Rebuilding or Red Tape? Housing Regulations After Wildfires

One key topic on the minds of residents who lost everything in the Palisades Fire a few weeks ago is rebuilding. When can they go back to the sites of their previous homes? How quickly will they be able to rebuild? Will the future resemble any part of what Pacific Palisades was in the past?

These are valid, important questions. I’m sure that many are eager to move out of the hotels or rentals that they were relocated to during the fires, but developing new housing in California can be a slow, arduous, and frustrating process. So, what HAS our state and local leadership said about rebuilding? Can they offer hope to these hurting residents?

Housing Development Process in California

Before diving into these questions, we need context. Let’s start with a basic overview of the development process in California. There are several steps to being able to build a housing project in our state, from submitting applications to gaining approvals, and to finally completing the actual building work.[1]

Let’s say I’m a developer and I want to build an apartment building in Los Angeles. The first step is to find the site I want to build on. It isn’t as simple as just finding some open space. As a developer, I would have to consider zoning laws, market demand, and the city’s General Plan. You’ll remember from previous episodes that zoning is important because it dictates what type of building you can develop. For an apartment building, I would need to find a site in a residential multi-family zone. Then I would have to consider the market – is there demand for an apartment building in this area? What is the market rate for rent? Will a buyer want to purchase my building for a high enough price to recoup my development costs? Lastly, I would need to look at the city’s General Plan. This is the policy framework that governs the long-range development plans for the entire city. It may also outline future changes to certain zoning. So, if the plan showed that the site I was considering is in a zone that is scheduled to be changed to single-family zoning, I would need to reconsider starting a high-density housing project in that area.[2] Clearly, just finding the site to build on has significant considerations, but it’s only the first step in the process.

Once I find a site, I then have to coordinate with city planning and formally apply for project approval. Drafting the actual application can take between six to twelve months, especially depending on what is required for the project under the California Environmental Quality Act, or CEQA. If my project will have minimal environmental impact, then I can submit a Negative Declaration. But if not, I would have to perform an Environmental Impact Review, which includes taking into consideration things like air quality, water quality, wildlife, traffic, and so on.[3]

Formal submission of the application would start the approval process. I might have to speak at public hearings to explain and obtain feedback on any zoning changes or the results of my environmental reviews. This part of the process is the longest, taking two to four years on average.

At this point, if I have stuck with it, and if the project makes it through all the reviews and approvals, it is now time to purchase the land. How has the land been available for sale this long? It is standard in this process for the developer to pay through an option-to-purchase contract, which gives the buyer the right to purchase the property at a certain time for a specific amount of money.[4] If the approvals don’t go through, then the developer doesn’t have to buy the land. But let’s say my project is approved, then I would actually purchase the site to begin the project.

Next, I would need to create permit plans. This goes into much deeper detail than the original proposal, including the plans for the electrical wiring throughout the building, all the pipe locations for running water, and on and on it goes. This can take nine to twelve months to draft, and it’s important to get it right, because that plan has to move to its own round of reviews and approvals. This time it is circulated among various departments for compliance with building codes, plumbing codes, and electrical codes. It’s even reviewed by the Fire Department for fire safety and prevention codes compliance.

Only after all these plans have been approved would I finally begin building out the project – a process that takes one to three years in and of itself, depending on the complexity of the project. After the project is built, the final step would be to go through inspections, at which point I would finally be issued certificates of occupancy.

On average, that whole process takes somewhere around seven year in total! That is without factoring in extra time to work out CEQA lawsuits or public opposition that may arise over the course of all the project approvals. This is significantly slower than most other states across the country. Arizona and Texas, for example, have average development times of one and a half to three years.[5][6] That’s about the time it takes for just one step of the process in California! It’s safe to say from looking at this process, that building new homes in California is a daunting task for any developer.

What about in the wake of a natural disaster, like the Los Angeles fires? Does rebuilding after a disaster have to follow the same steps? The process remains the same, but oftentimes the state can use emergency provisions to expedite approvals and bypass certain regulatory requirements. One example in this case is the suspension of the Coastal Commission’s permitting requirements. Governor Newsom has issued two executive orders directing the Coastal Commission in Palisades to suspend their permit approvals in an effort to speed up the development process.[7] They haven’t responded very well to those orders, so the process may be slowed anyway, but the point is that the government does have the power to undo a lot of the red tape in place under emergency situations. Mayor Karen Bass also announced the opening of a one-stop permit office to help with all rebuilding questions.[8]

But, despite these efforts to speed up the rebuilding process in the Palisades, multiple pieces of legislation approved by the Los Angeles City Council may prove to end up hurting victims more than helping them. What is the main driver behind this legislation? Two words: affordable housing.

