The Neighborhood Integrity Initiative is not the only development-focused ballot measure generating attention. The Build Better L.A. initiative will go up for a vote in November and would require developers include an affordable housing component in every new project.

LOS ANGELES—Developers may be slowing down on new construction projects until after the Neighborhood Integrity Initiative vote in March of next year. The initiative would halt any developments that are an exemption to the current masterplan, and with an outdated masterplan, that would include a majority of the development projects that are underway and in the pipeline. While the vote is still months away, it is causing a panic in the development community.

'Dealing with the March ballot development moratorium initiative next year could be another headwind,” Mike Malick, VP of investments at Marcus & Millichap, tells GlobeSt.com. “Because it is a blanket moratorium on development that requires any kind of conditional use permit or zoning change, we are looking at a big question market. There was a frothiness a couple of years ago, but these factors are causing developers to rethink what they will be allowed to develop, and that is going to have an impact.”

Malick recently closed a development site deal in Downtown Los Angeles where a 4.6-acre site on two parcels in the Fashion District traded hands for nearly $40 million. The buyer plans to continue to operate the property as an income-producing industrial property for now and develop it in the future. While the Neighborhood Integrity Initiative wasn't a factor in this buyer's decision, Malick says that other developers do have concerns. “Before a developer is going to spend a significant amount of money on entitlements, they are going to want to wait and see the results of this initiative,” he explains.

With the vote looming, developers don't know how to move forward or what will happen in the event that this initiative passes. It leaves a lot of gray area. “What is missing right now is government and regulatory clarity,” says Malick. “Right now, we are in an environment where it is difficult to get anywhere near clarity until we get beyond the March election.”

The Neighborhood Integrity Initiative is not the only development-focused ballot measure generating attention. The Build Better L.A. initiative will go up for a vote in November and would require developers include an affordable housing component in every new project.