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Related California CEO Bill Witte on how LA developers should navigate development-curbing proposals

Don’t plan a development that can serve as a poster child for the Neighborhood Integrity Initiative, he warns
Related California CEO Bill Witte and a photo of the DTLA skyline by Hunter Kerhart

Related California CEO Bill Witte and a photo of the DTLA skyline by Hunter Kerhart

Updated, July 22nd, 2016, 12:33 p.m.: It’s an awkward time to be a developer in Los Angeles, as proposals are planned for the next two ballots that could slow most building to a halt.

There’s the Neighborhood Integrity Initiative, which seeks a two-year moratorium on developments that require zoning changes associated with density, and is headed to the ballot in 2017. There’s also the Build Better L.A. Initiative, which would require that any development seeking a zoning change have a percentage (up to roughly 20 percent) of affordable units and pay local workers prevailing wages. That one goes to voters this November.

In the meantime, officials at the city and state level are discussing measures to address the region’s affordable housing shortage.

Related California CEO Bill Witte, speaking at Bisnow’s annual multifamily conference at Downtown’s Omni Hotel on Wednesday, warned the development community that it does not have much time to respond to the flurry of proposals.

“Taken individually, you can see where all these come from; Taken collectively, we’ve got a serious problem,” said Witte, who is also chairman of the Related Companies’ California wing, which builds both affordable and luxury housing. “In L.A., we basically have between now and the end of the year to come up with a response.”

Read on for Witte’s advice to developers about navigating what he called “ballot box planning.”

Don’t go to the mattresses, talk to the community

Witte warned the audience against the “typical default response from a developer” of trying to get existing projects grandfathered in sans restrictions — and waiting until the next cycle if it’s not possible. He also suggested avoiding the urge to rage against the machine.

“[Developers] just go to the mattresses, to borrow from Mario Puzo’s phrase, and just fight these things, [saying], ‘This is un-American, this is Socialistic, etc.,’” Witte said. “This is not going away, folks…so we all need to get involved.”

Instead of railing against it internally, he encouraged community discussions.

“I think it behooves all of us to really kind of step back from our entitlement and our financing and try to band together, to have neighborhood discussions, to try to resolve these matters,” Witte said.

Too often, he said, developers stay out of the discussion and only talk to the community when they are in the neighborhood input phase of a proposal.

“We need to say to the Neighborhood Integrity Initiative people, where do you plan on accommodating these people [that need housing], other than not in your neighborhood?” he said. “These conversations, believe it or not, rarely happen. Oh, yes, when we’re doing individual projects, one by one, we talk to communities and we think we’re pretty good at that. But [these proposals are] going to preempt everything you’re doing on a one-off basis.”

Talk to elected officials

Witte urged developers to speak to their elected representatives.

“[Those discussions] can take the wind out of the sales of those who would say, ‘Maybe we agree that this [isn’t] best either but nobody is doing anything and I don’t see it yet,’ he said. “I think it goes beyond just being in our self interest, which it absolutely is. I think it’s all part of our civic duty.”

He also encouraged developers to speak out in support of updated and more regional community plans that prevent the confusion that occurs when adjacent areas have different rules — even if such sweeping reforms are pie in the sky.

Don’t make yourself the scapegoat of overdevelopment

“If something is really out of context —  and I can name you three or four projects within the City of Los Angeles right now that will become the poster child for the Neighborhood Integrity Initiative — it probably isn’t right,” Witte said.

He encouraged developers to accept that there are certain areas that are protected from dense development, and where it is ill-advised to try to build something out of scale.

Affordable housing and community benefits should be a major consideration when planning, and in discussions with the community, he said.
“It could pass,” he said of the Neighborhood Integrity Initiative.

Correction: This story has been updated to reflect that the Build Better L.A. Initiative would require that a portion of projects requesting zoning changes be affordable. 

  • alwaysclimbinghigher

    Very intelligent and sane response, and I am interested to see if any of the developers of the “out of context projects” will heed the advice. Cough cough, Catalina Project/Colony Holdings, cough cough.

