Are developers being demonized in LA?

Some LA City councilmembers want to ban campaign contributions from developers whose projects are before City Hall. Is this a necessary step in cleaning up the dirty politics of land-use, or “misdirection” from the real problem: a dysfunctional planning process that ill serves a city in need of smart, optimistic thinking about how to grow for the future?

An ironworker with Local 416.
An ironworker with Local 416 atop Wilshire Grand (photo courtesy Kelly Candaele).

There’s a development boom underway in Los Angeles. Big commercial and residential projects are being built across the city. But not everyone is happy about this growth and Angelenos opposed to these projects argue that developers have too much clout in City Hall.

Critics argue that in exchange for campaign contributions elected officials give developers variances on projects to build higher or denser than the general plan allows, a practice known as spot zoning. 

“What we are opposed to is this pay to play process that permeates L.A. City Hall, this culture of secrecy and rule breaking that we have seen for decades from our L.A. city politicians. . .The city council and the mayor have ignored the people for far too long. And the system at L.A. City Hall desperately needs to be reformed,” said Robert Silverstein, a lawyer who has fought several major developments including the Palladium Residences and the Millennium Hollywood projects. He is a consultant to the group behind Measure S, also known as the Neighborhood Integrity Initiative; this is the measure on the March 7 ballot that would put a two-year moratorium on projects in the City of Los Angeles that require variances.

Developers and others in the planning community say spot zoning is often the only way to enable more density on expensive land, because the “by right” projects allowable in the general plan do not meet today’s needs.

An architectural rendering of Palladium Residences, courtesy of Crescent Heights
An architectural rendering of Palladium Residences, courtesy of Crescent Heights

So some Los Angeles elected officials have called for a ban on political campaign contributions from developers who have projects pending before City Hall. The proposed ban comes after a series of Los Angeles Times reports about campaign contributions from developers. Those articles have prompted investigations from the L.A. District Attorney’s Office and the state’s Fair Political Practices Commission.

And the ban proposal comes just two months before voters will decide on Measure S.

Well-intentioned or misdirected effort?

Is such a ban legal? Or is it, asks developer Mott Smith, “misdirection” from the real problem: a dysfunctional planning process that ill serves a city in need of smart, optimistic thinking about how to grow for the future? Could it even be a ploy by council members to ease voters’ frustrations in the hope of deterring them from voting for Measure S, which will be extremely restrictive of growth? And does it represent an attack on developers — who are “to liberals what foreigners are to the alt right,” says Mott Smith — when, in his view, corruption and dysfunction pervades the entire land-use and planning system?

On this DnA we talked to developers and critics of money in land-use politics.

Five city council members have proposed the ban on developer contributions ban in the hope of cleaning up a planning process many perceive as corrupt.

One is Councilman Paul Krekorian. He explained two motions introduced last week intended to address “the sense that the public has that their voice is sometimes left out of the policy discussions, particularly around land use.”

The first motion, said Krekorian, “is to increase the matching funds available to candidates for small or individual contributions, so that the average person who wants to participate in the political dialogue is empowered with a greater degree of influence because of the matching funds.” The second motion is intended “to ban developer contributions when there’s a real estate project pending before the city.”

DnA asked Krekorian how they would determine who would be the target of such a ban, given that a development process involves many institutions and individuals as well as just the developer? These include land use lawyers, engineers, architects, builders, contractors, unions that represent subcontractors, and others. Would all of those entities also be included in this ban?

CPNC Archives - Canoga Park Neighborhood Council
CPNC Archives – Canoga Park Neighborhood Council

Krekorian says this is “probably the single most difficult part of making an effective policy in this area,” and adds that “this isn’t intended in any way to demonize developers or to indicate that somehow development is bad or anything like that”

“But I think that’s one of the reasons that we’ve initiated this process, to begin discussion with the ethics commission, with people in the development community, with the business community, with neighborhood activist organizations, so that we can try to hit on the sweet spot where we can assure the greatest degree of certainty on the part of the public that decisions are being made on the merits and fairly [while] not unduly restricting people’s right to participate in the political process and right to make their views be heard.”

But would such a ban even be legal?

Jessica Levinson is a law professor at Loyola Law School and is President of the Los Angeles Ethics Commission. She says that she agrees “with so much of what Councilman Krekorian said, and I absolutely think that the public feels that their government officials are responsive to donors but not constituents. And I absolutely do believe that people in L.A. are particularly concerned about developers.”

She goes on to explain that the Supreme Court has long said even the appearance of corruption is a legally viable reason to limit contributions. And yet in practice, she says, “this proposal has legal and political problems.” Those problems include “definitional issues,” as in, “who exactly would be caught up in this?”

A Los Angeles Times report into campaign contributions relating to the Sea Breeze development has lead to an investigation by the District Attorney.
A Los Angeles Times report into campaign contributions relating to the Sea Breeze development has lead to an investigation by the District Attorney.

