The Los Angeles Business Council (LABC) has released a new study affirming that an overly complex authorization process is hindering Los Angeles from reaching its housing objectives. LABC has proposed several reforms that they deem necessary to fulfill the city’s objectives.
As per the city’s housing plan, Los Angeles must produce 457,000 new housing units by 2029, which is five times more than the 84,000 units constructed from 2010 to 2019.
In order to meet its needs, the city of Los Angeles originally planned to produce an average of 57,000 housing units per year. However, with recent changes to the plan, it is estimated that the city will now need to produce more than 60,000 units annually.
This month, LABC released the results of a study conducted by UCLA and California State University, Northridge which took an in-depth look at the complicated housing development process and how it has failed to meet current housing demands.
The researchers concluded that if policies concerning affordable housing were expanded, such as raising the Site Plan Review threshold by 200 units and incorporating the use of master planning, there would be a considerable increase in housing production.
In a statement, Paul Krekorian, President of LABC, stated that it is evident that we must simplify the authorization process if we are to achieve our housing objectives.
I am delighted to report that the Planning Commission has granted my proposal that Site Plan Review should be waived for affordable housing initiatives, and for a variety of mixed-use and mixed-income projects with a considerable affordable housing aspect, stated Krekorian.
The research examined all multi-family housing projects that were given the go-ahead in Los Angeles between 2010 and November 2022, giving the first thorough and detailed insight into the measurable obstacles during the authorization and building stages, according to the Los Angeles Building and Safety Department.
The research discovered that, on average, it took 3.9 years for projects to receive permission and be constructed, with 1.5 years of this time being spent going through the approval process. It was also noted that discretionary reviews during authorization and permitting added a “considerable amount of unpredictability” and had the most noteworthy effect on growing the entire development time.
The research determined that if all other elements stayed the same, projects that necessitate approval from the City Planning Commission would take six months longer to be given the green light, those needing Site Plan Review would take over three months additional, and Environmental Impact Reports would extend the approval process by 16 months.
The research uncovered blockages in the building process, with an example being that procuring an underground electric connection from the Los Angeles Department of Water and Power increased the total development period by eight months.
Projects that complied with the current zoning regulations were able to get their permits more quickly than usual, taking less than 12 months for approval.
The research demonstrated that if the approval time was cut by a quarter, the number of housing units produced between 2010 and 2022 would have risen by 14%, or 10,054 units, due to the expediting of projects that had already been initiated.
The study suggests that reducing the approval time would encourage the development of new projects, resulting in an extra 18,049 units, which is 25.2% more than the original amount of 71,532 units.
The research discovered that quickening the pace at which the city allowed for new housing and diminishing discretionary authorizations would have hastened the completion of thousands of housing units that were in the process of being built.
The study stated that by introducing more confidence into the development process, it would have stimulated more housing constructions with shorter approval periods.
A research project titled “Tackling the Housing Crisis: Streamlining to Increase Housing Production in Los Angeles” was co-authored by Dr. Edward Kung, an Assistant Professor of Economics at California State University, Northridge and Dr. Stuart Gabriel, a Distinguished Professor of Finance and the head of the UCLA Ziman Center for Real Estate.