Regional Housing Needs Assessment (RHNA)

It all starts with the Regional Housing Needs Assessment, or RHNA. This is a required process in the state of California to plan for housing across all cities and counties, specifically to accommodate low-income communities.

Every eight years the California Department of Housing and Community Development determines housing need, which is the number of new housing units needed across the whole state, and then it splits it among four economic categories. It will then allocate that total number of housing units that need to be built among all the cities and counties in California, who create housing plans to make it happen within the eight year cycle.[9] The current cycle we’re in started in 2021 and will end in 2029.

In 2021, Los Angeles was assigned 456,643 housing units – so that means Los Angeles is responsible for building over 450,000 new housing units by 2029. But it can’t build just any type of housing. These units are split out into income categories, meaning that a certain percentage of the new homes built must accommodate low-income communities. Income categories are based off percentages of area median income. Whatever the median income is in a county will determine how the income categories are broken out. There are four main groups: starting with very low income – which is defined as half of the area median income, low income – which is between 50 to 80% of median income, moderate income – which is between 80 to 120% of median income, and lastly, everything else is considered above moderate income.

Let’s illustrate these categories with some numbers to give you a tangible idea of what we’re talking about. For 2024, LA’s area median income for a family of four was $98,200. So, very low income would encompass families of four on an income of under $50,000 per year, low income would be between $50,000 and 78,000, moderate income would be between $78,000 and 118,000, and above moderate would be anything over that.[10] How is new housing tailored to accommodate people based on their income? Rental rates are capped at a certain threshold, and it means that only individuals or families who qualify as very low income, low income, or moderate income will be allowed to live there.

In Los Angeles, 25% of the required new housing units must accommodate very low-income individuals. This means that 25% of new housing can only be rented to families with an income of under $50,000, and they cannot be charged more than $1,200 per month in rent. For the next level up, 15% of new housing must be rented to low-income residents, so anyone under an annual income of $78,000, and their max rental rate is $1,400 per month. For the moderate-income category, 16% must be rented to this group, which is people with annual income under $118,000, and their max rental rate is $2,700 per month. Finally, the remaining 43% of new housing can be built for above-moderate income residents, for which there is no cap on rental rates.[11][12] So, new developers know that 25% of the new housing built in Los Angeles will only be available to households under $50,000 per year. This may disincentivize them from building because they may have questions of how much a buyer will be willing to pay, when the buyer knows they will only be able to rent out the units for $1,200 per month. After all, would you buy an apartment building in Los Angeles for millions of dollars if you know that the most you can charge your tenants will fall below your mortgage costs? And knowing that as a developer, would that incentivize you to want to build an expensive apartment building here?

Beyond outlining how many new housing units are needed, and how many must be limited to certain income groups, Los Angeles also has to identify where they will put all of this new housing. Just where are these going to be built? One way the county builds out affordable housing is by identifying “opportunity areas.” A “highest resource area” is one that has strong economic growth as well as social resources that promote the best quality of life for residents. From there, several other categories fall below it, like high resource, moderate resource, low resource, and high segregation & poverty areas. Counties have to analyze the breakdowns of their cities to understand where to allocate new housing units. For LA County, it found that its cities only had the potential to develop 230,000 new housing units in between 2021 and 2029, largely in part to the breakdown of its opportunity areas.[13] It has to find a way to make up the difference between the projected 230,000 new housing units and the required goal of 450,000 outlined by the RHNA. How will it do that? Our county has decided to force affordable housing through new legislation.

New Housing Laws for 2025

On December 10th, 2024, the LA City Council unanimously voted to adopt the Los Angeles Housing Element Rezoning Program,[14] and it went through its final approvals last Friday, February 7th.[15] This plan enacts several new ordinances that work to rezone housing across the county so that it can meet the 450,000 new housing goal set by the RHNA. The regulations it outlines will have a direct effect on development across the county, but especially on Pacific Palisades as it undertakes efforts to rebuild. 

