January 4, 1989 - From the January, 1989 issue

TPR January 1989 - Full Issue

Part of TPR Online Archive series. Janurary 1989 issue includes a rountable discussion on real estate development and growth management, predictions for the coming decade by various professionals in land use and urban planning, and more. 

Sewer Hook-Up...AQMD!...CRA Cap!...Mayoral Elections?!...Slow Growth! .... Earthquakes!

The Planning Report's Roundtable Discussion:

Issues for the New Year 

The following are excerpts from a symposium sponsored by The Planning Report to discuss critical regulatory trends in real estate development and growth management. The Symposium was the first in a series of roundtable discussions for The Planning Report. Present at the discussion were Carlyle Hall, Co-Founder, Center for Law in the Public Interest; Maria Hummer, Partner, Manatt, Phelps, Rothenberg & Phillips; Cindy Miscikowski, Planning Deputy, Councilman Marvin Braude; Kenneth Topping, Director, Planning Department. Moderating the discussion were Leon Whiteson of the Los Angeles Times and David Abel, Publisher of The Planning Report. These excerpts focus on predictions in land-use development and regulatory change.

TPR’s End-of-the-Year Symposium

David Abel: What will be the focal areas of concern in which both the City and the local neighborhoods can work to promote managed growth in the future?

Cindy Miscikowki: One issue of concern is the permanent sewer hook-up ordinance, which will be very close to adoption. And the most important element in the sewer hook-up strategy will be our air quality plan. I also believe that the housing/job balance in both the sewer hook-up plan and the air quality plan will ultimately give the City the outline of a regional management plan. But when the question becomes how to sell future projects to the local neighborhoods, I think the answer must focus on urban design.

Previously in this city you never heard discussion of urban design. But in working presently with local neighborhoods, groups are more concerned with the way a project looks than with the number of units or the amount of square footage in a commercial project. And if we want to create more housing in our neighborhoods, we must provide a good design which makes sense and is not an atrocity. Too often I think people look at the high density housing projects, and they might be tenements, and they say that density has got to be rolled back. Everyone saw R-3 as a bad zone, a bad density. I think if a project were part of an integrated proposal, and it was handsomely designed, the density problem should be lessened.

Carlyle Hall: My guess would be that the Air Quality Management Plan will be approved in almost its current form, and the interim sewer ordinance will be changed in a timely fashion in August. The permanent ordinance will take into account public benefit factors which the Planning Department will use in some sort of growth management element to be incorporated into the general plan and the 35 community plans as well.

As far as the political dialogue, it seems to me that the slow growth movement which has been the focus of land use activity and politics in the last few years in California, has a foothold in the city of Los Angeles. But I do not see a substantial constituency for a no growth movement. You see such constituencies in other communities, but I think there's a general recognition in Los Angeles that the community is much too complex. I think political frustrations relate basically to issues of accountability. With a large city like Los Angeles, it's hard for the individual citizens to feel they are participating and have any control over their future.

Consider a large entity such as the Department of Water and Power which has a special mission, and if you happen to be in their path, you know it's very difficult to get them to change. I think that as a result of some of these agencies, there is a great deal of frustration on the part of the average voter out there. Just how can they participate and interact? Events are so overwhelming for the City and its voters that there needs to be responsiveness on the part of local government in Los Angeles. That is why it's an important step, as Kenneth Topping has discussed, to begin the establishment of the proposed Community Planning Advisory Committees(CPAC's) in the 35 community plan areas.

Sleepers and Predictions

David Abel: Do you have a prediction on the CRA cap and the CRA government structure?

Carlyle Hall: Well my prediction is that it will take a while to work out. There are a lot of players in the game, and the county of Los Angeles has a financial stake that it wants to protect There are some politics that still have to be played out, and negotiations will probably take some time.

Leon Whiteson: Do you feel that the CRA, assuming the cap is raised, is the appropriate body to administer that housing fund, given their past record?

