Does Luxury Housing Trickle Down to Affordable Apartments?

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

Can you create affordable housing by building luxury towers?

A boom in development of large apartment towers has prompted a fight for a two-year moratorium on new projects that don’t comply with the city’s zoning codes.

But planners say that if this ballot measure, called the Neighborhood Integrity Initiative, passes, it will stymie efforts to create much-needed affordable housing in Los Angeles.

We heard from both sides of the debate in this week’s DnA broadcast or you can read the story below.

A Skyscraper in Koreatown

The heart of the fight is in Hollywood. But it’s also being battled in Koreatown, specifically at the corner of 8th and Catalina, next to a liquor store on one side and a low-rise apartment building on the other side.

There a Korean language press conference was being held in front of an empty site that sits between a liquor store and a low-rise multifamily building.

To dramatize what the fight is about, Jill Stewart, campaign director of the Coalition to Preserve LA, pointed to a tall, spindly palm tree growing out of the sidewalk.

“This palm tree here, we calculate it to be about six stories high. The building they want to build is 27 stories high. It’s New York City right here in Koreatown. We’re calling it blockbusting by the ‘three percenters,’ the rich trying to push out the regular people and it’s wrong and it’s not allowed by the zoning,” Stewart said.

Stewart and her coalition are pushing a two-year moratorium on all development that doesn’t comply with LA’s General Plan, the overall planning blueprint for the city. The initiative forbids the City Council from granting case-by-case plan amendments, also known as “spot zoning.” Opponents of the moratorium say such amendments are essential for achieving developments better suited to now than to 1946 when the General Plan was created.

Jill Stewart talks to reporters at 8th and Catalina Streets in Koreatown. To her left are neighborhood activists Aura Vasquez and Grace Yoo. Photo by Avishay Artsy
Jill Stewart talks to reporters at 8th and Catalina Streets in Koreatown. To her left are neighborhood activists Aura Vasquez and Grace Yoo. Photo by Avishay Artsy

“One of the reasons that the Neighborhood Integrity Initiative is fighting things like this is it absolutely goes against every single zoning rule on the books for this corner of land,” Stewart said. “The Planning Commission said no, this is a terrible idea, this is a wildly inappropriate project. They were overridden by the mayor who kept pushing it back in front of the City Council. So it’s back in the pipeline, the City Council is thinking of approving it.”

Mike Hakim is the Beverly Hills-based developer behind the 805 S Catalina St. project. We asked him to talk to us and he declined. What we know is that Hakim wants to build 270 apartments. That’s about twice as many units as the existing planning rules allow on the property. He sought a zoning change and an amendment to the general plan to redesignate Hakim’s property as a regional center, which city planners describe as a place with major public transit options, “a significant number of jobs and many non-work destinations.”

Grace Yoo is a community organizer and attorney in Koreatown, and she mocks that idea.

“They’re saying this is a regional zone. You notice we’re on a side residential street. There is no way this street width qualifies for a regional center,” Yoo said.

The city’s nine-member Planning Commission, appointed by Mayor Eric Garcetti, rejected the apartment project. They said it was too big for the surrounding neighborhood. But then the mayor surprised activists, housing advocates and planning wonks by vetoing their decision and throwing his support behind the tower.

According to the mayor’s office, the Mayor supported the General Plan Amendment as a way to bring needed housing to an area where it makes sense. The project is still pending in the City Council’s Planning and Land Use Management Committee, and will then need to go to the full City Council and Mayor for final approval.

Location of the proposed 805 South Catalina tower
Location of the proposed 805 South Catalina tower

As the LA Times reported, Mike Hakim also agreed to contribute $1 million to the city’s affordable housing trust fund, and $250,000 to a fund for community projects in Wesson’s district.

But it’s anger at projects like this that have lead to the effort to get the Neighborhood Integrity Initiative on the November ballot. Signatures are still being gathered.

Critics say while the problem is real, this is the wrong solution.

“I think people are right,” said Dana Cuff, who teaches urban planning at cityLAB at UCLA. “Actually the way the variance process has worked hasn’t been appropriate, and it’s given priority to projects that didn’t have community interests. Developers have run the city for decades in many ways because we had such a weak planning culture here. But I don’t think that means that the answer is to abandon planning and design in favor of just voting to stop. We need to think more carefully about how to move forward. not to stop altogether.”

The Coalition to Protect Los Angeles Neighborhoods and Jobs was formed to oppose the moratorium. Mike Shimpock heads the group, and says of the moratorium, “This is a cure that’s worse than a disease. It’s a problem in search of a solution.”

