The Right MIX

REAL ESTATE AWARDS – TRANSFORMING LOS ANGELES
By: ANDY FIXMER: Los Angeles Business Journal Staff
The city has adjusted its zoning laws and regulations, and allowed conversion of office buildings into residences. The result has been an explosion of mixed-use projects in L.A.

Life in L.A. has long been characterized by rows of stores and office buildings along the major thoroughfares and homes in the neighborhoods behind them. But a convergence of forces has brought back the concept of stores on the ground floor with housing above. It’s worked in the past – and elsewhere.

The Sunset + Vine project is a leading example of mixed-use development, with ground-floor shops and apartments above.

Before downtown Los Angeles was booming and prior to Hollywood’s housing renaissance, there was Ventura Boulevard.



The San Fernando Valley’s main artery proved to be one of L.A.’s first test cases of mixed-use development – projects with housing built above levels of shops, restaurants and parking. Gold Mountain Enterprises LLC proposed in 2000 to build 125 apartments above 16,000 square feet of ground-floor shops.

The Encino project set off a pitched battle between the developer and city officials favorable of the project and neighborhood and business groups wary of adding housing to the bustling thoroughfare.

Gold Mountain’s project predated the city’s mixed-use zoning laws and regulations, and the developers were forced to walk a fine line, remembers Benjamin Reznik, a partner at Jeffer Mangels Butler & Marmaro LLP, who worked to get approvals.

“We were trying to do something that didn’t fit into any one category,” Reznik said. “It was an uphill battle, but we eventually persuaded everyone to go along with it.”

But while the project was approved, the developers eventually lost. Gold Mountain was forced to sell the 1.7-acre property in bankruptcy court to EMC Development LLC, which is moving forward with it.

Since the Gold Mountain foray, the city has adjusted its zoning laws and regulations, smoothed out wrinkles in the approvals process and allowed owners to convert empty office buildings into residences. The result has been an explosion of mixed-use projects stretching across Los Angeles.

Five years ago, housing in commercial zones accounted for 21 percent of the permits issued by the city’s Planning Department. Last year, commercial housing projects made up the majority of approvals.

What started out as a trickle of projects, some in Santa Monica and Pasadena, and publicly subsidized experiments along the newly opened Blue Line between downtown L.A. and Long Beach, is reshaping how some of the population will live.

“It’s an evolution,” said former L.A. Planning Department director Con Howe. “I don’t see any negatives at the moment or on the horizon.”

Ever since the 1920s, L.A. city planners have noted there is more commercially zoned property along the region’s thoroughfares than will likely ever be needed. During the region’s explosive growth during the post-World War II era, the city expanded out from the mixed communities of its past, which had grown around its expansive network of trolley lines and stations.

As freeways and an expanded network of surface streets replaced trolleys as the main mode of transportation, planners compartmentalized and segregated the region into various uses: homes were in residential enclaves, malls in commercial zones and manufacturing in industrial areas.

The pattern guided development across the region for more than a half-century. “There had always been a presumption that you wouldn’t or shouldn’t build housing in commercial zones,” Howe said. “Ordinances presumed that and used that kind of language.”

Meanwhile, downtown boosters were trying to figure out a way to bring more activity to the city center, where a number of older office buildings had long sat vacant and unused.
“Here we had this new rail system with subway stations that stop at buildings that were empty and vacant,” said Christopher C. Martin, chief executive of AC Martin Partners Inc. and a long-time downtown civic leader. “We couldn’t fill these buildings somehow.”

The practice of segregating neighborhood uses began to change during the last decade. Even though L.A.’s population was growing rapidly the amount of new housing being built slowed to a trickle. A city task force found that between 1998 and 1999 only 1,940 new housing units were built in Los Angeles while the population increased by 65,000 residents.

As the region ran out of room to build more homes and apartment buildings, planners and developers shifted their focus to the hundreds of miles of commercial streets. The commercial strips can absorb traffic from residential development and are mostly dominated by low-density structures, such as strip malls and gas stations. Many of the main streets, even in tony neighborhoods, looked rundown with empty storefronts.

“There are sound neighborhoods crossed by commercial strips that aren’t very healthy and which aren’t great looking,” said Howe, now director of the Urban Land Institute’s Center for the West.

When Howe was hired as L.A.’s director of planning in 1992, the entire region had been debating mixed-use development. The year before, Howe – the head of New York City’s planning department at the time – was asked to help set development goals and priorities for Los Angeles.

Along with planning leaders from other cities, the group looked at ways L.A. could solve its housing dilemma while still protecting its neighborhoods of single-family homes. The group focused its suggestions to building mixed-use projects along the commercial corridors and city centers where the region’s mass transit system is based.

Already, other cities in the region had been flirting with mixed-use development. In Santa Monica, Janss Corp. – the firm responsible for developing Westwood Village – had built a mixed-use project at the northeast corner of Broadway and the Third Street Promenade, across from Santa Monica Place Mall.

And Pasadena had approved two large-scale mixed-use projects: Paseo Colorado – which included shops in an outdoor mall – and Del Mar Station, which is located above a Gold Line light rail stop.

To encourage mixed-use development in Los Angeles, the city had to rezone large swaths of land, rewrite building regulations and streamline approvals. The process took nearly a decade to finalize, but in late 2002 the City Council enacted three ordinances to promote housing in commercial areas. Adaptive Reuse, enacted in 1999 and expanded citywide in 2002, gives owners of empty buildings the right to transform their property into residences by reducing requirements for parking and easing regulations for height and setbacks.

The other two ordinances – RAS 3 and 4 – open commercial zones to mixed-use development, allowing developers to build more units on a parcel if affordable housing is included in the project.

“Over the course of 10 years the city put in place the kinds of incentives and code reforms that have enabled the marketplace to take off while the office market was still dead in the water,” said David Abel, publisher and editor of The Planning Report, a monthly newsletter on L.A. development. “It didn’t happen overnight.”

Due partly to the region’s strong housing market, by the time the Council enacted the provisions developers were already pushing forward with several mixed-use projects across the region. Some of those included Tom Gilmore’s Old Bank District buildings, the conversion of the former Standard Oil headquarters by Kor Group Inc. and Kennedy Wilson and CIM Group Inc.’s Gas Company Lofts.

“Those guys created the first real wave of modern mixed-use development,” said Scott Johnson, a principal at Johnson Fain Architects, which is working on designing several mixed-use projects.
A second wave isn’t far behind. In downtown L.A. alone, about 50 high-rise residential projects have been proposed and already there are several large residential projects under construction surrounding the Staples Center.

In Hollywood there are nearly 2,000 units in various stages of development on a portion of Vine Street, enough to already create somewhat of a backlash against the office building conversions. Another problem: filling all the ground floor retail space. Still, the region is a different place from the days when Gold Mountain Enterprises faced its battle to get its Ventura Boulevard approvals.

Howe believes it’s only a matter of time before religious organizations once again begin including housing in the development of houses of worship or until educational groups begin adding housing to new school projects.

“We’re still only at the beginning,” he said. “Developers will only get more creative.”