Fast Approvals, Slow Delivery: Just 23% Of Units Approved Under ED 1 Have Been Permitted

Los Angeles’ affordable housing streamlining effort has produced a flood of approvals since Mayor Karen Bass launched Executive Directive 1 in 2022, but the city’s building boom has yet to materialize. Fewer than a quarter of ED 1‑approved units have secured permits, revealing a widening gap between entitlement speed and real‑world delivery.

Financing challenges such as high interest rates and the high cost of construction, combined with a disconnect between proposed projects’ locations and the demand for those units, have shown that while making it easier to get a project approved is critical to getting more affordable housing built in the city, it’s far from the only piece of the puzzle. 

“One of the biggest lessons [of ED 1] is that speed of approval alone doesn't guarantee delivery,” Century Housing Corp. Vice President of Construction Lending Tracey L. Burns said. “Execution and funding are equally critical.”  

Just over 43,300 affordable housing units were proposed through the ED 1 program as of April 1. Of those, roughly 34,000 units have received planning approvals. However, only 8,058, or 23% of approved units, had received permits as of May, according to Bass’ office. 

The projects that made it to construction were the ones with experienced affordable housing developers and a clear path to capital, Burns said.  

The deals that stalled typically ran into financing gaps, rising costs or had teams that couldn’t move and deliver as quickly as the sped-up process demanded, she said.

Burns declined to specify exactly how many ED 1 projects Culver City-based Century Housing had provided financing for, but she said it was “a significant number … representing a meaningful portion of our affordable housing activity in Los Angeles.” 

One project that Century Housing lent to has not only pulled permits but also completed construction.

The 44-unit project is in West LA’s Sawtelle neighborhood and serves residents making up to 120% of the area median income, which is considered moderate income. 

The bulk of the units would rent for $1,800 to $2,100, depending on their size. Within a two-block radius of the development, rents for comparable units range from $2,100 to $3,200, according to Apartments.com listings.

The project’s deeded rents use a framework from 2023, but current rents have decreased. 

That project’s developer, Generation Real Estate Partners, had never done a 100% affordable project, although it is an experienced multifamily developer that has used density bonuses and other incentives and has completed some deed-restricted affordable units, Generation co-founder Steven Scheibe said. 

Generation’s parcel had been zoned for townhomes, so “the ED 1 program was able to unlock a little bit of additional land value for us in that we wouldn't normally have been able to build what we ended up building on that lot,” Scheibe said. 

Preconstruction on the project took about 12 months from start to finish, Scheibe said. It’s a marvel in a city where the process famously drags, but Scheibe also said that since ED 1 was put in place, he has seen the speed of approvals for market-rate projects ramp up, too. 

The Sawtelle project ran into some delays that ED 1 was supposed to help sidestep when a neighbor appealed the project's approval, citing circumvention of the California Environmental Quality Act.

Part of the streamlining process for ED 1 projects was that they would be exempt from CEQA. 

The appeal was tossed out about three months later, but the appellant also sued the city over the project. The Sawtelle project continued despite the hurdles. 

“We spoke to enough people who are a lot smarter than I am about this who kind of gave us the confidence that having your permits revoked is a very uncommon event,” Scheibe said.

Scheibe estimated that overall, the appeal and lawsuit only cost the project a few months’ delay. 

Toward the end of the project timeline, Scheibe said that the company started to realize that operating a 100% affordable project might not be something it was operationally ready for, so it went out to the market and sought a buyer. 

The completed project sold to the Housing Authority of the City of Los Angeles for $16.7M, or about $379K per unit. 

Some developers used ED 1, got their projects approved and permitted, but are selling the shovel-ready project, Burns said. High construction costs are a factor, but a huge issue is location.

Projects that were proposed in areas where the affordable rents aren’t a discount to market rents don’t make sense on paper, and lenders don’t want to get on board.

It is unclear exactly how many of these ED 1 projects are up for sale, but a cursory online search turned up at least half a dozen. Those for-sale projects are in North Hollywood, Arlington Heights, and South LA neighborhoods Vermont-Slauson, Vermont Square and Vermont Vista. 

All are areas of the city where 80% to 120% AMI rents are significantly above those of market-rate studios and one-bedroom units marketed online. 

ED 1 was made permanent late last year, and since then, a handful of new incentives at the state and local levels have been introduced that are stealing away some of the interest ED 1 once captured.

Burns said the interest has peaked, from her point of view, and far fewer ED 1 projects are crossing her desk. 

While Scheibe said that his team learned a lot from building an ED 1 project, if he had to do it again today, he wouldn’t go the ED 1 route, especially as a mainly market-rate developer. 

“We find there's other entitlement and housing production strategies out there more aligned to what we typically do, and given that some of these new programs offer opportunities to do them quickly and with more certainty, meaning no CEQA appeals, there’s not necessarily a need for us to go back to the ED 1 strategy for proposing housing,” Scheibe said.