Item No. 9. Page 1 of 4
Comparison Between City Incentive Programs and State Housing Laws Applicants currently have the ability to utilize State Density Bonus Law (SDBL) to achieve additional residential density. In order for applicants to choose to use the HIP or AHIP rather than the SDBL program, they need to obtain greater benefits.
Summary of State Housing Laws
State Density Bonus Law (Gov. Code Section 65915): This law gives developers the right to build additional dwelling units and obtain flexibility in local development requirements, in exchange for building on-site affordable or senior housing. To support the development of affordable and senior housing, projects can receive “waivers” and “concessions” to modify applicable regulations. This could include standards such as height, setbacks, parking, and ground-floor retail requirements. The handout in Attachment G includes a more thorough description of State Density Bonus Law and how it applies in Palo Alto.
SB 35 Streamlining for Affordable Housing (Gov. Code Section 65913.4): Effective since 2018, this law allows housing development projects that meet certain physical and affordability criteria to undergo expedited project review and ministerial approval. Palo Alto is subject to SB 35 based on the City’s limited progress toward meeting the City‘s low-income housing targets in its RHNA. To be eligible for SB 35 streamlining in Palo Alto, a project must provide at least 50% of their residential units at a rate affordable to low-income households. SB 35 projects are frequently combined with State Density Bonus Law to achieve density bonuses and waivers/concessions.
HIP
Table F-1 explores the tradeoffs between the HIP and SDBL. The HIP provides greater predictability for what community members can expect from housing projects. By comparison, SDBL offers developers more flexibility in terms of modifying development standards and seeking other concessions.
However, the HIP allows developers of rental housing to pay the affordable housing impact fee, whereas SDBL requires on-site below market rate housing; payment of fees is generally preferred by market rate developers and is therefore a strong incentive. For ownership housing, developers are required to include below-market rate units on site under the City’s inclusionary housing regulations. As a result, the City is likely to see ownership projects continue to utilize State Density Bonus Law.
With implementation of Housing Element Program 3.4A, there would be no difference in review processes since HIP projects would be eligible for Streamlined Review (i.e., one study session with the ARB). Although this will remove a key aspect of the original purpose of the HIP, which was to retain Architectural Review, the City’s objective standards will continue to provide more local control of design. There is little room to further streamline the HIP process. As a result, the HIP amendments are primarily focused on modifying development standards to incentivize applicants to use it instead of SDBL.
Item No. 9. Page 2 of 4
Table F-1: Comparison Between Proposed HIP and State Density Bonus Law Proposed HIP State Density Bonus Law
Benefits
+ Inclusionary housing fee in-lieu of on-site
affordable housing (rental housing only)
+ More predictability (for City/ community
members)
+ Higher density and FAR
+ Unlimited waivers from
standards that physically limit
housing units
+ Specified number of
concessions for cost reductions
Drawbacks - Limitations on additional modifications to
other development standards
- On-site affordable housing
required
Constants Streamlined review process (one ARB meeting)
Item No. 9. Page 3 of 4
AHIP
Table 2 compares the detailed draft amendments to the AHIP with the criteria and incentives in State Density Bonus Law and SB35 streamlining.
Table 2: Existing vs. Planned AHIP Regulations Compared to State Law Standard Existing Regulations Draft Amendments State Density Bonus Law SB 35 Applicability •Sites zoned CD, CN, CS, and
CC, but excluding shopping
centers
•Sites within ½-mile of a major
transit stop or ¼-mile of a
high-quality transit corridor
•Add all Housing Element
opportunity sites
•Add all sites eligible for the
HIP
Any site with Zoning or
General Plan compliance
Eligibility based on
specific environmental
factors and physical
conditions and Zoning
or General Plan
compliance
Affordability
Eligibility
100% affordable rental housing
projects at or below 120% of
the area median income
No specific changes
identified, except for height
bonus related to deeper
affordability
Minimum 5% affordability
at or below 50% of AMI or
10% at 80% of AMI to
qualify for minimum 20%
bonus
Minimum 50% on-site
affordability in Palo
Alto currently, at or
below 80% of AMI
Review/
Approval
Process
Architectural Review (up to
three meetings with the ARB)
Projects that meet objective
standards pursuant to Ch.
18.24, allow Streamlined
Review Process (i.e., one
study session with the ARB)
Per local requirements Ministerial: no
hearings required
Environmental
Review
Subject to CEQA Subject to CEQA Subject to CEQA No CEQA since ministerial action
Maximum
Residential
Density
None in commercial mixed-use
zones.
None, except 50 du/ac for
R1 Zoned Faith Based Sites
100% affordable projects
(at least 80% at 80% of AMI
and up to 20% at 120% of
AMI): no density limit
Per local requirements
Item No. 9. Page 4 of 4
Standard Existing Regulations Draft Amendments State Density Bonus Law SB 35 Maximum
Floor Area
Ratio
Residential: 2.0
Non-Residential: 0.4
Total: 2.4
Allow up to 2.4 Residential
FAR (without requiring
commercial uses, except in -
GF and -R combining
districts), except 2.0 FAR for
R-1 Zoned Faith Based Sites.
100% affordable projects
(at least 80% at 80% of AMI
and up to 20% at 120% of
AMI): no density limit for
projects that only regulate
FAR and not residential
density
Per local requirements
Maximum
Building Height
50 feet Allow up to 60 feet for
projects at or below 60% of
Area Median Income, except
50 feet for R-1 Zoned Faith
Based Sites.
100% affordable projects
(at least 80% at 80% of AMI
and up to 20% at 120% of
AMI): up to 3 additional
stories or 33 feet (above
base height limit)
Per local requirements
Minimum
Parking Ratio
0.75 spaces/unit 100% affordable within ½-
mile of transit: None
Otherwise:
1 sp. per studio, 1-bed
1.5 sp. per 2-, 3-bed
2.5 sp. per 4+bed
None if located within
½ mile of transit;
otherwise maximum 1
space/unit
Other
Development
Standards
Max. Lot Coverage: 100%
Min. Usable Open Space: 25-50
sq. ft./unit
None required near transit
(consistent with AB 2097
definitions)
0.5 spaces/unit elsewhere
100% affordable projects
within ½-mile of transit: five
concessions/incentives
Per local requirements