A More Reasonable Interpretation of the Density Bonus Law?

Tuesday May 18, 2004

From a recent Daily Planet story on University Avenue zoning: “For buildings that include affordable housing ... state law allows [developers] to build 25 percent more space than allowed under zoning requirements.” This is a succinct statement of Berkeley city staff’s interpretation of state law. It is not, however, exactly what the law says. 

California Government Code section 65915 says that when a developer reserves 20 percent of total units for rental to lower-income households, a project may exceed by 25 percent the “otherwise maximum allowable residential density.” Thus the key question in interpreting this law as it applies to any particular project is what density would be allowed if the developer did not include 20 percent affordable units. 

In Berkeley, unlike most cities in California, our zoning code does not specify density by number of dwelling units per acre. Consequently, for the purposes of section 65915 we extrapolate it from the rest of the zoning code and state law, looking at maximum height and lot coverage, floor-area ratios, setbacks, design standards, building codes, and so on to see how many units would be allowed on a particular lot. 

Further complicating matters, in Berkeley we require all residential development of five or more units to include 20 percent affordable units. To close a potential loophole, in much of the city we also prohibit construction of buildings with four or fewer units when there’s room for five or more. 

So back to the key question: If a Berkeley developer does not include 20 percent affordable units, what residential density is allowed? Since market-rate-only developments are prohibited, the answer is zero. This presents a logical conundrum for interpreting section 65915: state law says the developer gets a bonus, but 25 percent of nothing is nothing, which is no bonus. So how do we make the state happy? Clearly we must find a way to reconcile state and Berkeley law. 

One solution is to ignore the “otherwise” and tack the 25 percent bonus on top of the biggest building the code allows—the approach city staff have been using to justify approval of blockbuster projects like 1698 University (Tune-Up Masters). The problem with this approach is that the bonus for the most part produces more market-rate units. For example, given a 20-unit base project, a Berkeley developer would get a 20 percent bonus to build four more market-rate units, and a five percent bonus to build a single additional affordable unit. Clearly this is not the intent of the state law. 

To achieve a more appropriate outcome, we must look at the laws’ intents. State law encourages developers to make 20 percent of their units affordable by rewarding them with 25 percent more room to build than local zoning laws allow. Berkeley law encourages precisely the same goal by prohibiting market-rate-only development. In other words, the two laws seek exactly the same end, the state’s with a carrot, Berkeley’s with a stick. 

Starting from this view, one simple and reasonable way to harmonize the two laws is to calculate the “otherwise allowable” base project just as city staff do now, but excluding the 20 percent affordable units required by Berkeley law. In the hypothetical project described above, the base project of 16 market-rate units would get a 25 percent state density bonus, resulting in four affordable units, the same number required by Berkeley law. 

City staff might challenge this alternative interpretation of section 65915 with the familiar argument that the state prohibits cities from changing laws to diminish development capacity. But the issue here is how to interpret laws already on the books—and the City Council has full power to override staff on matters of interpretation.