Developers are experts at circumventing Measure JJJ – here’s a proposal that would make that harder

Value Capture Ordinance would increase affordable housing requirements for alternative entitlements

TRD LOS ANGELES /
May.May 31, 2017 08:30 AM

The reach of Measure JJJ could intensify in the coming months, if a new ordinance that aims to extend the scope of the city’s affordable housing requirements is approved.

Since the initiative passed in November, developers have been careful to craft their project filings in a way that would not require them to adhere to the newly-enacted measure, which requires union-approved wages for workers and a percentage of units set aside for low-income housing. But a new ordinance drafted by city planning officials aims to extend some of JJJ’s affordable requirements to alternative entitlements, making it more difficult for developers to skirt them, planning officials said. 

“[Developers] are scouring the code searching for alternate pathways to get additional density without having to build affordable housing,” Matt Glesne, an official at the Department of City Planning, told The Real Deal. “The proposal would clarify the language of these pathways and also put in new conditions,” which would increase the creation of affordable housing units.

Dubbed the Value Capture Ordinance, the proposal would increase the number of affordable units that developers are required to build when they file for certain entitlements — those that do not constitute a zone change, and therefore do not trigger the mandates of JJJ.

The goal of the ordinance, which could impact future projects in the L.A. pipeline, is to increase the overall supply of affordable housing units, according to city officials.

Before JJJ, developers would, almost by default, apply for a zone change to increase their project’s density. But now that the measure has added stipulations to zone changes, other entitlements have become more attractive, Glesne said. One popular route by which developers increase their project’s density is by applying for a conditional use permit for mixed-use projects. This request does not constitute a zone change, and therefore would not fall under the purview of JJJ.

In March for instance, Santa Monica-based Dynamic Development Company filed plans for a conditional use permit that calls for a five-story, 96-unit mixed-use complex at the corner of Western and Franklin avenues. Of the 96 units, 16 would be set aside for very low-income households. But under the proposed changes to the mixed-use conditional use permit, that figure could be higher.

But if the value capture ordinance is passed, such entitlements would become more costly.

Under the proposed ordinance, a project that seeks to double its floor-to-area ratio, for example, would have to designate 18 percent of its units affordable, as compared to the current requirement of 8.1 percent, according to Glesne.

The ordinance would also guarantee that there would be no net loss of affordable units. This means, for example, that when landlords evoke the Ellis Act to demolish rent-stabilized units, if they eventually build a rental property, they would be required to make up for the number of units razed. It would also require units to be designated affordable for a minimum of 55 years through “covenant” requirements. For the mixed-use conditional use permit, that would increase the mandated affordability period by 25 years.

The proposed ordinance – prompted by a 2014 motion filed by Council member Mitch O’Farrell –became more relevant after the enactment of JJJ and amid a push by L.A. lawmakers to fix the city’s affordable housing crisis. L.A.’s housing growth rate is still well behind the national average, with an increase in units of just 0.47 percent in 2016, according to a recent analysis of census data.

But the ordinance could mean more strain ahead for developers, their land use consultants and their wallets.


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