Los Angeles is tackling its housing crisis head-on. In December 2022, Mayor Karen Bass launched Executive Directive One (ED1), designed to fast-track the development of 100% affordable housing projects. For multi-family investors, this policy offers both strategic opportunities and important considerations.
Streamlined Approvals: Faster, Predictable Timelines
ED1 promises accelerated city approvals for fully affordable projects:
City approval in 60 days
Building permits within 5 days
According to LAist, this is achieved by exempting projects from CEQA challenges, which have historically delayed construction. The directive “applies exclusively to developments that are entirely affordable, excluding market-rate or mixed-income projects,” meaning investors must carefully select eligible properties.
For investors, this means reduced holding costs and faster returns—but only if the project meets ED1 eligibility criteria.
Labor Standards and Legal Considerations
While ED1 speeds up approvals, it also raises questions around labor. Many fast-tracked projects are exempt from prevailing wage laws and project labor agreements, which has drawn criticism from labor advocates. LAist notes that some argue this “could impact construction quality and worker compensation.”
Ongoing legal challenges and evolving policies may affect project timelines and costs. Investors should monitor regulatory developments closely and engage legal counsel when evaluating potential sites.
Investment Implications: Opportunities and Limitations
ED1 creates a clear pathway for multi-family investors, but not all properties qualify. Key points to consider:
Eligible Sites: Single-family zones, historic districts, and properties with existing rent-controlled units are often excluded.
Strategic Planning: Focus on fully affordable developments that can benefit from fast-tracking.
Labor Considerations: Factor in cost implications of labor exemptions when budgeting and scheduling.
By understanding these nuances, investors can maximize ED1 benefits while mitigating risks.
Takeaway: Aligning Social Impact with Returns
Mayor Bass’s ED1 initiative represents a major shift in Los Angeles’ approach to affordable housing. For multi-family investors, it offers a unique opportunity to participate in socially impactful projects while potentially achieving faster, more predictable returns. As LAist highlights, ED1 “could speed up affordable housing construction significantly,” but success depends on careful site selection and strategic planning.
Questions? Contact the TIG Team!
Click on a contact card below to email one of our team members directly.
