AB 87 Density Bonus: Pacific Beach Hotels Blocked 2026

What is AB 87 and When Did It Take Effect?

On January 1, 2026—just three days ago—California's most significant density bonus reform in decades took effect, fundamentally changing what builders can construct in Pacific Beach's coastal zone. If you submitted a mixed-use density bonus application this week, the rules just changed.

Assembly Bill 87 (AB 87), authored by Assemblywoman Tasha Boerner representing California's 77th Assembly District (which includes Pacific Beach, La Jolla, and other San Diego coastal communities), makes State Density Bonus Law benefits inapplicable to hotel portions of mixed-use projects. The law clarifies that the state density bonus law does not require local jurisdictions to grant incentives, concessions, or waivers to hotels, motels, or other transient lodging (other than residential hotels) as part of mixed-use projects.

Governor Gavin Newsom signed AB 87 on October 10, 2025, alongside Senate Bill 92 (SB 92) by Senator Catherine Blakespear, which addresses related density bonus reforms. Both bills received bipartisan support, with AB 87 passing the Assembly floor with a 54-0 vote.

The purpose is clear: ensure California's Density Bonus Law is primarily used for residential housing production, not visitor accommodations. As Assemblywoman Boerner stated, "California is not in a hotel crisis; we are in a housing crisis."

The Project Vela Catalyst: How Pacific Beach Changed California Law

AB 87 and SB 92 weren't created in a vacuum—they were sponsored specifically to address a project in San Diego that proposed a 238-foot tower adding 139 hotel rooms and only 10 affordable units. This project, known as Project Vela (or the Turquoise Street Tower), became the flashpoint that exposed a critical loophole in California's density bonus framework.

Located at 970 Turquoise Street in Pacific Beach, Project Vela is a proposed 22-story (some reports cite 23 stories), 239-foot-tall mixed-use tower that would include 213 total units, with 139 designated for "visitor accommodation" (hotel rooms), 65 market-rate residential units, and only 10 units reserved for very-low and middle-income families. The project exceeds Pacific Beach's three-story height limit and coastal zone restrictions by leveraging density bonus incentives intended for affordable housing production.

The community response was swift and fierce. Pacific Beach Planning Group, local residents, and elected officials rallied against what they viewed as an abuse of density bonus law. Opposition included Mayor Todd Gloria, San Diego City Councilmember Joe LaCava, state Senator Toni Atkins, Assemblymember Tasha Boerner, and Senator Catherine Blakespear—a rare display of unified political will across party lines and levels of government.

The project demonstrated how developers could exploit density bonus law to build primarily hotel projects with minimal affordable housing, particularly in high-value coastal areas where visitor accommodations generate significantly more revenue than residential units. This exploitation triggered immediate legislative action, with Assemblywoman Boerner—representing the 77th Assembly District that includes Pacific Beach—introducing AB 87 to close the loophole.

What Changed: Before vs. After AB 87 (December 31, 2025 vs. January 1, 2026)

Understanding the before-and-after of AB 87 is critical for builders planning mixed-use projects in Pacific Beach and throughout California's coastal zone. Here's what changed at midnight on January 1, 2026:

Aspect	Before AB 87 (Through Dec 31, 2025)	After AB 87 (Starting Jan 1, 2026)
Hotel Eligibility	Hotels and visitor-serving uses could receive density bonus incentives as part of mixed-use projects	Hotels, motels, bed & breakfast inns, and other visitor-serving portions explicitly excluded from density bonus benefits
Height Bonuses	Could apply to entire mixed-use project including hotel components	Apply ONLY to residential portions; hotel components must comply with base zoning height limits
Parking Reductions	Could apply to entire project including visitor accommodations	Apply ONLY to residential units; visitor accommodations must meet standard parking requirements
Concessions/Incentives	Could be used to reduce development costs for hotel portions	Cannot be applied to hotel, motel, or visitor-serving components (residential hotels excepted)
Development Waivers	Could waive development standards for mixed-use projects with hotels	Waivers apply ONLY to residential portions; hotels must comply with all base zoning standards
Commercial FAR	No explicit limit on commercial floor area ratio increases (combined with SB 92)	Commercial FAR capped at 2.5x base zoning (per SB 92, companion legislation)

What's still allowed: Legitimate mixed-use development with ground-floor retail, offices, restaurants, or other commercial uses that serve the residential community. The restriction targets visitor-serving accommodations specifically, not all commercial uses.

