The Real Deal Los Angeles

Here’s who’s backing the fight against the Neighborhood Integrity Initiative

Crescent Heights, Westfield and Eli Broad fund growing coalition

August 22, 2016 02:13PM
By Laurie Dove

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A portion of the DTLA skyline (by Hunter Kerhart), and top left: Crescent Heights CEO Russell Galbit (credit: Carl Hersh), bottom left: Eli Broad (via Elibroad.com)

A portion of the DTLA skyline (by Hunter Kerhart), and top left: Crescent Heights CEO Russell Galbit (credit: Carl Hersh), bottom left: Eli Broad (via Elibroad.com)

Many developers fear the Neighborhood Integrity Initiative, a proposed March 2017 ballot measure which calls for a two-year moratorium on substantial developments in Los Angeles that require certain zoning amendments.

Now, a coalition has formed to fight it, with a focus on how the initiative, if approved, could exacerbate L.A.’s housing shortage. It’s called the Coalition to Protect L.A. Neighborhoods & Jobs, and it is an increasingly organized and well-funded group. From January 1 to June 30, 2016, the Coalition received monetary and in-kind donations of more than $800,000.

“It’s probably the largest, broadest coalition our city has seen in response to an election initiative,” said Josh Komensky, a Coalition to Protect L.A. Neighborhoods & Jobs spokesperson. “People who do not agree on other issues are coming together to put a stop to this.”

The coalition has the support of labor groups such as Laborers Union Local 300; affordable housing advocates such as Southern California Association of Non-Profit Housing; poverty-focused non-profits such as the Downtown Women’s Center and Skid Row Housing Trust; L.A. City Council members such as Mitch O’Farrell and Gil Cedillo; and business groups such as  the Los Angeles Area Chamber of Commerce — parties that don’t always play well together in the sandbox. Most of its funding, however, comes from developers.

One of the developers that the NII used as its poster child for overdevelopment — Crescent Heights, the Miami, Florida-based developer behind the 751-unit mixed-use Palladium Residences project — is the largest backer of the coalition.

According to a campaign statement filed this month with the Los Angeles County Ethics Commission, the development firm, under its LLC “CH Palladium” donated $511,000 to the Coalition from the period between April 1 and June 30. The second-biggest donation was from Westfield Development, which chipped in $100,000.

Other notable donations during that period include $25,000 from billionaire philanthropist Eli Broad, whose Eli and Edythe Broad Foundation recently founded the Broad art museum in Downtown Los Angeles. Los Angeles-based developer Lowe Enterprises donated $25,000.

The coalition argues that the density restrictions proposed by the NII will make it nearly impossible to build new and affordable housing. By severely restricting the supply of housing in Los Angeles, rents and pricing will push the working class out of the already restrictive L.A. housing market, the Coalition argues.

“If [the Neighborhood Integrity] Initiative passes, construction of affordable housing in the City of Los Angeles would grind to a halt,” Robin Hughes, president and CEO of affordable housing development firm Abode Communities, said in the endorsement section of the Coalition’s website, goestoofar.com. “This measure strips away essential and established processes and procedures for the approval of vital affordable housing developments, and would significantly contribute to the ongoing affordable housing deficit here in Los Angeles.”

A report compiled by the California Legislative Analyst’s Office finds that for every 100 people who moved to the state between 2005 to 2015, an estimated 21.5 housing units were built, a disparity that already has caused rental and purchase rates to soar.

“The Neighborhood Integrity Initiative doesn’t show integrity and it isn’t good for neighborhoods,” said Mott Smith of Civic Enterprise, an independent developer that has built commercial and market-rate housing. “Instead, it locks in the vision of Los Angeles that we have right now, a stale concept that only meets the needs of a lucky few today, and will meet virtually no one’s needs tomorrow.”

The Coalition also argues that if the NII initiative passes and shuts down major construction projects in LA, the move will eliminate hundreds of thousands of working and middle class jobs, negatively impacting L.A.’s economy.

“Shutting down new housing construction would devastate Los Angeles’ economy and put thousands of people out of work,” Gary Toebben, president and CEO of the Los Angeles Chamber of Commerce, which has endorsed the Coalition, told The Real Deal. “It would also hobble our ability to address our homelessness crisis.”

As an alternative, Toebben said, Los Angeles needs to focus on changing its outdated zoning laws.

The controversial NII has backing of its own. It is spearheaded by the Coalition to Preserve LA, which is primarily funded by the $1.3 billion non-profit AIDS Healthcare Foundation. AHF CEO Michael Weinstein has an office two blocks north of the Palladium Residences on Sunset Boulevard in Hollywood and the highly contested pair of high-rise towers are expected to alter his view. The initiative has raised just over $1 million in the year to date, according to recent filings, with AHF accounting for the bulk of the donations.

High-profile supporters of the initiative include Leonardo DiCaprio, Kirsten Dunst, Joaquin Phoenix, Chris Pine, Garrett Hedlund and Chloe Sevigny, according to release by the NII.

The NII has sparked a flurry of counter proposals, including a plan that is expected to be on the November ballot from the L.A. County Federation of Labor (AFL-CIO). Despite their own ballot push, the AFL-CIO initiative, dubbed Build Better L.A., also has joined the coalition to fight the NII.

Last week, supporters of the NII told Mayor Eric Garcetti they will halt their campaign if he bans private meetings between real estate developers and city officials, consistently upholds zoning rules rather than allowing variances and forbids developers from choosing their own environmental consultants.

“Everybody in our Coalition agrees it would be great to not fight this on the ballot and instead concentrate our energy on solving homelessness and building quality houses in the right places in our city,” Komensky said. “If we don’t have to fight the Neighborhood Integrity Initiative, we’ll sing hosannas.”