How does California's density bonus law work, and how does it interact with TOC in LA?
State density bonus law (Government Code 65915) gives residential projects extra units, concessions, and waivers in exchange for affordable set-asides: reserving 15% of base units for very-low-income households earns a 50% density bonus, with smaller set-asides earning less and AB 1287 (2024) allowing a second, stacked bonus up to 100% total for additional affordable or moderate-income units. Projects also get one to four concessions (relaxed development standards), unlimited waivers of standards that would physically block the bonus units, and reduced parking. In Los Angeles, developers choose between state density bonus and the local TOC program — whichever yields more on that parcel.
The mechanics that create value.
The bonus is arithmetic on base zoning: a lot allowing 20 units by right with a 15% very-low set-aside (3 units) can build 30; push affordability further under AB 1287 and qualifying projects reach double the base density. Concessions are where the pro forma really moves — height, setbacks, open space, FAR — because each one waives a standard that would otherwise cost units or money, and the city must grant them unless it makes specific findings. Waivers are broader still: any standard that physically precludes the bonus density must yield. The affordable units are the purchase price of density the zoning map does not show.
Density bonus vs TOC — pricing both schemes.
TOC is Los Angeles's local implementation of the same trade, available only near major transit, with its own tier-based bonuses (roughly 50–80%) and incentive menus. A project uses one program or the other, and the answer differs parcel by parcel: TOC tiers can beat the state base bonus near rail, while AB 1287 stacking or moderate-income options can beat TOC elsewhere or on deeper-affordability schemes — and 100%-affordable projects may do better still under ED1. When I bring a development-adjacent building to market, the offering shows the strongest scheme, because developers bid on buildable units, not on the zoning code. The seller who never ran the analysis leaves that bid unbid.
Do the affordable units stay affordable forever?
They are deed-restricted for a covenant term — 55 years for rentals is the standard — recorded against the property. Buyers of completed bonus projects inherit the covenant.
Can a small project use the density bonus?
Yes — the law applies to projects of five or more units, and even small multifamily can trade one or two affordable units for meaningful extra density. The math gets checked project by project.
Does the density bonus override my lot's zoning?
It builds on top of it — base density comes from zoning, then the bonus multiplies it. It does not rezone commercial land to residential, though other state laws sometimes do that job.
SHAYA LOWENSTEIN · LYON STAHL INVESTMENT REAL ESTATE · DRE #01942326 · (323) 944-2221