Density is the permissible number of dwelling units that are allowed per unit of lot area -- for example, two dwelling units per acre, or requiring a half-acre lot per dwelling unit are identifiable measures of density found in zoning ordinances. Floor Area Ratio (FAR) is a zoning technique used to control building bulk. It sets a ratio of the building mass to the square footage of the building's lot area: for example, an FAR of 2 means that a building can't exceed an area of 40,000 square feet, if sited on a 20,000 square foot lot. A common zoning technique is for a district to have a relatively low density or FAR standard, but allow a landowner to build more floor area or more units per area of land area than would otherwise be allowed under the zoning provided that the landowner provides some public benefit or amenity to the community. The amount of excess density or FAR allowed as a zoning bonus depends on how valuable the amenity is deemed by the community. The purpose of these provisions is to encourage landowners to improve the quality of their developments to the benefit of the community, by creating an economic incentive for them to do.
Both the community and the landowner benefit from the incentive zoning provision -- a win-win outcome
If a community wants better development, then why not just require it through better zoning standards. Also an FAR standard, by itself, will not dictate the form that the building will take unless coupled to either a lot coverage requirement (controlling the building's footprint) or a maximum height requirement. There are also some real delay and uncertainty costs to landowners in having to negotiate out a project's amenities that would qualify for the bonus, instead of knowing what they can do as- of-right, but they don't have to elect to build under the bonus (unless the ordinance is designed to make it unfeasible to build unless the bonus option is exercised).
Example 1: Metropolitan Council, Saint Paul, MN
Description: A quick overview on floor-area ratio
Example 2: Minneapolis, Minnesota
Description: A link to Minneapolis’ Density and FAR regulations, as well as bonus eligibility. Placing parking underneath structures can increase permeable area to improve water catchment.
Example 3: Rochester, Minnesota
Description: Rochester clearly states in its lot site development procedures that density bonuses can be made to preserve natural features, woodlands, and other native habitats.