Civic Enterprises' Small-Lot, Bungalow Infill Housing Sells

As a developer of infill housing, is there still a vibrant market for housing in Southern California. If so, where are the opportunities?

It's a huge mistake to think that there's only one development market, even though people seem to talk this way all the time. This thinking fueled the recent boom and bust in loft development. The perception was that people wanted lofts, so tons of lofts got built, and the market got saturated.

Similarly, this thinking blinds people to very real opportunities in underserved markets. The two most interesting underserved markets we see are families who want a more urban lifestyle and moderate income households, who still can't afford the majority of what's out there, even as prices fall.

A few months ago, your firm completed the Maltman Bungalows project. What housing market did that project serve? What attracted buyers?

The project was as an experiment for us and the city. It was one of the first Small Lot Ordinance projects to go through in L.A. And it used the ordinance in a way that hadn't been anticipated when it was written, to preserve historic bungalow rentals as true single family homes.

The market we served was creative singles and couples who were starving for something different. They loved the price, the neighborhood, the layout of the historic court, and the old-L.A. character of the units. Most interestingly to us, many chose the bungalows precisely because they are so compact-one and two bedrooms in about 700 square feet. It's the same impulse for efficiency, sustainability, and design that drives the market for Mini Coopers and Smart Cars.

We came on the market at probably the worst time in recent history-the end of October, right as the housing crash was beginning. But our sales have out-performed everybody, and we've sold all but our last unit, all for asking or above.

The lesson is not to believe the simple story in the news. There are lots of opportunities if you know where to look.

How will Civic Enterprises' success be replicated? Is it possible that land prices and acquisition costs for similar projects escalated because of Maltman? Is that the result for many small, infill project developers?

There are bigger forces behind land prices than our one project. One big force for the last three to five years has been condo development. Every property-whether industrial, commercial or residential-was priced for condo development. This made a lot of good non-condo projects hard to pencil over the past several years.

In that respect, just as condos were the driving force increasing land costs, I'm hopeful that the decline in the condo market will push land prices back down to workable levels for apartments, industrial, and other good uses that have been waiting on the sidelines for too long.

What led the L.A. Conservancy to award the Maltman Bungalows one of their 2008 Preservation Awards?

You'd have to ask them, but I suspect they gave us an award because we demonstrated a way to preserve at least some bungalow courts-one of the more endangered architectural species in L.A.-while turning a profit.

The late, great Ira Yellin used to talk about the importance of "doing well" and "doing good" at the same time. By making money while preserving a piece of history, you make it a lot more likely that other people will see preservation as an opportunity rather than something to be avoided.

You've long been an advocate for parking policy reform in Los Angeles. How does parking fit into what you did with the Maltman Bungalows, and what you hope to do when you scale up this model?

The parking code, much more than other aspects of zoning or even the building code, is the single thing that most hurts the aesthetics of our city, hurts walkability, and drives up the cost of housing to the point where no normal person can afford to pay replacement cost for a new unit. I'd estimate that our outdated parking rules add about $100,000 to the cost of a typical unit in L.A. and are devastating to our streetscape.

The Maltman Bungalows have one space per unit and one tiny little garage, so small that only a Smart Car or a motorcycle could be parked in there. They're for storage, studios, or office space. What we've learned is that people will still buy a house even if it doesn't have covered parking, if it has all the other things that they love-the intimacy, the feeling of safety and the connections to the neighborhood. Those things are much more important than parking spaces. I'm glad to see the city is starting to rethink its parking codes.

When you say "rethinking" you appear to assume that it will result in a more positive outcome. What are the possible downsides of rethinking the city of L.A.'s parking ordinance?

The main downside is the possibility of a backlash from people who prefer the status quo. It's also possible you could get your policies wrong, so you have to learn from the successes and failures of other places that have implemented new approaches to regulation.

Returning to Silver Lake where the Maltman Bungalows were built, does that neighborhood still hold promising opportunities for investment in housing?

The biggest challenge to the commercial areas of Silver Lake is parking. One problem is that there is not enough street parking to support the level of activity that the businesses would like to see. In fact, DOT seems to paint another parking space red nearly every day, actually taking parking away from the area.

