CC 04-06-2021 Item No. 19 Density Bonus Ordinance_Staff Presentation1
City Council
April 6, 2021
Municipal Code Amendment
Density Bonus Ordinance
Background
Affordable Housing strategies (City Work
Program Item FY20/21) includes
Updates to City’s Density Bonus
Ordinance
Inclusion of adopted housing program in
ordinance
Other amendments
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CC 04-06-2021 Item No. 19
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State LawState Law
Former Program Jan. 1, 2021
Density Bonus - Maximum 35%
- 100% affordable projects
get more bonuses
- Maximum 50% bonus
OR
- Local housing program > 35%
Proposed changes to Density Bonus Ord.Proposed changes to Density Bonus Ord.
Existing Proposed
Target Group
Proportion of
Total
Affordable
Dwelling Units
Maximum
Density Bonus
Proportion of
Total
Affordable
Dwelling Units
Maximum
Density
Bonus
Very Low Income
5% 20%No change
6% - 10%
(1)22.5% - 32.5%6% - 12%
(1)22.5% - 37.5%
11% or more 35%13% or more 40%
Low Income
10% 20%
No change
11% -19%(2)21.5% - 33.5% 11% - 22%
(2)21.5% -38%
20% or more 35%
23% or more 40%
Mod. Income
(Common interest
developments)
10% 5%No change
11% - 39%
(3)6% - 34% 11% - 44%
(3)6% - 39%
40% or above 35% 45% or above 40%
Senior Citizen 35 units
(minimum)20%No change
(1)For every 1% increase over
5% of target units, density
bonus shall increase by 2.5%
up to maximum of 35 40%.
(2)For every 1% increase over
10% of target units, density
bonus shall increase by 1.5%
up to maximum of 35 40%.
(3)For every 1% increase over
10% of target units, density
bonus shall increase by 1% up
to maximum of 35 40%.
Correction to table (in red)
(discussed later)
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Economic Evaluation Conclusions
City’s program will incentivize rental housing
production
40% bonus allows enough additional market
rate units to offset cost of more VLI units
Will improve feasibility of rental development
projects
Improvement in rate of return is particularly notable
for higher density rental apartment developments
Economic Evaluation Conclusions
For condo development, neither City’s proposed
program nor AB 2345 program improve rate of
return over that of 2020 City requirements
Density bonuses most successful in incentivizing
very low income housing
City of San Diego program inspired AB 2345
Developers in San Diego used very low income
units to obtain density bonus (rental or ownership)
Will continue to incentivize very low-income rental
housing, serving households with greatest need
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Other reasons
Cupertino experience San Diego experience
Existing ordinance
provided adequate
incentives to include
affordable housing
Density bonus not used
to any significant
extent until local
program adopted.
Cupertino developers
familiar with density
bonus law and used
regularly
Other reasons
Groups like CA Rural Legal Assistance Foundation
and Western Center on Law and Poverty opposed
formula contained in AB 2345
Concerned might disincentivize production of low-
income units by making it harder to compete against
market-rate developers for sites
Recommended that pattern of increases follow same
pattern as density for affordability ratio existing in
density bonus law prior to passage of AB 2345
Cupertino’s housing program does this
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Planning Commission Review
●Reviewed amendments on February 23,
2021
●Recommended approval on 4-1 vote
(Kapil – no)
Typographical Correction and clarificationsTypographical Correction and clarifications
Income Level of unit
Proportion of Total
Affordable Dwelling Units
Maximum
Density Bonus
Very Low Income(1)
5% 20%
6% - 12%
(1)22.5% - 37.5%
13% or more 40%
Low Income(2)
10% 20%
11% -22%(2)21.5% -38.538%
23% or more 40%
Moderate Income(3)
(Common interest
developments)
10% 5%
11% - 44%
(3)6% - 39%
45% or above 40%
Changes do not change conclusions of economic evaluation
conducted by the Hausrath Economics Group
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Recommended Action
●That the City Council conduct the first reading of
Ordinance No. 21-______, "An Ordinance of the
City Council of the City of Cupertino Amending
Cupertino Municipal Code Section 19.56.030A
(Table 19.56.030) and 19.56.030F (Density Bonus
Ordinance) to Incentivize the Development of
Affordable Housing by Allowing for Density
Bonuses of up to 40 Percent," which includes a
finding that adoption of the ordinance is exempt
from the California Environmental Quality Act.
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