“I don’t think anyone disputes that the L.A. planning process needs to be updated. But rolling it back to the 1950s plan for Los Angeles is going to have unintended consequences that are going to destroy Los Angeles,” Shimpock said. “It’s going to send rents skyrocketing, it’s going to destroy jobs, it’s going to make it impossible to deal with the homeless crisis that’s facing the city of Los Angeles.”

But those who stand to benefit from the affordable housing don’t necessarily agree that a moratorium is the best way to achieve it. One Koreatown resident who also opposes the high-rise apartment tower is Aura Vasquez, vice president of the Wilshire Center Koreatown Neighborhood Council.

“I think what we’re trying to advocate for is more responsible development,” Vasquez said. “Development that also brings something back to these community. Not just developers that maybe don’t understand the culture, don’t understand the spirit of these communities, the personality of these communities. So what we advocate for is exactly that. We do want the jobs here, we of course want our city to prosper. But we don’t want it at the expense of people that are already vulnerable that are already struggling. We should be all helping each other and helping each other thrive.”

Mayor Eric Garcetti launched an effort to implement a “linkage fee” creating new local funding for affordable housing, at the Mayoral Housing, Jobs, and Transportation Summit hosted by the Los Angeles Business Council (LABC) in September 2015
Mayor Eric Garcetti launched an effort to implement a “linkage fee” creating new local funding for affordable housing, at the Mayoral Housing, Jobs, and Transportation Summit hosted by the Los Angeles Business Council (LABC) in September 2015

“We’re not against development,” added Grace Yoo. “We’re against inappropriate development. We are against kicking people out and making them homeless. Someone from United Neighborhoods for Los Angeles said it best. She said, ‘our building more Ferraris does not decrease the price of the Honda Civic.’”

Mayor Eric Garcetti is looking to build 100,000 new housing units in the next five years. And to make some of them affordable, the city is looking at tools like the affordable housing linkage fee, which charges developers a fee on market-rate housing projects to be spent on building affordable housing units. The Department of City Planning is also working on something called re:code LA, which would revise LA’s outdated zoning code.

“The city does have a comprehensive zoning code,” said Kevin Keller, the planning director for the city. “In many ways it dates back to 1946 so it certainly is overdue for an update. The Re:Code effort is a parallel process with community outreach to really re-envision the way the city zoning code can best contribute to a modern city in Los Angeles. A lot of that is going to take the shape of enhanced and updated policies, review policies, findings. And eventually those new zoning tools that will be developed will be available to help guide development across the city. Perhaps better design guidelines, more massing in orientation standards for neighborhoods that perhaps have a village feel to make sure our zoning really reinforces existing character.”

But the moratorium’s campaign director, Jill Stewart, says Re:Code won’t solve the problem of rampant zoning amendments that they say lead to developments that are too big for their surroundings.

“You know, all due respect to the well meaning people at Re:Code but that is a side effort,” Stewart said. “That is not the general plan rewrite. It’s outside of the system because the city does not want to do the legal. So Re:Code can come up with all kinds of ideas. But the hierarchical prime law of the land comes from the general plan not from a side plan called Re:Code, as decent as those people are. So Re:Code is great but they’re not conceiving of how much soft corruption is underway.”

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

The Battle Over Density In Hollywood

So what kicked off the moratorium fight? For that, you’d have to go to Hollywood and talk to Michael Weinstein, head of the AIDS Healthcare Foundation, located in a 22-story-tower on Sunset Boulevard. His group both rents and owns property in Hollywood. And he became incensed by a project planned for the next door site, called Palladium Residences, a residential complex consisting of two 28-story towers around a renovated Hollywood Palladium. It’s designed by a noted San Francisco architect named Stanley Saitowitz. But to keep the historic concert venue and pack in the residences, the developers sought a general plan amendment to use a backlot on the site for a tower. With that amendment the project could jump from 670 units to 772 units. Michael Weinstein is funding the effort to stop the project.

“I see these mega developments going up in Los Angeles and they’re changing the character of communities,” Weinstein said. “And they are basically deals between developers who buy a piece of land with the presumption that they can get any exemption they want from a City Councilperson and that the City Council as a whole will rubber stamp it. And it’s causing terrible congestion. It’s exacerbating the housing problems we have by gentrifying areas and pushing people out of those areas. And it’s greed, it’s just unmitigated greed.”

Bob Hale, an architect who worked on the restoration and expansion of Hollywood’s Columbia Square with his firm Rios Clementi Hale Studios, said the issue about housing is really about supply and demand.

