Affordable housing programs, both voluntary and mandatory, have proliferated throughout the state in recent years as affordable housing shortages have intensified and increased pressure has been placed on municipalities to achieve minimal affordable housing goals. Providing affordable housing to low- and moderate-income persons and fostering the stability of owner-occupied communities are recognized as legitimate purposes in line with California’s public policy. Policies supporting the development of affordable housing are reflected in various legislative enactments, including, for example, state planning law, which requires that the housing element of a city’s general plan contain a program to meet its fair share allocation of regional housing needs for each of four income levels. The general plan must also include a program that sets forth “a five-year schedule of actions the local government is undertaking or intends to undertake to implement the policies and achieve the goals and objectives of the housing element….”

To implement affordable housing programs, local governments may offer various financial and process-based incentives to developers. Common incentives include density bonuses, impact fee waivers, transfers of inclusionary credits to other projects, and expedited permit processing or other regulatory concessions. These incentives not only reduce the financial burden of providing affordable units and thereby encourage participation in voluntary programs, but also reduce the likelihood that mandatory affordable housing requirements result in a taking of property without payment of just compensation.