Why are city-owned lots sitting empty?
For the last eight years, I have used my commute from the South Bay to downtown to explore the neighborhoods of Los Angeles. The more I drive, the more I notice what I call L.A.’s “lost space,” mysterious plots of land that sit abandoned or underused throughout the city.
On Figueroa Street near West 52nd Place in South L.A., for instance, two barren parcels sit on opposite sides of the road, the larger one surrounded with an old rusted chain-link fence. As a person who studies the economy, I’ve found it puzzling: How is it that in one of the world’s hottest real estate markets, in a city that is in dire need of affordable housing, land like this sits idle?
The answer stands in plain sight at the center of one of those forlorn lots, where a large white sign reads: “Property of the City of L.A.” The city and other public entities, including the L.A. Unified School District and Los Angeles County, own a vast real estate portfolio. And they are among the region’s worst absentee landlords.
The city has been acquiring real estate ever since it was founded in 1781. Today its portfolio includes approximately 9,000 parcels, encompassing vacant land as well as office, mixed-use, commercial, industrial, single-family and multi-family properties throughout California, and in Arizona and Nevada.
Unfortunately, and rather shockingly, there’s no central authority overseeing L.A.’s holdings or developing a coordinated plan for putting them to good use. Until two years ago, City Hall didn’t even have an accurate record of what it owned. That information was dispersed among 55 documents spread across multiple city departments. Thanks to a public-private partnership between the mayor’s office, the Mayor’s Fund and the L.A. Coalition for the Economy and Jobs, the city now has a consolidated, more accurate record of its portfolio.
Analyzing this list, the city controller found that there are up to 500 underused city-owned sites available for development. The McKinsey Global Institute estimated in a 2016 report that there are also 5,600 to 8,900 vacant parcels, both publicly and privately owned, zoned for multi-family development throughout the region.
We now know that we’re land rich. Faced with a growing homelessness crisis, City Hall has started offering affordable-housing developers opportunities to develop a small number of the city’s surplus properties. That’s an important step. But there’s still no long-term strategy for using and leveraging L.A.’s incredible wealth of cityowned land to meet our needs for housing, schools, parks, recreation spaces, business development and many other things.
Instead, we’re getting well-intentioned stopgap measures that may ultimately stand in the way of the solutions we need. Elected officials have been pushing communities to accept short-term strategies to help house the homeless, such as shelters on city-owned parking lots. That’s no way to plan a city.
Overall, City Hall’s current approach to its real estate portfolio, worth an estimated $3 billion, is fragmented and balkanized. Too many departments and agencies handle the decision-making, policies, budgets, management and operations for L.A.’s unwieldy collection of assets.
Until this changes, the city will continue to make decisions in scattershot ways, rendering it difficult, if not impossible, to envision and raise capital for the urban development we need the most. In short, we’re winging it. And that’s a tremendous waste. What L.A. really needs is a chief asset manager, or an economic development nonprofit overseen by a board of directors from both the public and private sectors, to develop a strategic plan.
If City Hall would step back from the current system and look to the private sector as a partner with resources and best practices to share, it could find much better solutions — strategies that reduce costs and drive more revenue to the city budget while enabling L.A. to develop the homes, parks and quality of life its citizens deserve. The city has been an absentee landlord for far too long.
City Hall didn’t even have an accurate record of what it owned. That information was dispersed among 55 documents.