Valley project illustrates affordable housing dilemma.

Shawn Bidsal, the president of West Coast Investment in Van Nuys, wanted to build a complex of apartments and townhomes on a vacant piece of property at the north end of North Hollywood that would rent for well under market rates and address some of the need for affordable housing in the area.

But Bidsal is about to go back to city officials with a redesigned plan that is likely to boost rentals well above the current estimates, perhaps even higher than what might be considered affordable housing at all.

The problem is not just the cost of land and construction. In a city where the only space to build anything is almost always infill space, there are zoning regulations, existing infrastructure constraints and neighbors to consider.

Infrastructure in most San Fernando Valley neighborhoods is more than 50 years old. It was designed to accommodate single family homes, not multi-family dwellings. And the fabric of the communities where these available sites exist don't often mesh with the fiscal realities of building affordable apartment buildings.

The case of West Coast Investment and its proposed project at 7660 Lankershim Boulevard illustrates all the dynamics associated with building affordable housing, a term used to describe dwellings geared to those earning anywhere from 20 percent to 80 percent of the area median income, about $55,000 for a family of four in Los Angeles County.

"This is a classic example where you have people who want to do the right thing, but the perspective on what we need is different for different people, and the constant demand for newer, more luxurious housing tends to result in an inability to create the type of housing we wanted," said Robert B. Lamishaw, a partner with JPL Zoning Services Inc., a consultant for West Coast on the project.

A shortage of housing throughout Los Angeles has driven rental rates to record highs.

On average, San Fernando Valley apartment units of all sizes rent for $1,185 a month, according to the most recent data available from RealFacts, a Novato-based research firm. In North Hollywood, rentals average $1,159, nearly twice what a family earning 45 percent of the area median income can afford to spend on rent, according to federal guidelines.

The discrepancy is even more dramatic for larger units. An average two-bedroom apartment in the San Fernando Valley rents for $1,387; a three-bedroom unit rents for $1,754, according to RealFacts.

With housing costs escalating by 30 percent and more over the past four years, it's estimated that more than 25 percent of households in L.A. spend 50 percent or more of their monthly income on housing. (The national standard is 30 percent.)

Waiting list

West Coast has a front seat to the affordability crisis. The property it is seeking to develop already contains a 72-unit apartment house, where rents range from $660 to $950 a month for single, one- and two-bedroom units. The building is fully occupied, and Bidsal said there is a waiting list for the units.

"We are rejecting applicants that want two-and three-bedroom apartments because we don't have enough," he said.

With such clear demand, West Coast, which also owns a vacant three-acre lot adjacent to the building, began preparing to develop the rest of the property.

"We wanted to build more of the same for people who come to rent so we don't say no to them," said Bidsal. "The neighborhood lends itself to affordable housing."

West Coast drew up a plan that would add two additional multi-family buildings, each three stories and totaling 102 additional units.

In addition, the company designed a row of three-bedroom townhomes that would sit toward the back of the property, closest to where the lot butted up against a community of single family homes.

"We created a harmony from the front of Lankershim Boulevard with higher density to the townhouses, which blend into the single family homes," said Bidsal.

As drawn, the company expected one-bedroom units would rent for $750 a month; two bedroom apartments for $950 to $975 a month, and rents for the townhouses would be about $1,100 a month, well under market rates for such properties.

The apartments would create enough density to allow the company to profitably include the townhomes in the project.

"Considering the high cost of development, it allowed for the creation of enough density to still get a good rate of return," said Lamishaw.

West Coast and Lamishaw took the proposal to the city in Sept. 2002 and a first meeting was scheduled just short of a year later in August.

"At that hearing, there were some neighbors who expressed some concern that the new multi-family buildings would have an impact," said Lamishaw. "The council office weighed in and said we need the housing, but it's too dense."

City officials said there were a number of problems with the development as planned. Chief among them, the lot had only one point of ingress and egress from Lankershim Boulevard. Equally troubling was the sheer number of units, which officials said would surpass the neighborhood's capacity to absorb them.

"You want the infrastructure in place in order to be able to handle the capacity," said Jose Cornejo, chief of staff to Los Angeles City Councilman Tony Cardenas whose district includes the project area. "You can drive anywhere in the Valley where, in the past, they allowed apartment complexes to go in between single family lots, and you see the impact of the lack of infrastructure in place."

Balancing act

Cornejo concedes that balancing the city's need for affordable housing without trampling the needs of the community is a difficult task.

"It is a tightrope we walk, and you have to weigh the type of problems that could arise from these buildings with the type of benefits the community gets from them," Cornejo said. "I think the city can meet those needs in the appropriate places. This is not an appropriate place for that density of project."

The community of mostly working class households, while sympathetic to the need for more affordable housing as well, is not willing to embrace the idea of putting two more apartment buildings on the lot either.

For one thing, residents said, the existing apartment building, more than 20 years old, was neglected for a number of years. Graffiti marred the building and cars were often abandoned in the empty lot.

The new owners have changed the management company; they hired two maintenance men who clean the graffiti within 48 hours and they have instituted new strategies for screening renters, but doubt still lingers.

"I told them if you change those things we'll help you," said Jose Roy Garcia, the president of the Northeast North Hollywood Neighborhood Council. "And now the people doing the development are trying to do a good job, but it took me bringing it to the attention of the owner."

Garcia said he and the council would prefer to see more single-family homes on the site, which is actually zoned for single family use, not apartments. But the one thing both the community and the developer agree upon is that building single family homes on the site would be neither financially feasible nor logistically possible.

Then too, the compromise solution West Coast is set to bring before the city council office in coming weeks may not be financially feasible as an affordable project either.

The revised plan calls for just one additional apartment building of two stories instead of three with 20 units. In place of the second apartment building, West Coast is now proposing 54 townhomes. In all, the project was reduced from 120 new units to 74.

While Bidsal said he has yet to pencil out the new project, it is clear that the reduction in density and the additional cost of building townhouses instead of a third apartment building will likely drive the rental prices up considerably.

"The city talks about wanting affordable housing and then they want more parking and 25 feet of open space and they want the buildings to be attractive and to be a credit to the community," said Lamishaw. "It all makes sense, but where no one is making the connection is if you do all that, you don't create affordable housing because the numbers don't add up."