Summary:

California’s housing crisis has driven lawmakers to refine policies that incentivize affordable housing continually.  One of the most significant recent reforms is Senate Bill 92 (SB-92), signed into Law in October 2025, which amends the state’s Density Bonus Law (DBL).  This legislation introduces critical guardrails to prevent misuse of density bonuses while preserving incentives for affordable housing development.  This reiteration of the reform’s goal should make the audience feel that their concerns are being taken into consideration.

Background: What is the Density Bonus Law?

The Density Bonus Law, codified in Government Code §65915, requires cities and counties to grant developers additional residential density and other concessions if they include affordable housing units in their projects.  Historically, this Law allowed:

• Density bonuses ranging from 20% to 50% for projects that include affordable units for very low-, low-, or moderate-income households.
• Up to 80% bonus for 100% affordable rental developments, plus incentives like:
• Increased height limits
• Reduced parking requirements
• Waivers of specific development standards
• Eligibility for mixed-use projects, provided they include housing components.

Why SB-92 Was Needed

Recent controversies, such as the Pacific Beach “Project Vela”—a 22-story mixed-use tower featuring luxury hotel rooms and only 10 affordable units—have highlighted how developers have exploited DBL to bypass local zoning.  In some cases, commercial space exceeded local limits by over 1,500%, undermining the Law’s purpose.

Key Provisions of SB-92

SB-92 introduces reforms to restore integrity to the DBL:

1.  Limits on Commercial Floor Area

• Developers using DBL incentives can increase commercial floor area ratio (FAR) by no more than 2.5 times the base zoning allowance.

2.  Restriction on Transient Lodging

• Local governments are not required to grant DBL concessions for hotels, motels, or other transient lodging, except for residential hotels.

3.  Mixed-Use Development Clarification

• To qualify for DBL, at least two-thirds of a mixed-use project’s square footage must be residential.

4.  Affordable Housing Requirements Remain

• Developers must still meet affordability thresholds:
• 10% of units for lower-income households
• 5% for very low-income households
• Special provisions for seniors, students, veterans, and transitional foster youth.

5.  Effective Date

• SB-92 takes effect on 1 January 2026.  Projects with preliminary applications filed before this date are exempt from new restrictions.

✅ Developer Compliance Checklist for SB-92

Before submitting a project under the Density Bonus Law, confirm:

·         Residential Ratio

At least two-thirds of the total square footage is residential.

·         Commercial FAR Cap

o   Commercial space does not exceed 2.5× base zoning FAR.

·         Transient Lodging

o   No hotels, motels, or short-term lodging included (except residential hotels).

·         Affordable Housing Commitment

o   Meets minimum inclusionary requirements:

§  10% low-income OR

§  5% very low-income OR

§  Other qualifying categories (senior, student, veteran, foster youth).

·         Application Timing

o   Filed after 1 January 2026 for SB-92 compliance (or confirm exemption if earlier).

·       Local Checklist & Timelines

o   Review the city/county completeness checklist and adhere to processing timelines.

·       Parking & Height Incentives

o   Confirm eligibility for additional concessions under DBL.

Impact on Affordable Housing

While SB-92 does introduce some restrictions, it also provides clarity and predictability for developers, which can ultimately expedite the approval process.  SB-92 reinforces California’s commitment to housing over hospitality.  By curbing abuses, the Law ensures that density bonuses serve their intended purpose—expanding affordable housing stock.  While critics worry about reduced flexibility for mixed-use projects, proponents argue these reforms restore public trust and prioritize housing needs.

Bottom Line

SB-92 is a course correction for California’s housing policy.  It balances developer incentives with community safeguards, ensuring density bonuses remain a tool for solving—not exploiting—the housing crisis.  This emphasis on balance should make the audience feel that their interests are being taken into consideration.