Will development ban affect Redondo Beach market for years to come?

One of the moratorium’s biggest proponents says the housing crisis is a “myth”

Redondo Beach Mayor Bill Brand (via Charter)
Redondo Beach Mayor Bill Brand (via Charter)

The Redondo Beach City Council is expected to extend its moratorium on mixed-use development next month, despite warnings from the California legislature that it could exacerbate the state’s housing crisis. While Redondo Mayor Bill Brand argues the crisis does not apply to Redondo Beach — which has a population of less than 70,000 people — real estate and land use experts say moratoriums in smaller cities impact the rest of the region. They worry an expansion of the development ban could scare off investors and inflate rent for years to come.

“It’s understandable to see yourself as a small player, and think, ‘How big of an impact can this have in a county of 10 million people?,” said Marlon Boarnet, chairman of the Department of Urban Planning and Spatial Analysis at USC, who said the moratorium extension would increase rents in the area. “But it becomes a problem when too many cities use too many regulations to limit the housing supply…we’re seeing this across the county and it lags on the county’s growth.”

Nick Buchanan, president of Cape Point Development – which won approval in 2015 for the mixed-use Sea Breeze Plaza on Pacific Coast Highway in Redondo Beach thanks to a state housing law, much to Mayor Brand’s chagrin  – echoed the sentiment that anti-growth policies in small cities contribute to the state’s lack of housing.

“NIMBYism is going to have consequences, and it could drag on the economy,” he said, adding that “anti-development” community members in Redondo Beach “don’t care” about those impacts. “They just don’t want to see their community change.”

Both home prices and rents will become more expensive in Redondo Beach if development is further halted, Buchanan said.

“Redondo Beach is one of those cities – the housing stock is getting old and starting to deteriorate,” he said.  “A lot of people don’t like mixed-use development, but it’s a way to provide housing in built-out communities.”

Bruce Szeles, a member of the Save the Riviera group – which was credited by the mayor for pushing for development restrictions – told The Real Deal that the housing crisis is a “myth,” and that mixed-use developments have mostly failed in Redondo Beach. He said his group wants to steer the city into building facilities that house professionals who work high-paying jobs.

Some say it’s a perspective issue. From the vantage point of the Redondo Beach homeowner, there is no housing crisis, “especially if they were lucky enough to have purchased their home 30 years ago,” said Richard Green, chairman of the USC Lusk Center for Real Estate.

Redondo Beach vs. Sacramento

When it passed the initial 45-day moratorium, Redondo Beach blatantly balked at warnings from the California legislature, which were included in the city’s administrative report.

The state found that “the excessive cost of the state’s housing supply is partially caused by activities and policies of many local governments that limit the approval of housing…Among the consequences of those actions are discrimination against low-income and minority households, lack of housing to support employment growth, imbalance in jobs and housing, reduced mobility, urban sprawl, excessive commuting, and air quality deterioration.”

Mayor Brand acknowledged the statewide housing and affordability crisis at the City Council meeting on August 15, but said it has not been an issue for Redondo Beach.

“Redondo does not have a housing shortage,” he said. “The crisis we do have really is a traffic crisis and on-again off-again water crisis. … And if we continue with a lot of this addition of residential, soon we’ll have schools overcrowding.”

Chicken or the egg

Proponents of the ban say “overdevelopment” of mixed-use projects causes more traffic, but Councilwoman Laura Emdee said more affordable housing or rental units closer to major employment hubs would actually ease congestion. Emdee expressed concern about how it could affect one of the city’s most important industries and largest employers.

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“When I talk to the aerospace industries and the Air Force base, the first thing they tell me is they need housing closer to that area,” she said at the meeting. “I spoke to Hawthorne City Council, and SpaceX is telling them the same thing. … If you want to solve traffic you need housing next to the jobs.”

On Monday, Emdee elaborated during a phone call with The Real Deal.

“If you know anything about planning, you know if you put jobs near where people live, you won’t have as much traffic,” she said.

Even though most mixed-use projects that have been approved over the past few years were allowed under the current General Plan, community activists still opposed almost every proposed development, Emdee said. The groups who oppose the projects have a lot of power — because they have voted out former council members who vote to approve projects that they do not like.

“Our city has been held hostage by a group of people who don’t want any development in Redondo Beach,” she said. “[W]e already have a place that is known to developers [as not being] friendliest place for them to go.”

Emdee, herself, voted in favor of the moratorium, despite her concerns. She said she is not worried that a moratorium on mixed-use development will further discourage investors or developers – who are frequently challenged by community members in court during and after approval in Redondo Beach. She said it is the perfect time to slow the approvals so the city can update the General Plan to reflect what the community wants. Then the city can work on attracting more developers and investors to propose projects that the community would agree with.

“People aren’t going to jump to invest in Redondo Beach right away,” she said. “But we will come up with a much friendlier environment (for investors and developers) at the end of it.”

Too pricey to fail

Others say investors will still want to enter the wealthy area, despite a moratorium — they will just have to come up with more creative routes in.

Tony Cordi, a commercial real estate broker and president of the Innate Group in Redondo Beach, said Redondo Beach real estate is appreciating at a faster rate than its neighbors. In Manhattan Beach, the annual appreciation on real estate investment over the past five years is at about 8 percent, compared to almost 12 percent in Redondo Beach over the same period, he said. That extra incentive — while it could be caused and escalated by a constrained supply — is enough to attract investment and development for other land uses while there is a ban on mixed-use projects, he said.

“There are always going to be people who will want to invest, whether it’s office space, residential, retail, anything,” he said. “People will always find ways to make money.”

Ellis Posner, a real estate agent in Redondo Beach and several surrounding neighborhoods, said he disagrees with his neighbors about their opposition to many of the proposed projects, and said he usually pushes for “as much development as possible.” But he also said “demand is unrelenting” in Redondo Beach, and won’t be dampened by a moratorium on mixed-use development.

“Compared to Manhattan Beach and Hermosa Beach, Redondo still has much greater value,” Posner said. “The moratorium won’t dampen the real estate market.”

Marna Smeltzer, president and CEO of the Redondo Beach Chamber of Commerce, said the chamber was not made aware of the proposed moratorium until the Friday before the meeting, and they did not have enough time to discuss it or take a position.

At its September 5 meeting, the Redondo Beach City Council will consider discussing adding commercial zones to the moratorium. At its September 19 public hearing, the City Council can extend the mixed-use moratorium up to two years with a four-fifths vote.