Plan to Build ‘Affordable’ Housing on City-Owned Parking Lots Gains Steam

December 21, 2017 by · Leave a Comment 

Parking spots are a valuable commodity in the City of Los Angeles.

The threat of losing even a few parking spaces can lead to panic in densely populated neighborhoods where places to park a vehicle are in short supply. It’s an issue for businesses too, since many rely on publicly owned parking lots for their customers, not having parking lots of their own.

In the City of Los Angeles, elected officials have been actively identifying “under-utilized” city-owned properties – including parking lots – as potential sites for new affordable housing developments. It’s part of a plan to shore up the city’s critical housing shortage and to keep more people from falling in to homelessness.

Last week, the City Council  approved a plan to charge developers a new fee to build in the city. Council members say revenue from the new “linkage” fee will be used to build more housing units for low- to middle-income families.

As city officials, housing advocates, developers and the business community debated the viability and impact the fee would have on development, local council offices and city planners were busy in the background cataloguing city-owned properties with the expressed purpose of adding to the city’s affordable housing stock.

City-owned parking lot on Avenue 24 near the Arroyo Vista Family Health Center is one of 5 lots in Lincoln Heights the city is vetting as potential sites to build affordable housing. (Photo by B. Preciado)

City-owned parking lot on Avenue 24 near the Arroyo Vista Family Health Center is one of 5 lots in Lincoln Heights the city is vetting as potential sites to build affordable housing. (Photo by B. Preciado)

They are also looking for properties where housing for the homeless can be built.

In Council Districts 1 and 14, some of the sites being vetted are vacant lots; others are public parking lots.

Over the last two weeks the City Council has taken steps to formalize the public review process, approving motions by Councilmen Gil Cedillo (CD-1) and Jose Huizar (CD-14) for city-owned properties in Eagle Rock, Boyle Heights, near downtown L.A., in the Westlake area adjacent to MacArthur Park and in Lincoln Heights.

Requests for Proposals for teams to lead the public review, property acquisition agreements, approval of development teams, and the transfer of a property in Boyle Heights to a nonprofit that will use the site to house 18-24-year-old homeless college students are some of the measures that have been approved.

Huizar says he’s “thrilled” to be moving forward with “projects to better assist our homeless youth in Boyle Heights and provide much-needed affordable housing in the district.” He was referring to the transfer of a “triangle” shaped property on Pleasant Avenue in Boyle Heights to nonprofit Jovenes, Inc.

According to Huizar, city-owned properties offer “unique opportunities to develop land for homeless and affordable housing more quickly without the cost of land acquisition.”

Two public parking lots in Boyle Heights – on 318 N. Breed St. and 249 N. Chicago St. – have been identified as potential affordable housing sites. A vacant lot at the intersection of Genevieve Avenue and Monte Bonito Drive in Eagle Rock is also being looked at.

Cedillo also sees developing city-owned properties as a plus. He said: “The solution to combat the Housing Crisis in Los Angeles is to continue building housing as fast as possible, particularly affordable housing.”

Because parking is such a premium in the city, the possibility of loosing any spaces can be controversial and has been known to stop or at least delay some developments. Plans build housing on public parking lots near the Metro Gold Line Station in Highland Park drew loud criticism from local residents and businesses not only concerned about the added density and traffic, but also access to city-owned parking lots.

City planners and the development team for the project said one of the larger lots, off Avenue 58 between the Gold Line Station on Marmion Way and Figueroa Street, was under-utilized and often nearly empty. Developers, Cedillo, and his predecessor, former Councilman Ed Reyes, worked hard to convince stakeholders that the new developments would be required to include public parking provisions.

As for the parking lots under review in Boyle Heights, Huizar assures that any public parking taken for housing developments will be replaced. Where, or in what manner, will not be clear until when and if a development design is approved.

In Lincoln Heights, Cedillo’s office has targeted five city-owned parking lots for review. All five are near the neighborhood’s central commercial district along North Broadway: located behind or across from businesses such as CVS, the 99 Cents Only Store, WSS Shoes, and the Arroyo Vista Family Health Center, a community clinic whose patients are mostly low-income. The public parking lot off Avenue 24 provides parking for many of the clinic’s patients and on most days is filled to capacity.