Carlyle Hall: Well I don't think that there's any doubt that in the real world, the CRA will be administering the money to some extent. The central issue is what the administrative arrangements will be and who will co-administer the increased funds. I think it would be very useful to have other people participate in the administration of that money, and it’s my understanding that the CRA does not insist on having the sole and exclusive power over the way that those monies are spent.

David Abel: What is the future of regionalism after the L.A. 2000 report and the Chamber of Commerce report?

Kenneth Topping: I think that regional concerns will coalesce around the issue of transportation. We do not currently deal very well with the connection between transportation and land use at any level of government. However, I think that coordination between land use and transportation will emerge within the next decade so that regionally, we can have a better functioning metropolis. But there is a tremendous amount of trust building that has to be developed between the entities that presently see themselves as inherently at odds.

I'd like to just identify one issue which is a" sleeper,"--and that is seismicity. How do you rebuild after the "big one?" One of the answers is to have a plan to build more safely and to rebuild speedily. What's most important is to have that plan beforehand. Recently, 22 general managers of the City and their key staff met to address the issue of how to plan ahead of a major earthquake, recognizing all the agony that comes with the loss of lives or property. For rebuilding afterward, we are now starting to write a plan which will come out later this year.

David Abel: Carlyle, do you have any sleeper issues you want to tell us about?

Carlyle Hall: I'm not sure how politically explosive it will be, but I think that a sleeper issue we will be facing in '89 is the issue of open space zoning and public facilities zoning. The city for years has had an open space element in the plan but it hasn't had a zone that corresponded with parks and open space. Our parks have even had R-3 zoning. I think Pershing Square, for example, is R-3 zoning, and now the city will be coming up and addressing the issue of getting an open space zoning ordinance hopefully by December 31, 1989. That is going to be a very important issue. It doesn't compare in magnitude to some of the other things that we've been talking about, but there is a lot of land that's publicly owned. Caltrans, for example, and the school districts own a significant amount of land in this city and the revenue and the public policy dimensions are extremely large. There's also a very important public policy component to those issues because the neighbors and the residents in the surrounding area have very strong opinions about parks and open space.

David Abel: Any final thoughts?

Maria Hummer: Although I wouldn't term this a sleeper issue, I feel the issue of affordable housing is of primary importance in the city. It has not received as much attention as other significant issues such as transportation matters, sewer capacity, and air quality; however, I believe that working towards solving what some call the affordable housing crisis should be a primary goal of 1989.

Progress towards the solution can best be made through a working together of the public and private sectors--not just on a citywide, but on a region wide basis--to address this complex problem.

Leon Whiteson: My feeling is that Los Angeles is continuing in its makeshift way of action and reaction without knowing or understanding what is happening to it, and what is happening to regional metropolises all over the world. In the last decades since World War II, the world has developed into a network of regional metropolises that trade and react with one another. But we do not have an intellectual grasp at how the situation of L.A. relates to what has happened globally; decisions made in Tokyo could change everything that happens here, yet we still look from an extremely localized perspective. We can't even think regionally within Southern California! Therefore, while Los Angeles prides itself of being part of this mythical entity, the Pacific Rim, we do not think of how Los Angeles relates as a power center in relation to other power centers, and what the implications are for itself in doing that.

L.A. has always been a makeshift city, designed not to get in people's way. People could go about, make their livings and enjoy themselves without even having to look at the city or notice the streets. You look at the mountains, perhaps. None of our leaders have the--1 wouldn't say intelligence--but the intellectual capacity to frame this and say: L.A. is now a big boy in a very different world than used to be, and we have political structures and social structures and attitudes that are ante-diluvian. We need to understand much more about the city than we even begin to know. We have used buzz words like design, urban design, linkages. I’m as much in favor of urban design as anybody else, but we don't know what that really means. Not even architects or urban designers quite know what they're talking about. Every economy is vulnerable to every other, yet we talk about very local kinds of situations, and that makes us deal with problems in a series of makeshifts, which may or may not work. The community planning advisory committees, for instance, have been set up as a kind of makeshift solution. Maybe L.A. will survive through this series of make-shifts and maybe it won't, but I'm doubtful. Such limited perspectives don't work that well in the world we now live in.