Residential Priority Rule: Density Bonus Only for Housing

AB 87 establishes a clear "residential priority" principle: density bonus incentives exist to support affordable housing production, not commercial visitor accommodations.

Here's how to understand the distinctions:

Residential (Eligible for Density Bonus):

• Long-term rental apartments (minimum 30-day leases)
• For-sale condominiums
• Senior housing
• Affordable housing units (very low, low, moderate income)
• Student housing with minimum occupancy periods
• Residential hotels (SROs with cooking facilities and lease terms)

Visitor-Serving (Excluded from Density Bonus under AB 87):

• Hotels and motels
• Bed and breakfast inns
• Short-term vacation rentals
• Timeshares
• Resort accommodations
• Transient lodging of any kind (generally under 30 days)

Commercial (May Be Included, Subject to SB 92 FAR Limits):

• Ground-floor retail
• Restaurants and cafes
• Professional offices
• Community-serving commercial spaces
• Gyms, daycare, other resident amenities

For mixed-use projects under the new rules, builders must calculate density bonus eligibility based solely on the residential component. If you're proposing a project with 100 residential units (including 15% very low-income units) plus ground-floor retail, the density bonus calculation applies only to the 100 residential units. The retail component receives no bonus incentives but can still be included within the 2.5x commercial FAR limit established by SB 92.

Impact on Pacific Beach, La Jolla, and Mission Beach Mixed-Use Development

For Pacific Beach builders, AB 87 creates both challenges and opportunities. The law fundamentally reshapes feasibility analysis for mixed-use developments in key commercial corridors:

Garnet Avenue Commercial District: This corridor has been identified as a prime location for mixed-use development, with properties like 2710 Garnet Avenue marketed as "one of San Diego's most dense buildable coastal sites". Under AB 87, developers can no longer plan hotel-centric projects with minimal affordable housing. Instead, genuine residential-over-retail configurations are required, with density bonuses applying only to the residential floors.

Mission Boulevard Corridor: This beachfront corridor faces similar constraints. Projects must now prioritize long-term residential units rather than visitor accommodations, even though the tourism economy might make hotels more financially attractive.

Coastal Zone Height Limit Context: AB 87 intersects with Pacific Beach's existing 30-foot coastal height limit. The Rose Creek Village project at 2662 Garnet Avenue became the first to breach this limit using density bonus law, reaching approximately 60 feet with 60 affordable units. This project demonstrates compliant use of density bonus for genuine affordable housing—exactly what AB 87 is designed to encourage.

La Jolla Commercial Districts: La Jolla faces similar impacts along commercial corridors. High land values in La Jolla make hotel development economically attractive, but AB 87 now requires developers to choose: build hotels under base zoning constraints, or build genuine affordable housing and access density bonus incentives.

Mission Beach and Bird Rock: These smaller coastal communities benefit from AB 87's protections against out-of-scale hotel towers. Development must now align with residential character rather than resort-style visitor accommodations.

Compliance Requirements for Projects Submitted After January 1, 2026

If you're submitting a density bonus application in 2026, here's your step-by-step compliance guide:

Step 1: Separate Residential and Commercial Components
Clearly delineate residential units from any commercial space in your project plans. Document the residential unit count, square footage, and affordability levels separately from commercial areas.

Step 2: Calculate Residential-Only Density Bonus
Determine your base residential density allowed by zoning, then calculate the percentage increase you're eligible for based on affordable units provided. The City of San Diego's Affordable Homes Density Bonus program provides guidance on calculation methods.

Step 3: Apply for Appropriate Incentives/Concessions
Under California's density bonus framework, you're entitled to concessions based on your affordable housing percentage—ranging from 1 concession (for 5% very low-income units) up to 4 concessions (for 15% very low-income units). Ensure all requested concessions apply only to the residential portion.

Step 4: Apply Parking Reductions Only to Residential
Density bonus projects can access significantly reduced parking requirements—as low as 0.5 spaces per unit for projects near transit. AB 87 clarifies these reductions apply only to residential units. Any commercial or visitor-serving components must meet standard parking requirements.