  • alwaysclimbinghigher

    Very intelligent and sane response, and I am interested to see if any of the developers of the “out of context projects” will heed the advice. Cough cough, Catalina Project/Colony Holdings, cough cough.

  • alwaysclimbinghigher

    Very intelligent and sane response, and I am interested to see if any of the developers of the “out of context projects” will heed the advice. Cough cough, Catalina Project/Colony Holdings, cough cough.

  • The Neighborhood Integrity Initiative people have people out getting signatures to get on the November ballot.

  • The Neighborhood Integrity Initiative people have people out getting signatures to get on the November ballot.

  • The Neighborhood Integrity Initiative people have people out getting signatures to get on the November ballot.

  • 1976boy

    How about NII go all the way and simply put in place a moratorium on all projects, not just “dense” projects? Or are only single family houses allowed in their narrow universe?

    • SZwartz

      You can read the NII on-line. So why don’t you download it and find out what it actually says?

      • 1976boy

        I know what it says. My point is they are hypocrites. They want to outlaw one type of development and preserve another, which benefits them personally.

        • SZwartz

          How would that be hypocritical? They want to stop the type development which is killing Los Angeles but alowl projects which would improve Los Angeles proceed.

        • SZwartz

          How would that be hypocritical? They want to stop the type development which is killing Los Angeles but alowl projects which would improve Los Angeles proceed.

        • SZwartz

          How would that be hypocritical? They want to stop the type development which is killing Los Angeles but alowl projects which would improve Los Angeles proceed.

      • 1976boy

        I know what it says. My point is they are hypocrites. They want to outlaw one type of development and preserve another, which benefits them personally.

      • 1976boy

        I know what it says. My point is they are hypocrites. They want to outlaw one type of development and preserve another, which benefits them personally.

    • SZwartz

      You can read the NII on-line. So why don’t you download it and find out what it actually says?

    • SZwartz

      You can read the NII on-line. So why don’t you download it and find out what it actually says?

  • 1976boy

    How about NII go all the way and simply put in place a moratorium on all projects, not just “dense” projects? Or are only single family houses allowed in their narrow universe?

  • 1976boy

    How about NII go all the way and simply put in place a moratorium on all projects, not just “dense” projects? Or are only single family houses allowed in their narrow universe?

  • SZwartz

    It sounds sensible if you ignore the facts. Los Angeles has ceased to be a destination city and has become an exodus city where more people leave than come here.

    With a net loss of emigrants over immigrants, more housing becomes available each day. That is the developers’ dilemma. The demand is gone. In 2013 alone, they constructed 150% of the apartments needed by middle class and above. There is a glut with a 12% vacancy rate for these apartments constructed in the last decade.

    Like sharks who need to swim to breathe, developers need to build to survive. They do not care if there is anyone to live in their product as long as they can sell the units.

    That’s where the affordable housing scam comes into the picture. We do have shortage of homes for the poor because Garcetti has been rapidly tearing the down. Of course, except for developers whoa re in the demolition business, tearing down the homes of poor people will not sustain the building industry.

    Poor people cannot pay the rents so that developers can make a profit. Hence, the Developers’ Dilemma. There is no Demand for the high end of the market and the people at the low end cannot afford to live in new construction.

    Thus, the City will borrow $1,200 Million Dollars [That’s $1.2 Billion] and give it to the developers to build homes for the poor people. The developers will not have to repay the money, but we taxpayers will have to repay the money.

    Things will be getting much worse for developers. The Millennials have maxed out. 25 years ago, they hit their birth peak and that means each year, there will be fewer and fewer young people moving into the urban areas — yep that place which already has a glut of empty apartments.

    Millennials will be making a “double Exit.” By Double Exit, I mean that due to the economy many Millennials delayed starting a family, Now that the economy has improved and there are lots of good jobs all over the country, two group Millennials will be leaving. (1) The older group who postponed starting a family (2) the younger group who do not have to postpone starting a family.

