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On Sept. 29 the Governor signed SB 1818, which City of Berkeley planner Mark Rhoades has called a “bombshell.” Despite strong concerns expressed by the League of California Cities, the bill had sailed through its final votes: no nays at all in the Senate and only four (including Loni Hancock) in the Assembly. It makes many changes to crucial Section 65915 of the state’s density bonus law. 

SB 1818 comes on top of several other bills that amended that section during the last three years. The cumulative re sult is a dramatic overhaul that sharply increases potential impact on communities, while apparently reducing local governments’ flexibility and power to respond.  

Previous Amendments 

During the dozen years before 2002, Section 65915 had remained largely unchanged. Back then, it provided incentives only for housing developments in which at least 20 percent of the units were affordable for “lower income” households, 10 percent were affordable for “very low income” households, or 50 percent were specifical ly for senior citizens. For all these, cities and counties were required to either (a) grant a requested “density bonus” of 25 percent over the otherwise allowable zoning and general plan level and at least one extra “concession or incentive” (such as a r educed setback requirement), unless the city or county made a written finding that the extra concession or incentive wasn’t needed to make the units affordable, or (b) “provide other incentives of equivalent financial value based upon the land cost per dw elling unit.” In exchange, the affordable units had to stay affordable for 30 years or for a longer time period if required by an applicable assistance program, but only 10 years if the local government didn’t grant an extra concession or incentive. 

Then in 2002, AB 1866 added to 65915 a provision for condo projects in which at least 20 percent of the units were for “moderate income” households. (”Moderate income” generally means up to 120 percent of area median income, adjusted for household size.) For these, cities and counties were required to either (a) grant a requested density bonus of at least 10 percent and at least one extra concession or incentive, unless the city made certain written findings, or (b) provide financially equivalent other incent ives or concessions. In exchange, the moderate-income units would have to stay affordable for 10 years. 

More generally, AB 1866 wrote in a requirement that—subject to two escape clauses—cities and counties “shall” grant the specific concession or incenti ve requested by an applicant. The exceptions are where the local government makes a written finding, based on substantial evidence, that the concession or incentive either (a) isn’t needed to make the units affordable or (b) would have a “specific adverse impact,” as tightly defined elsewhere in the Government Code, upon “public health and safety or the physical environment” or on a property that’s listed in the California Register of Historical Resources. However, the applicability of these exceptions se ems unclear. 

The bill added a provision that if a city or county “refuses” to grant a requested density bonus, concession, or incentive, the applicant may sue, and shall be awarded reasonable attorney’s fees and costs of suit if a court finds that the re fusal violated 65915. It also added a provision banning the application of “any development standard” that has the effect of precluding a qualified development at the densities or with the concessions or incentives allowed by 65915. Critics have argued th at these provisions “cast a negative and litigious tone to the law,” and that the language about “any development standard” is dangerously broad. Both provisions do give to local governments escape clauses in cases where there’d be a specific adverse impa ct on health, safety, or the physical environment, or an adverse impact on a property in the California Register. But the provisions are so written that the applicability of those escape clauses is unclear. 

Also in 2002, AB 2755 amended the definition of “housing development” to specifically include rehab projects that convert an existing structure from commercial to residential, or increase the number of residential units inside it. 

In 2003, AB 305 added a subsection about child care facilities. Where an applicant proposes to include such a facility (other than a family day care home), located in or adjacent to the housing development and meeting certain conditions, the city or county—unless it finds that the community has adequate day care facilities—must either (a) grant an additional residential bonus equal to the child care facility’s square footage or (b) provide some significant other concession or incentive. 

This Sept. 23 the Governor signed AB 2348, which added a subsection about parking. It s ays that for a development otherwise qualifying under 65915, the local government shall—if requested by the developer—be banned from requiring more than specified amounts of parking in relation to unit size. The ratios are one space per studio or one-bedr oom, two per two- or three-bedroom unit, and two and a half spaces per bigger unit. And the subsection might even be read as letting “tandem” spaces count toward all those ratios!  

