Measure JJJ will Adversely Affect the Feasibility of Some Residential Projects in the City of Los Angeles

| Dec 9, 2016 | Firm News |

Measure JJJ, which was approved by voters on Nov. 8, adds important new requirements to certain residential projects in the City of Los Angeles. Subject to exceptions for projects in specified locations, the measure applies to projects that contain 10 or more residential units and need a General Plan amendment, zone change or height district change. (Because the City’s land use regulations are outdated, many residential projects in recent years have needed at least one of these modifications.) Where Measure JJJ applies, it requires that a certain percentage of residential units be made available at affordable cost to persons of low- or moderate-income (the measure allows for alternative performance such as providing affordable housing off-site or paying an in-lieu fee to the City’s affordable housing trust fund), that workers be paid prevailing wages, that 30% of work hours be performed by City residents and that 10% of work hours be performed by persons who live within 5 miles of the project and qualify as Transitional Workers by having two or more specified obstacles to employment.

Developers must factor Measure JJJ into their feasibility analysis when buying land for residential development or planning a project. If the effects of Measure JJJ cannot be avoided (such as by limiting the project to a maximum of 9 residential units or working within the generally applicable land use regulations), any pro forma for the project should be prepared in consultation with legal counsel and reflect careful consideration of Measure JJJ’s impact on project costs and revenue stream.