    Thus, just when developers need an influx of new blood, they are facing an accelerating exodus.

    The only thing that can save them is an infusion of cash to construct affordable housing, but that depends upon a naive public authorizing $1.2 Billions in bonds.

  • SZwartz

    It sounds sensible if you ignore the facts. Los Angeles has ceased to be a destination city and has become an exodus city where more people leave than come here.

    With a net loss of emigrants over immigrants, more housing becomes available each day. That is the developers’ dilemma. The demand is gone. In 2013 alone, they constructed 150% of the apartments needed by middle class and above. There is a glut with a 12% vacancy rate for these apartments constructed in the last decade.

    Like sharks who need to swim to breathe, developers need to build to survive. They do not care if there is anyone to live in their product as long as they can sell the units.

    That’s where the affordable housing scam comes into the picture. We do have shortage of homes for the poor because Garcetti has been rapidly tearing the down. Of course, except for developers whoa re in the demolition business, tearing down the homes of poor people will not sustain the building industry.

    Poor people cannot pay the rents so that developers can make a profit. Hence, the Developers’ Dilemma. There is no Demand for the high end of the market and the people at the low end cannot afford to live in new construction.

    Thus, the City will borrow $1,200 Million Dollars [That’s $1.2 Billion] and give it to the developers to build homes for the poor people. The developers will not have to repay the money, but we taxpayers will have to repay the money.

    Things will be getting much worse for developers. The Millennials have maxed out. 25 years ago, they hit their birth peak and that means each year, there will be fewer and fewer young people moving into the urban areas — yep that place which already has a glut of empty apartments.

    Millennials will be making a “double Exit.” By Double Exit, I mean that due to the economy many Millennials delayed starting a family, Now that the economy has improved and there are lots of good jobs all over the country, two group Millennials will be leaving. (1) The older group who postponed starting a family (2) the younger group who do not have to postpone starting a family.

    Thus, just when developers need an influx of new blood, they are facing an accelerating exodus.

    The only thing that can save them is an infusion of cash to construct affordable housing, but that depends upon a naive public authorizing $1.2 Billions in bonds.

  • SZwartz

    It sounds sensible if you ignore the facts. Los Angeles has ceased to be a destination city and has become an exodus city where more people leave than come here.

    With a net loss of emigrants over immigrants, more housing becomes available each day. That is the developers’ dilemma. The demand is gone. In 2013 alone, they constructed 150% of the apartments needed by middle class and above. There is a glut with a 12% vacancy rate for these apartments constructed in the last decade.

    Like sharks who need to swim to breathe, developers need to build to survive. They do not care if there is anyone to live in their product as long as they can sell the units.

    That’s where the affordable housing scam comes into the picture. We do have shortage of homes for the poor because Garcetti has been rapidly tearing the down. Of course, except for developers whoa re in the demolition business, tearing down the homes of poor people will not sustain the building industry.

    Poor people cannot pay the rents so that developers can make a profit. Hence, the Developers’ Dilemma. There is no Demand for the high end of the market and the people at the low end cannot afford to live in new construction.

    Thus, the City will borrow $1,200 Million Dollars [That’s $1.2 Billion] and give it to the developers to build homes for the poor people. The developers will not have to repay the money, but we taxpayers will have to repay the money.

    Things will be getting much worse for developers. The Millennials have maxed out. 25 years ago, they hit their birth peak and that means each year, there will be fewer and fewer young people moving into the urban areas — yep that place which already has a glut of empty apartments.

    Millennials will be making a “double Exit.” By Double Exit, I mean that due to the economy many Millennials delayed starting a family, Now that the economy has improved and there are lots of good jobs all over the country, two group Millennials will be leaving. (1) The older group who postponed starting a family (2) the younger group who do not have to postpone starting a family.

    Thus, just when developers need an influx of new blood, they are facing an accelerating exodus.

    The only thing that can save them is an infusion of cash to construct affordable housing, but that depends upon a naive public authorizing $1.2 Billions in bonds.