Overview of Housing Incentives

Housing Incentives

Introduction

The City of Los Angeles has taken a major step forward in addressing its housing crisis by adopting a comprehensive set of housing incentives programs. These housing incentives are designed to expand affordable housing, promote mixed-income developments, and streamline approvals especially near transit, job centers, and in higher-opportunity areas. A key aspect of these housing incentive programs is their close connection to ongoing Community Plan updates.

As Los Angeles revises its Community Plans, new zoning designations and land use policies are being aligned with the incentives adopted under the Housing Element Rezoning Program. This alignment includes the Citywide Housing Incentives Program (CHIP) and other related zoning tools. By coordinating Community Plan housing incentives with the adopted Housing Element, the City ensures compliance with state law while providing transparency for both community members and developers regarding maximum development potential.

How Community Plan Updates Work with Housing Incentive Programs

Community Plan Updates represent the City’s approach to shaping growth at the neighborhood level. These updates establish land use, zoning, and development standards that determine where housing incentives can be built and at what scale. Housing incentive programs are designed to work in tandem with these plans, making it easier to build affordable housing in areas where the City wants to direct growth.

The Community Plan Updates implement the new zoning code, which includes adopting a "Base" and a "Bonus" Floor Area Ratio (FAR) and, in many cases, a "Base" and "Bonus" Height Limit. The base zoning regulations define what a property owner or developer can build without including any community benefits. In contrast, the bonus FAR and height regulations serve as housing incentives offered to developers who provide community benefits.

In addition to FAR and height, developers can receive other housing incentives such as increased density, reduced parking requirements, or reduced setbacks. For residential or mixed-use projects, a developer must include a certain percentage of affordable units in the project to access these incentives. Once the developer has included the required number of affordable units, additional bonuses in floor area and height can be accessed if 10% of the total units in the project include three or more bedrooms.

As the Community Plan Updates continue, additional community benefits beyond affordable housing may be implemented. These could include extra development rights in exchange for publicly accessible open space, daycare facilities, or other identified community uses.

Key Connections Between Community Plans and Housing Incentives

There are several critical connections that make the housing incentives programs effective:

Zoning and Land Use Alignment – New zoning designations from Community Plans aim to align with state and local laws where bonuses apply. This ensures that developers can easily understand what is allowed and what incentives are available.

Predictability and Transparency – Housing incentives are codified directly into updated zoning districts. This reduces uncertainty and discretionary review, especially for affordable housing projects. Developers can clearly see what they are entitled to build when they include affordable units.

Tailored Incentives by Area – Community Plans identify growth areas, such as locations near jobs, services, and transit. Incentives are customized in these areas to guide housing where it is most needed. This targeted approach helps the City maximize the impact of its housing investments.

Public Benefits Integration – Community Plan policies influence which public benefit options are utilized. For example, developers can earn added benefits such as extra height or density when they include childcare space, larger units, or preserve historic buildings. This creates a win-win situation where the community gains valuable amenities and developers gain additional development capacity.

State Housing Goals (RHNA Compliance) – Updated plans ensure that the City of Los Angeles meets its Regional Housing Needs Assessment (RHNA) targets. These targets are issued on an 8-year cycle, and the City must demonstrate sufficient zoning capacity and housing incentives programs to meet its share of regional housing needs.

Housing Element Rezoning Compliance – The City’s Housing Element, as certified by the state, directs citywide and local programs to shape and increase zoning capacity for housing development. Failure to comply can result in serious consequences, such as the Builder’s Remedy, which allows new projects to supersede existing local zoning regulations. Therefore, aligning housing incentives with the Housing Element is not just good policy it is a legal necessity.

Citywide Housing Incentive Program (CHIP)

The CHIP Ordinance, adopted in February 2025, introduced three distinct housing incentives programs designed to streamline housing development across the City. These programs include the State Density Bonus Program, the Affordable Housing Incentives Program (AHIP), and the Mixed Income Incentive Program (MIIP). Each program takes a unique approach to incentivize development in areas with similar characteristics, including areas with greater concentrations of resources as established by the state’s opportunity maps, major corridors, transit-oriented neighborhoods, and eligible project sites. Depending on the applicable program, projects can apply for development incentives such as density bonuses, higher Floor Area Ratio (FAR), increased height, lower setbacks, and parking reductions.

1) State Density Bonus Program

In compliance with State Density Bonus Law, the City provides development incentives to applicants in exchange for including affordable units in a project. In recent years, various state bills have amended State Density Bonus Law to offer updated and more generous incentives. The State Density Bonus Program, adopted under the CHIP ordinance, is the local program that aligns Los Angeles’ processes with State Density Bonus Law. This includes streamlined review, density bonuses, parking reductions, and other state-mandated incentives. Similar to this program, the other CHIP programs were introduced to locally implement state incentive programs at the municipal level.

The State Density Bonus Program allows developers to increase their base density by a certain percentage based on the amount of affordable housing provided. For example, a project that sets aside at least 5% of its units for very low-income households, 10% for low-income households, or 10% for moderate-income households in a for-sale project can qualify for a density bonus. In addition to density, developers can receive concessions and waivers, such as reduced parking requirements, which significantly lower construction costs.

