New Mayor to face first test on housing.

AN early test of Mayor-elect Antonio Villaraigosa on a business issue could come in the form of a revamped proposal mandating affordable housing set-asides that goes before the Los Angeles City Council.

Councilmen Eric Garcetti and Ed Reyes are expected to introduce a revised "inclusionary zoning" proposal this week or next, which would put it on track for full council review tight around the time Villaraigosa takes office July 1.

The measure, which would require most new projects to contain some below-market rate housing, pits progressives against development interests.

So far, Villaraigosa has stuck to a middle path, saying that he favors mandated set-asides but that "builders must not be financially harmed."

Last summer's proposal by Garcetti and Reyes would have required developers to either build affordable units or pay a fee to the city. It was withdrawn after developers and Mayor James Hahn argued that the ordinance would only drive developers outside city limits.

The revised proposal keeps the mandates, but will add density incentives for developers and is also expected to give neighborhoods more say in whether projects with affordable set-asides can be located in their communities.

Developers and business advocates are expected to raise objections to the new plan. However, as of last week, it was unclear whether they would oppose it outright.

One opponent of the original proposal, Central City Association President and Chief Executive Carol Schatz, said she was waiting to see whether the measures she supports, such as boosting the city's affordable housing fund and targeting affordable units to certain neighborhoods, make it into the plan.