Density Bonus and CEQA Exemptions

Depending on affordability levels and the percentage of affordable units in a project, Density Bonus Law provides projects certain advantages for affordable housing projects. In addition to increased residential density, these advantages can range from lower parking ratios to extra height. Advantages that relate directly to the cost to produce housing at lower affordability levels are called "Concessions," and advantages that relate directly to whether the project can achieve the density or number of units they are entitled to under the law are called "Waivers."  

Developments are allowed up to four (4) concessions depending on affordability levels and percentages and must be approved by City Council.  In order to reject a concession, the City has to prove by substantial evidence that

  1. the proposed concession or incentive does not result in identifiable and actual cost reductions,
  2. it would cause a public health or safety problem (using very limited state definitions),
  3. would cause an environmental problem,
  4. would harm historic property, or
  5. would be contrary to law. 

Concessions may be obtained by an affordable project even if the project does not request a density bonus.

Waivers are unlimited and are automatic; they do not have to be approved by the local municipality. The City could reject a waiver using the reasons 2-5 listed above. The burden of proof for any rejection is on the City, and the thresholds set in Density Bonus Law for proof are very high. This ability to force a locality to modify its normal development standards is sometimes the most compelling reason for a developer to structure a project to qualify for the density bonus. 

Density Bonus Law is entirely separate from the California Environmental Quality Act (CEQA). Every project undertaken in the City goes through an initial CEQA evaluation to determine whether it is a project subject to CEQA or not. From there, additional analysis is undertaken to see if it qualifies for an exemption or is covered by a previously adopted CEQA document. If it does not qualify, the project goes through a CEQA analysis, and the appropriate CEQA document is prepared.

 There are two sets of exemptions under CEQA - Categorical and Statutory. 

Categorical exemptions are those classes of projects that have been found to not have a significant effect on the environment by the California Secretary of Resources and are declared to be categorically exempt from the requirement for the preparation of environmental documents. There are currently 33 different categorical exemption classes, including the Class 32 Infill Development Exemption. (Sections 15301 to 15333 of the CEQA Guidelines) The City of Morgan Hill does not regularly use the Class 32 CEQA Exemption because the majority of housing projects in the City do not qualify for that exemption.  

A Class 32 Urban Infill Exemption is allowed where: 

  1. The project is consistent with the applicable general plan designation, all applicable general plan policies, and applicable zoning designation and regulations. 
  2. The proposed development occurs within city limits on a project site of no more than five acres, substantially surrounded by urban uses. 
  3. The project site has no value as a habitat for endangered, rare, or threatened species. 
  4. Approval of the project would not result in any significant effects relating to traffic, noise, air quality, or water quality. 
  5. All required utilities and public services can adequately serve the site.

In Morgan Hill, housing developments tend to be larger than 5 acres or have issues meeting conditions (c) and (d).  Of the housing projects processed in the last few years, only two have been able to utilize the Class 32 exemption. Both projects were required to complete a full initial study to ensure that the project met the conditions required to use the Class 32 exemption. All environmental documents for projects can be found via the environmental links on their respective project page: http://www.morganhill.ca.gov/1958/Development-Projects or on the City's environmental review page: http://www.morganhill.ca.gov/868/Environmental-Review

The state legislature grants statutory exemptions from CEQA. The exemptions take several forms. Some exemptions are complete exemptions from CEQA, such as for ministerial projects. Other exemptions apply to only part of the requirements of CEQA, and still, other exemptions apply only to the timing of CEQA compliance. (Sections 15260 to 15285 of the CEQA Guidelines)

Portions of new or recent legislation are also creating additional exemptions to CEQA or thresholds for exemptions. SB35 is one such bill that mandates ministerial (over the counter) approval of affordable housing projects with zero CEQA analysis, provided the project meets certain thresholds. A detailed fact sheet is available here: https://www.morganhill.ca.gov/2098/SB35.

 It is also important to note that there have been many changes to CEQA in the last five (5) years.  The changes can all be classified under the umbrella of "planning for people, not cars."  This is also a focus of all the new housing legislation seen over the last five years.  Parking impacts are now considered exempt from CEQA.  Automotive delay (as measured solely by roadway capacity or traffic congestion) cannot constitute a significant environmental impact within CEQA.   LOS or Level of Service typically measures automotive delay.  Projects are no longer allowed to be denied based on the LOS metric. Instead, CEQA guidelines establishing criteria for determining the significance of transportation impacts that use vehicle miles traveled (VMT), which refers to the amount and distance of automobile travel attributable to a project