HCD letter of technical assistance — Carlsbad — SDBL implementation

STATE OF CALIFORNIA - BUSINESS, CONSUMER SERVICES AND HOUSING AGENCY

GAVIN NEWSOM, Governor

2020 W. El Camino Avenue, Suite 500 Sacramento, CA 95833 (916) 263-2911 / FAX (916) 263-7453 www.hcd.ca.gov

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February 16, 2024

Cliff Jones, Principal Planner City of Carlsbad Planning Division 1635 Faraday Ave. Carlsbad, CA 92008

Dear Cliff Jones:

The California Department of Housing and Community Development (HCD) received a request for technical assistance from Jose Ponce of JSP Design Studio (JSP) on November 7, 2023, regarding the application of the State Density Bonus Law (SBDL) (Gov. Code, § 65915 et seq.). The SDBL allows housing developments with at least five residential units to obtain increases in allowable density, incentives/concessions, development standard waivers, and, for qualifying projects, reductions in parking requirements by providing affordable housing. The purpose of this letter is to provide technical assistance for the benefit of both the City of Carlsbad (City) and JSP regarding basic eligibility under the law.

HCD understands that the proposed project, located at 334 Date Avenue, would provide seven housing units overall: five total units (three multi-family residential units and two accessory dwelling units (ADUs) of which one would be affordable to low-income households and two bonus units. The applicant seeks to have the two ADUs count toward the total number of units in the housing development[1] , thereby meeting the definition of a “housing development” under the SDBL and becoming eligible for a density bonus. The City is uncertain as to whether ADUs can be used in this way to achieve the minimum five-unit requirement. If so, the City also poses the downstream question of whether the ADUs would be considered within the maximum allowable residential density (i.e., base density) of the site for the purposes of the density bonus calculation.

1 Under State ADU Law, a local jurisdiction must allow up to two detached ADUs on a lot that has a proposed multifamily dwelling (Gov. Code, § 65852.2, subd. (e)(1)(D)(i)).

Cliff Jones, Principal Planner Page 2

Government Code section 65915 requires that local governments grant certain housing developments density bonuses if they provide specified levels of deed-restricted affordable housing. A “housing development” that may be eligible for a density bonus is defined by Government Code section 65915, subdivision (i), as “a development project for five or more residential units, including mixed use developments.” Therefore, the relevant question is: Can ADUs serve to qualify a project for a density bonus pursuant to the SDBL, even though the general plan designation on the site allows less than five primary units?

The answer is “yes.” A project initially qualifies under the SDBL when the project’s total units[2] meet or exceed five units – not when the maximum allowable residential density[3] for the site is five units or more. The phrase “development project of five or more units” is analogous to the term “total units” as defined in the SDBL. Although the SDBL makes no mention of ADUs in its text, it likewise does not expressly narrow the definition of unit to exclude ADUs. Provided they are counted within the total units of the project, ADUs are a type of housing unit that may be counted for the purposes of achieving the five total unit minimum.

Additionally, Government Code section 65915, subdivision (r), states that the SDBL should be “interpreted liberally in favor of producing the maximum number of housing units,” while subdivision (u)(2) expresses the Legislature’s intent to “further incentivize the construction of very low, low-, and moderate-income housing units.” Allowing ADUs to count toward the five total unit minimum is consistent with both subdivisions. Broadly interpreted, eligibility favors maximizing housing units and incentivizes the construction of a low-income housing unit in this instance.

The downstream question posed by the City is: If ADUs can be used to qualify a project under the SDBL’s minimum total unit requirement, can they likewise be used to calculate a density bonus? (i.e., Can they be included within the site’s maximum allowable residential density?)

The answer is “no.” The calculation of a density bonus is based solely on a site’s maximum allowable residential density which does not include ADUs. A density bonus is defined as “a density increase over the otherwise maximum allowable gross residential density…”[4] Maximum allowable residential density is defined as “the greatest number of units allowed under the zoning ordinance, specific plan, or land use element

2 Gov. Code, § 65915, subd. (o)(8).

3 Gov. Code, § 65915, subd. (o)(6). 4 Gov. Code, § 65915, subd. (f).

Cliff Jones, Principal Planner Page 3

of the general plan.” On the subject project site, the zoning ordinance allows up to two units and the general plan allows up to three. This means that the applicable maximum allowable residential density (i.e., base density) on the site is three units. The following is a summary table demonstrating the structure of the project. Note that with an applicable base density of three, it will be difficult for the applicant to achieve two bonus units because the necessary density bonus will be approximately 66 percent rather than the originally contemplated 35 percent. The applicant might consider an additional density bonus pursuant to Government Code section 65915, subdivision (v).

HCD finds that the proposed project meets the definition of housing development under the SDBL. It achieves the five-unit minimum total units by providing three primary units and two ADUs, thereby meeting the basic eligibility requirements for a density bonus under the SDBL. However, the calculation of the density bonus depends upon the site’s base density, which is three units in this case. HCD remains committed to supporting the City of Carlsbad in facilitating housing at all income levels and hopes the City finds this clarification helpful. If you have questions or need additional information, please contact David Ying at david.ying@hcd.ca.gov.

Sincerely, Shannan West Housing Accountability Unit Chief