Build Better L.A. initiative recently approved by voters establishes new labor and affordable-housing requirements for developers in Los Angeles seeking discretionary approvals for residential projects

Who Does it Apply to?

The Initiative applies to all residential housing projects with ten or more units needing a discretionary approval that is any of the following: (a) a general plan amendment, (b) a zone change or height district change that results in increased residential floor area, density, or height, or (c) authorization of residential use where previously not permitted.

What Does it do?

Residential housing projects that are subject to the Initiative will be required to provide on-site affordable housing units. The required number of restricted units to be set aside will depend on the requested entitlement and if the units are for-rent or for-sale units. The percentage will range from as little as 5% of units set aside in a rental housing project to Extremely Low Income households, to as much as 40% of units set aside in a for-sale housing project to Moderate Income Households.

In place of providing affordable housing units on-site, the Initiative offers alternatives to compliance, including providing affordable housing units off-site, acquisition of “at-risk” affordable housing properties and converting the units into non-profit or other similar type of housing, or payment of an in‑lieu fee into the City’s new Affordable Housing Trust Fund. The in-lieu fee will be determined by a formula using an “Affordability Gap” multiplier as defined in the Initiative. Additionally, projects that opt to provide off-site housing will be required to provide additional affordable units based on a formula that increases the number of required units based on the distance from the primary project.

Further, the Initiative requires that residential housing projects seeking discretionary approval be constructed by licensed contractors, with good faith effort to ensure that 30% of whom are permanent Los Angeles residents and at least 10% of whom are “transitional workers”—single parents, veterans, on public assistance, or chronically unemployed—whose primary place of residence is within a 5‑mile radius of the project. Projects subject to the Initiative will be required to pay “prevailing wage”—an average of area wages based on a formula created by the state government—to all construction workers on the project.

In addition to the provisions summarized above, the Initiative mandates new review and processing requirements for eligible projects as well as other measures. We are available to discuss the potential impact of the Initiative to your development objectives.

Real Property & Title Insurance Update

After the recent decision in Rodriguez, et al., v. Ocean Bank, etc., No. 3D15-1802 (Fla. 3rd DCA November 23, 2016), borrowers permitted to raise affirmative defenses and counterclaims against lender where subject Loan Modification Agreement failed to include waiver of claims, affirmative defends, or counter claims.