The right combination of zoning changes and decreased parking requirements can make infill projects feasible in some of the state’s most urban settings. That is the conclusion of Solimar Research Group, which continues to investigate land use options for crowded urban areas.
Recently, we explored how regulatory changes affect the financial feasibility of infill projects, and then applied our models to the land use surrounding a major rail extension in Los Angeles. The results should prove interesting to any agency that is approaching the issue of rapid growth with a strategy of high density, transit-oriented development.
We sought to calculate the degree to which changes in parking and density policy, as well to zoning, will shrink the notoriously stubborn gap between planning ideal and development reality. Our comprehensive pro-forma analyses revealed that while parking policy affects feasibility more than density allowance, reliance on one or the other is politically unrealistic. A combined strategy is essential. On the other hand, key zone changes may prove a powerful, singular tool in getting infill development off the ground.
We further explored how these proposed policy strategies would play out in the very real built environment of the planned Exposition Line extension of the Los Angeles Metro Rail system. Our parcel-by-parcel GIS analysis of infill opportunities surrounding proposed rail stations highlights the infill potential of underutilized industrial land along transit corridors.
To ensure the “real-time” relevancy of our calculations, we consulted local developers to identify actual development models. Five infill prototypes were selected, and examples of each — from an 8-10 unit townhouse to a 100-200 unit mixed-use project — are currently under construction. We then applied an “as is” pro-forma feasibility model to each, one based on current zoning standards and the industry’s minimum expected 15% net margin.
With our feasibility baselines established, we analyzed the fiscal impact of incremental increases or decreases in density and parking requirements. The selection of these two policies as regulatory variables was straightforward: one is a powerful determinant of gross revenue, the other a huge booster of project costs. We also calculated the impact on each prototype of building in either industrial or commercial zones.
Our pro-forma for development prototype 2A exemplifies the political near-impossibility of relying on a single regulation to promote infill in Los Angeles. Prototype 2A is a small, mixed-use project of 54 units, with a current feasibility gap of $1.2 million. A 50% density bonus reduces that gap to only $900,000; a 100% density bonus to only $700,000. While feasibility may arrive with 150% bonus, attendant density, height and FAR changes to the C-1 and C-M zones in which this project would be built are unlikely.
Construction of prototype 2A also is unlikely without a change in parking requirements. We found that only a 50% decrease in the number of required parking spaces reduces the $1.2 million gap down to $400,000. That is still too much. But a synergy of more modest changes produces a viable alternative. Our study indicates that a 75% density bonus combined with a 25-50% parking reduction provide enough incentive for developers to pursue projects of this size. This outcome repeated itself in our calculations for prototype developments of various sizes.
After calculating needed regulatory and zoning incentives, we took our prototypes to a built environment of high infill potential. The Exposition Line is scheduled for completion in 2010. It will serve an almost entirely developed area. We drew circular study zones around the planned La Brea, La Cienega, Crenshaw, Western and Vermont stations.
Our GIS “screening” of parcels around the La Cienega stop reveals a repeated pattern of industrial under-use that, as our pro-formas indicate, should be targeted for infill. Nearly 25% of the half-mile area surrounding the station is zoned industrial/light manufacturing, much of that characterized by large parcels. In addition, many parcels are underutilized and ideal for infill redevelopment. Finally, we identified parcels along the La Cienega Boulevard commercial strip that could be assembled into spaces that would increase the feasibility of projects the scale of Prototype 2A. These projects become even more realistic with the regulatory changes identified above.
Solimar’s complete fiscal and land-use analysis of infill potential along the Expo line is available at: http://www.solimar.org/pdfs/Expo_Final_3-30.pdf.
Greg Goodfellow is a research associate and project manager for Solimar Research Group, parent company of CP&DR.