Step 5: Demonstrate No Hotel Components
If your project includes any overnight accommodations, clearly document that they qualify as "residential hotels" (single-room occupancy units with cooking facilities and lease terms of 30+ days) rather than visitor-serving transient lodging.

Step 6: Verify Commercial FAR Compliance (SB 92)
For any commercial space included, ensure the total commercial floor area ratio doesn't exceed 2.5 times the base zoning allowance. This companion requirement from SB 92 works alongside AB 87 to prevent density bonus abuse.

Step 7: Work with San Diego Development Services
Engage early with the City's Development Services Department. The City maintains updated regulatory guidance and can provide interpretations of AB 87 as applied to your specific project.

Common Compliance Mistakes to Avoid:

• Attempting to classify short-term rentals as "residential" units
• Applying height bonuses to mixed-use buildings where hotels occupy upper floors
• Using density bonus parking reductions for visitor accommodation parking
• Failing to separate residential and commercial components in density calculations
• Submitting applications under old rules without verifying grandfathering eligibility

Grandfathered Projects vs. New Applications: Vesting Strategies

A critical question for Pacific Beach builders: Does AB 87 apply to projects already in the pipeline?

While AB 87's bill text doesn't explicitly detail grandfathering provisions, SB 92's companion legislation specifies that its commercial FAR restrictions do not apply to projects that submitted a preliminary application or entitlement application prior to January 1, 2026. Given that AB 87 and SB 92 were designed as complementary reforms addressing the same Project Vela issue, similar grandfathering logic likely applies.

Vesting Considerations:

Complete Applications Before January 1, 2026: Projects that submitted complete density bonus applications with the City of San Diego prior to January 1, 2026 may proceed under pre-AB 87 rules, subject to the City's determination of application completeness.

SB 330 Preliminary Applications: Senate Bill 330's preliminary application process allows developers to lock in development standards (including density bonus provisions) at the time of preliminary application submission. If you filed an SB 330 preliminary application before January 1, 2026, you may have vested rights to proceed under old density bonus rules—though this remains subject to legal interpretation and City review.

Project Vela's Status: As the catalyst for AB 87, Project Vela submitted its application before the law's effective date and is likely grandfathered, though California's Department of Housing and Community Development provided San Diego a potential path to deny the project based on other legal grounds.

Risk Factors: Even if your project appears grandfathered, modifications to plans, changes in ownership, or substantial delays in processing could invalidate vesting claims. Legal counsel specializing in California land use law is essential for vesting analysis.

77th Assembly District Context: Why Pacific Beach Got Special Legislative Attention

AB 87 is unusual in California housing legislation—it restricts development rather than streamlining it. Understanding why requires understanding the political dynamics of the 77th Assembly District.

Assemblywoman Tasha Boerner represents the 77th District, which encompasses Carlsbad, Encinitas, Solana Beach, Del Mar, Coronado, and San Diego's coastal communities from La Jolla south to Downtown—including Pacific Beach. This district is characterized by high housing costs, coastal zone restrictions, and strong community engagement in land use decisions.

Project Vela triggered intense constituent pressure on Assemblywoman Boerner. Pacific Beach residents, who had long accepted modest density increases for genuine affordable housing, viewed the 22-story hotel tower as a betrayal of density bonus law's intent. Boerner described AB 87 as "a win for common sense", emphasizing that developers were "exploiting a loophole in the Density Bonus Law to profit from projects that were meant to assist families struggling with housing."

The bipartisan support for AB 87 (54-0 in the Assembly) reflects a rare consensus: density bonus law should produce housing, not hotels. Even pro-development legislators recognized that allowing hotel exploitation undermined public support for legitimate affordable housing projects.

Mayor Todd Gloria, Senator Toni Atkins, Senator Catherine Blakespear, and Councilmember Joe LaCava all publicly opposed Project Vela and supported the legislative reforms, demonstrating coordinated action across city, state, and district lines to protect coastal community character while still supporting genuine affordable housing production.