News from the Courts: Building

Industry Defeats Special School Fees 

By Bart Doyle, Legal Counsel, Building Industry Association of Southern California

On November 29, the California Court of Appeals for the Second District handed the building industry a major legal victory by ruling that school districts in the Santa Clarita Valley cannot use the initiative process to impose special school fees which exceed the $1.50 per square foot standard established in state legislation.

This dispute arose last year, when a number of local school districts placed measures on the June, 1987 ballot, which would impose taxes to pay for building school facilities. The Building Industry Association of Southern California (BIA/SC) filed suit to remove the measures from the ballot on the grounds that they would enact fees in violation of the school fee legislation passed with industry support in 1986. An appeal to the California Supreme Court was unsuccessful and the measures were approved by the voters. BIA/SC then went forward with a new suit challenging the constitutionality of the fee.

The school districts argued that the provision of Proposition 13 which allows for truces to be imposed by a 2/3's vote was self-executing; that is, the legislature did not have to specifically authorize the vote.

The court rejected this argument, citing the history of taxation in the state of California and the voters' intent as expressed in Propositions 13 and 62. The court further held that in spite of the characterization of the levy as a tax, it was actually a development fee enacted in violation of the Government Code 53080. The court specifically noted that submitting these types of fees to the voters "was a poorly disguised, ineffectual attempt to avoid the statutory limitation to which development fees are subject."

Most importantly, the court concluded that these exactions were imposed "not on an electorate which, unsurprisingly, voted overwhelmingly to approve them, but rather, solely on the developers of new residential, commercial and industrial projects."

Since these special truces were not imposed uniformly on all persons or real property "in the same district," they violated the equality of taxation provisions in article XIIIA of the California Constitution. This holding may have the most wide-ranging impact, since it provides a new basis for challenging other discriminatory impact fees imposed by local governments and special districts. The school districts, however, have decided to appeal the decision with the State Supreme Court.


Insider Planning

By David Kramer, Editor

February 1 is the date the Planning Department is expected to return with the modified interim sewer hook-up ordinance. The ICO will include some suggestions from the Freilich Stone Consultants report such as point evaluations to demonstrate city priorities for affordable housing and air quality… There is still space on the sewer hook-up list for residential projects, and a one month wait for commercial projects.

The public/private task force established by the CRA to determine an equitable price for the transfer of floor-area ratio has yet to create a magical formula. As a result, several downtown projects have stalled. The CRA had proposed increasing the cost of transfers to $48.25 per square foot--almost twice the market rate.

Good news is possibly on the way for Santa Monica low-income tenants. An inclusionary housing program will go before the city's Rent Control Board early this month which will allow landlords to raise their rents for $300-$500 more than current rents if they set aside an equal number of apartments for low-income tenants…

The AQMD decision, which was delayed 2 1/2 months past the December 16 Board vote, means that both sides still have time to argue the controversial long-range plan to bring the Southcoast into compliance with federal clean air standards within the next 20 years. Before the scheduled vote, both sides were waging a rancorous media debate. A SCAG-USC study said that the plan

would cost Southern California $10 billion in the first five years while wiping out $200 million in local tax revenues. AQMD's response?: a press conference to charge that business and industry opponents were distorting the facts with a hastily prepared study… Meanwhile, air quality officials reported that 1988 has had one of the worst smog seasons of the decade.

