Why is everybody so afraid of inclusionary zoning?

The wonkish title for this affordable-housing program makes
the eyes glaze over. That’s a problem, because housing has rarely resonated
among voters as an important issue. Overdevelopment, though, has sparked voter
revolution.

Some advocates who see inclusionary zoning as the key to solving
the housing shortage have taken to shortening the name to IZ. Others prefer
“inclusionary housing.” Some, just among themselves, after hearing
angry complaints from neighborhood groups and builders, came up with a sardonic
list of options like “Housing for Them.” Or “Social
Engineering Housing.” Or “Keep your cosmetic surgeon close but your
gardener closer” — a reference to fears among mansion dwellers that they
would be forced to make room on the block for bottom-wage workers.

Inclusionary-zoning programs vary in their details but have
at their core a basic element: Builders get a “density bonus,” allowing
them to construct more apartments or condominium units than otherwise would
be permissible, in exchange for pricing anywhere from 10 percent to 20 percent
of units well below market rate. Similar programs have been in place for several
years in smaller cities around California, like Pasadena and Irvine.

For four years now, Los Angeles has been mulling one version
or another of mandatory IZ, which would mean that no builder of five
units or more would ever again get a building permit without committing a
portion of units to below-market-rate renters or buyers. Councilmen Ed Reyes
and Eric Garcetti have been crafting a mandatory IZ program for more than
a year, but they have been unable so far to put together the necessary eight
votes. The reasons include staunch opposition from business and real estate
leaders, who account for a huge chunk of campaign donations, and from homeowners
and neighborhood groups, whose members do much of the voting.

Even supporters get bogged down in the details. Should developers
be able to opt out by paying an “in lieu” fee? Should they have
to put the affordable units in the same complex as the market-rate housing,
to keep the place diverse, or should they be able to put up the affordable
units in another part of town? Once a sub-market-rate unit is sold, can the
owner build equity, or is it sub-market-rate forever? And what kinds of incentives
should builders get in exchange for subsidizing their own developments?

In theory — only in theory — the density bonus and other incentives
offered in IZ bring the builder enough extra revenue to balance out the loss
the company will sustain from taking in less than market rate at sale time.

It used to be that builders and city officials would negotiate
a package of entitlements and mandates for each project, with financiers and,
recently, labor and community groups involved in the talks. That way, everyone
knew the project would pencil out. Now many of the incentives have been passed
into law.

While many builders happily work with the city to construct
below-market-rate housing in exchange for a package of incentives, though,
many fervently resist the prospect of mandates. IZ opponents say a mandatory
program will put an immediate halt to new housing construction, and make the
affordability crisis worse, because projects will no longer pencil out.

When Reyes tried to move forward last spring with a mandatory
IZ plan, Central City Association president and CEO Carol Schatz told his
council committee that they would inadvertently drive middle managers, office
workers and wage earners out of the city.

“Somebody has to pay for it,” Schatz said, meaning
the buyers and renters of non-affordable units. “Market-rate units will
be priced higher.”

Ray Pearl of the Building Industries Association said the plan
would create a new “hidden tax” on middle-class residents who don’t
qualify for affordable units. “Affordability begins with availability,”
he said, and availability is provided by developers, not by the city.

Developers instead want to focus on the city’s incentives and
in fact have their eye on the Holy Grail of incentives: streamlining and certainty.
A clear, quick and final yes or no on a project. Preferably a yes. A City
Hall permit and entitlement office of superstar managers who will circumvent
L.A.’s notorious red tape, and automatic approval, as a matter of right, for
any project City Hall hasn’t finished processing within, say, 90 days.

Many affordable-housing backers like the idea. “Why not?”
said one advocate. “Anything to get the units built and the people in
homes.”

It’s the kind of idea that sends shivers up the spines of homeowner
groups whose members have visions of bulldozers rolling over their hard-won
density limits and carefully crafted community plans. Beginning with 1999’s
charter reform and continuing to today, the city made neighborhood empowerment
a top priority. How come the neighbors are suddenly considered NIMBYs?

Business leaders succeeded in getting Reyes and Garcetti to
shelve their proposal last spring for a 90-day review by neighborhood councils.
The real purpose of the delay, though, was to stall the process through the
summer and fall so that the council members who will vote, and the mayor who
will sign or veto, will catch a distinct whiff of a March revolt by angry
voters.

No one has been more outspoken on IZ than the Los Angeles chapter
of ACORN, the Association of Community Organizations for Reform Now, or its
spokeswoman on housing affairs, Alvivon Hurd, known by friends and foes alike
as Bon Bon.

An irreverent and outspoken activist, Hurd has led noisy demonstrations
in favor of mandatory IZ on the City Hall steps, through the lobby of the
decidedly exclusive Orsini apartment complex, and on the vacant site of the
next Orsini phase. She and her yellow-shirted cohorts show up at housing conferences
and in City Council chambers. Inclusionary zoning is needed, she says, and
only fair.

“Look at downtown,” Hurd said outside a housing summit
at UCLA. “Suddenly, everyone wants to live downtown. All these young
white people want to be there instead of in the suburbs. They’re building
all these new places, Medici, Orsini. Do you think any of us can afford to
live there? These people” — she pointed to her companions in the yellow
shirts — “they clean up after these rich people, they wash their cars
and take care of their children. But when they go home, they don’t want us
around. Now what would you call that? I don’t want to call it racist. But
what would you call it?”

Housing was a major theme of the 2001 mayoral election as candidates
parried over the wisdom of a $100 million trust fund to spur development of
affordable units. James Hahn signed on, and when he was elected he started
cobbling together funds from various sources. The $100 million mark hasn’t
been hit, for the simple reason that the money is being spent the way it should
— on affordable housing.

The fund is a crucial part of any affordable development. It’s
hard to get a loan for pre-development costs like negotiating entitlements
when banks don’t know if you will be blocked by City Hall red tape or angry
neighbors. It’s even harder for affordable projects, which have a much smaller
profit margin and little wiggle room. The fund helps projects jump that first
hurdle.

But affordable-housing projects are going up without mandatory
inclusionary zoning, and Hahn is skeptical of IZ. “He opposes what’s
currently on the table,” Deputy Mayor Renata Simril said. “He is
worried that it sends the wrong message to the development community.”

The mayor may have a point. Incentives (and soaring prices)
have shaken up the housing market in L.A. In Hahn’s first year in office,
the city issued permits for 5,635 new units. Last year it was 10,631. This
year, Simril said, the city is on pace to give out 12,000. But of course,
less than half of those will be offered below market rate.

As the March elections grow closer, Reyes and Garcetti have
had trouble getting the crucial eighth vote for success in the City Council.
But intense negotiations are under way, and scuttlebutt around City Hall is
that the motion promised nearly two years ago may come to the floor before
Thanksgiving.

Will it satisfy Bon Bon Hurd and ACORN? It can’t possibly. Not
if it makes enough compromises to get the business lobby, and the council
members it supports, onboard. It will be a start, though, and, perhaps most
important, a product of an unprecedented civic conversation about the landscape
of the future.

—R.G.