On August 30, the California State Assembly passed AB 2797, providing a much needed clarification to the application of State Density Bonus Law and the Mello Act in the Coastal Zone. The measure clarifies that a project cannot be found inconsistent with the Coastal Act merely because it receives a density increase under state law. This long-held interpretation of Density Bonus Law had recently come under question and been litigated in Kalnel Gardens, LLC v. City of Los Angeles.
“Density bonuses play a critical role in encouraging developers to build affordable housing,” said Assemblymember Richard Bloom (D- Santa Monica) , who introduced the bill. “By undermining Density Bonus Law and the Mello Act, the Kalnel case weakens our ability to build our way out of the current affordable housing shortage. AB 2797 corrects this erroneous interpretation of statute.”
State Density Bonus Law gives cities a powerful tool to encourage the development of affordable and senior housing. Under the law, developers who include affordable units in their project can receive an increase in project density. Developers often combine density bonuses with a larger package of incentives in order to make affordable housing pencil out. The Mello Act requires the preservation and production of affordable housing within the coastal zone, including by requiring developers to replace affordable housing units in the zone when they are demolished.
A recent court case, Kalnel Gardens, LLC v. City of Los Angeles, brought State Density Bonus Law and the Mello Act into conflict with the Coastal Act, which regulates development within the state’s coastal zone. In the case, a developer proposed a small residential development in Los Angeles that complied with both the Mello Act and benefited from a density bonus. Though the project was consistent with local planning and zoning as well as State Density Bonus Law, the local government denied the project on the basis that the increased density made the project in violation of the Coastal Act. The appellate court decision to uphold this interpretation jeopardizes future application of Density Bonus Law in the coastal zone and undermines the goals of the Mello Act.
“If left unchallenged, the Kalnel case could result in the construction of fewer affordable units at a time when they are needed more than ever. AB 2797 will ensure that this important incentive remains accessible to developers in the coastal zone,” said Bloom.