California Attorney General Issues Favorable Opinion for Developers on Density Bonus
In a recent opinion issued by the California Office of the Attorney General (Atty. Gen. Ops. No. 17-602), the Attorney General answered an important question posed by local governments and developers alike concerning the Density Bonus Law (Gov. Code, §§ 65915-65918). Specifically, California Assembly Member Sharon Quirk-Silva (formerly, the Mayor of Fullerton) asked:
May a city or county condition its grant of a developer's application for a density bonus upon the developer's payment of a "public benefit fee" that is imposed only on the density-bonus units?
The Attorney General answered "No."
The Density Bonus Law
The Density Bonus Law incentivizes the building of affordable housing by granting developers "a density increase over the otherwise maximum allowable gross residential density," as well as other incentives or concessions, in return for a commitment to provide affordable housing as part of a development project. In practical terms, this means that the density bonus rewards developers who agree to build a certain percentage of lower income housing by providing the opportunity to build more units than would otherwise be permitted under applicable regulations in the local jurisdiction where the project is being built.
The critical importance of the Density Bonus Law is that Government Code section 65915 restricts a local government's discretion when it comes to providing density bonuses for qualifying residential projects. Specifically, if a developer meets the requirements of Section 65915 by including a certain percentage of affordable units within the project, the city or county must award a density bonus.
Attorney General's Opinion
The Attorney General's opinion succinctly answered the question posed as follows: "The type of ordinance at issue here - one that imposes a fee only on additional units allowed as a density bonus - contradicts the Density Bonus Law. Rather than encourage construction of affordable housing, such a fee taxes developers for acquiring density bonuses. Thus the local law disincentivizes what the state law means to incentivize. Therefore, we conclude that an ordinance imposing a fee only on units created through a density bonus under section 65915 is invalid."
In reaching this conclusion, the opinion relied on "clear" Legislative intent, which states, in relevant part: "In enacting this chapter it is the intent of the Legislature that the density bonus or other incentives offered by the city, county, or city and county pursuant to this chapter shall contribute significantly to the economic feasibility of lower income housing in proposed housing developments." Further, Section 65915 explicitly states that the chapter should be interpreted "liberally in favor of producing the maximum number of total housing units."
The opinion reinforces the purpose of California's Density Bonus Law, which is to make residential development projects financially feasible for developers to build. By offering the developer an economic incentive to include additional units in its project, density bonuses help incentivize the creation of more housing which would otherwise not be permitted. Additionally, the opinion is in line with the California Legislature's strong intervention to address the State's housing crisis, including the groundbreaking package of housing bills passed last year.
The strongest takeaway from this opinion is the Attorney General's solid reaffirmation of the State's unwavering goal to create as much housing in California as possible, including lower income housing. By concluding that cities and counties cannot condition granting a density bonus on the developer paying a public benefit fee on density bonus units, the Attorney General is sending a clear message to local jurisdictions throughout the state - housing laws in California will be enforced and interpreted in a way that ensures that lower income housing units will not be left behind in the State's pursuit to have the largest number of housing units built.
The Attorney General's opinion may be accessed online at:
Nedda Mahrou, Esq., is an attorney in Jackson Tidus' Orange County office who represents commercial and residential real estate developers in a variety of land use, environmental and business related matters, as well as related litigation. She may be reached at (949) 851-7647 and at nmahrou [at] jacksontidus.law.