Increase in Apartment Densities Allowed by New Law

By HOWARD FINE

Staff Reporter

In a move to help alleviate L.A.’s housing shortage, city council has approved a measure that would increase apartment densities in certain neighborhoods.

But critics claim that the change would create greater congestion, and some developers believe it will be too costly for them.

The new measure, which grants higher “density bonuses” to multifamily housing developers committed to affordable housing units, is designed to spur development of apartments, townhomes and condominiums.

“We have a mandate from the state to build 60,000 housing units between 1998 and 2005, and this is one of the tools that we hope will get us there,” said principal city planner Jane Blumenfeld.

Current law, which has been on the books since the early 1990s, allows a density bonus of 25 percent citywide for projects with affordable housing set-asides. If a developer proposes to build an apartment complex in a zone that allows a maximum of 40 units, and the developer commits to setting aside a certain percentage of those units for below-market rents, the developer can add 10 more units (25 percent) to the project. The advantage is that the project can generate more revenues, offsetting the loss that a developer would realize on below-market-rate units.

Few projects developed

But Blumenfeld said there have been few takers. In the last five years, according to the city’s housing department, only 31 projects with density bonuses made it through the approval process, although several more are in the pipeline.

The reason, according to developers, is that the current law doesn’t do enough to offset the costs of building additional units.

Recognizing these difficulties, city planners decided to propose a higher density bonus of 35 percent in parts of the city. So, for that same 40-unit complex with an affordable housing set-aside,

the number of bonus units would be increased to 14 from 10.

But even before the density bonus ordinance is signed into law, it’s being questioned on two sides: from developers who say it does little to lower the high cost of building in dense urban corridors, and from homeowners groups concerned about the prospect of increased congestion higher densities could bring.

“While density bonuses are a positive idea, with more units, you need more parking, and in some cases, a whole different building approach,” said Avi Brosh, managing partner of Palisades Development Group, which builds multifamily units. “All that costs additional dollars, which are not always made up by the revenues coming in from the additional units.”

Brosh said that taking a 40-unit building up to 50 units might require a new garage level, doubling the cost of parking construction.

Also problematic is the cost of building itself, according to Dan Rosenfeld, a principal with Urban Partners LLC., which has developed multifamily projects in the downtown area.

“The issue is not the zoning, it’s the building codes,” Rosenfeld said. “Once you get above four stories, you can no longer only use wood, which is relatively inexpensive. You must incorporate some form of concrete or steel and that really pushes up the costs.”

Mitch Menzer, an attorney with O’Melveny & Myers LLP and president of the citywide Planning Commission, said the change wouldn’t affect the economics of affordable housing, “But if the decision is made to go ahead, this should make it easier for the developer.”

But unlike the current density bonus, the new proposal would not apply citywide. Rather, it would only apply to sites within 1,500 feet of transit corridors, bus and train stops and adjacent to large job centers like universities or business parks. By steering projects to these areas, planners hope to maximize the chance to get people out of their cars and onto mass transit.

Offsets wanted

Developers like Brosh said they are not sure the additional density bonus will accomplish anything without offsets for parking and building costs.

Density bonuses for affordable housing do work in more suburban areas, said Bill Fulton, editor and publisher of the California Planning & Development Report. But in highly urbanized L.A., the costs of land and construction are so high that the bonuses may be less effective.

“There’s such an overwhelming problem in Los Angeles, you never quite know how much incentives will be required to work,” Fulton said.

What’s more, the plan to increase density bonuses has caused some concern among homeowner groups.

“You’re going to be putting even more people into already crowded areas,” said Sandy Brown, president of the Holmby-Westwood Property Owners Association. “Where are all the extra cars going to go? And with our overcrowded schools, where are all the additional children going to go? And where will they get to play?”

Another issue, Brown said, is height limits. “If you’re adding units, you’re probably going to have to add a floor,” she said.