Business & Economy

LA's new incentives for developers to build more affordable housing might be working

A Westlake project for formerly homeless individuals, as depicted in this artist drawing, will make use of new incentives offered by the city of Los Angeles to build affordable housing.
A Westlake project for formerly homeless individuals, as depicted in this artist drawing, will make use of new incentives offered by the city of Los Angeles to build affordable housing.
KTGY Architecture

Listen to story

00:57
Download this story 0.0MB

Los Angeles has been trying for years to entice developers into building housing for low-income residents but it's been a tough sell because these units offer less return than market-rate ones.

Now the city is trying out new, more generous incentives for residential projects built near mass transit — and they're attracting interest.

Nineteen project applications have been submitted to the city since the incentive program began in late September.

Developers who add more low-income housing to their projects will be able to put up more units than current zoning allows and reduce the amount of required parking. To qualify for the incentives, projects have to be within half a mile of public transportation. 

"The thinking behind that was to try to focus new growth near where infrastructure’s being provided, near our major transit stations in the city," said Ken Bernstein, the city's principal planner.

In creating the program, the city is implementing a part of Measure JJJ, a ballot measure approved by voters last November.

The measure, initiated by affordable housing advocates and labor unions, was best-known for requiring developers who need land use changes to build a certain amount of low-income housing —and pay union-level wages to workers. But the measure also created a new set of incentives to encourage the construction of subsidized housing near transit.

Among the applicants for the new incentives is Aedis Real Estate Group, which is building a Westlake development made of repurposed shipping containers for the formerly homeless. Architect Keith Labus of KTGY Architecture + Planning said the new incentives have allowed the Hope on Alvarado project to grow from 64 to 84 units.

"Any time a developer can get more density and spread the cost of the land out over more units, that’s a win-win for them," Labus asid. He expects the apartment project of  one-bedroom and studio units to break ground by early next year. 

Another company among the first to apply for the incentives is LINC Housing Corp., which specializes in affordable housing. It's seeking to demolish an auto shop in South Los Angeles so it can build a 51-unit apartment building with all but the manager's unit set aside for extremely low-income tenants. 

The project is welcomed by housing advocate Joe Donlin of the South L.A.-based Strategic Actions for a Just Economy. The group was part of the ACT-LA coalition that supported the new transit-oriented incentives in Measure JJJ.

Donlin's group is concerned about new development forcing out or pricing out existing renters, but he said the new incentives encourage "development without displacement."

"What's really thoughtful about (Measure) JJJ is it requires deep levels of affordable housing and it also requires any project that demolishes existing housing to replace them," Donlin said. 

City Controller Ron Galperin, meanwhile, is taking a wait-and-see approach regarding the new incentives. 

"It takes time to see what the ultimate impacts are," Galperin said. "I would certainly hope that it will help create more housing and more affordable housing along transit corridors."

Galperin has been critical in the past of the effectiveness of affordable housing incentives.

The city currently has a so-called "density bonus" aimed at getting market-rate developers to build more affordable units. But an audit by Galperin's office found that market-rate developers using the density bonus only contributed 7 percent of the affordable units added between 2008 and 2014. The remainder were built in housing complexes entirely comprised of affordable units. 

Bernstein of the city's planning department said in comparison, the new transit-oriented incentives should be more attractive to developers even though the requirements for affordable housing are about 35 percent higher than what's mandated under the density bonus.  

"Although the developer will have to set aside more of a percentage for affordable housing, the incentives are correspondingly more robust," Bernstein said. 

The new incentive program will last for 10 years but after that, the city council can choose to extend it. 

Aside from using the density bonus and the new incentive program to jumpstart affordable housing construction, the city is looking for new ways to fund subsidized units. In the coming weeks, the City Council is expected to vote on a so-called linkage fee which would require developers to pay into an affordable housing fund.