Good Bargain

Published May 19, 2020

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Appendix A [link]

Report Summary

The City of San Diego’s new Affordable Homes Bonus Program (AHBP) created a surge in project approvals, and is set to produce more market-rate and affordable homes.

For more than a decade, California’s Density Bonus Law has been a policy designed to offer developers a bargain–if they set aside some units as affordable, they can build more units overall. Specifically, California’s Density Bonus currently allows a residential developer to build 35 percent more units than allowed by base zoning, if the developer agrees to set-aside up to 11 percent of the base density units as permanently affordable.

Proposed by Mayor Kevin Faulconer’s administration, San Diego’s AHBP was supported by a broad coalition led by Circulate San Diego and was approved unanimously by the San Diego City Council in August 2016. The new AHBP builds on the existing California Density Bonus Law and allows for a maximum of 50 percent more bonus units, if a residential developer chooses to set-aside up to 15 percent of the base density units as affordable.

This report contains an analysis of 20 months of entitlement data under the AHBP from the City of San Diego’s Housing Commission and Development Services Department. That entitlement data was compared to 12 years of production under the City’s implementation of California Density Bonus Law.

City data shows that the new AHBP is creating substantially more homes than California Density Bonus Law alone, with annual increases for entitlements including:

  • 490 percent increase for the number of projects applying to use the program
  • 551 percent increase for the number of deed-restricted affordable homes entitled
  • 356 percent increase for combined affordable and market-rate homes entitled

The AHBP is an example of successful city-wide policymaking. San Diego should continue to monitor and expand the program to ensure its continued success.

Beyond San Diego, this report can help decisionmakers recognize the potential of enhancements to current California Density Bonus Law, to expand the bargain of trading development capacity for new affordable homes. For example, in February 2020, Assemblymember Lorena Gonzalez proposed Assembly Bill 2345, to extend San Diego’s AHBP to the rest of California. Individual jurisdictions should also consider their own enhancements, to go above and beyond what California law may offer.


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