Starting in 2021, residential projects in California with on-site affordable housing can get a density bonus of up to 50%. Currently, under Government Code Section 65915—commonly known as the Density Bonus Law—the maximum bonus is 35%. It is available for projects that include 11% very low income below market rate (“BMR”) units, 20% low income BMRs, or 40% moderate income BMRs. Under a new law that flew somewhat under the radar during the last legislative session in Sacramento, a 50% bonus is available with increased affordability. Specifically, 15% very low income, 24% low income, or 44% moderate income allow the full 50% bonus.
The new state law, AB 2345, requires cities and counties to comply even if they have not yet updated local implementing ordinances. This means starting January 1, 2021, all jurisdictions in California are required to process projects proposing up to 50% additional density as long as those projects provide the additional BMRs in the “base” portion of the project, unless the locality already allows a bonus above 35%.
AB 2345 also lowered the BMR thresholds for concessions and incentives for projects with low income BMRs. For background, in addition to waivers from development controls that preclude a project from achieving the density bonus it is guaranteed (with some narrow exceptions) in exchange for on-site BMRs, the Density Bonus Law allows sponsors to ask for “concessions and incentives” from zoning and development regulations that would make the project more expensive to construct. Starting in 2021, projects with 17% low income BMRs can qualify for two concessions or incentives, and projects with 24% low income BMRs can qualify for three.
Finally, density bonus projects within one-half mile of a major transit stop and with direct access to the stop may be able to avoid minimum parking requirements.
All-Electric New Construction in San Francisco Starting in June 2021
On Tuesday, the San Francisco Board of Supervisors passed a law mandating new construction projects be all-electric. The building or project will need to use a permanent supply of electricity as the source of energy for all space conditioning including heating and cooling, water heating, pools and spas, cooking appliances, and clothes drying appliances. Gas or propane piping systems are not permitted from the point of delivery at the gas meter.
The all-electric requirement takes effect on June 1, 2021. Starting then, all new building or site permit applications will need to comply. Sponsors should keep in mind there is currently a multi-month delay to file permits at the Department of Building Inspection (“DBI”), and should not wait until the last minute to get their building or site permits on file.
There are two minor exceptions. If it would be physically or technically infeasible to construct an all-electric building, DBI can grant modifications, but only to those portions of the building where infeasibility can be demonstrated, and the alternative design provides equivalent health, safety, and fire protection. Importantly, financial considerations cannot be used to show infeasibility.
Also, a restaurant is allowed to have gas facilities used exclusively for cooking equipment. For permits filed through December 31, 2021, permits identifying a restaurant use will be allowed to have gas facilities. After 2021, the exception is narrowed and DBI has to determine that the gas system is necessary for the specific restaurant using the space. Identifying a specific restaurant tenant that early in the process will likely be a challenge for many new construction projects.
Authored by Reuben, Junius & Rose, LLP Attorney Mark Loper.
The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose, LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.