In a sign of CPR's to come, the Council approved the Hollywood Plan Revision(see TPR, Dec, 1988) which restricts commercial and residential development. The new plan cuts residential growth by one-third and commercial growth by two-thirds… The City Council also approved a Specific Plan for Westwood Village which will maintain the character of the area, provide for more parking in new development, and place a three-story height limitation on new construction… In more Westwood news, was the Westside Pavilion the straw that broke Zev's back? First, the City Council's Planning and Environmental Committee discarded the advice of the Planning Commission and the Planning Department when it rejected Westfield Inc.'s plan to expand the Westside Pavilion. Instead, P & E approved Zev Yaroslavsky's alternative which reduced expansion by 60,000 square feet and added 1,000 additional parking spaces. First set to Zev. Subsequently, after Zev agreed to a compromise which left ambiguous the possibility of retail development on the Pavilion 's bridge, the Mayor challenged this compromise with a veto threat, and Zev acquiesced… At the same time, Mayor Bradley was attempting to outflank the Councilman by stressing the necessary air quality sacrifices to be made—including charging for parking and more car pool lanes.

The Planning and Environment Committee recently acted on one of the Notification amendments. P & E recommended approval for an ordinance which would keep the public hearing notification radius for zone changes and conditional use permits at 300 feet, and the committee continued for two weeks an ordinance to consider a suitable means to notify homeowners and residents within the radius of a project.

User fees getting you down? The BIA is now looking for cases to apply AB 1600 which requires a nexus between any fee charged and the service provided to the project that is paying the fee.

Despite all slow growth and no growth perceptions to the contrary, real estate lending in Los Angeles continues to rise. Lending in the County rose to $16 billion for the first 9 months of 1988, up a considerable 30% from the same period last year.


Predictions! Predictions! 1989! 1989!

What Do You See Are The Most Significant Changes…

"We're going to see AQMD move towards land-use regulation. That won't be good. I can see a situation where in order to get a large project approved, you have to get permission from the City Council, and then you have to get permission from AQMD. And neither will have the authority to overrule the other."


Doug Ring, Shea & Gould

"We can't afford to ignore the issue of air quality. EPA has said that it will take our cars away in five years. 1989 will be the year of increased consciousness of air quality city-wide."

Ralph Crouch, Planning Deputy, Hal Bernson

"AQMD regulation is going to lead to more traffic mitigation and more traffic fees, and the agency is going to become one of the most powerful planning groups in the greater LA area. But we plan to start pressuring cities to take the money we're paying for traffic fees and put it into the intersections we are supposed to be affecting. Often that traffic money becomes lost in the general fund."

Ben Reiling, Zelman Development Company

"The most critical issue for the next two years will be the development of the Air Quality Plan and to what extent it will affect land-use planning. There will clearly be an effect--the question is. to what degree?"

Kenneth Willis, BIA of Southern California 

"1989 will bring an emphasis on regional solutions to our infrastructure problems. However, cooperation is a very difficult thing to accomplish. We have to balance the local political concerns against the greater responsibility to resolve some critical issues."

Sharon Kaplan, Psomas and Associates 

"1989 is going to be the year that it becomes generally understood by developers that there is no such thing as a right to develop. Until now, most developers felt that most of the time they can do their own development, but now it's less true. Once the Site Plan Ordinance is approved, every project will need a Conditional Use Permit. The days are over when you have the right to do anything. By 1989, people will come to understand for the first time in history that they can't do to their property what they want to do."

Gary Morris, GLM Enterprises 

"I think that the question of housing in relation to large land-use projects will be a critical issue. Developers need to take a good look at the need for affordable housing in order to make community areas lively and viable."

Hope Boonshaft-Lewis, CEO, Boonshaft-Lewis & Savitch 

"Developers are now the bad guys, and we have to overcome that. The continued slow-growth movement has caused considerable down-zoning. There is such an anti-developer attitude in the city, that when a building goes up, the response is, 'how did they let them do that?' We must confront the issue and still allow the city to grow."

William Cook, Century West Development 

"The biggest change will result from the Sewer Ordinance and its implementation. It remains to be seen what the impact will be, but its attempt will be a growth management policy. This would be a first for Los Angeles."

