Campbell council introduces ordinances to implement AB 1287, expand density bonuses for smaller affordable units

Campbell City Council on Tuesday introduced amendments to the municipal code intended to accelerate production of smaller, lower-cost housing units and to implement Assembly Bill 1287.

Housing Manager Eloisa Murio told the council the package has two parts: amendments to overlay and inclusionary housing chapters to extend entitlement periods and allow certain small projects to pay an in-lieu fee, and a new local density-bonus program to incentivize smaller “housing-by-design” units up to 625 square feet. “Based on the units that have been produced to date, the city is not on track to meet its assigned regional housing needs allocation,” Murio said, adding the city is anticipated to produce about “690 units of its 2,977 allocation.”

The proposed changes would extend the approval period for 100% affordable housing projects from three to five years, exempt the ground-floor commercial-space requirement for 100% affordable projects outside the downtown area, and allow projects of five to nine units to satisfy inclusionary obligations through a temporary in-lieu fee through June 30, 2030. Under the new local density-bonus program tied to program H‑1M, smaller units included as part of a project would generate bonus units at approximately a one-to-one ratio, enabling developers who provide a portion of smaller units to increase total project density.

Developers who commented were split on the likely effect. John Pringle, representing Barbano Enterprises (Hickory Pit site), said the proposals are helpful but may not be enough for long-delayed projects: “It is not unusual ... 30 projects in the Bay Area of 100 units or larger that have been trying to get built for well more than five years,” he said, and he flagged an almost $6.5 million park-fee cost for a large project. Jeremy, representing Presley Homes, said his company supports the small-unit density bonus, arguing it would help fill the “missing middle” housing gap and support downtown vibrancy.

Council members discussed tradeoffs, including whether extending entitlement terms risks leaving sites undeveloped longer versus giving affordable projects additional time to assemble complex funding stacks. One councilor asked whether a project that does not build within three years will build within five; staff replied extensions are intended to provide more time to assemble financing but cannot guarantee construction. Senior planner Steven Rose told the council applicants would have one additional 12-month extension opportunity after the five-year period before they would need to apply for a new entitlement.

Councilors also debated allowing 5–9-unit projects to pay an in-lieu fee rather than provide units on-site. Vice Mayor Fado said she supported exempting the ground-floor commercial requirement for 100% affordable projects but expressed concern that letting small projects pay a fee could reduce the number of on-site affordable units. Staff estimated the in-lieu fee option could generate approximately $735,000 per year and $3.68 million over five years based on a conservative projection of one applicable project per year.

A council member moved to introduce the ordinances amending chapters 21.24 (inclusionary housing), 21.14 (overlay combining districts) and 21.20 (density bonuses) and to take first reading; the motion was seconded and carried with four votes in favor and one abstention (Council member Skazola). The council subsequently voted unanimously to waive further reading. The staff recommendation and a desk item were included in the materials presented.

The ordinances were described as implementing Assembly Bill 1287 and program H‑1M of the 2023–2031 housing element (file number PLN 2025‑135). The council scheduled the second reading and final consideration for Dec. 2.