On September 28, 2021, California's Governor Gavin Newsom signed into law Senate Bill 290 (SB 290) as part of a suite of 27 bills geared to address California's spiraling housing crisis. The new legislation is part of the state's initiatives to address a critical lack of available and affordable housing through state funding, increasing density in residential zoning districts, and streamlining the housing development process.

SB 290 amends and clarifies California's Density Bonus Law (Density Bonus Law), which provides incentives for developers to encourage the development of affordable housing, including increases in project densities, reduced parking requirements, and reduced setback and minimum square footage requirements. The Density Bonus Law was amended in 2018 to, among other things, allow more units in a specific area (a density bonus) if at least 20% of the units in a housing project are set aside for lower-income students. In addition to the density bonus, SB 290 requires a city or county to grant one incentive or concession for a student housing development project that sets aside at least 20% of the total units for lower-income students.

The Density Bonus Law also provides for reduced parking ratios on affordable housing, prohibiting a city or county from imposing a parking ratio of more than 0.5 spaces per unit if the development provides at least 20% lower-income units or at least 11% very-low-income units, and is located within one-half mile of a major transit stop to which residents of the development have unobstructed access from the development. SB 290 expands this protection to developments that include at least 40% moderate-income units (with the exception that the 0.5 ratio applies to spaces per bedroom, not per unit).

Senate Bill 290 and the rest of the bill package signed on September 28 further Governor Newsom's $100 billion California Comeback Plan announced last July. SB 290 in particular will hopefully expand the use of the Density Bonus Law and encourage the development of more affordable housing for low-income students.

Practitioners should carefully review the law and its impacts on client interests. For an overview of affordable housing concerns at the local level, see Practice Note, Affordable Housing Issues for Local Government. For discussions of recent issues affecting affordable housing in California, see Legal Updates: