/>iCalifornia’s housing crisis has necessitated innovative legislative solutions at the state and local level to increase the supply of affordable housing across the state. Cities are required by state law to plan for a specified amount of new housing development in accordance with the targets set by the Regional Housing Needs Allocation (RHNA). According to the RHNA Allocation Plan, the City of Los Angeles has an allotment of 456,643 new units for the period from 2021 to 2029, which is more than five times greater than the City’s previous RHNA allotment. The City acknowledged in its 2021-2029 Housing Element that it is experiencing a severe housing crisis and would come up significantly short of its allotment based on its then-existing zoning.
As required by state law, the City designed a Housing Element Rezoning Program (Rezoning Program) to accommodate its housing allotment, which aims to increase the supply of housing across the City. The Rezoning Program includes updates to the Downtown Community Plan and the Hollywood Community Plan as well as the adoption of three related ordinances, which were approved by the Los Angeles City Council on February 7, 2025. These ordinances are referred to as the Citywide Housing Incentive Program (CHIP) Ordinance, the Housing Element Sites and Minimum Density Ordinance, and the Resident Protections Ordinance. These amendments to the Los Angeles Municipal Code are expected to benefit multi-family housing developers by streamlining review processes for project approvals and providing additional incentives for qualifying mixed-income and 100% affordable housing projects.
Some pro-housing advocates believe that the Rezoning Program is inadequate to meet the City’s housing obligations, as evidenced by a recent lawsuit filed by YIMBY Law and Californians for Homeownership against the City of Los Angeles. While the results of that litigation remain to be seen, the CHIP Ordinance does provide a helpful starting point by offering incentives and removing procedural barriers to project approval for qualifying projects across the City.
CITYWIDE HOUSING INCENTIVE PROGRAM ORDINANCE
The CHIP Ordinance includes three options for local density bonus programs, updating the City’s implementation of the State’s Density Bonus Program (DBP), adopting a Mixed-Income Incentive Program (MIIP), and creating an Affordable Housing Incentive Program (AHIP) for 100% affordable housing projects. These programs provide new incentives for qualifying mixed-income and 100% affordable housing projects with an aim towards increasing the supply of housing across the City, particularly near public transit, along major corridors, and in areas identified as Higher Opportunity Areas.
CITY’S DENSITY BONUS PROGRAM
The CHIP Ordinance revises the City’s implementation of the State DBP to align the review processes and incentives under the state and local programs. The DBP incentivizes providing affordable units by offering increased density as well as additional incentives and waivers of certain development standards for qualifying housing projects that include the requisite percentages of affordable housing units.
One upshot of the CHIP Ordinance is that it allows for increased density bonus of up to 100% in line with Assembly Bill (AB) 1287, which Governor Newsom signed into law on October 11, 2023. AB 1287 included an amendment to the State Density Bonus Law to provide an additional density bonus and incentives for qualifying projects providing moderate income units or very low-income units. Specifically, under AB 1287, a project providing the requisite percentage of affordable units can obtain the 50% maximum density bonus under the prior law as a base bonus as well as an additional density bonus up to 100% as an additional bonus in exchange for the provision of the requisite percentage of additional affordable units.
The CHIP Ordinance incorporates the additional bonus and incentives provided by AB 1287 into the City’s implementation of the State’s DBP. Like the State’s DBP, the CHIP Ordinance outlines the requisite percentages of affordable units provided for each income level. For units offered for rent, the minimum percentages of units provided for each income level to qualify for the Program are 5% very low income or 10% lower income. For units offered for sale, the minimum percentages of units are 5% very low income, 10% lower income, or 10% moderate income. The percentage of density bonus units that a project is entitled to depends on the percentage of very-low income, lower income, and moderate income (if for sale) provided. Like the State’s DBP, the maximum density bonus a project is entitled to is a 50% base bonus if it provides 15% very-low income or 24% lower income units for rent or 44% moderate income for sale. In addition, the CHIP Ordinance provides that a project may qualify for an additional bonus ranging from 20% up to 50% if the project provides the requisite percentage of very-low income or moderate-income units.
The CHIP Ordinance also provides new density bonuses and incentives for qualifying projects that provide housing for specified target populations, including senior citizens, transitional foster youth, disabled veterans, homeless persons, and lower income students.
The CHIP Ordinance updates the City’s DBP to reflect that a qualifying project may request up to four on- or off-menu incentives subject to the review process below.
Under the CHIP Ordinance, more projects will be eligible for ministerial review, avoiding uncertain and lengthy review processes, including environmental review under the California Environmental Quality Act (CEQA). The CHIP Ordinance updates the review processes for housing projects depending on the type of request under the DBP. Projects that request only the allotted number of incentives from the base incentives and menu of incentives provided in the CHIP Ordinance are entitled to a ministerial approval by the City’s Department of Building and Safety unless certain limited exceptions apply. This language in the CHIP Ordinance is consistent with the Department of City Planning’s current policy to ministerially review qualifying housing projects requesting only on-menu incentives.
The CHIP Ordinance also creates a new ministerial review process referred to as the Expanded Administrative Review (EAR) process, which applies to projects requesting public benefit options or off-menu incentives. The EAR process entails submitting an application and eligibility checklist to the Affordable Housing Services Section at the Metro/Downtown Development Services Center. The submitted documents are reviewed by the Department of City Planning to assess compliance with applicable regulations and standards. An informational public hearing may be required depending on the project or if otherwise required by the Code. Upon the Department’s determination that the proposed project complies with applicable standards and regulations, projects must be developed in keeping with the approved plans. Modifications of no more than ten percent may be permitted, but, for more extensive modifications, an applicant is required to restart the EAR process.
If the applicant requests to waive or reduce development standards, exceed the maximum density bonuses, or proceed with any other actions requiring discretionary approval, then the applicant will be required to obtain a Class 3 Conditional Use Permit, which is subject to discretionary approval by the City Planning Commission. Note that the CHIP Ordinance does not streamline other discretionary actions that may be applicable to a housing project, such as a General Plan Amendment, Zone Change, Project Review, or other discretionary action.
MIXED-INCOME INCENTIVE PROGRAM
The Housing Element identifies The Mixed-Income Incentive Program (MIIP) consists of three sub-programs designed to incentivize mixed-income housing development near public transit stops and in higher-opportunity areas: the Transit Oriented Incentive Area Program, the Opportunity Corridors Program, and the Opportunity Corridors Transition Program.
To qualify under these sub-programs, the housing project must meet the generally applicable requirements of MIIP as well as the specific requirements of the sub-program. Regardless of which program the project is applying for, the project must meet certain requirements, including providing a baseline of either four or five units depending on the program, meeting specific program requirements, reserving the requisite percentage of affordable units, and meeting applicable zoning and other requirements.
TRANSIT ORIENTED INCENTIVE AREA PROGRAM
The Transit Oriented Incentive Area (TOIA) program is intended to increase the supply of affordable housing near public transportation, particularly in areas identified as Higher Opportunity areas. Eligible projects under the Transit Oriented Incentive Area (TOIA) program are those located within the requisite distance to a major transit stop based on the criteria in the CHIP Ordinance. The TOIA program differentiates projects into particular incentive sets based on proximity to a qualified major transit stop and location within one of the City’s Opportunity Areas as identified on the California Tax Credit Allocation Committee (CTAC) Opportunity Area map. The base incentives are specified for each incentive set. Within each set, projects in Higher Opportunity Areas receive increased density and floor area ratios (FAR) compared to projects located in the Moderate or Lower Opportunity Areas within the same incentive set.
As with the City’s DBP, eligible projects qualify for up to four incentives. Compared to the City’s DBP, the TOIA program offers additional base incentives, including FAR and height, tailored to the incentive sets as well as additional on-menu incentive options. Significantly, the TOIA program allows for density increases beyond the density bonuses provided under the City’s DBP. If the property’s zoning allows for at least five units, then projects are eligible for density bonuses starting at 100% for Moderate and Lower Opportunity Areas in the T-1 incentive set and rising up to density limited only by FAR in Higher Opportunity Areas in the T-2 and T-3 incentive sets.
OPPORTUNITY CORRIDORS PROGRAM AND OPPORTUNITY CORRIDORS TRANSITION PROGRAM
The Opportunity Corridors (OC) program envisions new mid-rise affordable housing developments along major transit-served corridors within the City’s Higher Resource Areas as identified on the CTAC Area map. Like TOIA, OC differentiates projects into particular incentive sets. Like TOIA, OC offers additional base incentives, including FAR and height, and on-menu incentives compared to the City’s DBP. The base incentives are specified for each incentive set for the FAR and height. The OC program provides more generous base incentives than the TOIA program, including density limited only by floor area and increased FAR.
The Opportunity Corridors Transition (OCT) program permits low-rise housing development on properties in higher opportunity areas zoned as R2 or RD, allowing for small-scale development in low-density multi-family zones near Opportunity Corridors. The concept is that these low-rise housing developments will provide transitions between single-family houses and mid-rise multi-family apartment buildings. The OCT program differentiates by subareas based on proximity to an Opportunity Corridor as discussed above (CT-1, CT-2, and CT-3). The number of units required at each income level in order for the project to qualify for incentives depends on the OCT Incentive Area in which it is located. The program allows for between four to sixteen units depending on the subarea in which it is located. The other base incentives are also tailored to the applicable subarea but include a range of FAR and height allowances. Note that the floor area ratio incentives are determined based on the number of density bonus units. A project approved under the OCT program must also meet various performance standards, including satisfying specific requirements related to common open space and entryway standards.
AFFORDABLE HOUSING INCENTIVE PROGRAM
The Affordable Housing Incentive Program (AHIP) provides new incentives for 100% affordable housing projects in addition to the incentives offered under the State DBP. Like the MIIP programs, AHIP is intended to encourage housing development near transit and in areas identified as Higher Opportunity Areas. For example, AHIP provides additional incentives for projects located in Higher or Moderate Opportunity Areas or within a half mile of a major transit stop or very low vehicle travel area, including density limited only by floor area. AHIP also provides tailored incentives for qualifying 100% affordable housing projects citywide. Compared to the other programs in the CHIP Ordinance, AHIP provides an additional incentive for a total of up to five incentives for qualifying projects.
Additionally, AHIP adds “P” Parking zones and “PF” Public Facilities zones to the types of zones eligible for 100% affordable housing projects and covers a variety of project types, including public land projects, faith-based organization projects, and shared equity projects that provide the required percentage of restricted affordable units and meet specific ownership criteria based on the project type. Specifically, AHIP incentivizes 100% affordable housing on Public Facilities “PF” zones and on land owned by public agencies, 80-100% affordable housing on land owned by faith-based organizations, and 80-100% affordable housing on land owned by community land trusts or limited equity housing cooperatives. Under certain circumstances, these project types may be subject to the new ministerial EAR process described above.
STREAMLINED CEQA ENVIRONMENTAL REVIEW
One strategy that opponents of affordable housing projects frequently employ is leveraging the lengthy environmental review process under CEQA to delay and drive up the costs of housing projects. These delay tactics can be fatal, particularly for affordable housing projects which are often already limited by tight cost margins. Even the threat of CEQA-related delays influences whether developers and investors are willing to proceed with an affordable housing project due to uncertainties about timing and costs.
The City’s Housing Element addresses these concerns by streamlining the environmental review process under CEQA for most new housing developments. Pursuant to CEQA, an Environmental Impact Review was approved for the City’s Housing Element, which examines a vast range of environmental impacts from the proposed housing programs, including the potential environmental impacts of housing projects expected to qualify for the programs outlined above. Thus, rather than undergoing a full CEQA review for each individual housing development utilizing these programs, housing developers are permitted to use the standardized CEQA Streamlining Checklist Form (Form CP-4089) as the environmental review document. Streamlining CEQA review significantly reduces the timeline for project approvals and removes another barrier for developers and investors considering moving forward with a housing project.
CONCLUSION
The incentives programs included in CHIP Ordinance and the streamlined CEQA environmental review process are aimed at lowering procedural barriers that steer developers and investors away from affordable housing projects. While some pro-housing advocates believe that these changes are inadequate to meet the City’s obligations under state law, these programs do provide a helpful starting point for developers trying to make affordable housing projects pencil out.
