Encinitas’ complicated relationship with the density bonus

Encinitas’ complicated relationship with the density bonus
The density bonus can be invoked when developers meet certain supply thresholds, such as setting aside at least 10 percent of the project’s housing units for lower-income residents to rent or buy. Courtesy photo

ENCINITAS — What one person sees as a giveaway, another sees as a fair trade. Such is the nature of the contentious density bonus, a state law that rewards developers who build affordable housing with the right to build “bonus” units above and beyond what city zoning typically allows.

Critics in Encinitas say the law is a handout to developers, while others see it as a necessary step to getting affordable housing built.

According to the city, as of Dec. 31, 2017, Encinitas had approved 27 density-bonus projects, which led to the construction of 49 lower-income units. City Planner Roy Sapa’u stated in an email to The Coast News, “Density bonus developments have resulted in more affordable housing units in the City as intended and permitted by State Law.”

The density bonus can be invoked when developers meet certain supply thresholds, such as setting aside at least 10 percent of the project’s housing units for lower-income residents to rent or buy.

The amount of bonus units that can be added over a city’s zoning restrictions depends on the amount of affordable housing that’s provided by the development. Sapa’u noted that most of the city’s density-bonus projects “have requested and received the maximum (35 percent) density bonus allowed under the state law and local ordinance.”

With the density bonus, jurisdictions also have to provide concessions — such as reduced parking or setback requirements. The number of concessions required is based on the amount of affordable housing provided by the project. The idea is to incentivize the creation of affordable and senior housing, another subgroup covered by the density bonus, by making construction economically feasible for developers.

Encinitas has had a rocky past with the density bonus, with residents saying it has led to housing that’s inconsistent with community character. Encinitas Councilman Tony Kranz touched on that point, writing in an email to The Coast News that the required concessions result “in new housing that often has a much different look and feel than the surrounding homes.”

Kranz stated, “The new homes sell though, so developers are willing to endure neighborhood opposition in order reap the financial benefits. The law doesn’t allow for much discretion on the part of the Planning Commission or city council, so it is a political powder keg, making me not a fan.”

In the past, Encinitas’ resistance to the density bonus brought expensive legal woes, with multiple lawsuits filed against the city over its development-unfriendly interpretation of the law. The city’s current density-bonus ordinance complies with state law, and the city has publicly stated its intention to continue to update the ordinance, as necessary, to remain in compliance.

Kranz noted that while the density bonus “has resulted in the construction of affordable housing,” Encinitas’ “Inclusionary Housing Ordinance also requires construction of affordable units, so Density Bonus isn’t the only reason it is getting built.”

The inclusionary ordinance is the amount of affordable housing that Encinitas can require developers to include in projects. Measure U, the latest housing proposition facing Encinitas residents this November, asks voters to allow upzoning to 30 units per net acre at select sites — with the main purpose being to build affordable housing in compliance with state housing law.

Early results of a city-ordered economic feasibility study related to the ballot measure indicate that Encinitas may be able to mandate, should Measure U get approved, that developers of those upzoned sites set aside either 25 percent of those units for low-income households or 20 percent to very low-income households.

Likewise, the citywide inclusionary ordinance for non-upzoned sites could increase to 20 percent low-income or 15 percent very low-income from the currently proposed 15 and 10 percent, respectively.

Pending further study and deliberation this fall, if adopted, the higher inclusionary rates would help the city reach state-mandated quotas for providing housing for various income levels. The higher percentages would also reduce the number of market-rate units that get built in the process of making projects pencil out for developers — often a bone of contention for opponents of Measure U and its predecessor, Measure T.

Kranz wrote, “The financial calculations seem to show a project would still be feasible if we increase the percentage; it could also be argued that a developer might decide to use the Density Bonus law to increase the return on investment for the affordable they build.

It is a complicated issue.”

Indeed, the fact that it’s complicated to create good affordable housing is probably one thing that most Encinitas residents can agree on.

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