What ordinances are in this program, what do they do, and how do they ensure LA will meet its housing requirements by 2029? There are two ordinances that have significant impact on development regulations. The first is the Citywide Housing Incentive Program, also known as CHIP. Under CHIP, housing developers will be required to incorporate a certain percentage of affordable housing units within their projects, based on the project’s location, size, and other factors. This way, the county can incorporate its own requirements to build affordable housing into what developers are allowed to do.[16] High opportunity areas will be the first to see CHIP enacted, while low opportunity areas may not be eligible right away. According to the California Tax Credit Allocation Committee and the Department of Housing and Community Development, Pacific Palisades is designated as the highest level of neighborhood opportunity classifications, meaning that affordable housing will be required throughout the city.[17] The way that CHIP works is it incentivizes developers by allowing them to exceed current limits on building if they include a certain percentage of affordable units in their new development.[18] So, if developers do not incorporate affordable housing into their plans, they will be limited against their competition who DO include affordable housing units.

CHIP is only the beginning though; the second ordinance, and arguably the most important one for the people of Palisades, is the Resident Protections Ordinance, or RPO. The RPO outlines that if an apartment complex that was built before 1978 was destroyed, any replacement units must be rebuilt as affordable housing. This means that even if older apartment buildings were not rented out to low-income tenants previously, the new units will be subject to income thresholds. The Center Square reported that this would require a large portion of the apartments burned in the Palisades fire to be rebuilt as low-income housing.[19] But that isn’t all, because for apartment complexes built after 1978, owners have to prove that in the five years before the fire, so from 2020 to 2025, that all tenants occupying the building were qualified as higher income. If the complex does not have records, cannot prove its tenant’s income brackets, or is shown to have not had all higher income tenants, then the city will automatically apply, quote, “the percentage of Extremely Low Income, Very Low Income and Low-Income Households in the same proportion as their share of all renter households within the City of Los Angeles.”[20]

Let’s put some numbers behind it. Let’s go back to those rental rates we discussed earlier. Units in Pacific Palisades for very low-income residents will be capped at a rental rate of $1,200 per month, low-income residents at $1,400, and moderate-income residents at $2,700.[21] That is less in rent than the area that my husband and I live in, and we are not living in an area nearly as beautiful or iconic as Pacific Palisades. You are hard pressed to find rent for under $2,000 in standard areas of LA, let alone in such a nice area. Could you imagine buying a building in Pacific Palisades, and only being able to rent out units for $1,200 per month?

Just to prove this isn’t only my perception, let’s frame the context. Before the Palisades fire, the market rate for a two-bedroom apartment in the area was between $4,000 and $5,000 per month.[22] Just, let that sink in for a minute. Market rates were 4 to 5,000 dollars per month, and these regulations would require them to be rebuilt and rented out for literally a quarter of that. Think of how much that will alter the demographics of the neighborhood! Think also of how many residents will not be able to move back into their same apartment complex, because if they were paying $4,000 in rent per month then I would bet you their income is too high to qualify under the affordable housing regulations. The LA Housing Production Institute Director, Joseph Cohen, put it this way, quote, “Under the Resident Protections Ordinance, in most cases landlords will be required to replace apartments burned down in the Palisades with low-income units. Displaced residents will then find themselves ineligible to return because they won’t meet the income requirements.”[23]

Real Impact of Affordable Housing

What does this all mean? How should we think about affordable housing regulations being pushed by our government, and how are they poised to affect residents today?

Let’s first give fair consideration to why government might pursue affordable housing for low-income residents. A state or city government may pass affordable housing to protect low-income communities from being segregated out of neighborhoods or succumbing to homelessness entirely. The argument is that by capping rental rates, it keeps a certain amount of housing available to families who need it at lower prices. This promotes economic diversity by preventing high-income developments from dominating the market and creating a blend of social classes within communities. On its face, this is a good cause. We should want every person, regardless of their wealth or poverty, to have access to housing and to participate in their communities. I agree that safe, affordable, and good quality housing shouldn’t be limited to the rich, it should be available and possible for all people.

But, while this is a good goal, we must look honestly at if the policies passed actually achieve this goal. Because if legislation and regulation don’t actually result in this, or if they do more harm than good, then our government should also be willing to consider other policy options and pivot approach. California has some of the most extensive housing regulations, and yet we still have the worst housing crisis across the nation. Big cities like Los Angeles, San Francisco, and San Diego are the most concentrated areas for these regulations, and yet again, even just in the state we see that these are the most expensive places to live. That correlation alone isn’t enough to prove causation, but it is enough to ask – are these policies working? What are their true effects? 

