Los Angeles developers may have secured a potential win when Mayor Karen Bass revealed plans during her State of the City address for an expedited permitting process in the Pacific Palisades that she said could be taken citywide.

Bass talked through those plans among many others on Monday afternoon during her annual address at Los Angeles City Hall after which she unveiled a nearly $14 billion proposed budget for fiscal year 2025-2026.

Bass spoke boldly in her State of the City address about eliminating the bureaucracy across the city in its bid for a turnaround. It’ll be a steep hill to climb with the city facing a nearly $1 billion shortfall that will be partially addressed through 1,647 layoffs amid mass rebuilding efforts underway after January’s wildfires, homelessness and housing issues and Hollywood’s filming flight from the city.

“This is a broken system and to turn L.A. around, we have to fix this,” Bass said in her address Monday as she outlined the consolidation of some departments to gain efficiencies and rebuild the city’s reserves.

It’s the possibility of loosened permitting restrictions mentioned during the presentation that may have real estate salivating.

Bass spoke to the question that’s been looming over communities such as the Pacific Palisades, Malibu and Altadena when it comes to the timing of getting homes destroyed from January’s wildfires rebuilt. Bass said the city will create a self-certification program for Palisades residents, who fall under the city’s governance, aimed at streamlining permits for rebuilding. She also said the city will begin using artificial intelligence to further expedite the plan check process.

“If successful, we will take both of these new initiatives [self-certification and AI] citywide to accelerate building everywhere,” Bass said.

All of that comes as the mayor urged the city council to pass an ordinance waiving all plan check and permit fees in the fire rebuilding efforts.

Specifics on those initiatives will be released in the coming days, a city spokesperson said Monday, following Bass’ address. 

Self-certification and AI may help amid cuts that were evident across the proposed budget.

Perhaps most noteworthy to real estate is the suggested $152.9 million in Bass’ proposal for Building and Safety, which enforces zoning ordinances among other responsibilities across its nearly 1,000-person staff. The proposal is down from the $155.8 million approved in the prior fiscal year.

For the Department of City Planning’s 271-person operation, Bass has a proposed budget of $54.5 million for the upcoming fiscal year, which compares with the previously adopted $71.7 million.

Homelessness and housing

What didn’t make its way into Bass’ address was the contentious Measure United to House L.A. (ULA), which 58 percent of voters approved on the November 2022 ballot.

Many have called for the city to intervene and, at minimum, put a pause on the tiered tax aimed at raising money to address homelessness and housing affordability as those in the Palisades look to rebuild. The tax has drawn the ire of the real estate industry since its passage with brokers and agents accusing the measure of chilling deal flow, while doing little to address the city’s housing needs.  

Come June 30, ULA’s thresholds will be adjusted to a 4 percent tax on residential and commercial sales starting at $5.3 million and 5.5 percent on transactions of $10.6 million or more.

Bass’ budget has the House LA Fund, which holds the taxes collected from Measure ULA, at total appropriations of $913.9 million. Affordable housing programs account for the largest share — $306.5 million — of those dollars.

So far this calendar year, Measure ULA has raised $118.8 million across 174 transactions, according to city data for the first quarter of the year. Single-family housing has raised the most — $49.2 million — in the quarter. Commercial, excluding multifamily, isn’t that far off, generating $45.3 million in the first three months of the year.

On homelessness, an issue that’s been cited across the industry, from real estate agents to commercial landlords, Bass pointed to the public-private partnership LA4LA that was announced last year as an example of how the city is moving to more quickly place people in homes.

The mayor said the group would continue to “experiment with new, less expensive financing models and acquire vacant properties” as opposed to waiting out lengthy construction timelines before housing residents.

Bass’ budget proposal will now go before the Los Angeles City Council, which has until June 1 to approve it.

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