Talk of New Ban on Apartment Projects Raises Political Dust

Years after a host of apartment moratoriums quietly died, a ban on apartment construction has resurfaced as an issue in the Los Angeles City Council’s 7th District race.

Candidate Corinne Sanchez says she would seriously consider seeking such a ban if she wins election next month, saying apartments have lowered values of single-family homes in the northeast San Fernando Valley district.

Her rival, Alex Padilla, says a moratorium is too extreme but acknowledges that clusters of dense apartments have created problems in some neighborhoods.

At the heart of the debate is this question: Do apartments hurt property values? There doesn’t seem to be a simple answer.

Stephen Cauley, associate director of the Real Estate Center at UCLA, and an expert in the Southern California apartment market, said it is true that in many instances, an apartment building can lower home values.

“Clearly, if you own a nice home in a good, stable neighborhood and somebody builds a five-story apartment building next to it, the value of your home is reduced,” Cauley said.

On the other hand, he said, people who own homes on land zoned for apartments can usually make more money by razing the homes and building multifamily units.

“Property in a stable, established neighborhood of single-family homes is probably worth more for apartment development,” Cauley said.

Apartment owners assert that quality new apartments may improve the value of surrounding single-family homes if the apartments replace aging, deteriorating homes or businesses.

*

“There are a lot of old, small, single-family homes in the northeast part of the Valley that were built before World War II. If somebody could buy them up and build good quality apartments there, the property values would actually increase,” said apartment owner and broker H. Bruce Hanes of Hanes Investment Realty of Westlake Village.

The issue of a construction moratorium is academic, he said, because few new complexes have been built since the 1980s.

The recession of the early 1990s ground apartment construction to a halt, he said, and now land is scarcely available for major projects.

Only two permits for apartment construction, totaling 90 units, have been issued in the 7th Council District since Jan. 1, 1997, said Dave Keim, spokesman for the Los Angeles Building and Safety Department.

The permits were for a 75-unit complex at 12793 Mercer St. in Pacoima and a 15-unit building at 11725 W. Lemay St. in North Hollywood, he said.

Five permits, for a total of 65 units, are pending. These comprise three buildings of 16, 12 and six units at 12801 N. San Fernando Road in Sylmar, 25 units at 10894 W. Olinda St. in Sun Valley and six units at 8432 Burnet Ave. in North Hills.

Sanchez, who runs a social service agency, said her concern stems from “a disproportionate number of apartments of all kinds” in the 7th District.

“I’m in favor of looking at the number of proposed projects to see if they could be somewhere else in the Valley as opposed to the northeast. It seems that there’s a proliferation of apartments in the district, but there’s no thinking or planning about the ancillary services they require,” Sanchez said.

*

Padilla said he was not particularly alarmed about apartment construction, adding that a moratorium would be “an extreme measure” he doesn’t consider necessary.

“In pockets of this district, there are clear examples of concentrations of apartment buildings, but I don’t believe it’s the apartments themselves that have created the problem,” Padilla said. “It’s the lack of a General Plan or vision for the community. I understand the concern when there is an over-concentration of apartment buildings, but I think there’s a role for multifamily housing.”

Padilla said one part of the solution would be regional planning commissions, such as those outlined in the proposed City Charter revision, as opposed to one citywide body. Regionally based planning groups would be more familiar with local issues, he said.

Moratoriums were not uncommon in the late 1970s and 1980s, as homeowner groups objected to apartment construction.

Included were bans by city councils in Glendale, Burbank, South Pasadena, Whittier, Alhambra and Hawthorne.

In the Valley and other parts of Los Angeles, residents often pressured their council representatives to restrict or ban apartment construction.

In one example, residents of Valley Village, a quiet enclave in the southern portion of North Hollywood, campaigned against what they called “stucco mountains” that cast shadows over their expensive houses.

Most fights against new apartments and development of all kinds were rendered moot by the recession that began in 1990. But as the economy has recovered, the issue has rekindled.

In the Antelope Valley, both Palmdale and Lancaster have recently imposed moratoriums.

Such bans are legal, according to Kenneth Bley of the real estate law firm Cox, Castle, & Nicholson. Moratoriums, he said, have been challenged in court repeatedly by developers and property owners, who contend that such restrictions reduce the value of their holdings.

“The courts have held that cities have the authority to impose moratoriums for up to two years,” Bley said. “It’s unlikely that a court would rule that a moratorium constitutes a taking away of the property owner’s rights, especially when it’s a moratorium that prohibits apartments but still allows single-family home development.”

*

According to UCLA’s Cauley, apartment construction is likely to become a recurring topic of debate as the region’s economy continues to improve and a variety of interests struggle to address what many agree is a critical housing shortage in Los Angeles.

Many developers say that high land and construction costs prohibit the construction of anything but luxury apartments, but Cauley believes there must be places where builders can buy property cheaply enough to construct affordable units.

Such new units, he said, are less likely to drive down property values than neglected older properties.

“You don’t make slums with new construction,” he said. “They are the result of neglect, which creates substandard units.”

Cauley and others say construction will be needed because the city’s apartments are aging. More than a third of the 3.2 million apartments in Los Angeles County are nearly 30 years old, according to David Casper, a Grubb & Ellis broker, who said the county will continue to suffer from an imbalance between supply and demand because of the growing population and a lack of new building.

“Only about 5,000 new units are in the pipeline over the next 24 months, yet 60,000 new rental units are needed to meet demand over the next four or five years in L.A. County,” Casper said.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Apartment Values

Average cost and rent figures for San Fernando Valley-area apartments, based on 1998 sales.