It is common knowledge that in order for a city to legally require the inclusion of affordable housing in a project, it must do so in a manner that demonstrates a legal nexus exists for such a requirement. Recently, the City of Los Angeles adopted a resolution requiring that new multi-family projects in Warner Center provide an unsubsidized 25% of its units for people who work within 3 miles of the project and earn no more than 80% of median income. The legal nexus, or justification, given for this was traffic reduction. Additionally, if the prospective tenant or buyer works for a government agency, is a nurse, teacher or works in other community service fields, the three mile radius does not apply.
Did the city perform a study to support the nexus between affordable housing and traffic reduction? No. The idea was all based on anecdotal evidence and so-called “logic”.
Did the city perform a study to support the amount of the unsubsidized set aside at 25%? No. As one councilmember told me, that was the amount he felt was needed in order to have an impact on traffic in Warner Center; anything less was too little.
The first project which was to be subjected to this new requirement was a development proposed by one of our clients for the swap meet site on Eton Street in Warner Center. Needless to say, we raised many legal challenges to this requirement. Ultimately, the matter was negotiated at City Council and a compromise reached with our client to set aside a much smaller percentage of affordable housing units in his development. In so doing, however, the legal issues were never resolved. These are left for the next Warner Center developer to fight.
The Warner Center case forged new ground as the city attempted to impose affordable housing requirements that lacked the traditional legal nexus. To do so, it needed to manufacture a new and creative approach. However, creativity is not a substitute for the law. The city is ignoring its own inclusionary housing study commissioned recently which demonstrates that an unsubsidized affordable housing set aside requirement even at 10% (for the very low income category) is not economically viable and requires some form of subsidy or incentive. To bypass these factual realities, the city tried to link the need for affordable housing with traffic reduction. But, as indicated, it did so without a single shred of evidence to support it. It became abundantly clear at the various hearings that the city staff was flying by the seat of its pants. As one of the council members said in frustration: “If we want to impose affordable housing let’s do so for the right reasons. Let’s not call it traffic reduction.”
It will be interesting to watch as some of the other projects in the pipeline for Warner Center come forward and have to deal with these issues.
Benjamin M. Reznik is Chairman of the Government, Land Use, Environment & Energy Department at Jeffer, Mangels, Butler & Marmaro LLP. Mr. Reznik’s practice emphasizes real estate development entitlements, zoning and environmental issues, including frequent appearances before city planning commissions, city councils and other governmental boards and agencies on behalf of real estate development firms. For more information, please contact him at 310.201.3572 or BMR@jmbm.com.