“What you could question is whether this is the right supply for the marketplace,” Hale said. “But having said that, in fact, part of the marketplace is driven by the amount of supply out there. One of the major reasons for that incredible inflation of real estate in Los Angeles is just the fact that there is no more dirt in the city of Los Angeles. And so as time goes on that supply doesn’t change, demand increases, the value goes up, projects like this create more dirt in the sense of building denser and that’s really the only way that we’re going to create enough housing to meet the demand. Now that housing in and of itself is going to probably be, except for whatever they’re required to subsidize, affordable housing. It’s not going to probably be very affordable for a lot of people. But this is where it becomes more dicey is where there’s a kind of trickle down in the value of real estate, that as new product is developed and people can afford to move up into that, it frees up other less expensive existing product.”

Weinstein disputes Hale’s trickle-down argument that building more luxury apartments will free up the supply of affordable units.

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

“That’s the same as Reaganomics, that’s the same as trickle down economics, that somehow allowing the rich to pay less taxes and to have luxuries is going to help the rest of us and it isn’t the case,” Weinstein said. “That what’s happening in the communities that are gentrifying, is that the people are being forced out who’ve been there for decades. I don’t know why building $3,800 a month apartments helps the homeless, helps poor people, I don’t get it. It’s certainly counter-intuitive.”

The developer of Palladium Residences is Crescent Heights. We asked their spokesperson, Jamarah Harris, how do they feel about the firestorm created by their project?

“Well I think was a little bit of a surprise to us,” Harris said. “When you look at what’s actually happening on the ground in Hollywood, you don’t have a broad coalition of opponents of the project. You have three thousand voices in support, which was built over a number of years from the very start. And then a small handful of activists who, for reasons that I frankly can’t quite understand, continue to oppose smart growth throughout Los Angeles, and maybe have their own individual reasons for having some issues with the Palladium Residences. But when you look at the facts on the ground, you have a very diverse, a very young, working coalition of people who are supporting this project very enthusiastically.”

Harris mentioned that there are Hollywood residents who support greater density. One of them is Nick Chiodini, a casting director who lives in a house in the Hollywood Hills and ends up defending such projects to his neighbors.

“I’m right in the thick of the development area of Hollywood and I really think it’s a great thing. I don’t think that there is a case that development should go at. I don’t believe that there’s ever a reason to bypass opportunities to enhance a neighborhood. When I moved in to the area, Hollywood and Highland was only about a year old, and everything surrounding it was frankly horrifying. A major disappointment for someone who had aspired to live in Los Angeles his entire life,” Chiodini said.

Next up, we go to a historic Hollywood building that’s become somewhat of a ghost house and a 1950s courtyard apartment complex that may be swallowed by a colossal tower.

Goodbye, Courtyard Apartments

At the corner of Yucca and Argyle Streets, just a block north of Hollywood Boulevard, a luxury hotel is being constructed. It’s a common sight in Los Angeles today.

Luis Saldivar, left, and Sasha Ali in their courtyard apartment complex at 6220 Yucca St. in Hollywood.  Photo by Avishay Artsy
Luis Saldivar, left, and Sasha Ali in their courtyard apartment complex at 6220 Yucca St. in Hollywood. Photo by Avishay Artsy

Across the street is a 40 unit apartment complex. It was built in 1953, it’s two stories high and built around a courtyard, the kind that was built all over Los Angeles half a century ago.

“This place is amazing, you know, it’s small, I love that I open my front door and I step out into a courtyard. We’re pretty tight knit sort of mixed income, intergenerational, multi-ethnic sort of group living here,” said Sasha Ali, a resident of the complex.

“I was born here and I’ve been living in Hollywood since the days that we had prostitutes and drugs and you name it,” said Luis Saldivar, another resident of the complex. “I’ve been through all that in Hollywood. And now people want to come into Hollywood, since it’s reformed, Hollywood is becoming a vibrant community, and now all these developers want to come in and take over.”

But Sasha, Luis and the other residents received word in December that the building’s owner and a real estate development company, led by Bob Champion, wants to build a 32-story tower in its place. An environmental impact report for the project is pending. However, current plans include 180 residential units, 260 hotel rooms and ground-level commercial space. The scale of development does require height and plan changes. Currently Sasha and other residents are paying around a thousand per month for a one-bedroom unit. They don’t expect the new dwellings will be anywhere near as affordable.

“You shouldn’t displace people who have perfectly good housing at really affordable rates for the sake of a mega complex which there are tons of in Hollywood right now anyways,” Ali said.

