The cities of California have a long history of obtaining community benefits from real estate development through a variety of mechanisms, including fees, conditions of approval, and development agreements. Throughout California, zoning incentive programs are establishing clearer, better-defined approaches to ensuring that community benefits from new real estate development projects fulfill unmet development objectives while also providing transparency to developers.
The State of California’s Affordable Housing Density Bonus Law is an example of a zoning incentive value-capture program. Under this law, developers are granted additional density (i.e., the right to build additional market-rate units) in return for their development of affordable-housing units. Whenever a city offers planning and zoning flexibility, an additional increment of value is created, and it is appropriate for the project developer to share a portion of that value gain with the community for use toward a public benefit