Housing policy has a huge impact on housing development and housing affordability. No doubt, Los Angeles is suffering from housing policy issues, but there are pieces of legislation that are actually helping to encourage multifamily development in areas where it wouldn’t otherwise be possible. This actually highlights the importance of housing policy that both balances the needs of residents and creates a space for developers to bring much-needed housing supply to the market.
“Policy has a lot of different ways that it can produce housing or take away housing. Policy, whether it is zoning policy, land use policy or an incentive based policy, can really creates a micro areas within housing production, and then investors can come in and bring capital to an area,” Simon Ha, the head of the urban mixed-use practice at architectural firm Steinberg Hart.
The policy helping to bring housing to the market includes 2005’s SB 1818, transit-oriented development and new parking legislation. SB 1818 is a state density bonus bill. “SB1818 made the down zoned areas easier to develop. That was a state policy creating a one-size-fits-all incentive program for the entire state so that we can get affordable housing,” Ha says. “SB 1818 has been very successful, and we have seen a lot of smaller projects come through on the Westside that got extra height and density under SB 1818. That allowed four-or-five story projects to come to markets where previously height limitations made it impossible to do anything other than a strip mall.”
Transit-oriented development, however, is having the biggest impact in terms of bringing units to market. According to a report from the planning department, transit-development in Los Angeles totals 13,000 units, 20% of which are affordable. “At the same time, SB 1818 has produced almost 8,000 units. TOC is producing more units. That is an example of a policy that is pro-housing,” says Ha.
Parking regulations are next policy change that has the potential to have a major impact on multifamily. “Right now, we are talking about recoding Downtown Los Angeles for most of the areas served by transit,” says Ha. “The proposal is to take away the parking requirement and let the market dictate if parking is required. Without the parking requirement, developers would be able to build on smaller parcels and produce more housing and cheaper housing. This is going to change the way that we build in the city.”
Los Angeles housing policy issues date back to the 1970s, when the city down-zoned the market. The shortage of units and current affordability woes are driving new policy. “Policy started to change when we hit a certain density with housing and cars, and it became miserable for people to drive to the places where they needed to go,” says Ha. “Today, urban infill projects have a very difficult time getting through the process, through CEQA, neighborhood community involvement and ultimately getting approved.”