search

The Real Deal Logo

Trending

Lawmakers reach sweeping housing deal with “good cause eviction,” new 421aLawmakers reach sweeping housing deal with “good cause eviction,” new 421aParkmerced's $1.8B debt heads to special servicingParkmerced's $1.8B debt heads to special servicingMacerich faces “imminent” default on $300M Santa Monica Place loanMacerich faces “imminent” default on $300M Santa Monica Place loanMarty Burger’s new venture sputters on takeoffMarty Burger’s new venture sputters on takeoff
Development
Los Angeles

Builder’s remedy moves inland with Hawaiian Gardens project

Small apartment project opens new front in the emerging legal strategy for developers

Weeks after a flurry of so-called builder’s remedy project applications in Santa Monica set off a statewide frenzy, the previously obscure legal provision has now appeared in the small L.A. County city of Hawaiian Gardens.

The project comes from Long Beach-based workforce housing developer Urban Pacific, which wants to build a 13-unit project in Hawaiian Gardens, a small, suburban city located in the southeast corner of L.A. County.

The project application was recently denied by the city based on concerns over parking and the project’s lack of commercial space, Scott Choppin, the founder of Urban Pacific, wrote in a Twitter thread.

But after consulting with the powerhouse law firm Holland & Knight, which has expressed interest in taking on builder’s remedy projects, Urban Pacific filed a new preliminary application on Monday explicitly invoking builder’s remedy. A letter attached to the application was signed by a Holland & Knight attorney based in San Francisco.

“Sending this out as an example for everyone who’s thinking about doing a BR project,” Choppin wrote on the thread. “Holland & Knight took this on, as they saw it as a solid project given that CEQA was already complete and previously approved.”

The project application, which will include three affordable units in line with a 20 percent affordable requirement to invoke the provision, takes on added significance because it represents a potentially major shift in California’s builder’s remedy saga. To date, the known project applications filed under the legal strategy have primarily been in expensive cities — Santa Monica, Redondo Beach and Beverly Hills — where sky-high rents mean that projects can still pencil even with the provision’s 20 percent affordable requirement.

Sign Up for the undefined Newsletter

But a much bigger wave of builder’s remedy projects could be looming, particularly in the San Francisco Bay Area, where cities are likely to emerge as major targets for developers in 2023. As Choppin suggests, the Hawaiian Gardens application could help pave the way for similar, smaller builder’s remedy projects in lower profile cities that are also out of compliance with state-mandated housing plan deadlines.

Hawaiian Gardens, along with dozens of additional Southern California cities, missed an October 2021 deadline to adopt a state-certified housing element, thereby exposing the city to penalties that include builder’s remedy, a provision that allows developers to bypass local zoning requirements.

Hawaiian Gardens, Choppin continued, was “a perfect candidate” for his firm’s particular workforce housing model.

The Holland & Knight letter was addressed to the city’s mayor and City Council. The city manager was not immediately available to comment.

Hawaiian Gardens is the smallest city in Los Angeles County with an area of 1 square mile. Most of the city’s budget comes from a single business, the Gardens Casino.

Read more

Tags
BreakingBuilder’s RemedyLA Housing CrisisWorkforce Housing