Los Angeles Votes in Favor of Affordable Housing and Wage Measure | Practical Law

Los Angeles Votes in Favor of Affordable Housing and Wage Measure | Practical Law

Los Angeles voters recently approved ballot Measure JJJ, also known as the Build Better LA Initiative. This measure creates affordable housing requirements and establishes wage and hiring requirements for projects seeking beneficial zoning approvals.

Los Angeles Votes in Favor of Affordable Housing and Wage Measure

Practical Law Legal Update w-004-7929 (Approx. 5 pages)

Los Angeles Votes in Favor of Affordable Housing and Wage Measure

by Practical Law Real Estate
Published on 12 Dec 2016 • California
Los Angeles voters recently approved ballot Measure JJJ, also known as the Build Better LA Initiative. This measure creates affordable housing requirements and establishes wage and hiring requirements for projects seeking beneficial zoning approvals.
Ballot initiative known as Measure JJJ (Build Better LA Initiative) was approved by voters on November 9, 2016. It requires a certain percentage of units in residential projects in the City of Los Angeles (City) to be available as affordable housing, establishes wage and hiring rules, and provides incentives to developers.

Background

In response to a housing crisis, a surge in homelessness, and an outdated zoning plan, Los Angeles voters approved Measure JJJ.
The ordinance amends several sections of the Los Angeles Municipal Code and affects development projects with 10 or more units that require:
  • A general plan amendment.
  • Certain zoning or height district change, such as:
    • increases in floor area, height, or density; and
    • residential use in a non-residential zone.

Affordable Housing Requirements

The ordinance requires that the affected development projects provide a certain percentage of on-site affordable units or satisfy an off-site options in lieu of providing on-site affordable housing. The number of affordable housing units that are required depends on:
  • Whether the project is a for-rent or for-sale project.
  • The level of affordability of the unit (affordable to moderate, low, very low, or extremely low income households).
  • The percentage of density bonus increase.
  • Whether the developer is seeking authority for a residential use in a previously non-residential zone.

Rental Units

Rental projects of 10 or more units are now required to provide the following affordable housing units:
  • For a density increase, not less than the percentage of affordable units corresponding to the level of density increase required by California Government Code Section 65915(f), inclusive of replacement units.
  • For a general plan amendment, zone change, or height district change which results in a residential density increase of more than 35%, then not less than 5% of the affordable units must be available to extremely low income households, and either:
    • 6% for very low income households; or
    • 15% for low income households.
  • For a residential use where it was not previously allowed, not less than 5% of the affordable units must be available to extremely low income households, and either:
    • 11% for very low income households; or
    • 20% for low income households.

For-Sale Units

For-sale residential projects of 10 or more units are now required to provide the following affordable housing units:
  • For a density increase, not less than the percentage of affordable units corresponding to the level of density increase required by California Government Code Section 65915(f), inclusive of replacement units
  • For a general plan amendment, zone change, or height district change which results in a residential density increase of more than 35%, or a residential use where not previously allowed, then:
    • not less than 11% of the affordable units must be available to extremely low income households;
    • 20% are available to low income households; or
    • 40% are available to moderate income households.

Alternative Compliance Options

There are several alternative options for compliance with the new affordable housing requirements, including:
  • Off-site construction of affordable units.
  • Off-site acquisition of at-risk affordable units and converting ownership to a non-profit entity.
  • Payment of an in-lieu fee to the City for the construction of affordable units.

Transit Oriented Communities Incentives

Zoning incentives are also available for transit-oriented projects constructed within a half-mile radius of major transit stops. Qualifying projects may receive:

Hiring, Wage, and Licensing Requirements

The projects must also now meet certain hiring, wage, and licensing requirements.
Contractors working on the applicable projects must:
  • Be licensed and certified under City and state laws.
  • Hire workers that are licensed by the state and the City.
  • Make a good faith effort to ensure that at least 30% of workforce hours are performed by permanent residents of the City.
  • Make a good faith effort to ensure that at least 10% of workers live in a primary residence within a five-mile radius of the project.
  • Pay workers the prevailing wage in the project area under Section 1770 of the California Labor Code.
  • Hire 60% of their workforce from an apprenticeship training program or from workers who have on-the-job experience.

Practical Implications

The voters' approval of Measure JJJ demonstrates the need for the development of affordable housing in the City. However, the new rules may increase the costs of construction and reduce profits, ultimately decreasing the development of affordable housing and multifamily housing in general.