Change in Live/Work Definition Moves Forward

By Eric Richardson
Published: Wednesday, August 05, 2009, at 12:56PM

Rowan Auction Eric Richardson [Flickr]

A kitchen inside the Rowan Lofts, which developer Downtown Properties hopes will soon be eligible for FHA insured loans.

A small change in the definition of live/work units that could have a big impact for Downtown's real estate sales moved one step closer on Tuesday as the City Council's Planning committee instructed the City Attorney's office to prepare the ordinance.

Supporters say that redefining live/work as primarily residential will bring the ordinance more in line with how the units are actually being used, and will promote home ownership by allowing buyers to access highly-attractive federally insured loans.

Michael Cohn of Bank of America Home Loans urged the committee to move quickly. "There is a certain point of urgency here," he told the committee. "That is, there are a couple of loft projects that are going on right now that are opening up for sale that are going to be wanting to close escrows in the next 30 to 45 days. These guys are dangling on a vine right now."

Councilman Ed Reyes, chair of the Planning committee, shared that he had received emails from artists concerned that the change would affect their ability to work. Reyes asked that a meeting be set up with the arts community before the item goes to Council.

Supporters say that redefining live/work as primarily residential will bring the ordinance more in line with how the units are actually being used, and will promote home ownership by allowing buyers to access highly-attractive federally insured loans.

Shiraz Tangi, a land use attorney with Alston + Bird and chair of the Downtown Los Angeles Neighborhood Council's Planning committee, praised the city's effort on this project and the dividends it would pay.

"What the city is essentially doing is leveraging federal money to encourage economic activity in our city," said Tangri. "Given our economic crisis, I think the city really needs to look for these types of creative opportunities to partner with the private sector."

Where condo buyers were previously expected to put only three or four percent down, private loans today typically require 10 - 20% down payments.

"If you're buying a unit for $300,000, kind of our lowest-priced one bedroom unit, you've got to come up with $60,000 down, plus closing costs and everything else," Bill Stephenson of Downtown Properties explained to blogdowntown after City Planning Commission approved the item in July. "All of a sudden you need roughly $70,000, then you've got to move in, so you probably need roughly $80,000 in cash."

In contrast, FHA insured loans allow just a 3% down payment on loans up to $625,000. That means just $10,000 cash, a much more accessible sum.

The ordinance change must next go to City Attorney's office for final language before being sent to the full City Council. Once passed, existing buildings would need to resubmit building plans before falling under the new definition.

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Comments

1

This is a very significant change that just makes sense. I know it will put our household into the buyer's market much sooner than without this change. Thank you.

# on Aug.05.2009 AT 06:30 PM
2
Bud Coffey writes:

What will this mean to the artist community?

# on Aug.06.2009 AT 06:49 AM
3
Eric Richardson writes:

Bud: The change doesn't have any effect on existing buildings, so any existing live/work designations will stay exactly the percentages they are unless a building goes back and resubmits building plans. That's only going to happen in buildings that are actively trying to sell.

How it was presented Tuesday is that new conversion buildings who wanted to cater to artists could just ask for a different ratio as part of their approval process. You wouldn't be FHA loanable, but typically artist studios are rentals anyway.

# on Aug.06.2009 AT 08:43 AM
4
Qathryn Brehm writes:

So it benefits the property developer and artist be damned. There are already very few places where artists can do their work unless they are on a computer.

The live/work and A.I.R was to encourage artists to move into buildings and areas no one else wanted to be in or near. This is just history repeating itself over and over.

The arts are a great economic engine for this city and the artists are expected to fill the galleries, museums, theaters and concert halls and find workspace where ever they can. A very sad statement for an international city.

# on Aug.21.2009 AT 02:13 PM

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