Carol Schatz Anticipates L.A. City Inclusionary Zoning Plan Compromise; Vows to Resolve Issues

When TPR last interviewed you in 2004, you stated that the Central City Association (CCA) would "resist inclusionary zoning because it would be detrimental to the progress we've made Downtown and the progress we need to see in the city of Los Angeles." Now, four years later, please elaborate on CCA's position on inclusionary zoning in the city of Los Angeles.

First of all, CCA has been on record since 2000 saying that inclusionary zoning can work with the right incentives and that we, as an organization, would support an incentive-based program. The ordinance that was introduced in 2004 was so onerous as to be a non-starter. The set-asides were too great; there were not sufficient incentives; and it was particularity difficult on the for-sale side, where something like 40 percent of the project had to be set aside for low income buyers. What we told the mayor a year ago, and what we have since reiterated, is that we will work with the mayor's office but the policy has to be workable.

Last month, Mayor Villaraigosa proposed an inclusionary zoning ordinance called "The Mixed Income Housing Policy." Are there elements of the mayor's plan that you can accept? Are there elements that are tougher for the CCA to accept, given your organization's mission?

Right now there are a couple of issues. There are no real incentives in the mayor's proposal. He grants incentives that are ostensibly provided by SB 1818. But developers have been reporting that they are unable to get the incentives that SB 1818 provides because the community objects and councilmembers, in many instances, agree with the community. There is also very vague language in the proposed policy about it not applying to low scale single-family neighborhoods. What does that mean? Where is this going to apply?

There are parts of the city where there is almost no affordable housing. We need housing at all income levels in all parts of the city, the Westside in particular. People are driving miles and miles to work in West L.A., where there is no affordable housing stock. The communities that have really not provided their fair share really need to step up to the plate.

What is at stake with inclusionary zoning for the CCA and like organizations that support development in the L.A. metropolitan area?

First of all, we absolutely support, and have supported, the need for more affordable and work force housing. That is critical to the future health of the city; there's no debate about that. The question is, how do you design a policy so that you can provide incentives for developers to put the kind of housing you want in the places you want it, making sure that it is fair in its application. I believe that there is general agreement on all sides about that goal. The issue is how it is implemented.

The city of Los Angeles' Mixed Income Housing Policy will apply to all new residential projects with more than 20 units where land is zoned for larger housing projects. The intent is to increase mixed-income housing near employment centers and transit stops. The policy, however, will not apply to low-scale, single-family neighborhoods. Does the mayor's housing policy meet with your members' needs? Is it too ambiguous?

Our developers spoke to the mayor's office at a couple of meetings about this already. There is great interest in the definition of low-scale, single-family neighborhoods. What neighborhoods are we talking about?

If you take a look at low income housing, it's interesting that over the years before 1999, Downtown had about 13,000 residential units within the freeway ring. About 8,500 of those were very low-income or single-room occupancy units. We now have equal parts market rate and equal parts low income housing. That doesn't even count the units that have been created from tax increment dollars generated in Downtown throughout the city. What we're saying is that we already have a very large stock of affordable housing and low income housing Downtown. We need to see housing for all income levels but particularly on the more affordable side in other employment centers. In Downtown, the market segment that is missing is more moderate income housing, but we need to see more workforce housing all over the city.

That brings me to another point about the income levels. The mayor's office understands that moderate income housing, or workforce housing, is important. The question is, how we are going to define income levels? If you are a single cop and you make $60,000 a year, you're not going to get any help from this proposed ordinance the way it is currently drafted. We need to see more "give" in the middle ranges to really help the people who are working and finding it very difficult to live within the city's boundaries. The very-low income population is another very significant need. Anyone who does the economic analysis, however, will see that the subsidy that is required to provide for very low-income housing is huge, and it eats up the dollars available for the middle class. From our point of view, this ordinance really needs to help the, broadly defined, middle class.

In a recent article in the LA Daily News, Holly Schroeder of the BIA spoke about the application of this ordinance and the notion that it seems "one size fits all." You have focused in this interview on the needs of Downtown, but don't we have a policy that is applicable to the 498 square miles of L.A.? Is it possible to do a one-size-fits-all Los Angeles ordinance?

I‘m glad you asked, because that was an issue last time as well. The economics of building in South Central L.A. are very different from the economics in West L.A., for example. That's why we talk about incentives. We are making sure that developers in different neighborhoods can make this work, especially at this very difficult time. We know that this housing policy has to be viable long term. We must factor in the current market conditions. In addition, everyone expects it to get worse before it gets better. Everyone expects 2009 to be an even tougher year.

It can't be one-size-fits-all, which was the focus of the alternative plan we put forward four years ago, and which we recently updated. Neighborhoods should have some input as to where the housing should go. Neighborhoods shouldn't be able to say "no." Neighborhoods should do their fair share to meet our critical housing needs. Every Council District has to do its share because we need it everywhere. We must do this in a way that works for various communities. We must give the right incentives to developers to do it.

Gail Goldberg, the city of Los Angeles' planning director, spoke eloquently at the LABC's Housing Summit that the affordable housing crisis isn't just a planning crisis-it's a housing, jobs, transportation, quality of life, and infrastructure crisis. To offer a housing policy without addressing all these other related policy issues creates quite a few problems, doesn't it?

The jobs/housing balance, the jobs/transportation balance-all of these elements need to be addressed, and because we're all spread out, we can't just look at specific places like Downtown and Hollywood to solve the problem. You have to look at transportation corridors, not just for light rail but for buses as well. Buses get the vast majority of people to work. All that has to be evaluated. Housing must be linked to transportation.

CCA is forming a committee to work on the Mixed Use Housing/ Inclusionary Zoning ordinance. What will be the committee's agenda and composition?

We have recommended the creation of a working group to the mayor's office representing developers of all sizes and who are developing in many city neighborhoods. They need to hear directly from the people who will have to hear this burden. The agenda is to work with the mayor's office and come up with a plan that can work. The mayor's office has been very sensitive to the fact that the economics have to work.

On the day we're doing this interview the stock market fell 500 points. The underlying equity and appetite debt in the real estate business is probably below zero. How do these economic conditions factor into the city's housing policies, including foreclosure policies? Are the national's economics changing the city of Los Angeles' housing policy options?

A couple of developers have said, "Wow, they really know how to kick you when you're down." The housing market is at ground zero right now and it seems to be that we should be considering policies to encourage housing development, not discourage housing development. Things were bad in October of 2007 when this concept was first announced, but they are much worse now. A phase-in program, assuming we can come to consensus about a basic policy, is very critical. 2009 will be an even more difficult year. That has to play into this in terms of how the policy is laid out and how it is implemented.