While a development team has been selected to build affordable housing on city-owned properties near MacArthur Park in Westlake, (619, 623, 627 and 629 Westlake Avenue), the Lincoln Heights locations are still in the very early review stage, Fredy Cejas, Cedillo’s communication director  told EGP in an email.

He said a motion passed earlier this month by the City Council “only authorizes the City to enter into an Exclusive Negotiation Agreement with a selected team to begin a process of planning to identify alternative development schemes.

“The purpo

Housing could one day replace this parking lot near the 99 Cents Only store in Lincoln Heights. (EGP photo by B. Preciado)

Housing could one day replace this parking lot near the 99 Cents Only store in Lincoln Heights. (EGP photo by B. Preciado)

se of the Motion is to start the conversation with the community about proposed housing on City parking lots,” Cejas said.

While “no actual decision” on whether to build has been made, Cejas emphasized a decision has been made to explore how the lots can be developed with housing and what type of project may be feasible.

The news caught some Lincoln Heights businesses by surprise. Arroyo Vista’s Irene Holguin said they could not comment because they did not know anything about the proposal, which came to public light in a recent Facebook posting and Cedillo’s newsletter.

Lincoln Heights Business Improvement District President and property owner Steve Kasten said he too was unaware of the plans, but that as a businessperson his first reaction is you cannot take “all of the parking.”

“But if there is a way to create housing without eliminating parking for local businesses, I am for that,” he said, adding he wants to learn more. If new housing is built, Kasten said he hopes tenants will have incomes high enough to allow them to support local businesses.

It’s very important for the community to have input throughout the development process, Kasten told EGP.

In his email, Cejas said the city council and mayor recognize that Angelenos are facing a severe housing crisis. Rents are skyrocketing and building has not kept up with population growth. Cejas said a key strategy to deal with the issue “is to consider utilizing the unused air-space above City-owned parking lots.”

In some neighborhoods, that has meant building multi-story complexes with underground or roof top parking.

During Cedillo’s 2016 reelection campaign, challengers accused the councilman of having a secret plan to build shelters for the homeless on parking lot sites in Lincoln Heights. The councilman denied the charge, and Cejas this week emphasized that the sites under review “are not all for homeless housing.”

“The community will have a voice and be involved in the planning for the reuse of these lots as specified in the Motion,” Cejas said, adding that no parking would be lost because the city would require parking spaces to be replaced on a one-to-one basis.

According to Cejas, Cedillo will require development team selected to engage in a robust community participation process to solicit input from the district’s diverse stakeholders.

That input, Cejas said, will be used to “define the parameters of a potential project – including but not limited to what type of housing, the number of units, architectural design, parking requirements and other related city planning and environmental matters.”

Megan G. Razzetti contributed to this story.

 

L.A. City Council Approves Controversial Affordable Housing Fee

December 13, 2017 by · Leave a Comment 

The Los Angeles City Council Wednesday unanimously approved the creation of an affordable housing linkage fee — one of the most hotly debated proposals to come through City Hall in recent times.

Mayor Eric Garcetti, who championed such an ordinance two years ago, immediately signed the ordinance following the City Council’s approval.

“Ending the housing affordability crisis is essential to securing Los Angeles as a place where every Angeleno — no matter their income — has an opportunity to build a life in our community,” Garcetti said. “Everyone in L.A. deserves a place to come home to, and the affordable housing linkage fee is a critical investment in making that future possible for all of our families.”

Although some council members and key business leaders expressed hesitation while the proposal was dissected at four Planning Committee meetings, the council ultimately came together in unison to approve the fee as a way to help fight the housing crisis and rising rents in the city.

“This is an important moment. I’m thrilled to be a part of it,” Councilman Bob Blumenfield said.

Councilman Jose Huizar, who chairs the Planning Committee, told City News Service, “It’s a long process, but again it reminds us of how much work we still have to do. I think this council has paid so much more attention to affordable housing issues in these last couple of years, and it’s an issue that
has been long neglected, to speak quite frankly.”

Under the ordinance, commercial and residential developers will have to pay a fee for every square foot of new construction, generating an estimated $100 million per year to be used to provide affordable housing units.

Skeptics fretted that the fee could discourage development overall or that poor tenants would suffer as landlords passed the cost of the fee onto them.

