Housing development: density bonuses: affordability of for-sale units

Developers may meet qualifying affordability obligations by selling units to eligible nonprofit housing corporations for resale through below-market loan programs. The law also sets long-term affordability and homeowner-equity protections.

What the law does ​

• Allows density-bonus qualifying for-sale units to be bought by eligible 501(c)(3) nonprofit housing corporations serving extremely low-, very low-, or lower-income households through below-market-interest loan programs.
• Requires resale controls that preserve affordability for at least 45 years and limit sales or resales to income-qualified households.
• Requires equity-sharing deed restrictions to let homeowners recover improvement investments and receive at least 20 percent of the property's value increase during ownership.
• Requires local governments to enforce equity-sharing agreements, subject to conflicts with other funding-source requirements or laws.
• Requires recaptured public subsidies and the local government's share of appreciation to support homeownership purposes within five years, unless an eligible nonprofit agrees to recapture and devote all proceeds to lower-income homeownership locally.

Who it affects ​

• Housing developers seeking density bonuses for projects with for-sale affordable units.
• Eligible nonprofit housing corporations that purchase and preserve homes for lower-income buyers.
• Extremely low-, very low-, and lower-income households using qualifying below-market-interest loan programs.
• Cities, counties, and city and counties administering density-bonus approvals and equity-sharing agreements.

Context ​

The law does not require state reimbursement of local implementation costs because local agencies may levy charges, fees, or assessments to cover them.