Beverly Hills in Crisis as Judge Mandates New Affordable Housing: "People Are Furious"

Beverly Hills in Crisis as Judge Mandates New Affordable Housing: “People Are Furious”

For inhabitants of the country’s most sought-after ZIP code, the unwelcome news came in December: In a move to pressure the city to zone for more affordable housing, a restrictive ruling by a Superior Court judge put a moratorium on Beverly Hills’ right to approve any new home additions or project proposals by residents pending the approval of new homes for lower-income locals. In this ultra-exclusive community, where home remodeling is practically a sport, the notion that all renovations – from simple kitchen remodels to multi-million dollar grotto installations – would require the ushering in of outsiders, or be delayed indefinitely, brought a particular unease.

That unease has turned to outrage for many living in the 5.71 square miles that make up the famed city, where rents and mortgages are more than double the national average. Following Superior Court Judge Curtis A. Kin’s Dec. 23 ruling, the city now finds itself fully entrenched in a battle over what’s become an urgent issue across many U.S. cities: the demand for significant and meaningful affordable housing projects. Many residents – already wary of the added foot traffic that will follow the opening of the Wilshire/Rodeo Metro station – just want the status quo to remain in Beverly Hills. Some argue that Beverly Hills simply does not have the space to accommodate any new housing at all – affordable or not.

“People are furious, they’re infuriated that a judge has the right to put a moratorium on residents on something that’s not their fight and not their fault,” Aaron Kirman, a Beverly Hills resident who represents exclusive properties across L.A. and appears on CNBC’s real estate reality series Listing Impossible told The Hollywood Reporter. “The reality is, Beverly Hills doesn’t have much land. I think that [Judge Kin] put everybody in a very complicated and compromising situation.”

The notion that the city lacks for space is laughable to affordable housing advocates. “Other cities may sort of have that argument – Beverly Hills definitely does not,” says Matt Gelfand, in-house litigator for Californians for Homeownership, the group whose suit against the city led to Judge Kin’s ruling. “There is plenty of interest and there are plenty of places to put it,” he told THR, adding that proposals to do just that have flooded in over the past months. “Beverly Hills is obviously a job center. It’s got enormous commercial use. So it needs to have housing.”

The Dec. 23 building moratorium decision amounts to a judicial check on the city of Beverly Hills, which has failed, for decades, to submit a blueprint for affordable housing that the state deems adequate. All California cities are required to submit a plan, known as the Housing Element, to the state every eight years outlining how they will accommodate a proportion of the population growth as California grapples with a statewide housing crisis.

In 2018, California ranked 49th in the U.S. in housing units per resident, with an estimated shortfall of about 3-4 million homes. Beverly Hills, a city of 32,400 residents who overwhelmingly live in single-family homes, has seen its population shrink slightly over the past half-century even as California’s exploded, doubling to about 40 million. For decades, the wealthy city has managed to resist change in the name of, as many residents still say, “preserving its character.”

Beverly Hills has managed to maintain its cordon of chi-chi exclusivity in part because the Southern California Association of Governments, which distributes affordable housing projects throughout the region, long assigned the city a low number of required units. In 2018, the New York Times reported that a measly three affordable housing projects were required of Beverly Hills.

That number has since risen after a more housing-hawkish legislature established a stricter set of rules around how unit requirements are distributed. For the current eight-year cycle, Beverly Hills has been assigned a target of 3,104 additional homes. Three quarters of these must be earmarked for low – and middle-income residents. In order to both reach the target number and maintain the city’s “character-preserving” zoning, units were proposed in some of the city’s fully leased office buildings and a local Jewish Community – even the headquarters of the Academy of Motion Pictures was included.

Alan Nissle, who heads residential and hospitality real estate development firm Wilshire Skyline, told THR this week that Beverly Hills is stuck in an odd situation: if the city were to fully comply with California’s laws, provide more housing, and do its part to help out with the ongoing housing crisis, it would ultimately compromise the essential quality it’s so desperate to preserve, he says.

“[The city] needs to find a way to sufficiently address state needs without undermining its character,” he said by phone. “And unfortunately, until now, it hasn’t done enough legally and politically, to address the state’s concerns. As a result, its attempt to preserve that character has backfired.”

Following Judge Kin’s moratorium, the city immediately issued a legal challenge to the ruling. As a result, permits are still being approved as this all plays out. But residents now fear another legal loophole will threaten Beverly Hills’ exclusive status.

The Builder’s Remedy Solution

The Housing Accountability Act, which passed in 2017 as California was in the midst of a year-long spike in population growth, limits local government’s ability to “deny, reduce the density of, or make infeasible housing development projects” that are otherwise consistent with local standards and fit the current needs. The HAA includes the so-called “Builder’s Remedy” solution, which says that a city or county cannot veto a proposed housing project if the city has not adopted a Housing Element that has been approved by the state.

Beverly Hills’ ongoing failure to deliver a viable Housing Element blueprint has given hawkish real estate developers looking to build there, and build big, a rare opportunity. Without a housing blueprint blessed by the state, officials have unlocked the HAA’s full legal power and given developers a window to propose at least 14 tall residential buildings – structures widely loathed in Beverly Hills, where detached single-family homes and the well-to-do people living inside are the norm. Because these proposals reserve the required 20 percent of their units for lower income renters, the leadership in the city of Beverly Hills – aware of the optics of the situation and likely eager to appear compliant with state mandates – now seem to have little choice but to give these projects a green light.

Or perhaps the city of Beverly Hills will stand firm against the proposed high-rise projects – one of which is at 17 stories – that the Builder’s Remedy solution has triggered. After all, the city of Santa Monica managed to negotiate a settlement agreement with a developer who’d utilized the same Builder’s Remedy process after the beachside city similarly failed to gain state approval for its own Housing Element. And members of the Beverly Hills City Council, facing a March 5 election, might mostly be concerned with winning over angry voters who despise the idea of living beside high towers and among their new, less-affluent residents.

The city’s latest revised Housing Element blueprint was set to be delivered to the state this week. Having cursorily read the document, Gelfand tells THR that the the new blueprint still doesn’t meet a key legal standard in presenting evidence that the existing uses on the sites listed are going to discontinue. Nissle, who also perused the blueprint, says that, though it is not necessarily a slam dunk for state approval, the revision reflects the city’s due diligence and a genuine effort to meet the housing needs outlined by the state.

Recently, a plan from Nissle’s firm – for a seven-story residential in an area of Beverly Hills zoned for three stories – was approved by the city in a vote of 5-0. Of the 54 units in the building, six of them are earmarked for low-income residents. This is well below 20 percent but, of course, higher than zero. Is meeting regulatory authorities halfway a solution for Beverly Hills? It certainly has the feel of a compromise – albeit one highly unlikely to bring in the thousands of affordable units needed and required. For Beverly Hills, it seems the time has come to play catch up with some of its neighbors – like it or not.

“If [Beverly Hills] is going to grow, it has to grow vertically,” Nissle says. “It’s going the way of Hollywood and Santa Monica, for better or for worse. It’s just the new reality of things.”

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