Housing Overlay Zones (HOZs)

At a Glance

Type: Planning or regulatory tool
Where tool is used: Downtowns/transit corridors
Timeline: Long-term
Who implements: Jurisdiction
Relative density impact: High

Housing overlay zones (HOZs) are added layers on top of existing zoning ordinances that provide incentives for developers to build housing, particularly affordable housing, within specific districts. Overlay zones may include a variety of incentives to developers to include affordable units in their projects, such as:

Increased density bonus
Increased allowable heights
Lower parking requirements
By-right zoning or administrative project approval
Streamlined permitting
Allowing housing in locations not zoned for residential uses
Impact fee waivers
Lower parking requirements

In locations where the zoning doesn’t allow residential development, HOZs can enable housing construction while avoiding the lengthy process of amending a general plan. A key benefit of overlay zones is that they offer developers flexibility in developing more housing while reducing development costs, without imposing significant costs on the jurisdiction.

The four components of a HOZ policy are:

Geographic area of the HOZ;
Amount of affordable units required for projects to qualify for overlay zone incentives;
The package of incentives given to qualifying projects; and
The extent of exemptions from discretionary project-level approvals.

The following jurisdictions in San Mateo County provide HOZs:

Key Benefits

HOZs encourage affordable housing development without imposing additional costs to jurisdictions.
They can be tailored to meet the development needs and desired character of individual neighborhoods and districts.
HOZs provide flexibility and valuable incentives for developers.
HOZs can provide jurisdictions with an additional tool to provide enough land to meet their Regional Housing Needs Allocation (State-mandated requirements that assign a certain amount of a region’s total housing need to each jurisdiction) without having to rezone large amounts of land for residential uses.

Community Considerations

HOZs do not re-zone land; they create an additional set of development options that land owners can choose to exercise at their discretion.
Because they provide incentives in exchange for producing affordable housing, HOZs avoid some of the challenges and limitations associated with mandatory inclusionary zoning, impact fee, or in lieu fee policies.
HOZs can provide higher density bonuses and greater incentives than those provided under the California Density Bonus Law, and can be used instead of or as a complement to density bonuses and inclusionary zoning policies.