Chapel Hill, NC Zoning Overlays & Bonuses: Density Bonus Law (2026)

Section 3.10 of the Land Use Management Ordinance, Inclusionary zoning, requires qualifying residential developments of five or more units to set aside a share of units as affordable housing under Table 3.10-1, then pairs that requirement with development bonuses in Section 3.10.2(d) to offset the cost. Table 3.10-1 lists the density bonus as 'not applicable' in the TC-1, TC-2 and TC-3 town center districts, where the affordable set-aside is reduced to 10 percent, and as 15 percent in the balance of the planning area (town limits, extraterritorial jurisdiction and the joint planning Chapel Hill Transition Area), with the exception of the R-SS-CZD and MU-V, MU-V-CZD districts.

Section 3.10.2(d)(1) sets the formula: the bonus is computed by multiplying the maximum number of dwelling units approved in the zoning district under Section 3.8's Table 3.8-1 by the density bonus percentage established in Table 3.10-1. For subdivisions, Section 3.10.2(d)(2) lets an applicant who takes the density bonus reduce the minimum lot size required by Section 3.8 by up to 25 percent to fit the additional lots. The Ordinance also runs a separate, older incentive-zoning density bonus in Section 3.9 for redevelopment of existing shopping centers, granted by the town council when an applicant converts surface parking to structured parking on no more than 20 percent of the site, at a rate of 20,000 additional square feet of floor area per 100 converted spaces; that bonus is unrelated to the affordable-housing bonus in Section 3.10 and is evaluated separately by the town council under Table 3.9-1.