The unfortunate reality is that price controls don’t work. They don’t work in any industry, and they certainly don’t work in housing. When you cap the rental rates in one area, you just increase the cost of housing in another area. This is because no matter how good someone’s intentions might be, they can never escape the inevitable laws of the free market. Developers only want to build housing if they can make a profit; similarly, landlords only want to rent out their properties if they won’t be losing money on the endeavor.  

At the same time, the more people that want to live in one area, the higher the demand for housing, which means the higher this will drive up prices. The answer is not government overreach into limiting the market, the answer is higher supply. And how do we create more supply of housing? We have to reduce the regulations over the development process that we discussed at the beginning of the episode. It’s insane that building new housing can take close to a decade in our state. Our government leaders and housing regulators should look at models like Arizona and Texas, where it takes less than half the amount of time that California does to develop new housing, and learn from those states what we can do differently.

This doesn’t even mention several other points that could be made about creating new jobs and empowering the residents of our communities to contribute to society in such a way that earns them a decent living. Or about reducing the cost of living in other areas – like groceries, insurance, taxes, and gas expenses – so that people can afford housing. Or by working to reduce inflation so that real wages can rise to meet expenses. These are all policies that don’t seem related to housing policy from the outside, but they all tie back into the strength of our state economy, which will determine if people can live here – part of which is if they can afford housing here.

But even outside of affordable housing, price controls, and the free market, there is an even broader point to be made here, which is this: enforcing regulation around things like rezoning, low-income housing, and rent control, in an area that has just been devastated by a natural disaster – the damage of which was exacerbated by bad environmental policies – is disrespectful, tone-deaf, and downright cruel to the thousands of people who have just lost everything. Now is not the time for California to capitalize on the opportunity to rezone and rebuild Pacific Palisades the way they want it. Now is not the time to price people out of what was once their community, their neighborhood, and their home. Now is the time to honestly evaluate why we have so much red tape around development in the first place, and to ask ourselves – if we can cut it back in the case of an emergency like this one, shouldn’t we reevaluate keeping all of it in place in the long run? And then, to do everything possible to rebuild, for every single resident who was displaced, with the goal of allowing them to come home if that’s what they want to do. It will look different. People’s homes will not be what they once were. Everything has changed. But that doesn’t mean you shift focus to an easy way to fulfill your quota of affordable housing to build. Instead, rebuild what was there and then go through the proper channels that you would have had to go through anyway if Palisades never burned down in the first place. But this? This feels like taking advantage of people who are already wounded, hurting, and in desperate need of the next step forward. It’s just wrong.

For the Christian

For the Christian, why do we care about affordable housing regulation and red tape around housing development? We care about getting to what is true. Good leaders are willing to look at what works and what doesn’t and have the humility to admit when their approach was wrong, for the sake of the good of their people. We seek the truth in the commonsense, everyday areas of life – even things like affordable housing. If we genuinely want to help the poor, we should empower them with the truth of personal responsibility and the values of hard work and contentment. Our goal is to help people in whatever circumstance they are in to see that they have the free will to make choices that are responsible, wise, and demonstrate good stewardship and leadership in their families. We also don’t help our communities by enacting affordable housing regulations that drive up housing costs across the state. Instead, we must promote real change that will address the root causes of these deep-seated issues, even when that is hard and doesn’t provide an immediate, quick fix to the problem at hand. Lastly, we can never support government leaders who exploit those who are hurting and have suffered a major trial, like those who lost their homes in January. Which means that we cannot support how the Los Angeles and broader California government has so far approached rebuilding in the Palisades. Let’s speak with conviction on what is true for the good of those around us.

References:

[1] SV@Home. “Housing Development Process - SV@Home.” Silicon Valley at Home, December 13, 2022. https://siliconvalleyathome.org/resources/housing-development-process/.

[2] SV@Home. “General Plans - SV@Home,” January 10, 2023. https://siliconvalleyathome.org/resources/general-plans-2/.

[3] SV@Home. “CEQA (California Environmental Quality Act) - SV@Home,” December 13, 2022. https://siliconvalleyathome.org/resources/california-environmental-quality-act-ceqa/.

