Report: Los Angeles Must Speed Approvals to Meet Housing Goals

A cumbersome entitlement process is inhibiting the ability of Los Angeles to achieve its housing goal, according to a new study from the Los Angeles Business Council (LABC), which has recommended a series of reforms it says are essential to meet the city’s goals.

According the city’s housing plan, Los Angeles must produce five times more housing units by 2029 than it did in the previous decade, adding 457K new units compared to 84K from 2010 to 2019.

The means the city needs to deliver about 57,000 units per year on average, but with recently approved adjustments to the plan, Los Angeles actually will need more than 60K units each year.

The study released this month by LABC was conducted by UCLA and California State University, Northridge, who examined the complex housing development process and how it has not kept pace with housing needs.

The researchers found that expanding policies for affordable housing, including raising the Site Plan Review threshold by 200 units and increasing the use of master planning would significantly increase housing production.

“This study clearly indicates that we need to streamline the approval process if we want to meet our housing goals,” said Paul Krekorian, LABC president, in a statement.

“I’m pleased to say the Planning Commission has approved my motion to forgo Site Plan Review for affordable housing projects, and for many mixed-use and mixed-income projects with a substantial affordable housing component,” Krekorian said.

The study analyzed every multi-family housing project that was permitted in Los Angeles from 2010 to November 2022, providing the first comprehensive detailed understanding of quantifiable bottlenecks in the approval and construction phases, LABC said.

On average, projects took 3.9 years to be permitted and built, of which 1.5 years were spent in the approval process, the study found. Discretionary reviews during entitlement and permitting added a “significant amount of uncertainty” and had the greatest impact on lengthening total development time, the report said.

The study found that, all other factors equal, projects requiring City Planning Commission (CPC) review added six months to the approval process, Site Plan Review added more than three months, and Environmental Impact Reports (EIRs) added 16 months.

The study also found bottlenecks in construction processes: getting an underground electricity connection from the L.A. Department of Water and Power added eight months to total development time, for instance.

By-right projects—those meeting all current zoning requirements–secured permits more than six months faster than average, reducing approval time to less than a year.

Using the data to simulate policy changes, the study found that reducing approval time by one-quarter would have increased 2010-2022 housing production by 14%, or 10,054 units by the “pull-forward effect” of accelerating projects that had already started.

Shortening approval time would also incentivize new development. Together, the “pull-forward” and “incentive” effects would have added 18,049 units, 25.2% more than the baseline of 71,532 units, according to the study.

Speeding up the rate at which the city permits new housing and reducing discretionary approvals would have accelerated the completion of thousands of units that were under construction, the study found.

“In addition, by injecting certainty into the development process, shorter approval times would have incentivized additional housing starts,” the study stated.

The study, entitled Tackling the Housing Crisis: Streamlining to Increase Housing Production in Los Angeles, was written by Dr. Edward Kung, Assistant Professor of Economics at CSUN, and Dr. Stuart Gabriel, Distinguished Professor of Finance and Director of the UCLA Ziman Center for Real Estate.