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
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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)