Wed, Jul

The Devil’s in the Details – LA Speculators Can Still Scam the System in the Build a Better LA Initiative


PLATKIN ON PLANNING-In Los Angeles real estate speculators have refined their tool box of scams to either block or contain local neighborhoods when they push back against projects that are out-of-character, out-of-scale, exceed the capacity of local infrastructure and services, or that require a parcel level legislative action by the City Council for investors to pull building permits. 


Scam #1. Label neighborhood opponents NIMBY’s, which stands for Not in my Backyard. The implication is that the only problems with the speculators’ projects are their locations in areas where local luddites are so stuck in their backward ways they just cannot get on board with big, beautiful, trendy projects. 

Scam #2. Layer on zoning and environmental conditions. To overcome local opposition to such discretionary actions as zone changes, zone variances, General Plan Amendments, and their accompanying environmental reviews, City Planning’s staff reports and approval letters add on pages of conditions – mostly boilerplate -- to mollify critics. As most LA neighborhoods have discovered, however, these conditions are not enforced by the Department of Building and Safety. Furthermore, the Department of City Planning does not have any enforcement authority. The result is that few conditions are implemented, and to make even that happen, neighborhoods must launch waves of complaints to Buildings and Safety, City Planning, and Council offices. When that fails, some communities then go to court to make sure that projects comply with the conditions that padded their approval letters. 

Scam #3. Adopt zoning overlay districts. In combination with case-by-case zoning and environmental conditions, LA also has an alphabet soup of overlay zoning districts, such as Specific Plans (SPs), Historical Preservation Overlay Zone Districts (HPOZs), Residential Floor Area Districts (RFA), and Interim Control Ordinances (ICOs). What they and all other overlay districts have in common is their small area. They are also precise enough to deal with localized opposition to a citywide zoning problem though superficial fixes, such as design review. This scam then either keeps existing zoning in place or slightly modifies zoning in a small area, allowing most of Los Angeles to stay open to unrestrained real estate speculation. The squeaky wheels get a squirt of oil, while everything else creeks and groans onward. 

In combination, various zoning overlays now apply to 60 percent of the private parcels in Los Angeles. Since this massive mosaic is nearly impossible to enforce, many projects manage to squeeze through. Plus, all of these conditions and overlays have formal escape hatches that allow developers to circumvent them. When these real estate speculators really want their way, few overlay restrictions ultimately make a difference. 

Scam #4. The zoning ordinance loophole, a refinement of Scam #3. In these cases, overlay districts or even city zoning ordinances are front-loaded with wonderful “Whereas” clauses and appealing zoning provisions. But, the devil is in the details because the small print invariably contains loopholes that completely subvert the ordinance. Imagine a large wooden beam that has been totally hollowed-out by termites. It looks like beam on the outside, but there is nothing on the inside. 

Consider these examples. 

  1. In the case of Beverly Grove, where I live, local residents were able to meet former Councilmember’s Jack Weiss’s arbitrary level of 70 percent local opposition to mansionization, as measured by petitions. Like the Egyptian Pharaoh in the book of Exodus, good ol’ Jack eventually relented, but he still got his way through a loophole. He made sure that the Beverly Grove Interim Control Ordinance he sponsored only prohibited McMansions larger than those that his real estate buddies were building and selling. 
  1. The Weiss loophole strategy evolved into even more effective loopholes when, in 2008, the City Council adopted the Baseline Mansionization Ordinance. It, too, had wonderful “Whereas” clauses and appealing provisions. But, it was riddled with so many loopholes that it allowed houses to legally swell up by 42 percent through a combination of bonuses and exceptions that permitted the very McMansions that this ordinance was supposed to stop.  
  1. The same loophole strategy may now be at work for the amendments to the Baseline and Hillside Mansionization Ordinances that that the City Council directed Department of City Planning to prepare. Despite clear instructions from the City Council to remove any and all exceptions and bonuses that promote mansionization, City Planning’s initial draft keeps the proportional stories bonus, without any convincing rationale. And, even worse, their draft amendments allow unlimited balconies, decks, and breezeways, as long as they have a lattice roof or are uncovered. These architectural features have no size restrictions whatsoever. 

