A growing backlash against development in Los Angeles is alarming the real estate community.

Activists in Hollywood are gathering signatures for an initiative aiming for the November ballot that would place a two-year moratorium on most major real estate projects in the city and force future projects to comply with city planning and zoning codes. They point to their own polling showing 72 percent support for the measure.

What’s more, city of L.A. officials will consider a measure in March placing further restrictions on the size of homes in single-family residential neighborhoods in an effort to curb “mansionization.”

Taken together, these measures, if enacted, would make development in Los Angeles – already difficult and time consuming – much tougher. And that has some developers saying they might be forced to take their projects elsewhere.

“The capital will go to suburban communities where it’s easier to build, while folks like me who specialize in urban infill projects will have to go even farther afield, to places like Oakland,” said Mott Smith, co-founder of L.A. boutique development firm Civic Enterprise.

Smith pointed to one recently completed project, the 17-unit Maltman Bungalows in Silver Lake, saying that if the initiative had been in place, “I would never have been able to build it.”

In the face of such dire warnings, real estate and business groups are mobilizing to counter the development backlash. They have formed a coalition and promise to spend whatever resources necessary to prevent the initiative from passing should it make the ballot. They are also trying to sway city officials to soften some of the most restrictive portions of the anti-mansionization ordinance.

Most of their attention so far is on the Neighborhood Integrity Initiative, which is seen as the bigger threat.

“Everyone knows that L.A. is a tough place to do business,” said Carol Schatz, chief executive of the Central City Association, which primarily represents downtown L.A. property owners and business interests. “The passage of this initiative would send a message to developers and other investors that Los Angeles is an impossible place to do business.”

Negotiations underway

Some observers believe that with funding and organizational prowess from the AIDS Healthcare Foundation, proponents with the Coalition to Preserve Los Angeles will easily collect the roughly 61,500 signatures necessary by the late-April deadline to qualify the initiative. (Foundation executives said they joined the initiative effort as part of their opposition to the Palladium Residences project next door to their headquarters.)

Yet there’s still a chance the initiative might not make it to the November ballot.

Los Angeles Mayor Eric Garcetti has publicly said the initiative would threaten his goal of building 100,000 housing units over the next five years. He said he would meet with proponents to see if a compromise ordinance could be forged that would prompt withdrawal of the proposed measure.

That meeting took place earlier this month, according to Jill Stewart, the outgoing managing editor at newspaper LA Weekly who has been hired to start as the coalition’s campaign manager in February; there’s been no word from either side about any further meetings or compromise proposal.

Spot-zoning focus

In order to be acceptable to initiative proponents, though any compromise proposal would have to have at least some limits on spot zoning, the practice of granting exceptions from the zoning code for individual projects. Such restrictions would still hinder progress on many development projects.

The spot-zoning issue has been front and center with the initiative’s backers because they say the practice, aside from being prone to corruption, is destroying residential neighborhoods. Those who live in areas designed in the city’s general plan to be heavily residential in character suddenly can find there’s a tower proposed next door, they claim.

“A broad coalition of neighborhood groups, environmental groups and others are growing fed up with these private deals for spot zoning instead of following known and public plans,” Stewart said. “This is not a real way to plan and neighborhoods are being fundamentally changed in the process.”

Opponents say the real purpose of the initiative is to turn back the clock and prevent Los Angeles from becoming a denser city. They note that because community plans and the city’s general plan are decades old, almost every major project that comes forward needs at least one zoning variance to be viable. And not just for market-rate developments but also for those that meet federal affordability requirements.

For example, at L.A. nonprofit affordable housing developer Abode Communities, more than half of its projects completed or going through the entitlement process have required zoning variances, according to President Robin Hughes.

“This initiative puts everything in limbo with its moratorium and then extends the entitlement process,” Hughes said. “It could double the time to get a project entitled to as much as three years for the average project.”

On the for-profit side, the major concern is that the proposed measure, with its two-year moratorium, could scare away capital investors essential to financing developments.

“Projects subject to the building moratorium will incur substantial delay, which may sideline them for years or perhaps in perpetuity as lenders and investors leave Los Angeles in droves,” said Jamarah Harris, spokeswoman for Crescent Heights, the development company behind the Palladium Residences project.

History repeating

This is not the first time residents and neighborhood activists fed up with congestion and the proliferation of high-rise towers have fueled a movement to curb development.

Thirty years ago, a group of Westside residents mobilized and convinced the two City Council members representing them, Zev Yaroslavsky and the late Marvin Braude, to craft an initiative limiting the height and scale of high-rises along 85 percent of the city’s commercial corridors. Measure U passed with 69 percent of the vote, a percentage remarkably similar to the polling done by current initiative proponents.

Yaroslavsky, who has since retired from his political career, told the Business Journal last week that while many of the underlying concerns of residents remain the same, there’s one crucial difference.

“Back in the 1980s, the issue was that the zoning code was too liberal, allowing for too many high-rises that encroached on residential neighborhoods,” he said. “What’s different today is the lack of a proper process. Every property is fair game for upzoning. One day people think there’s a three-story height limit and then the next day, a seven-story building goes up. There’s no cohesive plan being explained to people.”

Yaroslavsky said he repeatedly warned city planning and elected officials that such spot upzoning would eventually backfire and lead to a residential revolt.

Mansion curbs

The same concern from residents who complain about neighborhoods being altered by projects out of scale with their surroundings is also driving a debate over mansionization. In 2008, the city passed an ordinance to limit the ability of property owners to build massive homes – or expand existing ones – that fill up more than half of their lots.

As the current real estate boom has gathered steam, neighborhood activists – mainly in more-affluent areas on the city’s western side – claim the ordinance has loopholes that allow mansions to be built.

“The ordinance passed in 2008 simply did not stop mansionization,” said Shelley Wagers, a homeowner in the Beverly Grove neighborhood and a board member of the Beverly Wilshire Homes Association. “The shortcomings are mainly a function of loopholes: bonuses and exemptions that undermine the intent of the ordinance.”

Responding to this and other complaints, Councilman Paul Koretz introduced a motion last year that lowers the percentage of square feet a home can take on a lot. The city Planning Commission is set to consider the motion at its March 10 meeting.

Wagers and other activist homeowners say the measure is a good start, though they believe too many exemptions and loopholes remain for their liking.

But critics and opponents say that what’s on the table will stymie home expansions, forcing many residents who want bigger houses to find them outside the city.