LA’s New Transit Oriented Development Incentives

In November 2016, California voters passed an initiative that streamlined the development process for Transit Oriented Communities (TOC). The measure was called JJJ and also incentivized affordable housing developments. Transit oriented developments are community developments that includes a mixture of housing, office, retail and/or other commercial development and amenities which are integrated into a walkable neighborhood. These developments must be located within a half-mile of quality public transportation.

 

Since the guidelines were released, approximately 20 applications have been submitted. Experts predict the TOC program will be most effective at increasing the scale of affordable projects. The question of whether market-rate developers will be enticed to cross into the affordable housing business remains.

 

Eligible areas are spread throughout the Los Angeles region. Most incentive-eligible areas are around transit stops in Downtown Los Angeles, but they also show up in South L.A. and along the train lines in Mid-Wilshire. Additionally, there are some eligible areas in the San Fernando Valley, from Hollywood and Westwood south to Mid-City. There is also a small grouping around the Port of San Pedro.

 

The guidelines make any housing development eligible as long as it is within a half-mile radius of an existing or planned rail station or the intersection of two or more bus routes with services intervals of 15 minutes or less at peak hours. The closer the development to a transit stop, the greater the incentives.

 

The guidelines also ease up on parking restrictions. Depending on which of four tiers the housing development falls into, parking restrictions are lessened. If a development is 100 percent affordable, parking is not required at all, nor is it required at tier four developments, which are within 750 feet of an intersection of two Metro Rail lines or Rapid Bus lines.

 

Experts are torn over the impact of the new TOC measures. Jim Ries of Craig Lawson & Co., a land-use consulting firm is hopeful. “It reduces a lot of the uncertainty,” he said. “I’m hopeful that it will spur a lot of development around these transit hubs.”

 

Doug Bystry, CEO of Clearinghouse CDFI and a former La Habra City Council member is underwhelmed, however. “I don’t believe that this [program] will really move the needle.” He believes, as do many, that market-rate developers need to get involved in the project to really see a difference. Many experts say that it is essential to bring market-rate developers into the affordable housing business and are unsure of the TOC program does enough to entice these developers.

Katie Craven
Katie Craven is Marketing, Communication and Brand Manager at Watchdog Real Estate Project Managers, a real-estate consulting firm that provides owner’s representation and project management services. More about Watchdog Real Estate Project Managers as well as additional blog posts can be found here.
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