What Housing’s CEQA Victory Means for Developers

Housing advocates sealed a victory this week with some big changes to the California Environmental Quality Act.

The statute, which was made law in 1970 by then-governor Ronald Reagan, has long been the source of nightmares for California developers, who view it as an easy path for lawsuits that cost time and money and push some projects out of the range of feasibility.

And while the rollback that comes in the form of two laws passed to adjust CEQA last week certainly helps mostly housing, it doesn’t apply broadly across markets or property types.

Here’s the fine print on Assembly Bill 130 and Senate Bill 131: The legislation applies to projects in U.S. Census Bureau-designated urban areas–essentially infill projects–caps at 85 feet high and can’t be used on projects of more than 20 acres. That goes down to five acres in the case of Builder’s Remedy projects.

The new laws will cut red tape for many multifamily and single-family housing developments. But it’s more of the same for many projects outside of that.

Some view it as a positive that any changes favoring developers were made to a statute that many thought would continue untouched in its long-established status as a third rail of California politics.

The limited changes to CEQA were enough, however, to raise the question of whether this marks the first crack in a broader dismantling–or perhaps an evolution, depending on one’s perspective–of the law.

Measure ULA proceeds offer affordable housing windfall

Affordable housing and homelessness program advocates received another win in the city of Los Angeles.

Real estate and other critics may have rolled their eyes with the latest news on the 2022 ballot measure approving a tax voters were told could raise anywhere from $600 million to $1.1 billion annually.

The City Council approved a $424.8 million expenditure plan — the largest amount to date — for the current fiscal year’s Measure United to House L.A. property tax funds.

The expense plan total is up about 40 percent from the previous fiscal year.

Measure ULA, often referred to as the mansion tax, applies a two-tiered assessment on all real estate transactions in the city starting with 4 percent on trades of at least $5.3 million. Deals of $10.6 million and up are taxed 5.5 percent.

The funds will be funneled to several programs. The largest amount, $87.9 million, is earmarked for multifamily affordable housing. Other program categories set to receive money include eviction defense, tenant education, tenant protections from harassment, acquisition and rehabilitation projects, new construction and programs to support home ownership.

Josh Flagg walks back hacking allegations against ex-Elliman boss

Former Douglas Elliman western region CEO Stephen Kotler was erased as a defendant in Josh Flagg’s hacking lawsuit.

Kotler and Compass’ Flagg offered a joint statement on Wednesday to announce the latest development in the lawsuit, offering “Mr. Flagg has confirmed that Mr. Kotler is not the party responsible for this conduct.”

The statement then made clear the latest development occurred with “no money changing hands.”

Last year, Flagg filed a lawsuit in Los Angeles Superior Court, alleging unidentified individuals accessed “private and confidential” information that was then shared with others. At the time, the defendants were referred to as “Does 1-10.” Kotler was added as a defendant in the case this year.

Flagg said in a separate statement he intends to continue with his search for the alleged hacker.

Turnaround talk for Mandarin Oriental Residences, The Harland

Centurion’s looking for a comeback story, and it’s bullish on L.A.’s condo market to drive a feel-good narrative.

Two struggling properties, now under the condo turnaround specialist’s ownership, have been re-listed with a new strategy and pricing.

The Harland in West Hollywood has gone from for-sale condos to rentals during the pandemic. It’s now flipped back to for-sale units that start at $1.7 million for one- and two-bedrooms.

Over in Beverly Hills, the Mandarin Oriental Residences trimmed prices by about 20 percent as it looks to woo buyers in search of their second, third or maybe even fourth home away from home. The new prices range from $2.6 million for a one-bedroom to $7.3 million for a three-bedroom.

Lots of developers suffer from what Centurion managing partner John Tashjian called “redevelopment exuberance,” reaching for mismatches on comparable properties to help price their own. The original developer may have also sought to develop every square foot to provide the large units buyers come to expect in L.A. But the law of diminishing returns, as Tashjian put it, exists.

“On the West Coast, when we see challenged condo deals, units are very large and price per square foot is no longer relevant,” Tashjian said. “It’s really whole dollar pricing.”

Forever 21’s former Lincoln Heights headquarters will be redeveloped into an industrial complex, called Mission Crossing, under its new owners.

Blackstone and Worthe Real Estate Group sold the fast-fashion retailer’s former headquarters at 3880 North Mission Road to Related Companies and Newland Capital Group for $120 million.

That’s a deal compared to the $165.7 million Blackstone and Worthe bought the 39-acre industrial and office complex for in 2018.

Forever 21 is in the process of winding down its business after filing for bankruptcy in March for its second go at Chapter 11 as it struggled to keep pace with competitors such as Shein and Temu.

Nordstrom to head out of Santa Monica Place

Nordstrom is reportedly packing up its bags at Santa Monica Place in what some might say is the other shoe dropping for the open-air retail center.

The planned departure in late August will leave about 122,000 square feet empty. That piles on to what the Santa Monica Daily Press reported is a vacancy at Santa Monica Place hovering around nearly 70 percent.

The mall went into receivership after Macerich defaulted on its $300 million loan last year. Receiver Trigild named Prism Places as the new property manager in April, tasked with revitalizing the property.

Trousdale nabs new 2025 record

Trousdale Estates, the Beverly Hills neighborhood known for its mid-century modern designs, notched its priciest trade this year with the sale of a tennis court estate.

The sale of 1120 Wallace Ridge for $32.3 million is the neighborhood’s most expensive closing so far this year. The mystery buyer walks away with a steal, considering the home first hit the market for $48 million in October.

The home is an example of the higher-end work done by prominent architect Edward Fickett, who is known as the “king of the tennis court estates.” Most of Fickett’s work is in tract housing, with the architect being credited for his role in the development of Sherman Oaks, Reseda and Granada Estates.