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Implementing State Density Bonus Law in Berkeley Implementing State Density Bonus Law in Berkeley

Implementing State Density Bonus Law in Berkeley - PowerPoint Presentation

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Implementing State Density Bonus Law in Berkeley - PPT Presentation

November 13 2014 City of Berkeley Planning amp Development Department State Density Bonus Law Adopted in 1979 amended several times since Main purpose is to promote production of affordable ID: 244904

bonus density units project density bonus project units state law affordable residential concessions allowable zoning maximum incentives reductions required

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Slide1

Implementing State Density Bonus Law in Berkeley

November 13, 2014City of BerkeleyPlanning & DevelopmentDepartmentSlide2

State Density Bonus Law

Adopted in 1979, amended several times sinceMain purpose is to promote production of affordable housing

Applies

only to projects with 5 or more dwelling units (does not apply to group living)Slide3

State Density Bonus Law

3 main concepts:Density BonusConcessions/IncentivesWaivers/ReductionsSlide4

State Density Bonus Law

Density Bonus = “a density increase over the otherwise maximum allowable residential density as of the date of [project] application.”Slide5

State Density Bonus Law

Maximum allowable residential density = “the density allowed under the zoning ordinance and land use element of the general plan, or if a range of density is permitted, the maximum allowable density for the specific zoning range and land use element of the general plan applicable to the project.”Slide6

State Density Bonus Law

Minimum affordability required (without bonus units):>10% lower income (80% AMI)>5% VLI (50% AMI)

Senior projects

Condo project with

>

10% moderate income (120% AMI)Slide7

State Density Bonus Law

Required bonus for projects with VLI units:% VLI Units % Density Bonus5 206 22.5

7 25

8 27.5

9 30

10 32.5

11 35Slide8

State Density Bonus Law

Required concessions/incentives for project with VLI units (without bonus units):% VLI Units # of concessions/incentives 5 1 10 2

15 3Slide9

State Density Bonus Law

Definition of “concession or incentive”:“A reduction in site development standards or a modification of zoning code requirements… including, but not limited to, a reduction in setback and square footage requirements and in the ratio of vehicular parking spaces…”

 “Approval of mixed-use zoning…”

 “Other regulatory incentives or concessions proposed by the developer or the city… that result in identifiable, financially sufficient, and actual cost reductions.”Slide10

State Density Bonus Law

Examples of concessions awarded on previous projects in BerkeleyAdditional ceiling heightReduced parkingReduced open space

Ground floor commercial space (in what would otherwise be an all-residential building)Slide11

State Density Bonus Law

Concessions must be granted unless City finds that the requested concession:Is not required to provide for affordable housing costsWould have a specific adverse impact, as defined in 65589.5, upon public health and safety or the physical environment, or on any property listed on the California Register of Historical Resources, and for which there is no feasible mitigation without rendering the project unaffordable

Would be contrary to state or federal lawSlide12

State Density Bonus Law

Waivers or Reductions Basis: 65915(e)(1): “In no case may a city… apply any development standard that will have the effect of physically precluding the construction of a development… at the densities or with the concessions or incentives permitted by this section. An applicant may submit to a city… a proposal for the

waiver or reduction of development standards

that will have the effect of

physically precluding

[a project with] the densities or concessions or incentives permitted under this section…”Slide13

State Density Bonus Law

Waivers or Reductions Waivers or reductions do not reduce or increase the number of concessions/incentives – they implement the required concessions/incentives (and the density bonus)Slide14

State Density Bonus Law

Recent amendment (AB 2222): Affordability required for 55 years (previously 30 years)

Existing affordable units (or affordable units demolished or vacated in last 5 years) must be replaced as part of new project, at same level of affordability as existing

Applies to applications submitted by January 1, 2015Slide15

Berkeley’s Density Bonus Procedures:

Affordable Housing Mitigation Fee

Based on nexus study

Applies to projects with 5 or more new rental units

Requires fee of $28K per market-rate unit

Fee waived if 10% of total market-rate units (including density bonus units) are provided as VLI units – works out to 9.1% of totalSlide16

Berkeley’s Density Bonus Procedures:

Density Bonus = a density increase over the otherwise maximum allowable residential density…[65915.(f)]

Dilemma

:

Most

housing projects are located in district without

density standards – what is “maximum allowable density” in Berkeley?Slide17

Berkeley’s Density Bonus Procedures:

General Plan Density StandardsThe General Plan provides density

ranges

but states

that these are “for general planning purposes” and “are not intended to be used as standards to determine the maximum allowable density on a specific parcel,” and that “allowable densities… are established in the more detailed and specific Zoning Ordinance.”Slide18

Zoning Districts with no Density Standards

Types of ProjectsAllowed in these Zoning Districts:

Mixed-Use Projects

Commercial

Residential

Commercial Districts and MU-R

Multi-Family

Residential

Projects

Commercial Districts, R-3,

R-4,

R-S, R-SMUSlide19

Four Basic Steps

1) Calculate the “Base Project”

2)

Calculate Density Bonus

3)

Review Concessions

4)

Grant waivers/reductions of development standardsSlide20

Step 1: Define the Base Project

Project Site

STREET

ADJACENT LOT

ADJACENT LOT

Conditions:

Comply with

all codes (zoning, building, fire, etc.)

Substantially consistent with “by-right” portion of proposed project (e.g.

setbacks, commercial uses, etc.)

“Maximum Allowable Residential Density”

Site of Proposed ProjectSlide21

Step 1A Result: Square Footage, Residential Use

Green = Residential

Blue = Commercial Slide22

Step 1B: Determine proposed Project’s Average Residential Unit Size

A. Proposed Residential Area (sq. ft.)B. Proposed Number of Units

C. Average Unit Size

A

/

B

=

CSlide23

Results Thus Far:

STEPSITEM

VALUE

1.A

Base Project Floor Area

40,000 sq. ft

1.B

Average Unit Size

2,000 sq. ft

1.C

Base Project Unit Count

20 units

2.A

#

of Affordable Units

% of Affordable Units

2.B

% Granted for Density Bonus

2.C

# of Density Bonus Units

Proposed Density Bonus

ProjectSlide24

Step 2: Define the Density Bonus Project

4 Affordable Units =

20%

% Granted for Density Bonus =

35%

Density Bonus Units = 7

Total Possible Units:

27Slide25

Results:

STEPITEM

VALUE

1.A

Base Project Floor Area

40,000 sq. ft

1.B

Average Unit Size

2,000 sq. ft

1.C

Base Project Unit Count

20 units

2.A

#

of Affordable Units

4 units

% of Affordable Units in Base Project

20%

2.B

% Increase Granted for Density Bonus

35%

2.C

# of Density Bonus Units

7 units

Proposed Density Bonus

Project

27

unitsSlide26

Concession Analysis

Project Assumptions

Base

Project (100% market rate)

10

%

Very

Low Income units

35

% Density Bonus

C. Density

Bonus

& Concessions

Units

20 MR

18 MR

2 BMR

25 MR

3 BMR

25 MR

3 BMR

Ceiling height

8

ft.

8 ft.

8 ft.

9 ft.

Yield (NOI/ Costs)

5.2%

4.5%

4.9%

5.2%

Return on Equity (Cash Flow/

Cash Equity)

3.5%

3.0%

3.3%

3.4%Slide27

Step

4: Waivers/Reductions granted (option 1)Slide28

Step 4:

Waivers/Reductions granted (option 2)