaces

Special Parking Requirements 

Lower parking ratios apply to specified projects.  Local jurisdictions can require higher parking ratios if supported by a specified parking study. 

Rental/for-sale projects with at least 11% very low income or 20% lower income units, within a 1/2 mile of an accessible major transit stop

0.5 spaces per unit

Rental projects 100% affordable to lower income, within 1/2 mile of an accessible major transit stop

0 spaces per unit

Rental senior projects 100% affordable to lower income, either with  paratransit service or within a 1/2 mile of accessible bus route  (operating at least eight times per day)

0 spaces per unit

Rental special needs projects 100% affordable to lower income households, either with paratransit service or within a 1/2 mile of accessible bus route (operating at least eight times per day)

0 spaces per unit

Rental supportive housing developments 100% affordable to lower income households

0 spaces per unit

Onsite spaces may be provided through tandem or uncovered parking, but not on-street parking. Requesting these parking standards does not count as an incentive or concession, but the developer may request further parking standard reductions as an incentive or concession. 

Are there any restrictions on affordable housing?

Affordable rental units must be restricted by an agreement that sets maximum incomes and rents for those units. As of January 1, 2015, the income and rent restrictions must remain in place for a 55-year term for very low or lower  income units (formerly, only a 30-year term was required).  

What are considered affordable rents?

 

HCD - RENTAL RATES, Affordable 

# of Bedrooms

Extremely Low (30%)

Very Low 

(50%)

Lower 

(80%)

*Moderate (120%)

*Median 

(100%)

Studio

$743 

$1,239 

$1,487 

$2,725 

$2,478 

1 Bedroom

$850 

$1,416 

$1,700 

$3,116 

$2,833 

2 Bedrooms

$956 

$1,593 

$1,912 

$3,505 

$3,186 

3 Bedrooms

$1,062 

$1,770 

$2,124 

$3,894 

$3,540 


What income levels apply to very low, low, and moderate units?   

Number of Persons in Household:

1

2

3

4

5

6

7

8

Santa Clara County Area Median Income: $141,600

Extremely Low

$33,150

$37,900

$42,650

$47,350

$51,150

$54,950

$58,750

$62,550

Very Low Income

$55,300

$63,200

$71,100

$78,950

$85,300

$91,600

$97,900

$104,250

Low Income

$78,550

$89,750

$100,950

$112,150

$121,150

$130,100

$139,100

$148,050

Median Income

$99,100

$113,300

$127,450

$141,600

$152,950

$164,250

$175,600

$186,900

Moderate Income

$118,950

$135,900

$152,900

$169,900

$183,500

$197,100

$210,700

$224,250