Interaction with Other 2026 Laws: AB 462, SB 79, SB 92, Title 24

AB 87 doesn't exist in isolation—it's part of a comprehensive 2026 regulatory landscape that Pacific Beach builders must navigate:

SB 92 - Commercial FAR Limits: Senator Blakespear's SB 92 caps commercial floor area ratio at 2.5x base zoning for density bonus projects. This complements AB 87 by preventing developers from using density bonus to create oversized commercial components even if they're not hotels. Together, these laws ensure density bonus serves residential purposes.

AB 462 - Coastal ADU Permits: AB 462 (also authored by Tasha Boerner) requires 60-day approval timelines for coastal development permits for ADUs in the coastal zone. This law supports genuine residential development in Pacific Beach's coastal zone while AB 87 blocks hotel exploitation—a coordinated approach to residential production.

SB 79 - Transit-Oriented Development: SB 79 provides streamlined approval for residential projects near major transit stops. Combined with AB 87's residential priority rule, this creates a pathway for builders: focus on transit-oriented residential development near Pacific Beach's transit corridors, access both SB 79 streamlining and density bonus incentives, but don't try to include visitor accommodations.

Title 24 2026 Energy Code: California's updated Title 24 energy code took effect January 1, 2026, requiring enhanced energy efficiency including heat pump requirements, improved air barriers, and heat recovery ventilation systems. Mixed-use buildings in Pacific Beach must comply with both AB 87's residential priority requirements and Title 24's energy efficiency standards, adding complexity but also improving building performance.

The cumulative impact: 2026 is a watershed year for California housing law. Builders must simultaneously navigate streamlined approval pathways (SB 79, AB 462), comply with new restrictions (AB 87, SB 92), and meet enhanced building standards (Title 24). Success requires comprehensive understanding of how these laws interact.

Business Opportunity: Pacific Beach Builder as AB 87 Compliance Expert

For Pacific Beach Builder, AB 87 creates a significant business opportunity. Developers planning mixed-use projects now need expert guidance to:

• Redesign projects for compliance: Projects conceptualized under old rules may need complete restructuring to separate residential and commercial components, eliminate visitor accommodations, and document residential priority.
• Maximize residential density: With hotel components no longer eligible for bonuses, developers need to optimize residential unit configurations to achieve maximum density while maintaining project feasibility.
• Navigate community engagement: Project Vela demonstrated the political risk of density bonus projects perceived as exploitative. Pacific Beach Builder's local expertise helps developers engage early with the Pacific Beach Planning Group, demonstrate genuine affordable housing commitment, and avoid community opposition.
• Coordinate with other 2026 laws: AB 87 compliance must be integrated with SB 92 commercial FAR calculations, AB 462 coastal permit timelines, SB 79 transit-oriented development standards, and Title 24 energy code requirements. Few firms have comprehensive expertise across this regulatory landscape.
• Leverage local knowledge: Pacific Beach Builder's construction services include experience with local projects, relationships with City Development Services staff, and understanding of Pacific Beach's unique coastal zone constraints that provide competitive advantages for developers navigating AB 87.

The Rose Creek Village project at 2662 Garnet Avenue demonstrates compliant density bonus development: 60 affordable units in a five-story building that exceeds the coastal height limit but serves genuine housing needs rather than visitor accommodations. This is the model AB 87 encourages—and Pacific Beach Builder can help developers replicate this success.

Conclusion: A New Era for Pacific Beach Mixed-Use Development

AB 87 represents a course correction for California's density bonus law. By establishing residential priority and blocking hotel exploitation, the law ensures density bonus incentives serve their intended purpose: producing affordable housing in a state facing a severe housing crisis.

For Pacific Beach builders and developers, AB 87 requires immediate attention. Projects submitted after January 1, 2026 must comply with the new residential priority rules. Understanding these requirements, properly structuring mixed-use projects, and navigating the broader 2026 regulatory landscape are essential for success.

The law also creates opportunity: developers who embrace genuine affordable housing production can still access substantial density bonuses, height increases, parking reductions, and development waivers—but only for residential components. This focus aligns with community values, reduces political opposition, and supports California's housing production goals.

Pacific Beach Builder specializes in AB 87-compliant mixed-use development, providing consultation services for density calculations, project design, community engagement, and permit strategy. Whether you're redesigning an existing project or planning new development in Pacific Beach's coastal zone, expert guidance ensures compliance and maximizes project success under California's new density bonus framework. Read more about San Diego housing laws and construction regulations on our blog.