Housing production in Los Angeles has slowed in the two years since Measure JJJ took effect, according to a report issued by the University of California Berkeley's College of Environmental Design and Los Angeles-based thinktank LAplus.

The ballot measure, which was approved by 65 percent of voters in the November 2016 election, requires that all Los Angeles developments seeking zone changes or general plan amendments employ prevailing wage labor and set aside a percentage of residential units for lower-income households. Prior to the enaction of Measure JJJ, such projects accounted for a significant portion of Los Angeles' new housing production - between 2016 and 2017 they accounted for more than 19,000 proposed residential units.

But in the two years since Measure JJJ took effect, the report finds that developments needing zone changes or other legislative actions have come to a halt. Few projects have filed for entitlements under the Measure JJJ rules, and only one project has been approved to date. Citing interviews with several developers, the report points to Measure JJJ's prevailing wage requirement as the primary impediment to the use of zone changes and general plan amendments. According to the report, union labor increases the cost of a podium-type development by 20 percent, and by 30 percent for low-rise construction.

Some of the lost production has been offset by the creation of the Transit Oriented Communities guidelines, which were also approved via Measure JJJ. The TOC program, which grant extra height and density to projects that provide affordable housing, have accounted for more than 10,000 proposed units between 2017 and early 2019.

Though one developer described the TOC guidelines as "the saving grace of JJJ," the report finds that the program's utility is mostly limited to projects at the upper end of the rent spectrum. Multiple sources cited by the report found that TOC developments only make sense in areas which command rents between $4 and $5 per square foot.

According to the report, this is reflected by the overall decline in the number of developer applications to the City of Los Angeles since the enaction of JJJ, down 11.3 percent on a per-quarter basis. The City of Los Angeles' own numbers show an approximately 35.6 percent drop since the enaction of JJJ, albeit using a different methodology and on a different timeline.

"These trends show that Los Angeles would have been better off if voters had authorized the TOC incentives as a stand-alone program," said Mark Vallianatos of LAplus in a statement. "Well through-out incentive programs can work, but they're no substitute for adopting a general pro-housing policy."

"The bottom line is we are trading off moderately more set-aside affordable units in TOC areas for a significant decline in housing production everywhere else," said Greg Morrow with UC Berkeley's College of Environmental Design. "We need to re-examine how Measure JJJ is implemented in order to address the perverse effect it has on housing production outside of TOC areas."

The report recommends several tweaks to Measure JJJ in order to soften its impacts, including exempting projects seeking to rezone sites specifically zoned for parking, exempting projects seeking to remove decades-old density restrictions, and exempting certain projects in "medium-market" areas which could offer more affordable rents.

Additionally, the authors recommend amendments to the TOC program, changes to various development processes and fees, and increased funding for affordable housing coupled with the strengthening of tenant rights.

The full report can be viewed here.