Groups that argued that the fee will slow down housing include the Los Angeles Area Chamber of Commerce, which said the “business community strongly supports affordable and workforce housing, but this proposal will make low- and middle-class housing more expensive to build and more expensive to rent or own.”

The L.A. Chamber acknowledged the city has a “housing supply crisis at all levels,” but said solutions that increase housing overall is what’s needed.

Huizar said before the vote that the fee is lower than what some studies had shown developers could absorb, which helped reduce the level of opposition in the business community.

Councilman Jose Huizar (center) and affordable housing advocates at City Hall Wednesday morning called for support for a linkage fee on developers to fund the building of affordable housing. (Photo courtesy Office of Councilman Jose Huizar)

Councilman Jose Huizar (center) and affordable housing advocates at City Hall Wednesday morning called for support for a linkage fee on developers to fund the building of affordable housing. (Photo courtesy Office of Councilman Jose Huizar)

“We could have charged more in this fee, but we chose not to, and we did that purposefully so that we have a large buffer there that will not discourage any development,” he said.

A report by the Department of City Planning and Housing and Community Investment Department estimates the fee could raise between $93.7 million and $114.3 million per year, with a tiered structure ranging from $8 to $15 per square foot for residential projects and $3 to $5 for commercial ones, depending on the market value of the neighborhood.

Council members Mike Bonin and David Ryu introduced an amendment to the motion that directs city staff to present an analysis within 60 days of the market impacts of increasing the residential fee in high market areas to $18. The amendment was seconded by Councilman Paul Koretz.

The three council members represent some of the pricier neighborhoods in L.A., including Bel-Air, Brentwood, Toluca Lake and the Hollywood Hills, indicating that there likely will not be opposition on the council to the increased fee because the trio collectively represents most of the high-market areas.

Huizar said he was supportive of looking at raising the high market fee.

“This is bringing it up a little bit more in those high demand areas, where they could probably absorb more of a fee than other areas,” he said.

“Because you want to encourage more development in low-income areas and those areas that don’t have much development, but where there’s such a huge demand and people’s portfolios are working out, they could absorb this a lot easier.”

Huizar pointed out that the city’s affordable housing trust fund contained around $100 million in 2010, but has nearly dried up as state and federal contributions plummeted.

“… We are one of the last large cities in the country that doesn’t have (a) consistent revenue stream to build affordable housing,” Huizar said.

Councilman Mitchell Englander expressed some criticism of the fee at one meeting, but later said he had always supported a linkage fee, and that it had just been a question of finding the “sweet spot” that doesn’t slow development.

The ordinance does include some exemptions for the fee, including for schools, grocery stores, hospitals and developments that include a certain level of affordable units, including where at least 40 percent of the total units are for affordable to moderate-income households making between 80 percent and 120 percent of the area median income.

There are also exemptions where at least 20 percent of the total units or guest rooms are dedicated for low income households, at least 11 percent is for very low income households, or at least 8 percent are for extremely low income households.

The Planning Committee considered for a time exempting nonprofits but ultimately decided against the move out of concern that developers would abuse the option.

Councilman Gil Cedillo over the summer suggested he wasn’t necessarily against the fee, but cast some doubt on how effective it could be.

“If we think this is the whole solution, we are really making a mistake,” Cedillo told City News Service in June.

But last week, Cedillo waived consideration of the linkage fee from his Housing Committee, which cleared the path for it to be voted on before the end of the year. The council also approved a motion by Cedillo that looks to amend the ordinance by creating a linkage fee exemption for middle-income households making between 120 percent and 150 percent of the AMI.

“Today’s council action is a historic move for the permanent development and preservation of affordable housing in Los Angeles,” Cedillo said following Wednesday’s vote. “As the chair of Housing, I will support any measure that gets us closer to our goal of building 100,000 units of housing by 2021.”

He added, “When creating a linkage fee, some cities have made certain exemption to the linkage fee, including exemptions for nonprofits and 100 percent affordable housing developments. Today, the City Council also approved my motion that asks for a similar exemption to extend homeownership opportunities for middle-income households, given the increasing price and shortage of housing. We have to attack the housing crisis at every level.”

