Incentive Zoning/Density Bonus

How it Works

Incentive Zoning offers rights to a developer in exchange for public benefits to the community. These public benefits could include providing public plazas, bike facilities, affordable housing, or other amenities.

Examples of incentive zoning include allowing flexible set back allowance, reduced parking standards, and relaxed Floor Area Ratio (FAR) requirements. The most common method of incentive zoning, however, is the density bonus, which allows a developer to construct a greater number of market rate units or building square footage than would otherwise have been allowed, in exchange for providing community benefits such as including affordable housing units. Generally, the density bonus does not exceed 20% of normal density and the exact bonus amount granted is determined by local officials. The incentive creates a voluntary path for affordable housing contribution that a developer may choose if the value of the incentive outweighs the cost of providing the community benefit.

A density bonus and other incentive zoning policies incur no direct cost for the local government. Because of its voluntary nature, incentive zoning can also benefit developers by providing a potential path to building more on a given site.

Case Study

The City of Mountain View adopted the El Camino Real Precise Plan in 2014 to establish land use and development regulations along the city’s nearly four-mile length of the El Camino Real corridor. This Plan helps implement the City’s General Plan goals and policies for the area. The Plan replaced the standard Zoning designation and development standards for this area with new development standards tailored to the unique conditions of the corridor.

A key piece of the Plan is allowing development density and height bonuses in exchange for community benefits, including affordable housing. The plan details three options for development: Baseline, Tier 1, and Tier 2. Baseline development can be approved throughout the Plan area and features the lowest level of City review with no contribution of public benefits required. The baseline height limit is 55’ with an FAR limit of 1.35. The Tier 1 and Tier 2 processes allow for increases in height and density in specified areas in exchange for community benefits. These increases can reach up to 75’ in height and a 2.3 FAR.

The Plan lists several public benefits that developments can provide to meet Tier 1 or Tier 2 requirements including affordable housing, pedestrian and bicycle amenities, public parking facilities, and public parks and open space. Affordable housing is considered a Plan Priority and the provision of on- or off-site affordable units above and beyond existing regulations is the primary public benefit listed. On-site affordable housing development is preferred in the Plan. Given the focus on affordable housing in the Plan, this Incentive Zoning/Density Bonus strategy can be a valuable tool in the creation of additional affordable housing and its inclusion in new development.

Lessons Learned

  • Ensure that local programs are consistent with State Density Bonus Law.
  • Ensure public benefit requirements and tiering are tuned to a range of development types (e.g., hotels, apartments, row houses, offices, ground floor commercial).
  • Development of a local density bonus program should be based on analyses that considers development costs and conditions particular to that jurisdiction or neighborhood.
  • Resolve any uncertainty with the public benefit program. For example, the developer should have clarity of City requirements and its rationale.
  • Assure transparency in the agreements and the process to assure public confidence.

Key Considerations

  • Parcel size and location should be considered when determining public benefit requirements.
  • Agencies must develop a clear methodology for calculating public benefits, and having clear direction on the public benefits that should be provided.
  • Agencies may need to periodically update their public benefits priorities and public benefit value expectations.

Additional Resources

Mountain View El Camino Real Precise Plan

Who’s Using It? *





Daly City


Los Altos

Menlo Park


Mountain View

Palo Alto

Redwood City

San Bruno

San Carlos

San Mateo (city)

Santa Clara (city)

Santa Clara County

South San Francisco


*ABAG Housing Policy Database v.1.0. Association of Bay Area Governments., February 2016.


ABAG. “California Housing Element Policy Best Practices, Version 1.2.” 21 Aug. 2014. PDF. <>.

California Government Code. Title7. Division 1. Chapter 4.3 Density Bonuses and Other Incentives.  <>

The Washington Area Housing Partnership. “Toolkit for Affordable Housing Development.” 2005. PDF. <>.