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Friday, Aug 19, 2022

Developers Set Low-Cost Housing

With a historic shortage of housing in Los Angeles, an unexpected set of developers is now working to meet the need.

In recent weeks, plans were filed with the city for hundreds of affordable housing units being developed by Relevant Group and Related Cos.

Relevant Group, known for building high-end hotels in Hollywood, is planning a 150-unit apartment building at 1316-1328 West Linwood Ave. in Westlake. Of the 150 units, 142 will be low-income housing, and eight will be very low-income housing. The company is requesting a density bonus to reduce open space requirements and to increase the height by 34 feet.

Earlier this year Relevant secured a $63 million loan from Calmwater Capital to construct the 190-room Thompson Hotel at 1541 Wilcox Ave. Calmwater Capital also gave Relevant Group a $34.1 million loan for the Dream Hollywood Hotel at 6417 Selma Ave. in 2016. The 178-room hotel opened in 2017.

The Relevant Group is also the developer behind the Tommie Hotel, a 212-room lifestyle hotel expected to open in 2020. Downtown, it’s redeveloping Hotel Barclay which was built in 1896. It is also developing the Morrison Hotel, which will open in 2020, in a building that is more than a century old.

Related Cos. — known as the developer behind the Frank Gehry-designed mixed-use complex The Grand, located across the street from the Broad Museum and Walt Disney Concert Hall — is working with the Housing Authority of the City of Los Angeles on an affordable-housing project at the Rose Hill Courts at 4446 E. Florizel St. in Montecito Heights. The housing authority filed plans to demolish a 100-unit affordable housing complex there to make way for a new project with 185 affordable units.

Neither Related Cos. nor the Housing Authority responded to requests for comment.

But the two developments will only be a drop in the bucket in a city where the outstanding need for housing units is approaching 1 million, according to Paul Habibi, lecturer of finance and real estate at UCLA’s Anderson School of Management.

“There is an acute shortage of affordable housing in the region,” Habibi said. “That’s been around for several years. We have seen some policy initiatives aimed at alleviating that shortage, but we’re still at a deficit.”

The city is offering tax incentives to spur affordable housing development.

Projects that are 100% affordable housing are usually built by specialized developers using a 9% low-income housing tax credit. Some developers work in 20% affordable units, which earns them a 4% tax credit. Other housing projects with a handful of affordable units are able to take advantage of density bonuses or city mandates, Habibi said.

Still, even with those incentives available, the need for affordable housing “will not likely be filled anytime soon,” he said.

Hannah Madans Welk
Hannah Madans Welk
Hannah Madans covers real estate for the Los Angeles Business Journal. A USC grad, Madans has done work with publications including The Orange County Register, The Real Deal and doityourself.com.

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