On Wednesday, Encinitas took the first step toward excluding itself from a new state law that allows developers to build more densely if they set aside homes for low-income residents in their project.
The city has had a tempestuous relationship with state housing law for years, resulting in multiple lawsuits brought by developers and tenants.
In an effort to expand affordable housing in California, the state Legislature passed AB 2345, written by Assemblywoman Lorena Gonzalez, in September. The law raises the state density bonus to a maximum of 50 percent if developers secure 15 percent of those units for very low-income households and 24 percent for low-income households.
In other words, in exchange for building more affordable housing, developers can increase the size of their projects by 50 percent. Affordable housing advocates considered it a win-win for developers and renters.
But within the fine print of the state law, there’s a clause — designed with cities like Los Angeles and San Diego in mind — that exempts cities with existing density bonuses that already exceed state requirements from following AB 2345. But those cities need to have their elevated standards in place before the end of the year, when AB 2345 goes into effect, to receive the exemption.
“What Encinitas is trying to do is to create an enhanced density bonus at the very last minute, so that they can say that the new enhancements don’t apply to them,” said Colin Parent, executive director of Circulate San Diego, a nonprofit that co-sponsored AB 2345.
Brett Farrow, an architect and member of the Encinitas Planning Commission — which wrote the amendments and presented them to City Council — told VOSD that the commission was already working on amending the law, months before AB 2345 was introduced. The City Council unanimously approved the measure Wednesday, but must vote on it a second time, per procedural rules.
Farrow said the Planning Commission had been reviewing its own local development rules to avoid any future lawsuits with the Building Industry Association, housing advocates or Encinitas’ own residents. The commission was ready to send its amendments to the City Council when Gonzalez’s state law was passed.
“We kind of got thrown through a loop here when the new Assembly bill was passed,” Farrow said. “Then, woah, we just spent all this time being meticulous and now we have to comply with this new law.”
After AB 2345 passed, the Planning Commission’s major change centered on the use of net acreage as opposed to gross acreage when calculating density. The state law calculates density based on gross acreage, meaning the project’s entire plot of land, including areas that are not environmentally feasible to build on. Net acreage refers only to the areas of that land that can be developed.
“We were using our density for housing based on gross acreage,” Farrow said. “It was reported down to us that that’s what Sacramento wants.” But when the commission learned that nearly every neighboring jurisdiction, including Carlsbad and Solana Beach, was using net acreage, it sought to change its density bonus law to match.
The Encinitas Planning Commission and City Council have said the state law’s “one size fits all” approach to housing density — meaning the use of gross acreage — doesn’t work for cities like Encinitas due to its hilly terrain and abundance of unusable land. As of Oct. 31, Encinitas had approved 32 density bonus projects, which have included 57 affordable units, said Jennifer Gates, the city’s principal planner.
Encinitas Mayor Catherine Blakespear, who also serves on the City Council, said changing the density calculation from gross to net acreage is a practical revision, not a way to circumvent the construction of more affordable homes.
“The city is committed to building affordable housing and we are doing everything possible to encourage it,” she wrote in an email. “This calculation does not reflect on our desire for affordable housing.”
Parent, however, said there needs to be more focus on the bigger picture. “AB 2345 gives one set of incentives to build affordable homes,” and the city’s new proposal provides fewer incentives to do that, he said.
This is also clear to Timothy Hutter, an attorney for the Building Industry Association. In the days since the Council meeting, Hutter said he has spoken with three of his developer clients who are reconsidering the projects they had planned to build in Encinitas under the 50 percent state density bonus, with a gross acreage calculation.
“There are going to be projects where somebody just says, you know what, it’s not worth it for me,” Hutter said. “That land’s going to stay as a duplex instead of becoming a 90-unit housing project with 15 affordable units.”
But there’s one thing about density bonus that the Encinitas Planning Commission, the Building Industry Association and Circulate San Diego can agree on: There will likely be more legal turmoil for Encinitas in the months to come.
Michael McSweeney, a senior policy adviser for the Building Industry Association, wrote in an email that the proposed amendments just add more roadblocks for developers who want to access the density bonus provisions. Over the last five years, the group has sued the city several times over its housing rules.
“As we may have to yet again challenge the city over their actions in court, this statement shall serve as our answer to your request for a comment,” McSweeney said.
Gonzalez said cities wanting to take a different approach must continue to be proactive in the ways they incentivize housing development.
“We need cities to act with urgency so that we can start improving the very dismal housing supply we have now,” she said.