A proposal out of Sacramento to put denser housing near transit has divided Californians. But a similar program is already underway in the city of Los Angeles.

It’s an incentive program called “Transit-Oriented Communities,” and it’s encouraging developers to build more housing units—including affordable ones available to tenants with qualifying incomes—near major public transportation stops.

Experts agree that to combat a housing shortage, one that has fueled rising rents and real estate prices, Los Angeles needs to build, build, build. Affordable housing is in especially high demand, and is growing increasingly harder to find. More than 8,500 units that are income-restricted now are expected to become market-rate over the next five or so years, and it’s estimated that LA County would need to add 517,000 income-restricted units to meet existing demand.

The strategy behind TOC is also to reduce car trips by putting people near public transportation options, meeting the city’s goal of reducing the number of miles that Angelenos drive.

The TOC program has been around for less than three years. In that time it’s generated plans for nearly 20,000 housing units, infuriated preservationists, and been the subject of a lawsuit.

It could leave an even bigger mark on LA in the future. The program could potentially be expanded under Senate Bill 50. The proposed legislation would require California cities to allow more multi-family housing, especially duplexes, triplexes, and fourplexes, near transit stops.

Here’s background on how LA’s program came about—and its impact.

What TOC does

The TOC program gives incentives to developers to build multi-family projects within a half-mile of major transit stops. In exchange for those incentives—which include the ability to stray from local zoning codes—developers must put affordable housing in their projects.

Some TOC projects are “by right,” meaning developers get fewer breaks. If a project site is is close to the intersection of a Metro rail and a rapid bus line, for example, the city lets a developer increase a building’s density by as much 80 percent more than what is normally allowed (with some exceptions) and lift its requirement to build parking, which usually is expensive. In exchange, the developer has to set aside 25 percent of its housing units for low-income households.

In the case of TOC, “density” typically means that the developer can build more housing units.

These “by right” projects are the most cut and dry, because there’s less gray area about whether a project will be approved. These account for about one-third of the TOC projects that pass through the department, planners say.

Things get a lot more complicated for developers who want to build projects that go beyond the minimum incentives, for example, by building taller or reducing the open space that would otherwise be required.

But what all TOC projects have in common is that they must include affordable housing, meaning tenants qualify to live in the units based on their incomes. The number of units and the level of affordability that the city requires are based on how close the site is to local bus lines, rapid bus lines, or rail lines and the types of incentives a developer wants to use.

The types of affordable housing range from low-income to extremely low-income. Low-income housing is reserved for households of four making $83,500 or less, and extremely low-income is aimed at households of four making $31,300 or less.

What’s the goal?

The goal is to spur more housing near transit, which is where it makes the most sense, planners say. By building more places for people to live, including affordable housing, near public transportation, the city is putting residents near non-car transportation options and (hopefully) making a dent in goals to reduce emissions.

“The idea is that people will take transit if it’s close,” says Ryan Leaderman, an environmental attorney who has worked on a number of TOC projects. “And denser areas mean walking and biking [to destinations] are easier.”

How does it work?

Developers fill out an application, including which “tier” of incentives their property qualifies for. The tiers are calculated based on how close to a major transit stop a project is and what kind of transit a project is close to. The tiers, along with the application, have to be verified by the planning department.

The tiers go from Tier 1 (low) to Tier 4 (regional). A first tier project could be one that is under a half mile away from two non-rapid bus lines that arrive every 15 minutes or more frequently.

A fourth tier project is close to two intersecting Metro rail stations, or a rapid bus line and a Metro rail station. Future rail stations count too, if they are funded and the location of the stations are known. (The rundown of all the tiers can be found in the guidelines on the planning department’s website.)

There are some exceptions to the allowable density increases, for example if the project site is in a community where planning guidelines have been recently updated. But the program still applies—just with added requirements or restrictions.

It’s important to note that the TOC program can only be used on a site where the property owner could already build five or more units. So if you couldn’t already build a five-unit building on your property, you can’t with TOC—no matter how close to a major transit stop you are.

What does a TOC project look like?

Are you curious about how all of this plays out in real life? To get a feel for what a TOC project looks like, take a gander at renderings for a 209-unit apartment complex planned next to Tom Bergin’s in Miracle Mile. The eight-story building would set aside 28 units for tenants with extremely low-incomes.

The property falls under the fourth tier, the highest tier in the program, and is close to a future Purple Line station at Fairfax and the rapid buses that pass through Wilshire and Fairfax.

Has it been successful?

“TOC has been a really contentious program in the city, but if you look at our numbers, the raw data of housing production, it’s also been one of the most successful,” planning department spokesperson Steve Garcia has said.

City planners say the program has been popular with developers in part because it reduces some of the uncertainty of the approval process—the tiers are set up to clearly lay out how much affordability a project needs to get certain benefits, and if a project meets those thresholds, it gets to move forward.

Leaderman agrees, saying that in terms of ramping up housing production near transit, the program has been “a home run.” He attributes its success to “creating real, good incentives to produce housing,” especially affordable housing, which he says is costly for a developer to include in a project.

Why not everyone is a fan

Preservationists have also said that the TOC program incentivizes property owners to demolish older buildings that contain rent-controlled housing and replace them with new buildings.

Similarly, anti-displacement activists such as the Crenshaw Subway Coalition fear the program will push out existing residents as property owners turn older properties into larger and more profitable ones. While TOC buildings do include income-restricted units, there’s no guarantee that existing tenants will qualify to live in them.

In September, a group called Fix the City sued Los Angeles over a TOC project. Its lawsuit seeks not only to overturn approvals for that residential building but also to undo the entire TOC program.

Fix the City says the TOC incentives go far beyond what voters approved when they voted for Measure JJJ, and that the program fails to provide the well-paying jobs for locals that Measure JJJ was supposed to bring.

Asked if he thought the program had been successful, Fix the City spokesperson James O’Sullivan said that in order to answer, he’d need to know the cost of the program’s achievements. “Who benefits from that success?” he asked.

It’s unknown how many rent-controlled units have been demolished because of the TOC program.

Opponents of the program might be glad to learn that the TOC incentives aren’t meant to be around forever. Officials with the department of city planning say that the bonuses are designed to be replaced as new planning programs to build affordable housing near transit come into effect.

How the TOC program came to be

It was born out of Measure JJJ, which was approved by voters in 2016 and sought to create more affordable housing and jobs in LA by requiring projects that needed special city approval or zoning changes to get built to include low-income units and hire locally.

Measure JJJ also created a framework for a program focused on building more affordable units within a half mile of public transportation options—the TOC program. (Not everyone agrees that the TOC program is in line with the goals of Measure JJJ.)

The program went into effect in September 2017. From October 2017 to June 2019, nearly 19,928 units were proposed through the program—3,863 of them affordable. City planning department data show that 46 percent of all residential units proposed between April and June 2019 were submitted through the TOC program.