The second parking problem is when new businesses want to open up and revitalize dead storefronts, if it's not a Taco Bell or a minimall or some other proven suburban form, they're stuck with a two-year discretionary process. So the mini-malls, the Taco Bells, and the auto shops have the advantage as it stands now.

I know that Councilman Garcetti and the neighborhood council are looking at addressing those issues.

Of the city's new land use and planning policies, which have most benefited small, infill development firms like Civic Enterprise?

Under Mayor Villaraigosa and Gail Goldberg, we've seen an enormous shift in the way we do planning in this city. When they say that they're doing "real planning," they're actually starting to mean it. The small-lot subdivision ordinance was the smartest thing that the city has done in years. It took away numerous barriers for the production of lower-cost housing and higher-quality housing in the city.

The adaptive reuse ordinance, even before the current regime came in, was extremely positive. It said that we're not going to let the tail of our jumble of codes and policies wag the dog of the urban form we get. Instead, we're going to start with the assumption that we are going to save our Downtown buildings, we are going to save our Hollywood buildings, and we're going to make everything else fall in line to favor that vision.

Those are the two most important changes that we've seen in recent years.

Could you comment on the 12-to-2 reform that the L.A. City Planning Department is now advancing? How significant would such a reform be for small-scale, infill developers?

It's life or death for small-scaled projects. When Westside Urban Forum and UCLA co-sponsored Prop X about a year-and-a-half ago, we challenged teams of young architects, developers, and planners to come up with a simple change to the city's approach to land use management that would improve the beauty of our city and lower the cost of housing.

The winning team's proposal is what became 12-to-2.

After months and months of research and meeting with city officials, developers, and community members, they discovered that, shockingly, we have a one-size-fits-all approval process that was really designed for 1950s subdivisions. If you're not a 1950s subdivision or an off-the-shelf project (like a "four-over-one" condo building or McMansion), you have a hell of a time getting through the process.

The problem is that we have 12 agencies in L.A. that regulate projects, and only one of them cares what our neighborhood plans say. Everyone else-Bureau of Engineering, DOT, DWP, etc.-operates in a silo, with their own plans and policies, completely independent of the Planning Department. The result is that any project that isn\'t off-the-shelf or extremely large and well-capitalized dies a death of a thousand cuts.

Other cities have figured this out and put their planning and/or building departments in the lead for project review, placing the other "specialist" departments in support roles for carrying out the city's vision. That's what 12-to-2 seeks to do in L.A.-keep everyone involved, but make it clear that each neighborhood should have only document guiding its development, and every department in the city needs to be playing off that same sheet of music.

If the Mayor, Eric Garcetti, and Gail Goldberg succeed with 12-to-2, which will put Planning and Building and Safety in the lead, we will move from a process that unintentionally encourages outsized, out-of-place developments to one that favors projects that comport with plans, fit in the neighborhoods, and are economically feasible.

What has been the reaction of other city agencies and departments to a potential reduction of sign-offs as a result of 12-2?

It has been surprisingly positive, because all the departments pay the price for our current dysfunction. When a project is delayed, when it changes radically from what the community was expecting, and when its public improvement components come out looking terrible, there's plenty of blame to go around. And none of the specialist departments benefit from having to fight for their priorities with every single decision on every single project.

Most of the GMs seem to realize that their departments will be more successful if we move past this culture of deferral and passing the buck to one where someone is in charge of saying, "This is the vision for this particular neighborhood," a job clearly suited for the Planning Department. Building and Safety, of course, must have a central role in plan check, building permits, and inspections.

The best model I can think of, again, is what happened under the Adaptive Reuse Ordinance. The specialist departments came together under a single vision-save the old buildings-and were asked to bang their heads together until they found a way to save the old buildings while upholding their own standards and regulations. It wasn't always smooth sailing, but the results speak for themselves.

What problems can arise in L.A.'s Site Review Process if it is streamlined into 12-to-2 sign-offs?

To be completely fair, the number one challenge is that 12-to-2 becomes a mirror for Planning. Somebody once said about the Irish that they don't know what they want, but they'll fight to the death to get it. I'm afraid that that might be the situation that Planning finds itself in. If it doesn't know what it wants for the neighborhoods where 12-to-2 is implemented, it could be very challenging. Right now, there are so many stops on the way and such a diffuse accountability that it's very easy not to have a vision.

