On May 3rd, the Downtown plan was approved by the LA city council. As the first plan that uses the city’s new zoning code, following the old plans for the area from 20 years ago, this plan will bring nearly one hundred thousand new housing units to the area. Downtown LA is 1% of LA city’s area but accounts for 12% of the city’s jobs, and 40% of Metro Rapid bus lines. Since the trend of LA is looking for new ways to orient development around transit and commerce, Downtown LA is the go-to, especially since Metro’s newest train infrastructure project, the regional connector, is right in the middle of Downtown. In a real estate market where affordable housing is in high demand, the policy solutions this plan suggests are much needed.

Even though the plan has been approved, it has not yet been implemented. Expect the new plan to be brought into effect in 4 months or more, as the City Attorney reviews and finalizes the plan. There is a lot of political momentum for this plan, so it shouldn’t be too long until the form and legality process is over and the plan is brought into effect.

From the new plan, more opportunities for development open up. Indeed, most of the planning area is up zoned, meaning more development is allowed now than before. The specifics of how parcels will change are available for perusal on the LA city planning’s downtown interactive map. Most of the area has height which is limited by floor area ratio, meaning that the sky’s the limit when it comes to building height, as long as you have the floor area. Floor area ratio – with new incentives in place for developers to gain floor area ratio – is now more than doubled in some places, from a maximum of 3:1 to 10:1 in a part of the “transit core” designated area of the plan. It is important to say that in order to get the maximum FAR bonus, the development needs to be eligible for all available incentives, including affordable housing incentives for residential uses, private owned public space incentives for commercial/retail uses, and transit oriented development incentives for any use. This will incentivize developers to look for opportunities to create inclusionary housing, public space, and to prospect strategically to develop areas that are well served by multi-modal transportation. 

Since the new plan uses LA’s new form-based code, the new plan authorizes more uses for buildings and less exclusionary zoning. With the new zoning, most of the plan area is designated mixed use, with exceptions for a medium residential region in the northern most region including parts of Chinatown, and an industrial region in the southeastern most part of the plan area. The intention of having most of the plan mixed use is to encourage infill development and create a balance of uses. 

Some programs the plans include are game changers for the market. The plan proposes a study to find the feasibility of an inclusionary housing policy, meaning DTLA may require developers to save a portion of their building for affordable housing. Another plan program is a TDR clearinghouse, to shut down the old Transferrable Floor Area Ratio program and allow it only in the plan region designated as “traditional core”. There are also new policies about displacement, where low and moderate income tenants get the first right of refusal, allowing them the option to return to the new construction at an affordable rate before the new construction is put on the market; on top of that, there is a no net loss program which ensures displaced residents have another affordable housing option somewhere in the city. Two other important programs are the land value tax, which taxes vacant land owners for the rent value the land could yield, and community land trusts that help keep community ownership of the land.

The plan isn’t without its challenges. The plan sets out to reach many different and sometimes conflicting goals. It is increasing housing while trying to retain historic and culturally important areas of the city. it is creating more intense uses of land while trying to revitalize the LA river. It is trying to increase circulation, jobs, and housing, and also enact a demand based parking metering system.

Another challenge is trying to manufacture attraction to the city’s core when LA was built as a diffuse, polycentric city. It’s easy to live life in LA and scarcely go Downtown, because there is so much attraction elsewhere in the city.

What are your thoughts on the new plan? How do you think this will help the real estate market in Downtown?

Written by: Gabriel de Luz