A Blueprint for Affordable Housing Development in Los Angeles

In the bustling city of Los Angeles, the Community Housing Incentive Program (CHIP) ordinance stands as a beacon for developers and property owners seeking to invest in affordable housing projects. This comprehensive guide dives deep into the nuances of the CHIP ordinance, offering a roadmap for navigating its intricacies and maximizing its benefits.

Understanding the CHIP Ordinance:

At its core, the CHIP ordinance is designed to encourage the development of affordable housing through a series of incentives and requirements. By offering density bonuses, stacking incentives, and targeting strategic locations for mixed-income projects, the ordinance aims to address the city's pressing need for affordable housing while providing developers with attractive incentives.

Maximizing Density Bonus:

One of the key features of the CHIP ordinance is its provision for density bonuses. Developers can increase project density in exchange for including affordable units. For example, very low-income units (earning up to 50% of the Area Median Income or AMI) may constitute 5% of total units, while low-income units (earning up to 80% of AMI) may need to be 10%. This not only maximizes the return on investment but also contributes to addressing the affordable housing need in the city.

Stacking Incentives:

Beyond density bonuses, the CHIP ordinance offers additional incentives to developers. For example, including a childcare facility qualifies for bonus incentives, while donating land to the city can earn a minimum 15% density bonus. These options can significantly enhance the appeal of a project and make it more attractive to investors and stakeholders.

Mixed-Income Project Sweet Spots:

The CHIP ordinance encourages mixed-income developments, especially in strategic locations such as near transit hubs and high-opportunity areas. By targeting these areas, developers can capitalize on desirable locations while catering to a broader range of income levels.

Meeting Affordable Unit Requirements:

The CHIP ordinance sets clear benchmarks for the minimum percentage of affordable units required for various income levels in designated areas. For example, moderate-income units (earning up to 120% of AMI) for sale may need to be 10% of total units. Developers can use this information to plan their projects effectively and ensure compliance with the ordinance.

Base Incentives:

Apart from density bonuses, the CHIP ordinance provides a range of base incentives to encourage affordable housing development. These include reduced parking requirements, inclusionary housing waivers, fee reductions or waivers, and a streamlined permit process. These incentives can significantly reduce the costs and complexities associated with affordable housing projects.

Public Benefit Options:

Developers can also fulfill public benefit requirements by incorporating various elements into their projects, such as providing public open space, creating affordable housing units off-site to replace demolished units, implementing job training programs for low-income residents, integrating public art into the development, and providing on-site social services for residents.

In-Lieu Fees:

In some cases, developers can pay fees into a city fund in lieu of satisfying certain public benefit requirements. This provides an alternative path to compliance for developers who may find it challenging to meet specific requirements directly.

Analyzing the CHIP Ordinance:

Based on the analysis of the CHIP ordinance, developers and property owners can gain valuable insights into the requirements and incentives offered by the program. By understanding the nuances of the ordinance, they can make informed decisions and maximize the benefits of their affordable housing projects.

Conclusion:

The CHIP ordinance in Los Angeles offers a robust framework for developers and property owners to create affordable housing projects that not only meet the needs of the community but also provide attractive returns on investment. By understanding the various incentives, requirements, and options available under the ordinance, developers can navigate the affordable housing landscape with confidence and contribute to addressing the city's housing challenges.