TFAR Policy Passed by Council: What Will it Mean for Downtown?

The process of creating the Policy began soon after the May 1988 adoption of the TFAR Ordinance, which created a procedure for trans­ferring excess allowable development density within the Central Business District Redevelopment Area from one or more “donor” sites to a “re­ceiver” site. It required a Public Ben­efit Payment to be made in connec­tion with transfers governed by the Ordinance. Until the adoption of the TFAR Implementation Policy, how­ever, no criteria existed for determining the type and amount of Public Benefit Payments.

What is TFAR?

Transfer of floor area ratio (“TFAR”) is a widely-used planning technique to allow increased density on one site by transferring unused development rights from another site. The concept of density transfers was included in the Redevelopment Plan for the Central Business District, which was adopted in 1975. 

The purpose of the TFAR Ordi­nance, among other things, is to fa­cilitate those projects transferring FAR which “generate public benefits and which serve a public purpose, such as: providing for housing, open space, historic preservation, cultural and community public facilities, and public transportation improvements.” 

To transfer FAR, the first stop is the CRA. An applicant must file a request to submit an application for a transfer plan, and must identify and describe the donor site, the receiving site, the amount of floor area to be transferred and the proposed condi­tions of approval. 

If the CRA Board approves the request, the applicant and the Agency jointly submit an application to the Planning Commission. The Planning Commission may then approve, con­ditionally approve, or disapprove a transfer plan. In order to approve a proposed TFAR, the Planning Com­mission must make certain findings on the adequacy of the infrastructure, compatibility with other develop­ments and consistency with other City ordinances. The City Council is the final step in the process. All indi­vidual TFAR transactions must be documented in an Owner Participation Agreement (OPA) or a Disposition and Development Agreement (DDA), which require City Council approval. 

After an approved FAR transfer, the receiving site’s FAR may not ex­ceed the maximum FAR and appli­cable height district limit in the Central City Community Plan and the Los Angeles Planning and Zoning Code. Any approved TFAR must be evi­denced by a recorded document, signed by the transferor and trans­feree in a form which clearly sets forth the amount of floor area trans­ferred and restricts the allowable floor area remaining on the transferor site. 

Public Benefit Payments 

The TFAR Ordinance did not include specific guidelines for imple­menting and administering FAR transfers or a formula to calculate the Public Benefit Payments to be as­sessed. These guidelines were incor­porated into the TFAR Implementation Policy. 

Most significantly, the TFAR Implementation Policy specifies the formula for calculating the amount of Public Benefit Payment (“PBP”) and defines a mechanism for the devel­oper to receive various levels of credit against the PBP for providing afford­able housing, childcare facilities or transportation improvements beyond those required to mitigate project impacts. Certain transfers serving a public purpose between parcels held under common ownership may be exempted from the Public Benefit Payment on a case-by-case basis. 

Under the Policy, donor sites are limited to historic properties, housing development sites, public open space sites, certain cultural and public fa­cilities, the Convention Center and other appropriate sites as determined by Council. Density currently held by the Agency is also eligible for transfer. 

Receiver sites must be approved and are restricted to areas with infra­structure adequate to support devel­opment. As part of the OPA or DDA, the applicant is required to make a Public Benefit Payment equal to $35 per square foot of transferred floor area. This formula is fixed until Oc­tober 31, 1992.

The Public Benefit Payment funds are in addition to all other mitigation costs and do not include any price paid by the developer to the owner of the donor site for the density being transferred. The funds are to be used to achieve public goals, such as the creation of affordable housing, the preservation of historic structures, support of a jobs-housing balance, the provision of childcare facilities, traffic improvements and the provi­sion of public open space. A Public Benefit Program Committee, to be composed of representatives from appropriate City departments, will determine the allocation for these funds and is required to spend all Public Benefit dollars within five years. 

The Outlook for TFAR 

Although several projects in­volving transfers of development rights are currently in the pipeline awaiting finalization of an OPA or ODA, today’s economic climate cre­ates additional hurdles for these projects before they can be built. 

With the multitude of fees, exac­tions and procedural requirements imposed upon downtown projects, developers and lenders alike face a significant cost premium for building in downtown. Burbank, Glendale and other outlying areas are now attract­ing major employers and developers that may have otherwise invested in the Central Business District. Thus, the imposition of a $35 per square foot Public Benefit Payment on top of all other costs is very significant. 

Affordable housing, childcare facilities, public open space and transportation improvements are all very worthwhile goals for downtown. The business and development com­munity has demonstrated its willing­ness to bear a fair share of the costs of producing these amenities. The present challenge is for the government to contribute its share and work with the private sector to achieve public benefit goals while recognizing the constraints of current economic con­ditions.