How the Government Plans to Create Density

From San Diego to Los Angeles, local governments are looking to public-private partnership structures to create density in cities and better utilize city-owned land. In San Diego, those public-private partnerships have been focused on redeveloping the waterfront area around the Port of San Diego, while Orange County and Los Angeles have been utilizing the structure to build density and increase the housing stock, according to city leader who spoke at RealShare Southern California at the Hollywood Roosevelt Hotel in Los Angeles. Scott Mayer, chief real estate officer at County of Orange; Yousef Salama, innovation manager for public-private partnerships at L.A. Metro; and Shaun Sumner, assistant VP of operations at the Port of San Diego, spoke on the Evolution of Southern California panel, moderated by David Bitner, head of Americas capital markets research at Cushman & Wakefield, about the challenges facing the Southern California market and how they are addressing those challenges from within the organization.

At the Port of San Diego, there is $3.5 billion in commercial ground lease activity that will come to fruition in the next decade. These developments will completely overhaul the waterfront experience with a mélange of asset classes along the coastline, from hotels and retail to office space. Sumner said that public-private partnerships have been essential in the redevelopment of the site. “Government plays a critical role in accelerating development in Southern California,” he said on the panel. “Everything we do is a public-private partnership.” He said that the port plays an essential role in the partnership by helping to navigate the entitlement process. “One of the biggest things the government can do is do some of the heavy lifting,” he said, adding that they help with masterplanning so that developers only need to come in and pull permits.

For Orange County and Los Angeles, public-private partnerships are a way to create density and combat the housing shortage and affordability crisis striking both markets. In Orange County, Mayer admitted that housing was one of the biggest challenges in the market, explaining that they have seen millennials migrating out of the market to find more affordable living opportunities. Salama said the migration of lower-income residents, especially those making below $50,000 per year, are also leaving the L.A. market in search for more affordable housing.

Both markets are focused on creating density to combat the housing challenges. In Los Angeles, that has meant forming public-private partnerships on transit-oriented development. Much of the funding for those projects is coming from Measure M funding, which will provide $120 billion in taxation funding over the next 40 years and create 65,000 jobs. Currently, transit-oriented projects are happening along the metro expansion lines, many through lower-income areas where affordable housing options are most in need. “We need to bring in the private sector to help us with these projects,” said Salama. “We are open to hearing ideas and suggestions on how we can better mange our assets.”

In Orange County, Mayer suggested another solution that would help increase density and help incentivize development is updating the general plan and zoning throughout the county. He calls for increased density through townhome development, condominium development and denser detached single-family townhomes.