West Coast Real Estate Update: January 2017 #1

by Holland & Knight LLP

Holland & Knight LLP

Proposed Landmark Rules Could Make LA Redevelopment More Difficult

Los Angeles City Council Member Jose Huizar has proposed a new set of rules that could make it more difficult for owners of historic properties in Los Angeles to redevelop those properties. The new rules would prohibit property owners from demolishing a building once the Cultural Heritage Commission agrees to consider an application to classify the building as a landmark. Under current law, a building under consideration as a landmark can be razed until the point in time when the commission actually decides to designate the building as a landmark.

While the proposed rule could make it more difficult for property owners to redevelop a property, it would also provide them with earlier notice that an application for landmark designation has been filed against their property. This could give property owners more time to develop arguments as to why a building should not receive landmark designation if they have plans for future redevelopment. The proposed ordinance would also extend the time the commission and City Council have to approve or deny an application from 75 days to 135 days.

The next step for the proposed ordinance is review by the Planning and Land Use Management Committee before going to the full City Council for a vote, which could happen in the next couple of months.

Senate Bill Could Expand 30-Year-Old Low-Income Housing Tax Credit

For the past 30 years, the Low-Income Housing Tax Credit (LIHTC) has driven development of affordable residential real estate across the United States. Since 1986, the LIHTC has attracted enough private equity to develop nearly 3 million apartments for working-class families, seniors and formerly homeless individuals. During that time, LIHTC-supported development has proven to be advantageous to developers, investors, residents and communities.

The biggest challenge currently facing the LIHTC is the overwhelming demand for the housing it enables developers to produce, which vastly exceeds the amount of tax credit authority available to states every year. In areas facing affordable housing crises, such as Southern California, the San Francisco Bay Area and Seattle, there is simply more demand for affordable housing – and developers willing to build it – than there are tax credits to go around.

Last year, Sen. Maria Cantwell (D-Wash.) and Sen. Orrin Hatch (R-Utah) introduced the Affordable Housing Credit Improvement Act to increase tax credit authority by 50 percent. The proposed legislation would allow for 400,000 more affordable units nationwide than would be possible under the current statutory scheme. The bill was assigned to the Senate Finance Committee, where it took a back seat to election-year politics, but has a chance to be incorporated into broader tax reform that should be considered this year by the recently sworn-in 115th Congress.

LA City Council Members Want to Stop Campaign Contributions from Developers

Los Angeles City Council members David Ryu, Joe Buscaino and Paul Krekorian have proposed banning contributions to Los Angeles City Council campaigns from developers while their projects are being considered by the city. The proposal also would prohibit contributions from developers if their projects had recently been considered by the city, although no time frame was specified.

If approved, the plan would expand the city's definition of "developer" to include building contractors and subcontractors, and could increase the enforcement staff at the city's Ethics Commission to perform more frequent audits of council members' campaign contributions.

To implement the plan, ordinances would have to be drafted and brought before the City Council in the coming months.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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