Carmen Estrada, Los Angeles Planning Commissioner

"The City will be more aggressive in pursuing solutions on a regional basis, leading possibly to a new regional mechanism. The first step is to communicate with the contract cities about sewer hookup approvals. But the City is already beginning to exert more direct control on the region."

Norm Emerson, Emerson & Associates 

"While there will be more talk about regionalism, the actual power will become more parochial. We may need regional solutions, but local planning decisions will be strongly influenced by community groups."

Jim Gilson, Tuttle & Taylor 

“In the new year, we will focus on the application of CEQA. There's a new ruling that has thrown all redevelopment permits into a discretionary basis for CEQA review. For preservation and land-use, this is a whole new ballgame for redevelopment areas. We've been losing buildings left and right."

Judy De Turrenne, Local Homeowner's Association 

"1988 was the important year because it legitimized slow growth concerns. The trend is clear that no growth is in its ascendency. The City is now looking for ways to demonstrate that it's no longer ‘Anything Goes.’"

Robert Stelzl, Bren Investment Properties 

"The most significant area we have to confront is the expense of land. It's scarcer and harder to zone. Due to the fact that there are more governmental restraints, we have less ability to build. People are talking about affordable housing, but how do you get it? The higher prices change the product we can deliver."

Mike Sonderman, Lincoln Property Company 

"Industrially, developers will begin to reconsider pieces of land within 10 miles of City Hall which were previously ignored because of toxic or waste problems. This scarcity of desirable land leaves developers searching around."

Jeffrey Stern, Stern Investments 

"There will be a slowdown in new commercial construction because in most areas the over-supply will catch up. I don't think the Mayor's race will have any effect on development. It will also be interesting to see how the Master Plan for Central City West turns out."

Bruce Merchant, The Hammerson Property 

"There won't be any problems with high rise office buildings in the near future. The slowdown won't come until 1991. In downtown, they're building over one million square feet of office space. As long as there's land that is available downtown, people are building on it."

Sheridan Matlow, Matlow-Kennedy Corporation 

"There will be a significant reduction in authorized development because of development exactions and downzoning."

William Ross, Ross & Scott 

“There won't be many significant changes, just refinements. But for developers, the environment has significantly changed in the past 10 years with increased developer responsibility for mitigating impacts. "

Nelson C. Rising, Maguire Thomas Partners 

“The entire community has to focus on the issue of affordable housing. We have to come to a consensus on how to achieve more affordable housing and also satisfy the concerns of its impact upon our infrastructure.”

Ted Stein, Los Angeles Planning Commissioner 

“Developers are going to have an increasingly difficult time getting projects approved. NIMBY (Not In My Backyard) groups will continue to have influence. And cities are going to have to get more involved in affordable housing through any creative means.”

Thomas Safran, Safran & Associates 

“There has to be a growing realization that land-use planning and employment are closely related. If you don’t have growth, you won’t have jobs. And the disadvantaged parts of the city are alert to the fact that you can’t have one without the other.”

William Tooley, Tooley & Company 

“Prior to the city elections, we can expect heightened scrutiny of large projects in the city. Development will become increasingly more difficult in the city, and the pressure will increase from neighborhood concerns.”

Burt Pines, Alschuler, Grossman & Pines  


Guest Columnist

Public Real Estate: The County As Developer

by Joan C. Ling 

Joan C. Ling is the manager of the Development Planning Division of the Los Angeles County Community Development Commission. Her division provides real estate development management services to a number of public agencies and county departments. The range of technical support can take a project from concept through construction, including feasibility analysis, site planning, governmental approval, processing and development negotiation.

The County of Los Angeles - like most public agencies in California - faces a revenue squeeze that becomes more acute as time passes. Developing under-utilized County owned properties provides an increasingly important way to generate revenues to support County services.

In 1982, the County sought and obtained state legislation providing for the ground lease and development of land which would otherwise be sold. Under AB912, the County can enter into a ground lease with a developer while retaining title to the land. The ground lease spells out the project scope, the development schedule and the financial terms. The financial terms typically provide for the County to receive a guaranteed income stream as well as a share of the profits.

