Position Paper: Inclusionary Zoning
COMMITTEE RECOMMENDATION: Oppose Inclusionary Zoning.
DESCRIPTION: The proposed citywide mandatory Inclusionary Zoning would require the developer of new housing of at least five units to set aside at least 12% of non Section 8 rental units as affordable and at least 20% of for-sale units as affordable. For Section 8 new rental units, at least 10% would be set aside as affordable. Other factors are:
1. Affordable rent would be 30% of targeted income, net of utility allowances.
2. Buyers of inclusionary units would pay 35% of targeted income, net of
insurance, property taxes, homeowner association dues, and utilities.
3. The inclusionary units must have a comparable number of bedrooms as the
market rate units.
4. The set aside would be permanent for both rental and for-sale housing.
5. On resale, the owner must sell the property to a targeted income
6. The price of the home would be limited to original sales price, plus increases
in area income, improvements approved by the city, broker’s fees, and other
typical seller costs.
7. Under certain circumstances, in lieu fees and off site construction would
8. State and city law allow a density bonus for inclusionary housing, with an
additional 15% by right if the project is located next to transit.
9. Town home construction of affordable units would be allowed in single
family detached home developments.
10. Stacked flat construction would be allowed in town home developments.
11. Rental units would be allowed in ownership developments.
12. Affordable units may be smaller and more modest than market rate units, but must meet minimum size standards.
13. Parking requirements would be reduced.
14. Common space, floor area, and height restrictions may be modified.
BACKGROUND: Under the State of California mandated Housing Element, the City of Los Angeles adopted a goal of producing 8,000 units a year between 1998 and 2005. Since only about two-thirds of that has been built, the City is looking for a means to meet the future needs as well as making up for the past substantial deficits. The motion indicates that home ownership and other housing are out of reach for a vast majority of the public including police officers., teachers, nurses, receptionists, and janitors. The City is therefore seeking proposals that would meet the public’s housing needs.
FISCAL EFFECT: There is a variety of ways Inclusionary Zoning would affect the City’s fiscal well being. Although newly constructed apartment buildings and homes would increase the assessed valuation for property taxes, the resulting reduced amount of construction would limit the increase in assessed value. For new buildings that are constructed, there are two possible effects of the inclusionary units. David Paul Rosen, who wrote the Rosen Report on Inclusionary Zoning for the City of Los Angeles, has commented that a developer of such properties can team up with nonprofit corporations and make the affordable units tax exempt. That would deprive the local government agencies of tax revenue needed to provide the public services received by occupants of such housing. If nonprofit developers are not involved on a particular Inclusionary Zoning project, property taxes on those affordable units would be severely reduced, compared to market rate, due to the lower value of those units.
Arguments Supporting Inclusionary Housing:
Arguments Opposing Inclusionary Housing:
Supporters: Association of Community Organizations for Reform Now (ACORN).
Opponents: Apartment Association of Greater Los Angeles, Building Industry Association, Central City Association, Los Angeles Chamber of Commerce, Southland Regional Association of Realtors, and Valley Industry and Commerce Association.