LA housing affordability measure forces city, developers to adapt

A week after Los Angeles voters passed a new housing affordability measure, city officials are figuring out how to mesh the citizen's initiative with local law, while developers grapple with what this means for their bottom lines.

Measure JJJ, which failed to receive the backing of top city officials, requires developers with projects requiring land use changes to include a certain amount of below-market homes in their projects and follow certain wage and hiring rules.

But parts of the initiative are left up to the city's discretion. For example, planning officials are working with the City Attorney's Office to decide which projects will be grandfathered under the old planning rules.

"That’s what needs to be sorted out: Is this based on filing date, or whether an application has been accepted or completed by a certain date?" said Ken Bernstein, principal city planner.

The cut-off date chosen by the city will determine whether a project gets built or falters because of added costs that developers say they will have to shoulder under JJJ. 

The measure's supporters, a coalition of labor and housing advocates, contend the construction boom in L.A. is not going to stop, and that the measure at least guarantees affordable homes get built.

L.A. residents agreed, handing the measure nearly two-thirds of the vote. 

But the initiative could still face some bumps ahead. Bernstein said the city is aware of possible litigation from opponents of Measure JJJ.

The Los Angeles Chamber of Commerce, which led the charge against the initiative, said that it was too early to say whether it would mount a legal challenge but did not rule out the possibility.

"At this time, the coalition opposed to JJJ is reviewing all of its options," said Ruben Gonzalez, a senior adviser at the chamber.

At least one developer said fallout from Measure JJJ has already begun. Scott Ouellette, who handles land deals for the Santa Clarita-based Williams Homes, said on Monday he cancelled escrow on a large plot in the San Fernando Valley.

The plan to build 160 town homes on commercial land would’ve required a zone change, which triggers JJJ. That would force his company to pay union-scale wages and require up to 40 percent of for-sale homes be priced at below-market rates.

"We don’t anticipate that we can be profitable under JJJ, and we simply will have to go build elsewhere," Ouellette said.

The initiative will not become law until at least early December. The Los Angeles County Registrar-Recorder still needs to certify the election results, which then need to be finalized by the city council, Bernstein said.