August 23, 2004 - From the August, 2004 issue

Business Community Offers Alternative To L.A. City Council's Mandatory Inclusionary Zoning Proposals

In recent years, few issues have energized the business community, particularly developers, like the mandatory inclusionary zoning policy being discussed by the L.A. City Council. TPR is pleased to present this interview with Ray Pearl, Executive Officer of the Building Industry Association's Greater L.A. and Ventura Chapter, in which he lays out the details of a counter proposal presented to the City Council ealier this month.

Ray Pearl

The Planning Report has done numerous interviews on the inclusionary zoning proposals that have come before the L.A. City Council. Now, the CCA and BIA have come forward with an alternative. Who makes up this coalition and what is being proposed as an alternative?

A diverse coalition of civic leaders, business organizations and concerned members of the community has come together with a common goal: to create a real and effective policy to solve the housing crisis in the City of Los Angeles. Led by the Central City Association and Building Industry Association, the coalition includes organizations such as VICA, the L.A. Area Chamber of Commerce, African-American Chamber of Commerce, a number of realtor associations, the Police Protective League, the Apartment Owners Association and the Building Owners and Managers Association (BOMA), to name just a few.

We face a severe housing shortage in the city of Los Angeles-not enough units are being produced. Last year, for example, the City's population grew by 65,000 people, yet fewer than 9,000 new homes were built. And that was the most the city has produced in approximately ten years.

Council members Garcetti and Reyes proposed a draconian and counter-productive mandatory inclusionary zoning ordinance. As part of the process, they gave the business community 90 days to come up with an alternative. That ninety-day period culminated on August 10th with our proposed solution, the Housing-For-All: Fair Share Program.

Our plan would establish a five-year pilot program under which the city would set a goal of producing 100,000 units. One of the key components is the distribution of housing throughout the city. We've heard criticism that some districts welcome housing, and others don't. Some have too much affordable housing, some have none. This plan not only sets the goal, but spreads housing evenly among all 15 council districts. So, 1/15th of that

goal would be met in each council district.

We go further by creating overlay zones within each district called Housing Incentive Zones. The city Planning Department, City Council offices, neighborhood councils and community organizations would work together to decide where in their district they want housing to be built. Once the Council approves these Housing Incentive Zones, a developer receives a number of by-right incentives allowing them to increase what they are able to build. As a trade off for those by-right incentives, the developer would then provide a mandated percentage of affordable housing.

Or, the developer can choose to continue to do exactly what is done today. In a project where the affordable housing option might not work, or where the Council doesn't think it's the right thing to do, the developer has the choice to proceed without the by-right incentives. The goal is to increase the production of housing for all income levels.

Lastly, one of the key components is neighborhood incentives. As part of our proposal, the city's portion of the increase in property tax increment from any new housing would be returned to each councilmember to spend within their district to improve the communities that are willing to accept this new housing. These funds could be used on updating community centers, enhancing libraries, providing new open space, fixing potholes-whatever the community desired.

Our goal is truly to create a comprehensive housing policy that produces housing for everyone from low and very low income families, to work-force housing, to market rate housing.

In a November 2003 interview with The Planning Report, Eric Garcetti said, "The issues we want to look at regarding inclusionary zoning 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." What's lacking in this program, and what makes your alternative a better solution?

The Garcetti-Reyes proposal is narrowly focused on mandating affordable housing everywhere in the city; it's a one-size-fits-all program. But one-size does not fit all. Our proposal is built on ensuring that each council district has the flexibility to implement the program, and that the neighborhoods are willing to accept the housing and the incentives that go along with the ability to produce the affordable housing. In other words, if you get the incentives in these incentive zones, you will build the affordable housing. If you don't want to give the incentives, then you don't have to build the affordable housing. It provides flexibility for developers, for the city, and for neighborhoods. It's much more comprehensive, with the intent of increasing the supply of housing, rather that just focusing on this mythical problem of not enough affordable housing in the city. We have an overall housing crisis, not necessarily just an affordable housing crisis.

