DOWNTOWN LOS ANGELES — In recent months, some city and business leaders have looked at the blitz of construction in Downtown Los Angeles with concern: While they welcome the thousands of inhabitants the projects will bring, they worry that a flurry of six- and seven-story buildings will mean a lost opportunity to build a dense Downtown.
Now, 14th District City Councilman José Huizar has inserted himself into the discussion, filing a motion last month that would incentivize high-rise building and also put a moratorium on low-rise construction in key areas.
The move has sparked concern that, some say, could lead to a chilling effect on developers. While many observers hope Downtown seizes the opportunity to become denser with a collection of high-rises, they worry about a move that tells property owners what they can do with land they spent millions to buy.
Huizar quietly authored a motion that would have the Department of City Planning expedite incentives that are being written into revisions of the Downtown Community Plan and Downtown Zoning Code. The incentives would smooth out the approval process for construction by streamlining entitlement processing and speeding up site plan reviews, among other aims. Additionally, it would pare down restrictions and requirements by reducing or eliminating parking regulations, density limitations for hotels and more.
Far more concerning to some is the call for an 18-month interim control ordinance that would essentially halt the construction of wood-framed buildings below seven stories in wide swaths of the Central City. It’s an effort to hit the brakes while the Community Plan and Zoning Code are revamped, as well as to push developers toward higher ambitions on some of Downtown’s most valuable land.
Areas affected under the proposed moratorium would include Figueroa and Flower streets between Venice Boulevard and Seventh Street, as well as all parcels along any street between Georgia and Flower streets from Olympic Boulevard to Seventh Street.
Additionally, the prohibition would apply to construction in the vicinity of Pershing Square.
Exceptions to the proposed moratorium include adaptive reuse projects that are transforming historic buildings into housing (see full motion at the bottom of page).
The problem, said Huizar spokesman Rock Coca, is that a number of prime spaces — such as surface parking lots — are becoming low-rise structures. Though that is usually a matter of economics, it means density opportunities are being lost in an urban community that welcomes them.
“If we’re looking at Downtown in terms of its longevity as an economic engine, it’s clear we need to build bigger hotels and residential projects,” said Coca. “The problem we’re having right now is that if low-rises go up, they’re not getting maximum efficiency out of the space. And then they’re around for decades.”
Most experts agree that upping density in Downtown, especially in light of growing public transportation and infrastructure, is the smartest plan for the long term. However, some fear that outlawing certain types of construction, even temporarily, could turn off developers entirely instead of inspiring them.
Carol Schatz, president of business advocacy group the Central City Association, said the motion sparked mixed reactions when it was discussed at a recent CCA meeting.
“Frankly, if I were to assess the general feeling in the room, there was great concern about the use of an ICO and what it might do to the emerging market, because the market is just coming back,” she said. “We need to be shepherds to make sure the vision for L.A. doesn’t compromise that.”
Rising Buildings, Rising Prices
Building wood-framed low-rise structures is far more affordable for developers than going tall. Once a building hits approximately seven stories, it is required to use steel framing; the added costs mean a property doesn’t pencil out financially, in terms of the rents or condo prices it could command, until it reaches approximately 20 stories.
Schatz isn’t the only one with concerns about Huizar’s move. UCLA’s Eric Sussman, who lectures on real estate and accounting, questions whether an ICO is necessary.
“I don’t think a moratorium is the practical answer,” Sussman said. “Besides, you have to have a pretty tremendous crystal ball to make those predictions [about] whether land will run out in Downtown L.A. It’s not like New York or San Francisco, where land for urban development is so limited.”
In fact, concerns about land might play second fiddle to the financial challenge of building a high-rise hotel or apartments. Sussman is among those who point out that securing funds for a high-rise is far more difficult than getting money for a low-slung wooden building.
High-rise construction hasn’t ground to a halt in Downtown. The developer Related is erecting a 19-story apartment building on Bunker Hill and Canadian firm Onni Group is working on a 32-story South Park tower. Then there’s Korean Air’s Wilshire Grand replacement, which aims to be the tallest building in the Western United States.
However, those projects are the exception, not the rule. Sussman suggests that municipal leadership is required if a trend toward the tall is to occur.
“If the private sector can’t meet your goals, the public sector has to step up,” he said.
For decades a city facilitator existed. But things changed with the 2012 dissolution of the Community Redevelopment Agency, says Department of City Planning Director Michael LoGrande. He, like many others, is unsure how the city should use financial incentives to build up the skyline.
“It has more to do with the banks and other institutions than anything else, and the city might need to find a way to push better funding,” LoGrande said. “But we’ve seen a really big growth of rent prices in Downtown, and we want to be very careful not to intervene in the marketplace too much as we pursue a certain vision.”
A number of questions await those who wish to take on the challenge of sculpting the skyline. For instance, Huizar’s motion places an emphasis on building hotels in Downtown to make L.A. a more attractive convention city. Meanwhile, the demand for housing is also skyrocketing. What takes priority?
Even within the topic of housing, there’s a question about whether to pursue rentals or condominiums. Condo prices per square foot in Downtown rose 23% between the second quarters of 2012 and 2013, according to a report by the Mark Company. But only 68 condos are currently under construction versus 4,107 rental units, according to the same study.
“It’s something that we need to take a more surgical approach than a broad brush to,” LoGrande said. “There’s a lot of nuance. We’re not just trying to discourage low-rise and promote high rise — it’s about using the space smartly, and our end goal is to encourage an active, livable community.”
Huizar’s motion will be reviewed by the council’s Planning and Land Use Management committee, and the process will likely include many more meetings with private sector leaders before any formal documents get a legislative vote. The timeframe for that process remains unclear.
With the market powering up, many seem confident that Downtown will soon be ready for a high-rise boom. The question is, how quickly will that day come, and how many buildable plots will still be left?
© Los Angeles Downtown News 2013