In the face of runaway housing costs, San Francisco is proposing to implement the state “density bonus” law.  First adopted by the California legislature thirty-six years ago, the state law (California Government Code Section 65915, et seq.) encourages the production of affordable housing by offering an increase in the number of units otherwise allowed under applicable zoning controls in exchange for offering below market rate units. 

The City's proposed program provides two separate “density bonus” options: (1) the state law approach, and (2) a new local density bonus program with greater incentives.

The state density bonus program would be available to any site in the City.  The local density bonus program would apply only in those zoning districts that currently contain limitations on residential density (e.g., one unit per 800 sq ft of lot area).  This includes, among others, RC and RM districts and most NC districts (the “program area”).  The program will not apply to newer zoning districts established pursuant to neighborhood plans (e.g., Eastern Neighborhoods, Market-Octavia) because density limits in those zoning districts are generally already “form based,” or limited by other physical constraints like height, bulk and setbacks, rather than by residential density formulae.  In addition, the density bonus program as currently proposed would not apply in RH-1 and RH-2 districts (one- and two-unit districts), which make up 70% of the land area in San Francisco.

Under the state law approach, a proposed project would be eligible for up to a 35% density increase for projects that provide affordable housing units on-site.  The amount of the “bonus” is graduated, and depends on the number of affordable units provided and the level of affordability of those units.  In addition, project sponsors electing to participate in the state law program may be eligible for relief from certain zoning controls such as rear yard requirements or minimum parking requirements, and may quality for a height bonus (up to two stories), when necessary to accommodate the increased density granted under the bonus.  It is important to note that a height increase under the state law program will only be available upon a showing by the project sponsor that additional height is necessary in order to be able to build the “bonus” units.  

Under a new local density bonus program, a proposed project that includes 30% or more of its units as affordable (including 12% low- or moderate-income and 18% at “middle income” affordability levels, i.e., 120% of area median income (AMI) for rental units and 140% of AMI for condo units), will be exempt from residential density limits and eligible for a height increase of up to two stories, regardless of whether such additional height is necessary to accommodate increased density.  Projects participating in the local program would be required to provide at least 40% of the units as two-bedroom units.  Projects with 100% affordable projects will be eligible for a three-story height increase, as well as relief from residential density limits.  

For sites outside the program area that wish to gain the benefit of the state density bonus law, the department will evaluate potential bonus requests on a case-by-case basis.  Although such negotiated solutions will be available, the goal of the legislation appears to be to facilitate and streamline development within the program area.

The details of the new density bonus programs are still being worked out.  The Planning Department anticipates releasing a draft ordinance in September, and hopes to adopt legislation by the end of the calendar year.  We will be following development of the new program and will continue to provide updates as they are available.