Los Angeles has long grappled with significant housing challenges. The city has some of the oldest housing stock, the highest rents in the nation, and accelerating housing instability.
The 2021-2029 Housing Element found that Los Angeles’s current zoning regulations are insufficient for the City to meet its Regional Housing Needs Assessment (RHNA) target. The Housing Element also identified rezoning as a primary tool to meet the RHNA goal of 255,433 units by February 2025.
LA City Planning responded by creating the Housing Element Rezoning Program. A core component of this is the Citywide Housing Incentive Program or CHIP.
CHIP introduces numerous incentives to expand mixed-income and 100% covenanted affordable housing development opportunities.
It will be implemented over two years (2023-2025) through four draft ordinances:
The CHIP Ordinance introduces three main programs within the Los Angeles Municipal Code (LAMC).
All three are designed to work together as a local density bonus program under the State Density Bonus Law:
CHIP’s overarching strategy is to provide greater options and choices for developers and builders. Each program requires different affordability set-asides and offers various incentives based on unit mix, size, location, zoning, etc.
The higher the number of restricted affordable units and the closer you build to transit and within a higher resource area, the greater the incentives.
In addition, several new eligibility criteria, project exemptions, and changes to discretionary and ministerial processes exist.
The CHIP Ordinance aims to provide streamlined review procedures for developments with affordable units, including mixed-income, with both LA City Planning and LADBS:
Additionally, the CHIP Ordinance proposes an amendment to the thresholds associated with Project Review contained in LAMC Section 16.05, switching from the classification of Site Plan Review (SPR) to Project Review (PR): a discretionary approval required for multifamily projects with 50 or more market-rate units.
In effect, discretionary approvals for mixed-income and affordable developments will be reduced.
Under CHIP, projects may utilize several incentives from a pre-set “menu of incentives.” Additional incentives include yard/setback reductions, passageway reductions, transitional height, etc. Projects also have multiple paths to meet the required percentage of restricted affordable units.
The broader CHIP program aims to create most of the newly created housing capacity in Higher Opportunity Areas.
Higher Opportunity Areas have been identified as having high access to high-quality transit, jobs, high-performing schools, and lower exposure to environmental hazards and pollutants. These are identified in the CTCAC/HCD Opportunity Area Maps.
Since understanding the combination and number of incentive programs can be complex, we have outlined them below by program:
The CHIP Ordinance introduces Public Benefit Options for all three programs. This is a new, unique program for the City of LA.
It provides by-right development bonuses in exchange for community benefits including but not limited to (and depending on program eligibility):
| Public Benefit | Incentive |
| Childcare Facilities | 40% of units as 2 bedrooms granted additional FAR of up to 0.5 or 11 feet in height |
| Multi-Bedroom units | Exemption of all 3+ bedroom units from floor area calculations and an additional story of height |
| Land Donation to City (for housing) | Min. density bonus of 15% |
| Active ground floor, including commercial uses such as | Up to 1,500 square feet of active space exempt from floor area calculation |
Above-ground parking counted in FAR: TOIA-eligible projects will include above-ground parking in calculating the total floor area. The most recent ordinance added space for flexible parking structure designs that facilitate the possible future conversion of parking areas to active uses.
Parking with active uses would not count towards the calculation of Floor Area. We would like to point out that all eligibility TOIA tiers have no parking minimum.
No single-family zones: Originally, CHIP explored how programs could be applied to single-family zones throughout the city. As of August 1st, the draft ordinance no longer contemplates single-family zones as eligible for added development bonuses.
Land zoned for single-family uses is only eligible for AHIP incentives when a proposed project is on a parcel owned by a public agency or a Faith Based Organization.
However, additional public feedback is being solicited for this decision.
Affordable Linkage Fee & Project Review Exemptions for Mixed-Income Housing: MIIP projects are exempt from the Affordable Linkage Fee. Projects that meet exemption eligibility will also be exempt from Project Reviews.
The CHIP Ordinance is significant in addressing Los Angeles’s housing crisis. By providing substantial incentives and streamlining approval processes, the ordinance aims to create more affordable housing options throughout the city.
As Los Angeles continues to grow, initiatives like the CHIP Ordinance will ensure that all residents have access to safe, affordable, and equitable housing.
The program will also grow and incorporate LA’s new zoning code and changes to community plans. Read more about the code and DTLA 2040 here.
ATC will keep you updated on CHIP Ordinance procedures and incentive changes as they are updated.
Next week, we will be diving into the Adaptive Reuse Ordinance.
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