LA City Council Adopts Value Capture Ordinance to Address Affordable Housing Crisis

LA City Hall

CITY HALL - The Los Angeles City Council approved an ordinance today that requires developers seeking to build above and beyond permitted constraints to include affordable units in their project.

The “Value Capture” ordinance, a housing initiative first introduced by Councilmember Mitch O’Farrell in 2014,  addresses building applications for Conditional Use Permits (both for mixed-use and commercial), as well as permits for height and area changes, none of which are covered by other incentive based programs.

The regulatory settings recently changed when voters overwhelmingly approved JJJ, establishing a value capture policy for projects requiring a zone change or general plan amendment.

“What the authors of JJJ did not address are other paths to entitlement that allow for greater development rights without providing affordable housing,” said O’Farrell. “This incentive-based approach will create surety for everyone and result in tangible units of affordable housing City-wide.”

Through Value Capture, all pathways to permitting getting a direct benefit via the planning process will provide a certain percent of covenanted affordable housing at 55 years. In addition, any replacement housing as a result of redevelopment must result in a "net gain" -- again solving another problem unintended by the original density bonuses ordinances.

The Council actions today, whether it is a fee or inclusion on-site through Value Capture, reaffirms the city’s commitment to addressing the housing crisis regardless of the permitting path new construction will take.  

The Council voted 14-1 on the ordinance, which will now go before the Council for a second reading in the new year.