AB 2433 Affordable Homes Bonus Law: Enhanced Density for Pacific Beach For-Sale Housing Projects

Assemblymember David Alvarez introduced Assembly Bill 2433 on March 10, 2026, creating new density bonus incentives specifically for builders who include deed-restricted for-sale homes in their projects. The legislation, announced jointly with Circulate San Diego, addresses a critical gap in California's housing policy: while existing density bonus laws have successfully incentivized rental apartment construction, they've provided limited support for affordable homeownership opportunities in high-cost coastal markets like Pacific Beach and La Jolla.

AB 2433 rebalances these incentives by granting additional density bonuses, streamlined ministerial approvals, and automatic eligibility for projects that include affordable for-sale condos or townhomes restricted to low- and moderate-income families. For Pacific Beach builders working with constrained coastal lots, these enhanced bonuses could unlock 2-4 additional units on properties that would otherwise accommodate only single-family or duplex development.

How AB 2433 Differs from Current Density Bonus Law

California's existing Density Bonus Law (Government Code Section 65915) has been the primary tool for encouraging affordable housing development since 1979. However, the law has historically favored rental projects over for-sale developments. AB 2433 specifically targets this imbalance by creating parallel incentives for deed-restricted homeownership units.

Under current law, builders receive a 35% density bonus when 10% of units are reserved for low-income renters. AB 2433 extends this same framework to for-sale condominiums and townhomes, allowing developers to access the full bonus menu—including additional density increases, parking reductions, and development standard waivers—when they commit to selling units at below-market prices to qualified buyers.

The bill works in conjunction with recent housing reforms, including AB 2074's high-rise streamlining provisions and SB 1116's small-lot starter home legislation. Together, these laws create a comprehensive toolkit for addressing San Diego's acute homeownership affordability crisis, where median home prices in coastal neighborhoods exceed $2 million.

Enhanced Density Bonuses for Coastal Projects

The bill amends Section 65915 of the Government Code to make density bonuses, incentives, and waivers explicitly non-discretionary for qualifying projects. This means Pacific Beach developers who meet affordability thresholds receive automatic approval without requiring general plan amendments, local coastal plan revisions, or discretionary planning reviews.

Crucially for coastal builders, AB 2433 builds on AB 1287's reforms, which created an additional 100% capacity bonus for projects with sufficient affordable units. The legislation also clarifies that density bonus projects can supersede local development standards—including height restrictions—when necessary to achieve bonus density. This is particularly significant in the Coastal Height Limit Overlay Zone, where the 30-foot height limit established by Proposition D in 1972 has constrained development for over five decades.

Unlike traditional discretionary approvals that can take 12-18 months and face community opposition, AB 2433's ministerial pathway provides certainty. Projects meeting affordability criteria must be approved administratively within 60-90 days, similar to the streamlined processing that density bonus projects have successfully leveraged to bypass local height and density restrictions.

In San Diego County, moderate-income households qualify at 80-120% of Area Median Income (AMI), which equals $104,640-$156,960 annually for a family of four (based on San Diego's $130,800 AMI). This income range captures teachers, nurses, first responders, and other essential workers who currently face homeownership barriers in coastal neighborhoods where median prices exceed $2 million.

What This Means for Pacific Beach Builders

AB 2433 creates three key opportunities for coastal developers:

Automatic Ministerial Approval: Projects meeting affordability criteria become "use by right," eliminating discretionary review delays and providing development certainty after initial application submittal.

Stacked Bonus Access: Builders can access the full density bonus stack available under AB 1287 while deed-restricting units at affordability levels deeper than statutory minimums, improving project economics while serving lower-income buyers.

Coastal Height Waiver Clarity: The bill reaffirms that density bonus law supersedes local height limits when physically necessary to achieve bonus density—a principle the California Department of Housing and Community Development confirmed applies even to voter-approved height restrictions.

Project Economics: Sample Financial Analysis

Consider a typical Pacific Beach infill lot currently zoned for two units. Under base zoning, a builder might construct two market-rate townhomes selling for $1.8 million each, generating $3.6 million in gross revenue. With AB 2433's density bonus framework, the same lot could accommodate four units with a 35% bonus, or potentially five units with additional concessions.

In this five-unit scenario, a developer would deed-restrict one unit for sale to a moderate-income household at approximately $550,000 (based on 120% AMI affordability calculations). The remaining four market-rate units would sell for $1.6 million each due to smaller individual unit sizes. Total project revenue: $6.95 million—nearly double the base scenario, even after accounting for the affordable unit.

The enhanced density also improves land efficiency metrics. Construction costs increase moderately (shared walls, economies of scale), while land acquisition costs remain fixed. For builders purchasing lots in the $800,000-$1.2 million range typical of Pacific Beach residential zones, AB 2433 bonuses can transform marginal projects into financially viable developments.

This economic model explains why for-sale density bonus projects have proliferated in San Diego since AB 1287 removed owner-occupancy restrictions. AB 2433 further sweetens these incentives by reducing processing timelines and eliminating discretionary approval risks.

Implementation Timeline and Next Steps

The bill is currently in legislative committees. If it passes the Senate and receives the governor's signature in late 2026, implementation would likely begin in early 2027, requiring local governments to update ordinances and approval processes to comply with the new ministerial approval requirements.

Builders with projects in pre-planning should evaluate whether restructuring to include 10-20% affordable for-sale units would unlock enhanced density bonuses and streamlined approvals under AB 2433's framework. Early consultation with planning staff and affordable housing specialists can identify optimal strategies before formal application submittal.

The legislation also requires jurisdictions to establish deed restriction monitoring systems to ensure long-term compliance with affordability covenants. These restrictions typically run 30-45 years for homeownership units, compared to 55 years for rental projects, making for-sale density bonus developments attractive to both builders and municipalities seeking to expand homeownership opportunities.

AB 2433 FAQs for Pacific Beach Builders

---

This article provides general information about proposed legislation and does not constitute legal or financial advice. Consult with qualified professionals regarding specific projects and density bonus applications.