What SB 1818 Does 

SB 1818 replaces the former single-figure density bonus es (25 percent and, for condos, 10 percent) with a complex set of sliding scales. These let developments with merely half as many affordable units as previously required obtain density bonuses—though relatively smaller ones—but then as the percentage of a ffordable units increases, potential density rapidly escalates. If there are 10 percent lower-income units the developer is entitled to a 20 percent density bonus, but for each additional l percent of lower-income units he or she gets an extra 1.5 percent of density bonus, up to a maximum bonus entitlement of 35 percent. Similarly, 5 percent very-low-income units earns a 20 percent density bonus, then for each additional 1 percent in such units there’s an extra 2.5 percent of density bonus, up to a maximu m 35 percent bonus. For condo projects (or planned unit developments), 10 percent moderate-income units gets a 5 percent density bonus, then each additional 1 percent in such units brings an extra 1 percent of density bonus, up to a maximum 35 percent bon us. 

Those formulas are paralleled by mechanistic sliding scales for the required number of other “incentives or concesssions.” A development with 10 percent lower-income, 5 percent very-low-income, or (in a condo) 10 percent moderate-income units gets one such goody. A project with 20 percent lower-income, 10 percent very-low-income, or (in a condo) 20 percent moderate-income units earns two incentives or concessions. A development with 30 percent lower-income, 15 percent very-low-income, or (in a condo) 30 percent moderate-income units gets three!  

So for developments whose proportions of lower-income or very-low-income units are at or near the previously applicable thresholds, SB 1818 boosts the density bonus from 25 percent to 35 percent—and the numb er of other incentives or concessions from one to two. Another prominent result is that whereas condo projects containing 20 percent moderate-income units but no lower-income units could formerly demand only a 10 percent density bonus (and one other incen tive or concession), they now seem entitled to a 15 percent bonus (plus two other incentives or concessions). 

Yet for what it recasts as “senior citizen housing developments,” the bill apparently reduces the density bonus, from the previous 25 percent down to 20 percent (without any sliding scale)—and even seems to omit any requirement for extra incentives or concessions. Go figure. 

SB 1818 deletes the important long-standing general language “or...provide other incentives of equivalent financial value....”  

For moderate-income units in condo projects, the bill abruptly deletes the formerly required 10-year period of continued affordability. Moderate income will now be required only of the initial buyer—who it seems can promptly turn around and resell the unit at market rate. The bill does say that upon resale a defined share of the appreciation shall be “recaptured” by the local government, for general use thereby “within three years” in promoting affordable housing. But during the bill’s review, this recapture provision was criticized as “administratively intensive” and costly. 

SB 1818 also adds provisions whereby under certain conditions an applicant can get a special density bonus by donating a substantial piece of land suitable for construction o f housing for very-low-income households. But this bonus plus all other density bonuses under Section 65915 can’t exceed a combined entitlement of 35 percent. 

The Upshot 

Swollen to some 3500 words, Section 65915 has become a dense and daunting legal thic ket with ample unclarities and some puzzling inconsistencies. At the Berkeley Planning Commission’s Oct. 13 meeting, Rhoades said that staff would analyze SB 1818 within the next 30 days and then report back. 

Commission chair Harry Pollack suggested it m ay also be timely to “tweak” Berkeley’s inclusionary ordinance, which actually requires five-or-more-unit developments to include affordable units. Whatever he may intend, the reference calls to mind an irony of what the League has called the state’s “one-size-fits-all” approach. Various Berkeyans have asked why this city’s commendably requiring affordable units should be “penalized” by its triggering the need, under Section 65915, to sacrifice cherished local standards. 

(Some have even turned the issue around by suggesting that where Berkeley’s inclusionary requirement amounts to the same as 65915’s affordability threshold, no density bonus is required. They’ve remarked that in such cases zero units would be allowed unless the local inclusionary units w ere provided—and that a 25 percent bonus over zero still equals zero.)  

Meanwhile some citizens have questioned the adequacy of the brand-new zoning provisions for University Avenue, which were painstakingly crafted with 65915’s former rules in mind, and with no general awareness of SB 1818’s potential impact. 

Section 65915 contains requirements for local implementing ordinances, and “legislative body approval of the means of compliance with this section.” Although the Zoning Ordinance’s skimpy Section 23C.12.050 tries to do something like that, its paraphrase of the state law is patently obsolete. And local critics have argued that the situation is needlessly worsened by the total lack in Berkeley’s commercial and high-intensity residential zones of an y dwelling-unit “density” standards on a parcel basis.  

Implementing 65915 may be quite costly for Berkeley, in many direct or indirect ways—from time spent redoing laws and procedures, to potentially granting incentives in the form of development-fee wa ivers, to potential impacts on infrastructure and neighborhood quality of life. In any case, the thorny basic issues involved seem urgent. SB 1818 will go into effect on Jan. 1.  

John English is a planner by profession, and has lived in Berkeley for most of his life. 

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