Voters Retaliate Against Major Real Estate Projects in Los Angeles

Voters in the second-largest U.S. city are considering a measure that could effectively halt major real-estate projects, the most extreme example yet of a revolt against development that is breaking out across the country.

A boom in luxury development over the last five years has transformed urban America, bringing young people, restaurants, retailers and jobs back to city centers.

But construction activity has tilted toward the high end. Many longtime residents have become resentful of new towers that cast shadows over their neighborhoods of single-family homes and push up rents. Average apartment rents nationwide have surged 26% since 2010, according to MPF Research, due in large part to strong demand after the housing crash.

Now some activists are pushing back with actions that threaten to grind housing production in some cities to a crawl.

The moves threaten to further constrict a tight supply of housing. Housing starts dropped 2.6% in January, the Commerce Department said Thursday. The number of single-family and multifamily starts per 1,000 households last month was about 36% below the 50-year average, according to Ralph McLaughlin, chief economist at Trulia.

In Los Angeles, residents in early March are set to vote on a ballot initiative that, if passed, would suspend for two years any development that requires a modification to the city’s existing planning rules. Currently, such modifications are routine for new developments.

“People feel the system is rigged,” said Michael Weinstein, president of the AIDS Healthcare Foundation, which has poured some $3.7 million into promoting the measure. “It’s all about billionaires getting what they want.”

Many of the patients served by the AIDS Healthcare Foundation are struggling with rising housing prices, he said.

New barriers to development are rising in major cities, either through new regulations—such as requirements that developments include affordable housing—or through increased community resistance.

San Francisco in June passed a ballot initiative that puts a 25% on-site affordable-housing requirement on most new residential buildings, which developers say will make many projects economically untenable. An independent analysis by the city’s Controller’s Office has recommended the requirement be reduced, based on the results of a soon-to-be-released feasibility study.

Read the full article here.