The proposed amendment, however, must still be vetted through the City Council review process before it can be finalized, which will likely begin in January and take two months to complete, Cedillo’s Communications Director, Fredy Cejas, told EGP Wednesday.

The L.A. Chamber has expressed support for Cedillo’s motion, saying in an editorial Tuesday that it “could lessen the detrimental impact of a linkage fee on middle-income housing.

“This exemption would incentivize the construction of housing designed for middle-income Angelenos who are finding our city more and more unaffordable as a place to live and raise families,” Toebben said. “Without this exemption, the linkage fee would add $12,000 to $24,000 per unit to the cost of building middle-class housing.

Other California cities such as Oakland, San Diego and San Francisco have a linkage fee, as do other cities around the country.

Garcetti set a goal in 2014 of constructing more than 100,000 units in Los Angeles by 2021 as a way to combat a housing shortage that has contributed to rising rents and an increase in homelessness in the city.

EGP Managing Editor Gloria Alvarez contributed to this story.

 

UCLA Study: $583 In Housing Funds Could Be in Danger

September 14, 2017 by · Leave a Comment 

Los Angeles could miss out on hundreds of millions of dollars in revenue if Mayor Eric Garcetti’s goal of building 100,000 new units of housing by 2021 is not met, according to a study released Tuesday by the UCLA Anderson School of Management.

“This study illuminates the need to reform and streamline the city of L.A.’s housing development process now,” said Paul Habibi, who lectures on finance and real estate at the UCLA Anderson School of Management and is also a lecturer at UCLA School of Law. “To ensure that the mayor’s 100,000-unit goal is met, the city must enact reforms that allow us to make the most of a strong market, and help us weather the years ahead as the current development cycle runs its course,” or risk the loss of $583 million in housing revenue.

A number of recent studies have ranked Los Angeles among the most unaffordable housing markets in the nation, as rent and real estate prices have skyrocketed due to a housing shortage. As a result, some city leaders have been pushing numerous ways to speed up the development of housing, including a “linkage fee” on developers being touted by Garcetti.

The UCLA study, which was produced in partnership with the Los Angeles Business Council, concluded that L.A. is on track to hit the 100,000-unit goal, but more reforms are needed to reach the included goal of 15,000 affordable units and to ensure that development continues at its current pace.

“We see Mayor Garcetti’s 100,000-unit goal as a floor for our city’s housing needs and believe we have a ceiling closer to 500,000 units based on our regional housing needs assessment,” said Mary Leslie, president of the Los Angeles Business Council. “Developers conservatively cite a five- to six-year timeline for building one affordable housing project. That is far too long if we’re going to build our way out of this housing crisis.”

While the study does not recommend a linkage fee, it does recommend funneling a portion of the money generated by new housing through tax revenues and fees back into the city’s Affordable Housing Trust Fund.

The study also recommends that the city take action to decrease processing times for development proposals by 25 percent, expand expedited processing to include projects that require new environmental impact reports, and raise the city’s site plan review requirement above its current threshold of 50 units.

“The city has available mechanisms to cut down pre-construction processes, but they are not broad enough in their scope to be effective,” said City Councilman Gil Cedillo, who is chair of the Housing Committee. “That is why I have introduced a motion to expand L.A. City Planning’s expedited
processing section, which allows applicants to pay a fee to reduce up to 50 percent of the time it takes to process entitlement applications. I’m also working on increasing the city’s site-plan review threshold, which has added an additional deterrent to increasing our affordable and workforce housing stock by adding additional bureaucratic hurdles to an already burdensome process.”

Although the city is on pace to reach 100,000 units by 2021, the study predicts a number of factors that could throw it off its pace, including that at least one economic downturn is possible by 2021 and that the Los Angeles Department of Building and Safety projects a decline in future development
activity over the next two fiscal years.

Another factor the study cites is Build Better L.A., a ballot measure approved by voters in November that requires developers seeking special approval for projects bigger than zoning laws allow to include a number of affordable units, which the study authors said adds significant regulation to future development projects.

L.A. Council Committee Approves Fee on Developers

August 24, 2017 by · Leave a Comment 

A Los Angeles City Council committee Tuesday supported one of Mayor Eric Garcetti’s top priorities, requiring real estate developers to help fund the construction of affordable housing through a “linkage fee.”