Let me offer you another quote from Councilman Garcetti: "[Citywide inclusionary zoning] is a hefty load, but it 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?" So, who could be against such a proposal?


What the councilman just described is embodied by many of the components in our plan. There are some similarities between the two plans. Our plan is much broader and more comprehensive. Nobody in the business community disagrees with providing incentives, streamlining the process, and increasing the flexibility of the building envelope. What we were concerned with is the one-size-fits-all approach under which a developer must provide affordable housing no matter what. That would render some projects infeasible, and they wouldn't be built. What we're saying is, "let's get housing built for all income levels."

So, there is a subtle difference. This is not a mandatory inclusionary policy. This offers flexibility, it offers a way to increase the production of housing, and it also offers the guarantee-when incentives are given-that more affordable housing will be a component of future projects.

The business coalition you speak for envisions about 100,000 new housing units being built in the city. That's a lofty goal. How realistic is this goal?

We absolutely realize that it is a lofty goal, and we don't kid ourselves into thinking that it's going to be easy. Our view is that it's worthwhile to choose an ideal goal and build towards that number. It's not going to happen in the first year; you are not instantly going to get 20,000 units when, in the best year of the last ten, we didn't even get to 9,000. But, if we're going to address the housing crisis, instead of just paying lip service to this issue, we're going to have to set lofty goals. And, all 15 councilmembers, the mayor, the communities, and the neighborhoods are going to have to be on board. The development community will certainly work with those local communities and elected officials to meet this goal. If government wants the housing, and communities are willing to accept it, we believe that we can begin to make a dent in this housing crisis.

Many TPR interviewees have suggested that there's an absence of actual planning going on in Southern California and in Los Angeles-mediation and negotiation most definitely, but very little planning. Our inner city and inner suburban neighborhoods are being asked to include new schools, and new parks, and new libraries, and more child-care, etc. How, given development pressures, do we best integrate housing into the fabric of a neighborhood without proper planning, which seems today to be under-funded and without strong strong support from city leadership?

Los Angeles certainly needs a proactive planning process that focuses on creating better and livable communities with all of those components that you mentioned. Because the Fair Share Program is so comprehensive in nature, our hope is that this will spur the very planning you're talking about. In sitting down and choosing where we want housing, we're going to involve council offices, we're going to involve the Planning Department, and most importantly, we want to involve neighborhoods.

The city of Los Angeles is virtually built-out. The only way you're going to provide more housing is for the city to begin to grow up. But no development should be shoved down somebody's throat. If we can all work together and begin to plan proactively now, we will put the city in a position of being proud of this process. How we address the housing crisis today will say a lot about who we are tomorrow.

Who on the Council will champion your approach? How do you see your position being advanced?

I don't believe that a one-size-fits-all mandatory proposal has a lot of support. There is a willingness on the city's part to address the housing crisis, and there's a desire on the part of many councilmembers and community leaders to focus on this issue. If you go through the details, I don't think that our proposal and the Garcetti-Reyes proposal are that far apart. We sincerely hope that our comprehensive plan will be the one off of which we build.

The next step is to begin to sell this to the communities and to educate councilmembers on the details of the plan. We need to explain our side of the story and why we think this plan will work. We need to work with housing advocates and communities to help them understand why we believe this is in the entire city's best interest and truly is a win-win proposal.

Lastly, what are the likely consequences if Los Angeles fails to find consensus around a plan for building additional housing to shelter a growing population?

Failure is not an option. To ignore this crisis is to put ourselves in a position years from now where the city of Los Angeles becomes a very difficult place in which to live and one in which the problems continue to worsen. We're at the point in the debate where a problem has been identified and talked about for years. We were issued a challenge, and we've risen to that challenge with the hope that we can really begin to improve on the great city that Los Angeles is.


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