Are you suggesting that there ought to be a central planning vision and authority for all of the entire city of Los Angeles' 470 square miles?

Absolutely not. There should be many visions, but right now, we do not have the administrative mechanism in the city to implement any vision at all, let alone many of them. Today, the specialist departments review projects from a highly prescriptive perspective instead relying on performance standards to find common ground with others. As a result, when the intent of a local plan conflicts with a specialist department's saying "My way or the highway," "my way" usually wins. And when that happens, planning becomes completely meaningless.

If we succeed with 12-to-2, there will finally be a mechanism by which the particular plans for particular neighborhoods can provide the same sort of guidance for interdepartmental collaboration that Adaptive Reuse did.

There's a lively debate going on in the region about density, the densification of corridors, and the potential threat to the quality of life that some feel density represents. What's your take on the nature of this increasingly lively conversation?

There are legitimate issues behind the complaints we're hearing. They're usually framed wrong in the media, but some are legitimate.

The biggest problem is that there's no trust in our land-use process-period-and our process deserves all the mistrust it gets. Communities don't see what they wrote in their plans getting built on the ground. Developers who try to follow the plan get killed by delays and discretionary reviews. And no politician can make a reliable promise to deliver land-use outcome to a community other than stopping a project. This is a disaster and has to be fixed.

I take issue, however, with the focus so many leaders and media outlets have placed on "density" as the problem. I honestly don't think people have a great idea of what they mean when they say "density." If you walk down Sycamore Avenue in Hancock Park, you see all the beautiful four-plexes and six-plexes and the tree-lined streets, and you think, "This is pretty nice." Yet that's an extremely dense street. On the other hand, when you walk in front of a massive parking lot or block-long concrete bunker of a building on Lincoln Blvd., you think, "I have to fight this crap."

Density, per se, isn't the problem here. It's really a question of scale, context, and appropriateness. When we have a land-use process that is transparent and rewards neighborhood appropriateness, we'll see a very different kind of discussion going on.

It's been a decade since you were the editor of The Planning Report. Hopefully, the quality of public discussion regarding urban planning issues has improved. Are the debates any more substantive today or is the planning rhetoric unchanged?

There are people who want to keep fighting the "growth-no growth" battles of ten years ago, but, unfortunately for them, the rest of us have moved on. It's really a generational thing. If you look at websites like The Planning Report, Planetizen, or CurbedLA, you discover that young adults want to be urban, want to be connected, and have a much more sophisticated idea about what it means to live in a city than our older leaders do.

The younger generation is too smart for the "growth-versus-no-growth" debate and the "density-versus-no-density" debate. What people crave is stimulating, authentic, urban environments, and a city that is navigable and acceptable.

In reality, what is the nexus in Los Angeles between land use and transit planning? Is there evidence that local planners, officials, and neighborhood councils have broken down the two silos?

No, because a city that has an effective link between transportation and land use is one where sensible development around transit is allowed. Right now, because of the zoning codes and parking codes and the way we manage development, the only densification and intensification that we see around transit stations happens in mega-projects that have their own specific plans and huge packages of variances.

Everybody I've talked to who loves cities, loves cities with rich fabric around the transportation system-not mega-malls. That rich fabric is still essentially illegal in Los Angeles; you're just not allowed to build like that. We will not have a meaningful connection between our transportation and our land use until we make it legal for small developers to build nice, modest urban projects on typical parcels.

What regulatory signals does Civic Enterprise look for from municipalities and their agencies and departments that encourage the company to invest and develop urban infill and neighborhood housing?

We help bring out the organic fabric of neighborhoods. And we like to help the in-place community benefit from the changes that happen. When cities tell us that they understand that they have to make their zoning work for the existing parcels and that we shouldn't have to assemble land to make development work, when they tell us that they're open to new approaches for parking, when they tell us they don't believe that we have to clear out the neighborhood to make it fresh and give it vitality-those are things that tell us that a city is ready for us to do work there.

I just came from the APA conference in Las Vegas, and I think people are ready for a new way to think about economic development and neighborhood revitalization. We're through with this modernist, 1950s approach where, if you don't get to build the whole thing, it doesn't count. People crave authenticity. I'm hearing it from the planners, I'm hearing from elected officials, and I'm hearing it from communities.