Planopedia

A density bonus is a development incentive that allows developers to increase the maximum allowable development for a proposed development, as defined by a local zoning code, in return for support for specified public policy goals. Density bonus programs are a common planning tool at local, country, and state levels all over the United States, but can vary greatly both in the kinds of bonuses offered and the policy goals the incentives are intended to address. Most experts agree that density bonus programs are most effective as a planning tool in locations with strong real estate market demand and a limited amount of developable land.

Density Bonus Varieties

Because density can be defined in so many ways, even in the specifically circumscribed context of zoning codes, density bonuses can be offered for more than one variety of development intensity. For example, a density bonus program could increase dwelling units per acre (du/ac), Floor Area Ratio (FAR), building heights, or developed square footage. Density bonus programs around the country also provide bonuses for metrics not typically associated with density, such as reduced parking requirements and development setbacks, among other examples. 

Some density bonus programs also offer a range of potential bonuses depending on the scope of the development proposal. In California, for example, the size of the density bonus is determined by a sliding scale (page 5 of the linked pdf) that corresponds to the percentage of affordable units at each income level included in a proposed development.

Many density bonus programs also allow developers to pay a fee, often called an in-lieu fee, instead of building the desired community benefit directly into the project. In-lieu fees thus offer a degree of flexibility for the developer in choosing how to meet the requirements of a density bonus program—cash or capital investment. 

Density Bonus Purposes

As already mentioned, density bonus programs are designed to offer incentives for development activities that address specific policy goals. Given the country's worsening housing affordability crisis, density bonus programs in the United States are most frequently deployed as incentives for the production of affordable housing (also referred to as low-income or social housing). Density bonus programs are thus a common tool of inclusionary zoning—the voluntary or mandatory inclusion of affordable housing units in new developments. 

But density bonus programs are tools for many policy goals beyond affordable housing as well. Around the United States, density bonus programs provide incentives to promote policy goals as varied as environmental protection and open space conservation, parks and open space funding, the production of child care facilities, and the development of grocery stores.

Density Bonus History

Density bonuses programs have been in place in the United States for many decades. New York City adopted its first density bonus program in 1961, and California adopted its State Density Bonus Law in 1976. Though density bonuses are relatively common and, thus, correspondingly popular as a planning tool, density bonus programs have mostly failed to address the purpose of ensuring an adequate supply of housing affordable at a variety of income levels. Five decades after adopting its statewide density bonus program, the housing affordability crisis in California was still so acute that the State Legislature enacted AB 2345 in 2021, significantly expanding the statewide density bonus program based on the model provided by the city of San Diego’s Affordable Homes Bonus Program. Planetizen's archive of density bonus stories is marked by frequent controversies, legal battles, and program updates.