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LOS ANGELES-A local development company intends to sue the city for rejecting its plan to build a 300-unit apartment complex Downtown, claiming that its project should be exempt from an ordinance that requires new multifamily complexes to include set-asides for low-income renters.

The City Council last week unanimously rejected LA-based G.H. Palmer Associates’ plans to build the Visconti at Third and Bixel streets, noting that the developer had not reserved at least 15% of the units for low-income renters. The company wants to instead charge market rate for all of the units, and has refused to pay a fee to a special low-income housing trust that would provide it with an exemption to the low-income ordinance.

The 10-year-old ordinance was passed at a time when more than 6 million sf of commercial space had been proposed for the western fringe of Downtown, sparking fears that most of the area’s old but affordable housing units would be demolished. Though none of the offices were ever built because recession soon set in, the ordinance was never removed from the city’s books.

The Visconti should be exempt from the ordinance, G.H. Palmer EVP Peter Novak says, because the project would not involve the demolition of any existing housing units. Instead, it would be built on the site of an abandoned warehouse.

Novak says the builder will file suit within days, seeking to overturn the City Council’s decision. “We’re not going to roll over and play dead,” he says.

In an ironic bit of timing, state officials said Monday that they have awarded $150,000 in grants to Los Angeles so city leaders can figure out ways to create more housing Downtown.

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