Loopholes in the Build Better LA initiative countering the Neighborhood Integrity Initiative 

But, all of these loopholes are child’s play compared to the loopholes in the Build Better LA counter-initiative to the Neighborhood Integrity Initiative that I and other CityWatch writers have favorably written about in recent weeks. 

For a quick review, the Neighborhood Integrity Initiative will prohibit the City Council from taking any legislative actions, specifically zone changes or General Plan Amendments, to approve mega-projects at the parcel level. It also requires a comprehensive update of LA’s General Plan, and it will only allow future zone changes and General Plan Amendments to apply to large areas, not individual parcels. 

The counter initiative follows the loophole strategy refined in the previous examples. It leads with wonderful Whereas clauses that accurately describe LA’s housing crisis, and it would allow parcel level zone changes and General Plan Amendments for projects that contain certifiable affordable housing and are built by unionized workers. 

So far so good. Who can oppose the construction of affordable housing, and who can oppose hiring construction workers who have the benefits of bargaining units and resulting contracts that ensure fair compensation, safe working conditions, job protection, and other perks, such as health insurance? 

But, before you wax too positive over this counter-initiative, you need to carefully read the counter-initiative’s major loophole because that is where the devil resides. After the introductory pages of background information and ordinance language describing LA housing crisis and the need to use unionized labor, the sneaky loophole, of course, innocuously appears. It is, true to form, buried at the end of the document and undermines every wonderful provision that preceded it. So there will be no confusion on how this loophole works, here is its exact wording: 

“Sec. 11.5.11.(g) The City may, by majority vote of the City Council, adjust the affordable housing percentages set forth in this section upon a showing of substantial evidence that such adjustments are necessary to maximize affordable housing while ensuring a reasonable return on investment for Developers.” 

In other words, when affordable housing requirements conflict with the self-defined bottom line of developers, the developers can make a bee-line for City Hall, undoubtedly with envelopes in their pockets for Councilmembers’ Office Holders Accounts. Given the Councilmembers’ aspirations for second and third terms, as well as to higher offices, legal and quasi-legal campaign contributions should also be expected. 

In effect, the exact pay-to-play practices that have prompted the Neighborhood Integrity Initiative will continue through the Build Better LA Initiative. The power of the City Council to enact parcel levels legislative ordinances will be increased, not reduced, through this loophole. Given the loophole’s vague language (i.e., “reasonable return on investment”), the lack of any precise threshold of profitability, the non-existent standards of financial evidence, the missing formal review process, and the failure to hold public hearings and appeals on developers’ requests for the City Council to waive affordable housing requirements on a project-by-project level, this loophole well deserves Jill Stewart’s alternative title, “The Backroom Bonanza Initiative.” 

In future columns I will examine other loopholes in the Build Better LA/Backroom Bonanza Initiative. In particular, I will look at the vague language expanding the Density Bonus program that I discussed earlier to all areas within a half-mile of a subway station or major bus stop. As with SB 1818, City Planning will again automatically grant all such requests. Evidence requirements, if any, will be determined at a later date in the form of regulations prepared by the new Director of Planning. The normal scrutiny usually given such criteria, when they are prepared as ordinance, will not take place. 

In other words, there will be no public documents, no staff reports, no public hearings, no debates and votes by the City Planning Commission and the City Council, and, naturally, no right of appeal by anyone who objects to the standards and procedures ginned up by City Planning to implement the Initiative. Likewise, the actual waivers will be totally insulated from any type of public review. 

We can assume that the real estate speculators behind this counter-initiative are the same people who will request exemptions from the ordinance’s provisions. They will also be hard at work behind the scenes at City Hall to ensure that City Planning’s waiver requirements are as flimsy and permissive as possible. 

At this point, it is only a question of time until the corruption and fraud that prevails at City Hall, which would get a vital transfusion through the Build Better LA/Backroom Bonanza Initiative, are uncloaked for public view. 


(Dick Platkin is a former LA city planner who reports on local planning issues for City Watch LA. Please send any comments or corrections to [email protected].) Prepped for CityWatch by Linda Abrams. 

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