Developers are speaking out against city efforts to curb “mansionization” – the expanding size of homes in single-family residential neighborhoods.

As the Business Journal detailed last week, a recent building boom in major projects, together with the spread of mansionization, has sparked both a backlash from residents and calls for action. As a result, the city of L.A.’s Planning Commission is set to consider at its March 10 meeting a motion from Councilman Paul Koretz that lowers the percentage of square feet a home can take on a lot from 50 percent to 45 percent for small residential lots and eliminates some exemptions toward that calculation, such as garages.

But some in the development community see problems with the proposal.

“The current proposed amendments to the mansionization ordinance will in essence destroy construction on anything other than very large lots,” said Michael Klein, principal at Westside Housing, a West Hollywood contractor-developer that specializes in expanding single-family homes.

In some cases, his firm’s contractors add on rooms to existing homes; in other cases, Westside buys older small homes, tears them down and replaces them with somewhat larger residences.

“What’s proposed now, if a family wants to add on bedrooms to a second floor, the math simply doesn’t allow that to happen,” Klein said. “They’ve cut out way too much of what would be allowable.”

He said this problem would be most acute on lots ranging in size from 5,000 to 7,000 square feet, which he characterized as the bread-and-butter properties of his business.

“This would impact our business dramatically,” he said.

But proponents of the tougher rules say they won’t stymie most projects, just the most egregious ones.

“The new rules will allow houses of up to 2,700 square feet on those smaller lots, enough for any family, even an extended, multigenerational one,” said Dick Platkin, a retired city planner and Beverly Grove homeowner who has written extensively against mansionization in the Citywatch blog.

Employer Tax Hike

This week is the deadline for California employers to pay their unemployment insurance tax. It’s likely to be a painful experience for many employers as the rate has gone up once again, by $21 for each employee.

This is part of the continuing fallout from the Great Recession, when California’s unemployment insurance fund – paid for by a tax on employers – went broke and the state had to borrow nearly $10 billion from the federal unemployment insurance trust fund to keep its fund solvent. The state fund had sunk so deeply in the red because hundreds of thousands of laid-off workers started to collect unemployment benefits. Also, back in 2001, the state increased benefit payouts with no corresponding cuts in eligibility or increases in employer taxes.

As a condition for being allowed to borrow those billions, the federal government required California to increase the tax on employers by $21 a year for each employee until the bailout is repaid, starting with the 2012 tax year. For the 2015 tax year – the tab that’s due this week – the per-employee cost is $147, roughly three times the 2010 level. So, for an employer with 200 employees, the total tax is $29,400, more than $20,000 higher than in 2010.

And there’s more pain to come. The 2016 tax rate jumps to $168 for every employee, which will apply to payments due exactly one year from now. The 2017 rate will climb to $189. Relief is not expected until the 2018 tax year, when the per-employee rate goes back down to $42 as the debt to the federal government is paid off.

Business Backs DWP Hikes

Within hours after the Los Angeles Department of Water and Power board of commissioners approved both electricity and water rate hikes, the Los Angeles Area Chamber of Commerce and Los Angeles Business Council came out in support of the move, calling it necessary to address the utility’s aging infrastructure.

“We have seen too many broken water mains and have experienced too many brownouts and blackouts for years in neighborhoods throughout the city,” said Mary Leslie, chief executive of the Business Council.

Chamber Chief Executive Gary Toebben stressed the need for investment to keep the local economy humming.

“The business community knows that improvements to and maintenance of utility infrastructure is key to the health of our economy,” he said. “Both the water and power proposals from the LADWP are fiscally responsible and accountable to the needs of the utility.”

But Toebben also said the rate increases need to stay at the utility and called for the temporary suspension of the utility’s 8 percent revenue transfer to the city’s general fund.

The Central City Association, a promoter of downtown L.A. business interests, also came out in support of the rate hike.

Staff reporter Howard Fine can be reached at [email protected] or (323) 549-5225, ext. 227.