Ground leases are advantageous to the County because lease revenues return significantly more money over time than does income from fee sales. The County also takes over both the improvements and the land upon the termination of a lease. With the development scope specified in the ground lease, the County has an increased measure of land use control.

Yet the County of Los Angeles is not unlike any private developers in the development process. A bevy of staff and consultants work to identify feasible projects, formulate development scopes, negotiate contracts and seek development approvals from responsible jurisdictions.

By policy, the County subjects itself to the same review and approval process as must any private developers. This policy presents many challenges. While the County owns properties in prime locations, many of those same properties do not have the development rights associated with the highest and best use. Furthermore, local jurisdictions facing slow growth pressures are increasingly vigilant about their remaining open space and under-developed areas. Some jurisdictions are down-zoning publicly owned land as a way of preserving open space.

It is in this context of restricted development rights and down-zoning that the County seeks project approvals. Not all County land can be developed - even if it is located in a hot real estate market - due to local resistance. But there are many projects that have overcome zoning and plan restrictions because of the conditions specific to a site and its environment. What follows are two success stories: one because of the economic benefits that would accrue to the community and the other because of the environmental improvements that would result from the development.

Perez Industrial Park, a seven acre industrial park, is the result of cooperative efforts between the County and the City of Baldwin Park Redevelopment Agency. The project came about because the County identified a portion of a facility yard which could be used for industrial development. At the same time, the City was looking for ways to enhance its tax revenue base.

In order for the project to proceed, the portion of the property designated for open space in the City's General Plan and Zoning Map had to be changed to industrial use. In addition, a tract map was needed to legally separate the industrial development parcel from the rest of the County property and to eliminate property lines attendant to two adjacent remnant lots acquired as part of the development site.

With the assistance of the City, the County filed for and obtained a zone change, a General Plan amendment and a tract map necessary for the industrial development to take place. The approval process went forward with extreme ease because the County included the City as a partner very early on in the process. With the completion of the project, the City stands to gain 240 jobs and to increase the property tax base by six to seven million dollars.

Another example is Del Aire, the thirty acre office park located in an unincorporated area near LAX. The site was acquired by Caltrans as a construction staging area for the Century Freeway. It was zoned as a low density residential area. The County's Economic Development Corporation (EDC) bought the property from Caltrans in order to develop a one-million-square-foot-plus office park. 

Obtaining the development approval for the project was the first order of business and a formidable challenge. The EDC and its consultants were able to change the zoning from R-1 to MPD (manufacturing planned development zone). In addition, a conditional use permit and a parcel map were approved as part of the development approval package. In the end, the County's Planning Commission approved a maximum development of 1,500,000 building square feet.

This success story is due to the circumstances surrounding the site as well as the intelligent design responses to area residents' concerns. The site had been vacant for over a decade and was the scene of teenager beer parties and illegal dumpings. The surrounding neighbors were frankly relieved to hear that the site would be cleared for development. As the development concepts were introduced to the area residents, design changes were made to address the traffic and visual impacts that the project would have on the neighborhood. Several streets were closed from the main arterial to prevent business traffic in residential neighborhoods. A forty-five foot height restriction was imposed on buildings near residential properties. Due to the developer's willingness to respond to the resident's input, the project when completed will enhance the physical environment in the area. In addition, the County will receive significant amounts in ground lease revenues and property taxes.

In the face of growing fiscal constraints, the County of Los Angeles and other public agencies are looking to their under-utilized real estate assets for revenues. This concept is not without controversy, however, because it frequently pits the public landowners' right to realize profit from that ownership against the public desire for growth limits and open space. This tension of competing public goals may be alleviated by delivering desired public benefits along with the development, i.e., economic development, physical improvements, and social services can be included in the development package. In many cases, public development projects - sensitively planned - can enhance the communities in which they take place.



© 2022 The Planning Report | David Abel, Publisher, ABL, Inc.