Breaking Down the Citywide Adaptive Reuse Ordinance

The 2021-2029 Housing Element found that Los Angeles’s current zoning regulations are insufficient for the city to meet its Regional Housing Needs Assessment (RHNA) target. To address this gap, City Planning has identified rezoning as a key strategy to support the development of 255,433 units by February 2025.

LA City Planning responded by creating the Housing Element Rezoning Program. A core component of this is the Citywide Housing Incentive Program or CHIP. Complementing CHIP is a revised adaptive reuse program, the Citywide Adaptive Reuse Ordinance.

This is the second in a three-part series on the Housing Element Rezoning Program. Read more about CHIP here.

What is Adaptive Reuse?

LA faces two challenges: a housing supply shortage and high vacancy rates in the office market. Downtown LA office space, for example, had a Q1 2024 vacancy rate of 28.8% (CBRE). In early 2024, 20% of all Southern California office space was vacant (The Real Deal).

Adaptive reuse projects solve both challenges by converting eligible buildings or structures from non-residential to residential use. The most common trend is converting vacant office spaces into multifamily residential.

These conversions can breathe new life into underutilized buildings and neighborhoods. Certain urban or suburban Class C buildings present quick and cost-effective housing conversion opportunities. Converting vacant office space provides a sustainable response to the impact of the COVID-19 pandemic on the real estate market, including the rise of remote work.

LA’s Legacy of Adaptive Reuse

Adaptive reuse is not new to Los Angeles. The 1999 Adaptive Reuse Ordinance (ARO) played a pivotal role in transforming 12,000 distressed units in Downtown Los Angeles into vibrant live/work spaces and visitor-serving facilities. The ARO was partially intended to reduce vehicle miles traveled by encouraging mixed commercial and residential uses in existing buildings.

Under the previous ARO, only buildings constructed before July 1, 1974, are eligible. Older buildings are assumed to have an advantage for conversion because maintenance has often been deferred, warranting a complete electrical, HVAC, and plumbing renovation for the new use.

Challenges

Converting office to residential sounds simple in concept, but the execution can be complicated. The success of a conversion project is highly dependent on its location, the residential market, and the state of the building.

Challenges of adaptive reuse:

• Deep office floor plates that, when converted to residential, result in awkward, unconventional layouts with limited natural light. Deep floor plates commonly utilize tensioned slabs that complicate the core drilling required for residential plumbing and ventilation.
• Offices typically have fewer windows, which are smaller than those used in residential construction, and a higher number of elevators. The open center space in many office buildings often goes unused in residential conversions.
• Extensive physical changes and building code requirements can drive up costs, making it less appealing for developers.
• Adaptive reuse projects are treated as new buildings by planning and permitting departments instead of tenant improvements (TIs), thus requiring planning approvals and processes in addition to permits.
• Many commercial areas lack neighborhood amenities, such as grocery stores, schools, etc., that would make them desirable places to live.

What You Need to Know

The proposed Citywide Adaptive Reuse Ordinance will expand the existing incentives to encourage converting underutilized buildings into new housing. How?

1. Broader Building Eligibility

Eligible buildings are “those that were constructed in accordance with building and zoning codes in effect at the time they were built” and are:

• At least 15 years have elapsed since the building was completed.
• Any parking structure or parking area within an existing building may be converted if at least five years have elapsed since the building was completed.
• At least five years have elapsed since the building was completed and the project is approved by a Zoning Administrator.

Instead of tying Adaptive Reuse eligibility to a fixed date, the City has proposed a rolling clock of 15 years after the original Certificate of Occupancy issuance. This creates a larger pool of buildings eligible for a faster, by-right approval process.

The Department of Building and Safety will review and approve adaptive reuse projects involving buildings at least 15 years old or parking structures at least five years old.

Applications seeking reuse of younger buildings (between five and 15 years old) are subject to approval of a Conditional Use Permit by a Zoning Administrator. The same ZA process will be applied to projects seeking additional relief from development standards or floor area averaging when they incorporate new construction.

2. Citywide Coverage

The proposed ordinance broadens the current ordinance’s reach from greater Downtown LA to the entire city. This means that all areas of Los Angeles, including urban and suburban locations (see the city’s eligibility map here), can be eligible. Projects located on lots within the Downtown Community Plan Area do not qualify for the Citywide Adaptive Reuse Program but are superseded by the Downtown Community Plan.

Projects located in zones that permit residential or mixed-use are more likely to qualify. The ordinance includes provisions that relax zoning restrictions and facilitate conversions in commercial and industrial zones where they were previously restricted. Projects cannot be located on a lot with an applied Density District.

3. Revised Incentives

The previous ARO “exceptions” for existing floor area, height, and yards have been renamed “incentives.”

These incentives include:

• Exemptions from some building code standards that apply to new construction. This allows older buildings to be converted without extensive and costly upgrades. Existing floor area exceeding that permitted by zone, height, district, or specific plan shall be considered permitted. Projects are not required to comply with any applicable upper story or building mass provisions nor provide standard or open space or landscaping.
• Removal of minimum unit size requirements
• Ability to build one-story structures on the roof, such as fitness rooms, lounges, shade for roof terraces, or other similar features. These structures do not count as new floor area if these are accessible to all residents or guests.
• Ability to repurpose excess parking spaces for other uses, such as leasing to non-residents, converting to storage, or using for amenities like fitness centers.
• Allows conversions that remove internal space to create courtyards or light wells to be replaced with equivalent square footage that may be added within vacant areas of the project site or on an adjacent property.

4. Unified Adaptive Reuse (with affordability unit requirements)

LA City Planning has determined that an inclusionary affordability requirement would render most adaptive reuse conversions economically infeasible. Instead, the ordinance includes incentives to encourage the voluntary provision of affordable units.

One incentive is Unified Adaptive Reuse, which allows for infill development and adaptive reuse of nearby buildings. The project’s infill or new construction portion is eligible for unlimited density (within the floor area limitations of the underlying zoning) in exchange for providing a set percentage of affordable housing units. Alternatively, adaptive reuse projects providing affordable housing units on-site will be eligible for a vertical addition of up to two additional stories above the existing building height.

What’s Missing?

Developers often point out that the financial feasibility of adaptive reuse in Los Angeles is still challenging. The Citywide Adaptive Reuse Ordinance misses some critical considerations for successful conversions:

• Financial incentives to mitigate the high costs of conversions.
• Updates to the LA City Building Code.
• Allowance for partial office building conversions to residential. Many argue that these need to be considered a tenant improvement instead of a complete building change of use, potentially by using a threshold for the degree of change to a building. Many large office buildings with high vacancies could be better utilized by partially converting their vacant floors into housing or hotel space. This would make the conversion more akin to a tenant improvement than a complete change of use and full building upgrade.

To learn more, read the full revised ordinance here.