2) Affordable Housing Incentive Program (AHIP)

The Affordable Housing Incentive Program (AHIP) offers incentives to projects that provide 80% to 100% affordable units. This program is specifically designed to encourage the development of deeply affordable housing. One of the key features of AHIP is that it expands the sites where 100% affordable housing projects are allowed to include zones such as Public Facilities zones. This opens up new opportunities for affordable housing development on land that was previously restricted to non-residential uses.

Eligible projects under AHIP are required to provide a minimum of 80% of units as affordable. In return, developers receive significant housing incentives, including higher FAR, increased height limits, reduced parking requirements, and streamlined permitting processes. By focusing on projects that are predominantly or entirely affordable, AHIP addresses the most pressing need for low-income housing in Los Angeles. This program is particularly important for meeting RHNA targets for very low and low-income categories, which are often the hardest to achieve through market-rate development alone.

3) Mixed-Income Incentive Program (MIIP)

The Mixed Income Incentive Program (MIIP) offers a variety of incentives through three distinct geographic designations: Opportunity Corridors, Corridor Transition Areas, and Transit Oriented Incentive Areas. Each designation is tailored to specific locational characteristics and development goals.

Opportunity Corridors – Project sites eligible for Opportunity Corridor incentives are located in Higher Opportunity Areas, which are established by the state’s Department of Housing and Community Development (HCD) Opportunity Area maps. These areas typically have high access to jobs, quality schools, and low poverty rates. The Opportunity Corridors program was designed to incentivize development on major streets near transit in these Higher Opportunity Areas. By encouraging mixed-income housing in high-resource neighborhoods, the City aims to promote economic integration and expand housing choice for lower-income households.

Corridor Transition Areas – Adjacent to Opportunity Corridors, Corridor Transition areas offer housing incentives for projects with low-scale typologies that transition to lower-scale neighborhoods. This designation recognizes that not every area can support high-density development. Instead, Corridor Transition Areas provide moderate incentives for projects that respect the character of surrounding neighborhoods while still adding much-needed housing. These incentives might include moderate density bonuses, reduced setbacks, and parking reductions, but with lower height and FAR limits than in the core Opportunity Corridors.

Transit Oriented Incentive Areas (TOIA) – Transit Oriented Incentive Areas offer citywide housing incentives to project sites within one-half mile of transit, including rail stations and frequent bus lines. TOIA builds off the City’s Transit Oriented Communities (TOC) program, which has been in effect since 2017. In many cases, TOIA offers incentives beyond those in the original TOC program. These incentives include higher density bonuses, greater FAR increases, larger height allowances, and deeper parking reductions. By focusing on transit-accessible locations, TOIA supports the City’s goals of reducing vehicle miles traveled, lowering greenhouse gas emissions, and creating vibrant, walkable communities.

The Role of Higher Opportunity Areas in Housing Incentives

A recurring theme throughout the CHIP programs, particularly MIIP, is the focus on Higher Opportunity Areas. These areas are defined by the state’s HCD Opportunity Area maps, which identify census tracts with high levels of access to economic and educational resources. By directing housing incentives to these areas, the City aims to reverse decades of disinvestment and segregation. Lower-income households, including those in affordable units, gain access to neighborhoods with good schools, high employment rates, and low crime. This is not only a matter of fairness but also a legal requirement under state housing law, which mandates that each jurisdiction affirmatively further fair housing.

Parking Reductions and Other Non-Density Incentives

One of the most effective ways to reduce the cost of housing development is to lower parking requirements. Parking structures are expensive to build, often adding tens of thousands of dollars per unit. The CHIP programs explicitly include parking reductions as an incentive. Depending on the program and location, developers may receive significant reductions in required parking, sometimes to zero for projects near high-quality transit. This not only lowers costs but also encourages the use of public transit, walking, and biking, which aligns with the City’s sustainability goals.

Other non-density incentives include reduced setbacks, which allow buildings to occupy more of a lot, and increased height limits, which enable more units on the same parcel. These housing incentives are critical in high-cost areas where land prices are steep. By allowing developers to build taller and closer to the property line, the City makes it financially feasible to include affordable units.

Compliance with State Law and the Builder’s Remedy

The document highlights the importance of Housing Element Rezoning Compliance. If the City fails to comply with state housing law, it becomes vulnerable to the Builder’s Remedy. Under the Builder’s Remedy, developers can propose projects that supersede existing local zoning regulations, provided that a certain percentage of units are affordable. This effectively strips the City of its local control over land use. Therefore, adopting and implementing housing incentive programs like CHIP is not optional it is essential for maintaining local decision-making authority.

By proactively aligning Community Plans and zoning with state requirements, Los Angeles ensures that it remains in compliance. Developers benefit from clearer rules and faster approvals, and the City benefits from predictable, planned growth that includes the affordable housing it desperately needs.

Summary of Key Takeaways

In summary, the City of Los Angeles has created a robust framework of housing incentive programs that work hand-in-hand with Community Plan updates. The key takeaways include:

By understanding these programs, developers, community members, and policymakers can work together to expand housing supply, improve affordability, and create more inclusive neighborhoods across Los Angeles. The adoption of these housing incentives programs marks a significant shift toward proactive, incentive-based planning that rewards community benefits with development flexibility. As Community Plan Updates continue to roll out, the connection between zoning and housing incentives will only grow stronger, making it easier than ever to build the homes Los Angeles urgently needs.

Also Read: 14th Annual Demographia International Housing Affordability Survey: 2018