November 19, 2003 - From the November, 2003 issue

LA To Consider Incusionary Zoning Ordinance

The lack of affordable housing througout California has led many cities to adopt inclusionary zoning ordinances, forcing developers to include a specified amount of affordable units in every project. The LA City Council is currently weighing whether to enact such a measure. TPR is pleased to present this interview with L.A. City Councilman Eric Garcetti, in which he explains how the city can benefit from inclusionary zoning, and what incentives could be included to offset costs to developers.

Eric Garcetti

Eric, the need for affordable housing in Los Angeles is pretty clear, but the need to pass an inclusionary zoning ordinance is not so clear. What is attractive about the concept of inclusionary housing to add to the city's policy for boosting the production of housing, particularly affordable housing?

First, it's going to take a combination of different initiatives, both in the public sector and the private sector, to address this housing crisis. This is the worst housing crisis we've had in half century in Los Angeles and we've already taken some dramatic steps to address it, most notable of which was the Affordable Housing Trust Fund. Inclusionary zoning, which exists in over 107 municipalities in California alone, can be an important part of the solution if it's done intelligently. It can be a win-win, giving developers more land and more profit while at the same time adding more affordable housing. But no matter what, we have a long way to go, and the private sector is vital to solving the problem.

It's also very important to this city, which has traditionally been one of the most segregated cities in the country, that inclusionary zoning help promote economic integration. The goal is that the son of a janitor grows up next to the daughter of a lawyer and they play together, they are friends together, and we create a new fabric that Los Angeles has lacked throughout its history.

How is the ordinance taking shape? What's the baseline that we're working from?

So far, everything is quite open. The issues we want to look at include: the size of the requirement, the level of affordability, and the dynamic we must create that will allow developers to meet this need in a variety of ways. Right now, cities, housing advocates and developers are also working together to make sure that the benefits package that comes with any new requirement not only makes this an even wash, but is an opportunity to actually create a better tomorrow for affordable housing. That working group, with which we've worked very closely, is led by the Central City Association, has put some great suggestions on the table.

What steps have been taken so far to create a healthy dialogue to help craft a potential ordinance? What types of incentives and proposals have been kicked around thus far?

We had our first hearing in the Housing, Community and Economic Development Committee jointly with the PLUM committee and it was one of the best hearings I've been a part of since I've been in City Hall. You had ardent advocates for affordable housing telling the committees that we had to make things easier for developers-streamlining bureaucracy, speeding up processes, and making sure that bonuses were not just lip service, but real. On the flip side, you had developers that were sitting at the table saying we should do this, not only because it can make financial sense, but because it's the moral thing to do. That's the sort of city we all envision, one in which we're not scared by proposals because everybody's at the table together.

More specifically, making density bonuses usable by adjusting height and FAR limits is very important. Eliminating guest parking, especially along transit corridors, allowing an in lieu fee for a portion of the open space requirements, as well as the possibility of looking at in lieu fees to meet some of the affordable housing need. All of that is not only before us, but will be included in part of the final package. I'm looking at the threshold for site plan review, and also examining some creative solutions that weren't put on the table by the CCA group. For example, allowing city planners to work on the weekends and earning time and a half. Developers are ready and willing to pay the extra money in order to get the bonus of actual streamlined and facilitated review.

We've all talked repeatedly about needing to expedite or streamline the planning process and procedures in Los Angeles. Now, we have a real opportunity to take action. If we can implement a social good, an economic good, and use this as the vehicle for that reform as well, we've done a pretty good job. We're on our way; I haven't seen this grouping and this much brainpower come together in a long time.

Some would say that inclusionary zoning is adding complexity to the mix instead of easing the ability of developers to move projects forward. What else is on the table to expedite projects to make the process more predictable in cost and also more reasonable in time?

In committee this week, I had two projects that took advantage of density bonuses in the NoHo CRA areas, a situation that enabled developers to add market - units as well as adding affordable units. This resulted in not only putting more affordable housing units in, but more housing units to meet the housing crisis in general. To me, that is not adding complexity, that's adding profit, plain and simple. In adding profit, we motivate the private sector to be a stronger partner with the public sector in supplying more affordable housing.


In looking at other ways to expedite the planning process, specific community plans have great potential. The two community plans in my district will be the first that take advantage of RAS and adaptive reuse. Through these community plans, we now have that tool through which we can actually put RAS down in communities. This will be a huge bonus, because now it becomes by-right. Similarly, if an inclusionary zoning ordinance gives density bonuses, that allows things to happen by-right with density bonuses and you don't have to go through that entitlement process. But, inclusionary zoning does not add an additional administrative hoop in the planning process, and we have to be very clear about that.

In the last year to two years we have seen passage of the RAS ordinance and the establishment of the Mayor's Housing Trust Fund. Talk about the impact that those two initiatives have had so far.

The Housing Trust Fund has been a phenomenal success. Not only is it the largest per capita trust fund for housing in the country, but it spurred statewide action, such as Prop. 46. In the first round of MHP funding for Prop. 46, the city received 25% of the statewide funding. We're leveraging each dollar multiple times. We probably will increase affordable housing in the city by two to three fold versus three years ago because of the housing trust fund and Prop. 46.

RAS is just a tool right now-it's not doing anything today, anywhere. But, when you have the first community plans adopt to RAS, which will happen in Echo Park, Silver Lake, and Hollywood shortly, you will begin, probably at the end of 2004, to see that begin to work in the city. That will have growing pains though, because most developers are either good at commercial or good at housing, and asking them to both is going to require a new breed of developer to emerge in Los Angeles.

Adaptive re-use is already making a huge difference in downtown, and beginning to in Hollywood as well. But as much as we have formal tools, it's really important to emphasize the informal tools and opportunities available. In my own district, my office organized a day-long forum that brought together the community and neighborhood councils with nonprofit developers, for-profit developers, architects, and planners-people who are usually shouting at each other on opposite sides of the table. The question was not phrased as whether or not you want housing, but what you want your community to look like. More than any formal tool that I've put forward, that has totally changed the equation of how people talk about and engage in development in our district.

Lastly, Los Angeles is obviously a very diverse market with diverse housing needs. Can one inclusionary zoning policy cover the entire city?

Clearly inclusionary zoning means many different things in many different places. The over 107 inclusionary zoning policies throughout California are written very differently. Some have been more successful than others, and we're looking at the very best of them. I've heard the argument that it can't work in all parts of the city. However, if we do our job right, we are actually adding profit and adding incentive to any developer, like in North Hollywood. In that case, the market took care of itself.

Markets are, half the time, incredibly rational and driven by scientific forces. The other half of the time, markets are incredibly psychological and have very little to do with science or balance sheets-they have to do with human beings. That's where the fault of us comes in. Human beings tend to make decisions based on emotion and based on what they've heard rather than their own experiences. I think a mandatory policy nudges developers into uncharted territory, where they will realize it's actually better than it is today.

Time after time, the municipalities who have done this the right way have shown that this can work. It is a hefty load, but if we can actually reform the building envelope requirements in the city, if we can change the way that we do permitting and planning just enough to make developers build housing and affordable housing together in a way that's more profitable than today, who could be against that?


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