Developer says housing policy is a fixer-upper
Los Angeles’ push to have developers set aside portions of new residential projects for below-market-rate housing is facing a showdown at City Hall this month, with the outcome likely to shape the city’s future housing policy.
In recent years, Los Angeles has gradually increased the percentage of units that developers must set aside for moderate-income residents.
Now, a developer is pushing back after the city ordered it to reserve 25% of the 438 units planned at a Warner Center apartment complex -- the largest set-aside the city has ever required.
The resolution of the issue could have major implications not only for city policy, but, ultimately, also for the availability of housing for middle-class workers.
The average monthly rent in the city has nearly doubled in the last 12 years and now stands at about $1,700. About 13,000 below-market housing units were built in L.A. over the last six years.
But during that same period, about 11,000 below-market apartments were either torn down or converted into condos, according to a study by the Southern California Assn. of Non-Profit Housing.
The idea behind the city’s “inclusionary housing” rules, officials say, is to allow people who work in an area but might not be able to afford market rents -- such as teachers, shopping mall employees and police officers -- to live near their jobs.
When a development opens, the first renters for the below-market units must work nearby and meet the economic qualifications.
Last year the City Council approved an ordinance requiring new housing developments in the fast-growing Warner Center area of the west San Fernando Valley to set aside 25% of the units.
Councilman Dennis Zine, who represents the area, said the goal was to prevent Warner Center from turning into “another Century City,” where many people who work in the office towers, schools and shops cannot afford to live nearby.
“We’ve got to maintain the livelihoods for working people so they don’t have to move to Lancaster and Palmdale and spend $2 to $3 a gallon on gas to drive the freeways every day,” he said. “It’s a quality-of-life issue. I want hard-working people to be able to afford a residence in Los Angeles.”
Average rents in Warner Center range from about $1,800 to $2,200 a month. Under the city’s rules, units set aside for inclusionary housing in the district would rent for $1,463 for a one-bedroom unit and $1,674 for a two-bedroom.
But Simms Commercial Development is demanding that the city reduce the 25% requirement, arguing that it is onerous and that officials have never proved that such set-asides reduce traffic. Additionally, Simms wants L.A. to drop a $1-million fee for the project that the city would use to lessen the impact of traffic the development is expected to generate.
The developer said setting aside such a large portion of the complex for below-market housing sets a bad precedent.
“If they do 25% in Warner Center, then they can do 25% ... in other areas of the city,” said Ben Reznick, an attorney for Simms. “Economically, it’s more bearable if you do 10% of a project. Then it can still be done.”
Housing advocates and some council members worry that if Simms prevails, it will prompt other developers to challenge their workplace housing requirements.
“It’s going to send the wrong message and make it harder for those who look at the bigger picture and who are trying to provide affordable housing in this city,” said Councilman Ed Reyes, who represents parts of the Eastside.
Two years ago, Reyes proposed a citywide inclusionary housing policy that would have required developers to set aside some below-market units in most new apartment and condo complexes. But the idea stalled amid opposition from developers and others.
So today officials consider inclusionary housing set-asides primarily on a development-by-development basis (there are a few places where specific percentages are required, including parts of downtown and coastal areas). In some cases, the city encourages builders to reserve more units for below-market rents by allowing them greater density for their projects, said Jane Blumenfeld, principal city planner.
Some projects have as little as 5% of units set aside. But most new larger downtown L.A. housing projects must include 20% affordable housing.
Two highly publicized projects -- the Hollywood & Vine mixed-use development and the Grand Avenue Project designed by Frank Gehry -- have a 20% set-aside.
Affordable housing has become an issue in many parts of L.A. in recent years. Workers in some of the city’s more affluent areas, such as the Westside and West Valley, complain that they cannot afford to live near their workplaces, forcing them into punishing commutes.
Wrestling with the ongoing affordable-housing problem, the City Council earlier this week approved sweeping new rules designed to aid renters who lose their apartments when the owners convert them to condos.
The reduced-rate housing in Warner Center would be available to people earning 120% or less of the county’s median family income, which is roughly $58,000 for a single person and $83,000 for a family of four.
But in its appeal to the City Council, Simms questions whether the set-asides would actually reduce traffic. The developer noted that under the rules, any units that are unoccupied after four months can be rented to anyone who meets the income requirements, regardless of where they work.
Councilman Jack Weiss, who sits on the planning and land use committee, said the developer might have a point.
“I’m a strong supporter of additional affordable housing in Los Angeles,” said Weiss, who represents parts of the West Valley and Westside. “But it would hurt the cause if the city did something contrary to the law and later it was overturned by a court.”
Some housing advocates believe a lot is riding on the outcome of the Warner Center fight.
If Simms prevails, “one would have to question all the talk about needing to produce affordable housing in the city as hollow words,” said Larry Gross, executive director of the Coalition for Economic Survival, an advocate for low-income housing.
Reznick, the attorney for Simms, said the debate is about whether the city is trying to boost its affordable housing numbers on the backs of developers.
He said other builders support the appeal but are “afraid to speak up” for fear that their projects will be jeopardized.
If the City Council approves Simms’ request, Zine said, he will push for a moratorium on new development in Warner Center until a new specific plan for the office, apartment and shopping district is completed.
“We’re asking developers to have a little compassion and not build, build, build,” he said.