Who wants to live next to a millionaire?
Playa Capital Co. is betting that plenty of ordinary Joes and Janes do and that more than a few millionaires are willing to live next to subsidized housing.
It's a gamble that's far from a sure thing.
The first residential phase of the company's 1,087-acre Playa Vista project got underway last month, with million dollar-plus homes going up in the same neighborhood as $500-a-month subsidized apartments.
Will it work? It depends on who you ask.
Renowned architect Jon Jerde, chairman The Jerde Partnership International Inc., is among the skeptical.
"Low-end people don't want high-end people in their midst and high-end people don't want low-end people in their midst unless they're working for them," said Jerde, designer of the Universal CityWalk and several other large-scale retail and mixed-use projects. "That's when the mix doesn't work so good. They want their own enclave."
Jerde said creating distinct villages that group people of like economic situations is a smarter way to plan such a development. That way, he said, the residents take pride in their own communities and develop a sense of belonging to a neighborhood that is different from the surrounding communities.
That has certainly been the case with most of Los Angeles throughout its history. Despite its ethnic and economic diversity, L.A. is not known as a place where rich, poor and in-betweens generally mingle much. Many wealthy residents live in guard-gated enclaves, others behind walls or ivy-covered fences. Even those living in homes out in the open have been known to fight ferociously to prevent lower-class residents from encroaching on their turf. (The creation of West Hills, North Hills and other such communities in the San Fernando Valley may be the clearest manifestations of such sentiment.)
Nonetheless, Playa Capital officials remain optimistic.
"I think there's an elitist sector of any society that wants to go behind the gates," conceded Kenneth Agid, vice president of marketing at Playa Capital. "I think there's a greater sector that looks for a mix of social types."
And there will undoubtedly be that at Playa Vista.
Detached homes, condominiums and townhouses being built will range from $200,000 to $1.5 million. And interspersed among the for-sale homes will be rental units ranging from $500 per month to $1,200 per month.
"I wish them a lot of luck," said Murray Weisberg of Coldwell Banker's Brentwood office. "I think it'll be impossible."
Weisberg asserts that Playa Capital is in for a rude awakening because people of vastly different incomes have incompatible lifestyles and need to be separated by physical buffers or distance. Housing developments at Playa Vista will be centered around parks and open spaces that encourage interaction.
"You have one who wants to work on a car in the front yard and you have one who doesn't want to live like that," Weisberg said. "The psychographics of the people are entirely different."
Playa Vista will avoid some of that built-in conflict by instituting strict by-laws spelling out what residents can and can't do.
Sally Anne Sheridan, former mayor of Irvine and now a real estate agent with Strada Properties in Newport Beach, concurred that strict covenants, conditions and restrictions are crucial to providing a perception of homogeneity.
For instance, Irvine's various village homeowner associations don't allow residents to repair vehicles on the front lawn and require residents to maintain their properties. If they don't keep up their property, Sheridan said, the homeowners association can kick them out or fine them.
"It works because of the type of people who live there," Sheridan said. "People don't look different. They just pay differently."
William Fain, a partner in architectural firm Johnson Fain Partners, said that Los Angeles' housing crunch and modern social mores make the time ripe for Playa Vista's residential experiment.
"Today, it's gotten much more sophisticated and people's incomes vary and there's a great need among the middle class, especially on the Westside, for affordable housing," he said. "I think the market's so strong out there that affordable housing has a different meaning. You're going to find that the market is going to cover up a lot of prejudices."
The key, according to Fain, is to make sure the affordable housing units are of equal size and quality to the more-expensive models. That way, residents living in low-rent units don't have the stigma of living in public housing developments.
Of course, wealthy residents may not be terribly pleased if their $1.5 million home is virtually indistinguishable from units that sold for a small fraction of that amount.
To minimize such jolts, Playa Capital has devised a plan to include every income level between the high and low ends.
In Playa Capital's case, that means $1.5 million homes will be interspersed with $800,000, $500,000 and $200,000 homes, in addition to market-rate rental units and subsidized units.
Playa Capital's Agid, who participated in building the city of Irvine as marketing director for The Irvine Co., said he has traveled the country looking at pros and cons of the mixed-income scenario. He said that investigation revealed that low-income housing is not an automatic obstacle to high-end housing.
"The biggest problem arose when (affordable housing) was juxtaposed with all high-end units. Neither group enjoyed the relationship," Agid said. "The high-income residents would be patronizing toward the families in affordable housing, which really tweaked their noses."
The lesson learned was that a developer can create peaceful coexistence by providing a wide range of housing choices, as opposed to offering only extremes. "If you have a gap, it creates a schism and creates a conflict," Agid said.
By the end of the projected build-out of the site, in 2011, Playa Capital expects to have 19 different housing products among the 13,000 residences. That includes 1,950 affordable units and 2,600 market-rate rental units, Agid said. The affordable units will be set aside for families with annual incomes ranging from roughly $24,000 to $60,000.
Using one of the first housing projects that will be available at Playa Vista as an example of the "socio-economic continuum" the company is trying to establish, Agid said, North Crescent Park will feature condominiums costing from $200,000 to $750,000 and an apartment building with an affordable component.
"We're proud of our rental component and our affordable component and we'll put it right up front. The exterior appearance and scale have to be of equal importance regardless of the cost," he said. "You want them to feel of equal weight in the texture of the community."
And to help ease any tensions, Playa Capital is preparing such unifying amenities as a community intranet, an internal public transportation system and outreach programs designed to connect people of all kinds and encourage their interaction.
While it's still too early to tell how well the concept will actually sell, it is at least eliciting curiousity among Angelenos.
Agid reported that Playa Capital has so far received 12,000 inquiries about the community, with most interest coming from existing West L.A. homeowners interested in a home costing between $400,000 and $450,000.
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