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Solimar Research

Conflict Continues Over Future Of L.A.'s Industrial Properties

Jan 9, 2008
In 1909 the City of Los Angeles annexed San Pedro and a narrow corridor connecting the port to downtown. Now the city wishes it had included the industrial land on both sides of the corridor too. Large developable industrial parcels are an endangered species in portions of the City of Los Angeles, and the fact that they are at the bottom of the real estate market food chain makes them a hot commodity for speculative developers in a slumping market.

The City of Los Angeles has big plans for its industrial land — but no one can agree on what those plans are. Since Mayor Antonio Villaraigosa issued a directive in December 2005, the Department of Planning and the Community Redevelopment Agency (CRA) have conducted a two-year Industrial Land Use Policy Project (ILUP) and recently released recommendations on what to do with the city's industrial land.

Applications for conversions for the large, less-expensive manufacturing parcels through zone changes have inundated the planning department. The mayor and ILUP team are weary of parcel-by-parcel land use decisions that often result in parcels too small to permit companies to re-locate or expand and that create conflicting uses between residents and — oh, say — the cement factory next door. Live-work adaptive reuse conversions in the Toy District and the new Arts District (previously known as the Warehouse District) have spurred internal concern about the eroding industrial base and the permanent loss of jobs. The city needs more middle-class jobs and commercial tax increment and is hoping to attract high-tech and green-tech companies to these parcels in the future. It's a common issue throughout urban California.

The ILUP report recommends affirming existing industrial preservation policies and explicitly calls to preserve 80% of industrial land as employment protection districts, while permitting an industrialized version of a mixed-use district on 9%, and transit focused development on another 8%. Many believe the ILUP team's 17% concession isn't enough and a parcel-by-parcel battle over the final categorical geographies could be brewing.

If the mayor's team has it way, bygone will be the days of plan amendments and zone changes. The new vehicle of change shall be the community plan process as 12 community plans are being updated now to include the recommendations. The CRA and the Planning Department have devised new zones based on four industrial categories that correspond to a land use inventory and other criteria such as infrastructure and accessibility. The community plan program would implement these zone changes and other ILUP recommendations during the plan updates.

The report and recommendations have raised a stir among the development community and some members of the City Council. Some, like the Central City Association, see this process as a crafty method to implement a policy without having to approve it.

Not surprisingly, property rights advocates want to build residential and mixed-use on industrial parcels because that's what the market demands. However, very few vacant industrial parcels remain around downtown, in Hollywood and on the Westside; therefore, many companies choose to locate inland and northward up into the San Fernando Valley rather than purchase and recycle an already improved site. The problem with this, according to Steve Andrews, of the CRA, is the migration of centralized industries not only hurts jobs-housing distribution, but also increases distribution costs of some heavy, hard-to-ship manufactured goods such as granite countertops.

But perhaps most problematic to the city's plans for industrial preservation is the by-right commercial development on these parcels. On the Westside big-box stores and mini storage companies comprise significant tracts in the "employment protection district." While these retail uses generate more general fund revenue for the city than residential uses, these businesses do not generate the middle class jobs an industrial base provides. Planning says it will make a list of uses not permitted in the new zones. But will the cash cows of big-boxes be blackballed? Only time will tell.

The next three years of the community plan program and subsequent plan updates looks to be exciting and emotional, with showdowns between blue-collar companies and residents, between the CRA/Planning team and housing developers, and between the mayor and the council, all over the fate of some of LA's last large parcels.

- Aaron Engstrom
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