The government treats lobbyists and government contractors differently from other donors. But not, she says, developers and developers principals. “So we’re targeting a much broader group for prohibition” and “we’re not exactly sure who that group is.” She adds that “if they prohibit campaign contributions from developers I don’t think that that money is suddenly going to disappear.” Instead it could wind up being funneled toward “independent expenditure groups” which can be even less transparent.

Councilman Paul Krekorian said that in a perfect world we’d move closer to a public finance system of campaigning. That was echoed Monday by Councilman Mike Bonin. He is calling for the city to move to a system where local candidates are eligible for taxpayer funds if they show they meet a certain threshold of support from small contributors.

Would radical transparency help?

Meanwhile, City Controller Ron Halperin argues that since it will be legally and politically impossible to clean the money out of politics, the problems in the system would be best alleviated by “radical transparency.”

He describes this as “a website that first of all will have information not just about every donor, but also what relationship may exist between that donor and various projects, that show how all the dots are connected. Because we know that there are developers involved. There are lobbyists involved. There are the lawyers. There are the spouses. There are lots of different parties. And the question is how we can provide the most information to everybody about what it is that is actually going on.”

Construction in the Los Angeles Arts District, on the site of the former Megatoys building, taken in 2014. Photo by Patrick Pelletier.
Construction in the Los Angeles Arts District, on the site of the former Megatoys building, taken in 2014. Photo by Patrick Pelletier.

It seems that one of the main goals of the proposed ban on developer contributions is to address spot zoning. That’s where developers get permission to build higher or denser than the general plan allows. Critics say these variances are typically given in exchange for campaign contributions. Developers say the city has to grow and these variances are necessary because the general plan is outdated.

So the question becomes, is the effort to ban contributions from developers intended to solve a political problem or a planning one?

“I’m completely dissatisfied with trying to address long term planning in this city when we have woefully obsolete community plans throughout the city,” Krekorian said. “So that is an essential part of fixing this problem. Not everyone will be satisfied with every single project. But on the whole you’ll have good planning which makes sense. You have a vision for for a community for generations ahead and will be able to build towards a better more functional more sustainable city.”

“I think developers are to liberals what foreigners are to the alt-right.”

Better planning is certainly the answer according to some in the development community. Mott Smith is principal with Civic Enterprise development, professor in USC’s master of real estate development program and one of the founders of L.A. Plus, a new group trying to provide a “politically neutral, data-driven, evidence-based positive vision of LA’s urban future.”

While Smith applauds the effort to confront the dirty politics of land-use he calls it “misdirection” because “the bulk of the corruption… doesn’t really even exist in relationship between developers and politicians.”

 

Mott Smith's development group Civic Enterprise restored and adapted this 1926-vintage 17-unit bungalow court on a 36,000 SF site in Los Angeles’ Silver Lake neighborhood, subdividing the property into 17 fee-simple lots.
Mott Smith’s development group Civic Enterprise restored and adapted this 1926-vintage 17-unit bungalow court on a 36,000 SF site in Los Angeles’ Silver Lake neighborhood, subdividing the property into 17 fee-simple lots.

“We have a system in California where development is seen as the cash cow for everything,” says Smith, “and there are tons and tons of stakeholders in our current dysfunction,” from unions and neighborhood organizations to “good organizations” like environmental groups who often “get big payoffs because of our dysfunction. And cities pass fees to pay for all of these deferred infrastructure costs that traditionally would be paid for by everybody, like affordable housing or sewer systems or transit, which end up getting covered by individual developments. All of those stakeholders have an interest in keeping the system dysfunctional because when a developer gets hungry enough… to do a giant expensive project, it’s a feeding frenzy and the politicians certainly are one piece of that feeding frenzy. But I would argue a relatively minor piece of that feeding frenzy.”

But even if multiple groups are complicit in the dysfunctional system, developers are the target of people’s ire right now. Why is that?

Smith responds: “I think developers are to liberals what foreigners are to the alt-right. It’s a natural expression of human xenophobia, where anybody who brings change must be bad. And developers have built a profession on change. I think it’s natural for people to view developers with suspicion because, anybody coming in to shake things up, they might be well-intentioned, maybe ill-intentioned, the outcome might be good, the outcome might be bad. It’s reasonable to be suspicious of developers.”

IMG_5961
Yes on S (aka Neighborhood Integrity Initiative) billboards are appearing across Los Angeles. Measure S seeks to put a moratorium on development projects that require zoning variances. One of the measure’s primary backers is the Aids Healthcare Foundation (photo: Frances Anderton).

So is the real question we should be asking about planning?

“100 percent yes,” says Smith. “The tools that we’re using to manage growth in Los Angeles right now were invented by Herbert Hoover in the 1920s when he was secretary of commerce and he did it specifically in order to create single family suburbs on the farms of America… and those same tools are what we’re using now to try to manage our city… What they don’t do is they don’t manage change and we do not have a healthy relationship in California or really in Los Angeles with change… And so what we need to do is totally rethink what planning is [now] with all kinds of stakeholders and all kinds of people and an unknown future. How do we do that? Nobody who’s doing planning right now has that answer. But it’s imperative that we come up with that answer and stop demonizing people who are the agents of change.”