[4] Rafii, Robert. “Options to Purchase Real Estate.” Law Info, December 9, 2024. https://www.lawinfo.com/resources/real-estate/options-to-purchase-real-estate.html.

[5] Lamb, Matt. “How Long Does It Take to Build a Custom Home in Arizona?,” October 29, 2024. https://www.collectiveconstruction.com/understanding-the-timeline-to-build-a-custom-home-in-arizona-how-long-does-it-take#:~:text=This%20stage%20includes%20site%20preparation,to%20minimize%20weather%2Drelated%20delays.

[6] Carlin, Brian. “What Is the Home Building Process? (North Texas).” Hedgefield Homes, October 1, 2020. https://www.hedgefield.com/home-building-process.

[7] Collin Callahan, “After the Fires: Rebuilding Effort Must Start With Protecting Property Rights,” Pacific Legal Foundation, February 7, 2025, https://pacificlegal.org/after-the-fires-rebuilding-effort-must-start-with-protecting-property-rights/.

[8] Mayor Karen Bass. “Mayor Bass Marks One Month Following Start of Palisades Fire,” February 7, 2025. https://mayor.lacity.gov/news/mayor-bass-marks-one-month-following-start-palisades-fire#:~:text=%E2%80%9CIt%20has%20been%2030%20days,every%20step%20of%20the%20way.%E2%80%9D.

[9] California Department of Housing and Community Development, Southern California Association of Governments, and Terner Center for Housing Innovation at the University of California at Berkeley. “What to Know About: RHNA, Site Selection, and Rezoning.” DRAFT 2021-2029 Housing Element, 2021. https://planning.lacity.gov/odocument/6e79ba73-689a-4f6f-95e4-057dd85b5b57/What_to_Know_about__RHNA_Site_Selection_and_Rezoning.pdf.

[10] Department of Regional Planning. “Los Angeles County Affordable Housing Program,” May 9, 2024. https://planning.lacounty.gov/wp-content/uploads/2024/05/housing_2024-income-limits-costs.pdf.

[11] California Department of Housing and Community Development, Southern California Association of Governments, and Terner Center for Housing Innovation at the University of California at Berkeley, “What to Know About: RHNA, Site Selection, and Rezoning.”

[12] Department of Regional Planning, “Los Angeles County Affordable Housing Program.”

[13] California Department of Housing and Community Development, Southern California Association of Governments, and Terner Center for Housing Innovation at the University of California at Berkeley, “What to Know About: RHNA, Site Selection, and Rezoning.”

[14] “Housing Element Rezoning Program | Los Angeles City Planning,” n.d. https://planning.lacity.gov/plans-policies/housing-element-rezoning-program.

[15] Khouri, Andrew. “Los Angeles City Council Gives Final Approval to Housing Rezoning Plan.” Los Angeles Times, February 7, 2025. https://www.latimes.com/california/story/2025-02-07/los-angeles-city-council-gives-final-approval-of-housing-rezoning-plan#:~:text=The%20Los%20Angeles%20City%20Council,called%20Citywide%20Housing%20Incentive%20Program.

[16] Los Angeles Municipal Code. “Draft Chapter 1A Citywide Housing Incentive Program Ordinance.” Los Angeles Municipal Code, November 13, 2024. https://clkrep.lacity.org/onlinedocs/2021/21-1230-S5_misc_3_11-13-24.pdf

[17] California Tax Credit Allocation Committee and Department of Housing and Community Development. “2025 CTCAC/HCD AFFH Mapping Tool,” n.d. https://belonging.berkeley.edu/2025-ctcachcd-affh-mapping-tool.

[18] Khouri, “L.A. City Council Gives Final Approval to Housing Rezoning Plan - Los Angeles Times.”

[19] Schrupp, Kenneth. “Los Angeles Law: Pacific Palisades Rebuilding Must Include Low-income Housing.” The Center Square, January 29, 2025. https://www.thecentersquare.com/california/article_e8916776-de91-11ef-919a-932491942724.html.

[20] Ibid.

[21] Department of Regional Planning, “Los Angeles County Affordable Housing Program.”

[22] Schrupp, “Los Angeles Law: Pacific Palisades Rebuilding Must Include Low-Income Housing.”

[23] Cohen, Joseph. “x.com.” X, January 28, 2025. https://x.com/CohenSite/status/1884302413521404039.