An architectural rendering of the 6220 West Yucca Street project.
An architectural rendering of the 6220 West Yucca Street project.

We reached out to developer Bob Champion and he told us in an e-mail, “whatever project is built, if any, will have an affordable housing component, so no affordable housing will be lost. Second… any displaced tenants will be given the first right to relocate into the affordable component of the new project.”

Opponents of the moratorium say that however imperfect a system, the ability to get variances is essential.

“The zoning and built environment of Los Angeles is very complex,” said architect Bob Hale. “But the moratorium is like taking a sledgehammer to something that really needs to be dealt with at a much finer scale. Basically what they’re asking for is a ballot initiative that involves a fundamental re-planning of all of Los Angeles. And it takes away the right for a landowners to try to develop their properties in any way other than how they’ve been historically designated. And it’s going to make it so that we are not really going to be able to develop within the city of Los Angeles.”

Remaking The Villa Carlotta

Our next site visit was to a building that is being preserved, but not for its longtime residents. In the Franklin Village neighborhood is an elegant but derelict looking 1926 apartment building called the Villa Carlotta. Colorful former residents include Marion Davies and gossip columnist Louella Parsons. There are 50 units, but it turns out 48 of them are empty.

Sylvie Shain brought us upstairs and through a very quiet and empty hallway to her apartment with high ceilings, wooden beams, hardwood floors and big French windows overlooking the street. She and her chihuahua mix, named Brad Pitt, live here.

Sylvie received an eviction notice in December of 2014 and has been fighting it ever since. The building’s owner, CGI Strategies, used the Ellis Act to evict the residents. That’s a 1985 state law that allows landlords to evict tenants from their rent-controlled units if they are converted to non-rental use. CGI plans to convert the historic building to a boutique hotel akin to Chateau Marmont. Shain’s fight to remain at Villa Carlotta has turned her into a housing activist.

“Well it’s actually worse than a zoning variance. They have filed for a general plan amendment. So the project doesn’t even conform with the city’s plan at all and, in addition to the general plan amendment, they’re asking for zoning variances. There’s issues with parking there. You know the fact that it’s zoned residential. I mean there’s a multitude of things are asking for, a beverage alcohol beverage permit, so there’s a number of different entitlements that they’re asking for to be able to move forward with this project and, yes, all this with our Councilman who’s gone on record over and over saying that he would not be supportive of the zone change.”

Sylvie Shain looks out her window of the Villa Carlotta in Hollywood. Photo by Avishay Artsy
Sylvie Shain looks out her window of the Villa Carlotta in Hollywood. Photo by Avishay Artsy

The councilman who represents the Franklin Village neighborhood, David Ryu, ran on the issue of transparency. On his website is a statement where he pledged to refuse political contributions from developers with current or upcoming projects in LA. He also pledged to make meetings with developers who have active projects in the City made available to the public. We reached out to him but did not hear back.

One of the things that we heard from Hollywood residents is a sense of frustration that the housing that replaces theirs is not going to people who live full-time in LA, but rather to outside investors and short-term renters.

“The truth about a lot of these developments that have come up in Hollywood recently are that most of them are vacant,” said Sasha Ali. “They are not actually even being advertised to people in Los Angeles, they’re being advertised to people in New York and other metropolitan centers like San Francisco where, obviously, rental rates over there are much higher than over here but it’s impacting what’s happening with rental rates over here. So it makes no sense for perfectly good housing to be demolished in favor of a development that will most likely remain empty.”

It’s this feeling that the new development is not for regular Angelenos, whatever the mayor and planners might say, that has people from across the region showing support for the moratorium, says Jill Stewart, the director of the Coalition to Protect LA.

“We have about 150 neighborhoods around the city, 120 neighborhoods around the city who immediately began to call us to tell us what’s going on in their areass way outside of zoning. They understand that that’s the zoning. What they don’t understand is, how’d they get this past the City Council? This is not what was supposed to be built here. We don’t get what’s going on so.”

So how does one reconcile these frustrations at an imperfect planning process with the need to build more affordable housing?

“That’s the million dollar question, that’s for sure,” said Dana Cuff at cityLAB. “I guess I would say that the basis of this feeling about the changes that have happened in L.A. that aren’t making the city a better place to live are rightly coming from neighborhoods. And so I understand that and think neighborhoods should have a lot more participatory role in the way we think about how the city would grow and change. But then who’s going to come between the neighborhoods to say, all right, Neighborhood A, you don’t want any high rises, and Neighborhood B, you don’t either. So where do they go? Where should all these new housing units that we desperately need go?