by Kevin Cody
To encourage residential development in Hermosa’s downtown and along Pacific Coast Highway, the Hermosa Beach City Council voted at its Tuesday, February 4 meeting, to eliminate associated development fees on one- and two-unit projects. And to reduce fees on three- and four-unit developments from $76/sq.ft. to $40/sq.ft.
The fees are contained in the city’s Land Value Recapture (LVR) plan, implemented by the council two years ago. LVR allows residential development where previously only commercial development was allowed. The plan’s purpose is to help Hermosa satisfy a State mandate to build 558 new housing units by 2029.
But since adoption of the LVR plan in 2024, no LVR development plans have been submitted to the City.
“Land Value Recapture is a failed experiment,” Mayor Rob Saemann said at Tuesday’s meeting.
But rather than abandon the plan, the Mayor said he hoped his motion to relax LVR fees will encourage residential development of the eligible properties. LVR fees for mixed use developments of five units or more will remain at the $104/sq.ft. established when the plan was adopted.
Councilman Raymond Jackson was the sole vote against the Mayor’s fee change motion.
“There is zero data to support the notion that reducing the fee will lead to residential development,” Jackson said.
He countered with a proposal to waive LVR fees on developments of four or fewer units, but only if construction commences within three years. The three year grace period, he said, would encourage property owners to begin development rather than “bank” their property. The proposal was not supported by other councilmembers.
Downtown property owner John David asked the council to eliminate the LVR program entirely
He quoted Will Rogers’ “Law of Holes.”
“When you’re in a hole, stop digging,” David said.
“LVR is a poison pill. It blocks housing development by driving up costs,” David said.
The LVR plan waives the associated fees if the residential development qualifies as affordable. But the property owner has to agree to a 52-year deed restriction to keep the property affordable, under County affordability guidelines. Affordable housing is typically half the cost of market rate housing.
“For many small property owners, their buildings are their pension. The 52-year deed restriction forces them to sell to large developers who can consolidate neighboring properties,” David said.
Community Development Director Alison Becker cautioned the council against eliminating the LVR program because it might cause the State Department of Housing and Community Development (HCD) to invalidate the City’s General Plan Housing Element. If that happened, housing developments throughout the city could be exempt from city zoning restrictions, including height and density restrictions.
Last October a State Court of Appeals ruling invalidated Redondo Beach’s Housing Element because it utilizes zoning “overlays” that allow, but do not require, residential development in commercial districts.
Hermosa Beach’s Housing Element, and many other cities’ Housing Elements also utilize zoning overlays to satisfy state mandates for new housing. ER
