With Permanence Pending, ED1 Faces Familiar Affordable Housing Roadblocks

In a little over a year, Mayor Karen Bass’ first executive directive, ED 1, has facilitated the approval of more than 9,000 units in 100% affordable projects around the city.

The temporary measure has expanded the pool of developers submitting fully affordable projects, engaging private developers who aren't using public funds. 

The directive dramatically cuts the time it takes to approve these projects, creating certainty and cost savings that make affordable projects attractive to develop. But as the city looks to make the directive permanent, familiar challenges and complications to building housing in the city of Los Angeles are rearing their heads. 

As of October, 119 projects containing 9,093 units had been proposed through ED 1, the Los Angeles Department of City Planning reported, a stark contrast to the roughly 4,850 units proposed during the same period the prior year. There were approximately 16,000 units proposed as of February, CalMatters reported. 

“It does the things it says it’s going to do, and that's really incredible,” said Tiffany Spring, policy manager at the Southern California Association of Nonprofit Housing.

One thing ED 1 did was remove uncertainty around the permitting and entitlement process. Spring had heard from seasoned affordable developers that they wanted to develop projects, but because the entitlement process in LA is so complicated and subject to change, they chose other cities for project sites. 

But ED 1 streamlined the multidepartmental web of approvals, shaving down the timeline for approvals from years to an average of 45 days, according to the Planning Department.

The more you can create certainty, the more you can entice developers to LA, Spring said. 

Speeding up the approval process opened up the field of potential developers.

A November analysis by Abundant Housing LA of submitted ED 1 projects estimated that between two-thirds and three-quarters were private developers’ projects that didn’t make use of public money. Activating the private sector has long been seen as a critical element to building faster and cheaper affordable units and a key component in finally making a dent in the city’s shortage of below-market-rate housing.

In some cases, developers with market-rate projects in the works abandoned them for 100% affordable ones because, with a combination of the reliable deadlines of ED 1 and the increased density they could get on a site because of state and local bonuses, these projects became financially attractive. 

A number of in-progress developments in Los Angeles penciled out with healthy returns when owners bought the land. But after over a year of rising interest rates, other hard costs rising and the unknown timelines for entitlements, some are reconsidering their projects as fully affordable, according to Jonathan Lee, an executive managing director on Colliers’ structured finance group.

Lee’s team is working to secure financing for seven ED 1 projects. The deals are in various stages, but he expects to close one of the seven in March.

“If a developer can reentitle in an expedited time frame, increase density to make a project financially more viable and accomplish this in a 90-day window, they are going to pivot all day long,” Lee said. 

But even though the directive has accomplished what it set out to do, it doesn’t exist in a vacuum. After about 14 months, the directive is beginning to run into lawsuits and LA’s aging zoning rules in a way that may impact its efficacy just as the city moves to make it permanent. 

The third rail of affordable housing production in LA is single-family-zoned neighborhoods. The executive directive initially allowed for 100% affordable projects to be eligible for streamlining, which included skipping public hearings and protecting projects from appeals.

The so-called loophole was closed, but not before eight projects in these areas began their expedited journeys through the entitlement process, the Los Angeles Daily News reported.  

The city later deemed the projects ineligible for ED 1 streamlining after complaints from single-family homeowners, according to an op-ed in the Los Angeles Times. The city is now being sued by a pro-housing nonprofit, YIMBY Law, that wants the streamlining reinstated. 

With single-family zones off the table for streamlined 100% affordable housing, the areas of the city in which these projects can be proposed are limited. As the economic justice nonprofit Strategic Actions for a Just Economy has found, that means that some naturally occurring affordable units are being demolished to make way for affordable units by covenant. 

SAJE found that more than a third of the units proposed in the first 10 months of the executive directive’s existence were for projects in South Los Angeles, an area of the city with a high concentration of poverty. Another third of those required the demolition of existing housing, including rent-controlled units. 

This practice is something that experts have said exacerbates the city’s homelessness crisis by displacing already-vulnerable renters. 

An additional motivator for developers to choose South LA is the land cost, JZA Architecture founder and principal Jeff Zbikowski said. He said he has worked on 40 to 45 projects submitted to the city using ED 1 in the last year. In South LA, some developers may have seen the chance to buy land relatively inexpensively, which is even more critical when dealing with a project where rents will ultimately be restricted, Zbikowski said.

He said ED1 as it was written was never meant to be permanent, but now that the permanent version seems to be getting closer to the finish line, he sees “kind of a narrow window still left in the Wild, Wild West of ED 1.” 

The ordinance that would replace ED 1 but make its processes permanent has already passed through the City Planning Commission and is due at the city council’s Planning and Land Use Committee but hasn't yet been placed on the agenda.

The permanent version is likely to differ from the temporary directive. Those changes could open up certain parcels left out of the temporary version or blunt the process’s attractiveness to developers.