Although two members had expressed some reservations about the proposal at a meeting in June, the committee approved without objection some new recommendations that would create a tiered fee structure depending on the market rate of the neighborhood.

“We are very proud here today to bring this very important proposal before the committee for action,” said Councilman Jose Huizar, who is the Planning and Land Use Management Committee’s chair, at a news conference before the meeting.

“We want to come away with as many dollars as possible with a committee and council vote and create what we have not had in the city of Los Angeles for a number of years now — a steady, funded revenue stream specifically earmarked for affordable housing.”

Garcetti first proposed the idea for a linkage fee two years ago and called on the City Council to pass it during his State of the City speech in April, but the fee has proven to be divisive.

“This is by far one of the most divided subject matters, depending on who you talk to that are in this space. Everybody’s got a different opinion,” Councilman Mitchell Englander said.

“This is like navigating a live mine field, that if we make it through it somehow, we’ll live. But if we misstep at all, we don’t, and the consequences are devastating.”

Some key business groups, including the Los Angeles Area Chamber of Commerce, have also come out against the linkage fee and argued it would slow the construction of affordable housing by increasing the cost of building.

“The business community strongly supports affordable and workforce housing, but this proposal will make low- and middle-class housing more expensive to build and more expensive to rent or own,” according to the chamber.

The fee approved by the city’s Planning Commission in February would have charged $5 to developers for every square foot of new commercial construction and $12 per square foot for new residential projects. On Tuesday, however, the committee instead voted to approve a tiered structure, ranging from $8 to $15 per square foot for residential and $3 to $5 for commercial, depending on the market value of the neighborhood.

The vote, if approved by the full council, directs the city attorney to craft an ordinance creating the fee. The ordinance would then need to be voted on and signed by Garcetti before it could become law.

When Garcetti first proposed the idea, he estimated the linkage fee could raise up to $100 million per year for affordable housing, but a staff report approved by the commission downgraded the estimate to $75 million to $92 million per year.

A Department of City Planning and Housing and Community Investment Department report estimated the fee could raise between $93.7 million to $114.3 million per year with the tiered structure.

Garcetti set a goal in 2014 for construction of more than 100,000 units in Los Angeles by 2021 as a way to combat a housing shortage that has contributed to rising rents and an increase in homelessness in the city.

However, not all city leaders are convinced the linkage fee will help affordable housing or that it won’t lead to other problems.

Englander in June expressed worry that the fee could end up harming low-income people because developers and landlords will just pass the cost on to tenants.

“Everybody wants to stick it to the developer,” Englander said. “Hey, that would be a great option. At the end of the day we are sticking it to the nurse, the teacher, the firefighter and they can’t afford it and they are moving out of Los Angeles and they are commuting two hours.”

Councilman Curren Price said at the same meeting that a “one size fits all” fee could end up harming low-income neighborhoods.

However, Englander and Price both ended up supporting the new tiered fee, and Englander said he has always supported a linkage fee, it has just been a question of finding the right “sweet spot” that doesn’t slow development.

The fee would have various exemptions, and the committee recommended adding a few more, including exemptions for all hospitals and nonprofits, although it asked staff to report back on what the fiscal impact would be.

Although he is not on the committee, Councilman Gil Cedillo, who chairs the Housing Committee, has also expressed doubts about the fee.

“If we think this is the whole solution we are really making a mistake,” Cedillo told City News Service in June

“There’s a sense — and I’ve said this publicly and in forums — I don’t want people to think we are solving the problem. And people get attached to process and to the battle and they’re not looking at how we should approach the war.”

The report from the departments of planning and housing and community investment concluded that the fee would not result in a significant increase in housing prices.

The report also concluded that developers are unable to pass on the costs of new housing impact fees to tenants and home buyers because most developers are introducing a relatively small number of units into a community, where the price has already been set by the marketplace.

The idea for a linkage fee to fund affordable housing is not new. Other California cities such as Oakland, San Diego and San Francisco have one, as do other cities around the nation.

“I’m from New England. I went to school in Boston,” Councilman Mike Bonin said at the news conference.

“When I was in college, Boston established an affordable housing linkage fee. When they were talking about it, I remember the headlines in The Boston Globe — the sky was going to fall and the world was going to end, housing would stop and the boom in Boston would end. It didn’t happen.”

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