In spite of developers’ concerns about the feasibility of Executive Directive 1, a program designed to speed up affordable housing construction, Los Angeles Mayor Karen Bass is looking to make the order permanent.
The L.A. City Planning Department is referring ED1 to two city council committees — the Planning and Land Use Management (PLUM) Committee and the Housing and Homelessness Committee — to set the policy in stone, according to the mayor’s office. If the committees approve the directive, it will be sent to the full city council for a final sign-off.
Bass first issued ED1 over a year ago, ordering the city to trim approval processes for affordable housing projects to 60 days and exempt the projects from lengthy environmental reviews.
Some developers have been hesitant to take advantage of the program, arguing the math on these projects still doesn’t pencil.
“The projects that exist are taking pretty aggressive stances on the rents they’ll achieve,” Jared Goldstein, an executive at Canfield Development in Sherman Oaks, said at a conference in February. “The rents that they’re inputting in their financial models are often the maximum Section 8 rents. That rent is greater than what the unit would lease for, in many cases, even as a market-rate unit with no restrictions.”
There is currently no set expiration date for the ordinance issued in December 2022.
“Projects are being approved in a matter of weeks instead of six to nine months,” Clara Karger, the mayor’s press secretary, told TRD in an email.
More than 14,000 units of affordable housing are proposed using ED1 and the city said it has seen an 85 percent increase in the annual number of affordable housing units proposed, according to the mayor’s office.
But none of those projects have been built and developers have expressed concerns about how many of these projects will materialize.
“When you actually underwrite them with real numbers, then these things don’t pencil,” Adrian Berger, who runs acquisitions at Cypress Equity Investments, said at the same event in February.
This story has been corrected to reflect that L.A. City Planning Department referred ED1 to two city council committees.
The post Despite developer doubts, LA mayor wants to make ED1 permanent appeared first on The Real Deal.
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