Density Bonus

State Affordable Housing Requirements

The Housing and Community Development Department mandates that city governments institute a plan to meet their existing and projected housing needs and increase housing supply and affordability levels by updating the housing and land use elements of their general plans.

Encinitas is in the process of updating its housing and land use element. In its draft plan, submitted to HCD in September 2015, Encinitas incorporated high-density R-30 zoning (30 units per acre), which HCD sanctions as a stand-in, or “proxy” for affordable housing.

The eye-opener here is that HCD allows this zoning to count as affordable housing, even if such housing is NEVER built or the units that are built sell at market rate. HCD Assistant Deputy Director of Housing Policy, Glen Campora, confirmed in an Encinitas forum that there is NO guarantee affordable units will be built. In fact, the “Affordable Housing” projects can – and usually do – end up consisting mostly of luxury condo units.

As shown in SANDAG’s chart below, the actual affordable “Percent of Goal Produced” housing produced is abysmal.

RHNATabB

Over a four-year period, the county Regional Housing Needs Assessment numbers produced just 4-8 percent of the required affordable housing units. The remaining units produced were market rate, doing nothing to satisfy affordable housing demand. The increased density brings with it a variety of urban ills, including: CO2 emissions, increased traffic congestion, pollution, additional water demands, parking shortages, reduced emergency vehicle response time and overburdened sewer systems. There is no corresponding investment in infrastructure to offset these burdens.

The state’s density-bonus law supports HCD’s goal of promoting affordability by giving developers of residential units a “density bonus” when a portion of the units are rented or sold at affordable rates. However, as implemented, it instead creates market-rate housing and virtually no affordable housing. All of the BONUS housing in the density-bonus law is market rate. The developer commits to building a small number of affordable units, usually in the range of one to three units, to get a maximum increase of 35 percent in the number of market-rate units over the normal zoning. The developer profit from market-rate units is extraordinary. The impacts on infrastructure and traffic come from the total number of units built, not just the affordable units.

The truth is that in high-priced land areas like Encinitas, a significant number of affordable units will never be built without public subsidies, which were cut off by the state a few years ago and are no longer available. The only subsidies density-bonus projects provide are profits for the developer from additional market-rate units.

Density Bonus Calculations

Assemblyman Ed Chau introduced AB 744 in part to clarify ambiguous language and modify the density-bonus law with changes on how to round base density calculations. (This contradicts the assertion in the VOSD article that the law’s language is “unequivocal.”) Even Meea Kang, an affordable housing advocate and former president of the California Infill Builders Association, admitted the ambiguity. About one-third of cities and counties in California round down on base density, and rounding down has been in Encinitas’ Municipal Code since incorporation in 1986. The clarifying language was removed from AB 744 because of existing litigation.

Since 2009, Encinitas has been sued three times for its interpretation of the law, twice by the same developer and once by the Building Industry Association. It’s important to note that these lawsuits are over practices that are standard in other cities.

An outstanding explanation showing the multiplier effects of density bonus may be found here: https://www.youtube.com/watch?v=EfVJ3OWLM5M.

Where Is the Affordable Housing?

The shortage of affordable housing has not been solved over the past 30 years. Instead, the scarcity has grown and reached what can be described as a crisis in many of the state’s localities. For example, the city of Los Angeles has an affordable housing shortage of 100,000 units. Encinitas is hardly alone in finding it nearly impossible to produce truly affordable housing.

One local developer called Encinitas “a density bonus magnet,” not because of the opportunity to build affordable housing, but for the profit potential from market-rate bonus units. The map below indicates some of the density bonus projects that already exist in Encinitas:

Curr db

Encinitas is struggling to update its housing element, not because Encinitans are “defiant,” but because we know that true affordability won’t come with the housing element update. Encinitas is not an isolated example, but rather part of a growing awareness statewide of the need for reform.