Amid gentrification fears, officials kill plan for 577 apartments in South L.A.

The South Los Angeles Area Planning Commission has voted to reject a plan for 577 apartments near a Crenshaw Boulevard light-rail station, the latest flare-up in a debate over gentrification and the benefits of market-rate housing.

The commission, which is made up of appointees of Mayor Eric Garcetti, unanimously opposed the six-story development known as District Square, despite a last-minute offer from the developers to charge below-market rents at 63 apartments inside their project.

Tuesday’s vote effectively kills the project at City Hall, unless a member of the City Council requests a review and a reversal of the decision. Councilman Herb Wesson, who represents the area, has already come out against District Square.

“What we need is affordable housing, and no matter how you try to tweak this project, this development will not do that,” Wesson said in a letter read to the commissioners by one of his aides. “If the current residents of the neighborhood cannot afford it, we should not build it.”

The commission’s vote comes as residents in South Los Angeles, a region of the city with serious concentrations of poverty, are voicing growing concerns over gentrification and the prospect that pricey new residential projects will spur landlords to hike rents at their own buildings. Plans are already in the works for a 400-unit project next to the District Square site and a major renovation of the Baldwin Hills Crenshaw Plaza, which is expected to add 900 new homes.

Stacey Brenner, a lobbyist for District Square developers Mark and Arman Gabay, declined to say what her clients will do next. During Tuesday’s hearing, the developers’ lawyer said the city had no legal basis for rejecting the project, which is planned along two light-rail lines.

District Square complied with the city’s planning rules for Crenshaw Boulevard, said Todd Nelson, the developers’ attorney. Nelson also warned the commissioners that if they voted the project down, they would be violating a state law that requires that cities provide a specific health and safety rationale for rejecting a residential project that complies with local zoning laws.

“The project before you is a textbook example of a project that meets the purposes and the criteria of the Housing Accountability Act,” he said.

Tuesday’s vote marked the latest twist in a decade-long saga over District Square. In 2010, Wesson and his colleagues voted to provide the Gabays $26 million in taxpayer loans and grants to build a two-story shopping center with a Target retail store and a Ralphs supermarket.

The project was soon beset with problems, with Target and Ralphs dropping out, and the shopping center was never built. City officials eventually sent the developers a series of default notices demanding repayment of $6.3 million in taxpayer loans, which remain overdue.

Arman Gabay, one of the project’s developers, was arrested last year on bribery charges in an unrelated case dealing with Los Angeles County government leases. He has pleaded not guilty.

The Gabays worked with Garcetti’s office to retool District Square, adding hundreds of residential units. But the reworked proposal drew protests from members of the surrounding community, who complained about its larger size and the potential for it to push rents higher in neighborhoods along Crenshaw.

Gina Fields, who serves on the Empowerment Congress West Area neighborhood council, said her group had pushed for District Square to set aside 45% of its units for low-income households. Appearing before the commission, she said her group is determined to protect residents living in “the last long-standing African American neighborhood in Los Angeles.”

“We do not want our neighbors priced out and displaced,” Fields said.

As the project changed, so has Wesson’s position on it. For years, he tried to help the Gabays salvage their shopping center proposal, seeking to postpone default proceedings and secure additional taxpayer loans.

Wesson, now running for a seat on the county Board of Supervisors, publicly came out against the new proposal for District Square in September, saying he believed the construction of hundreds of market-rate apartments would hurt the neighborhood and result in the ouster of low-income families.

The developers responded Monday by offering to designate 63 of the project’s apartments as “workforce” housing, serving households that earn 150% of Los Angeles County’s area median income, which would have been capped at $145,000 per year for a four-person family, according to rent information provided by one city official.

Under such an arrangement, the workforce housing units could have cost as much as $2,910 for a one-bedroom apartment and $3,274 for a two-bedroom unit, the official said.

The area planning commission was unmoved by the developers’ offer, voting to uphold challenges to the project from a neighborhood resident and from the Crenshaw Subway Coalition, a group focused on fighting gentrification.

Damien Goodmon, the coalition’s executive director, described the vote — and the debate at the commission’s meeting — as a “major victory.”

“We had a real dialogue about gentrification and displacement, a real dialogue about public safety hazards and risks,” he said. “And this body turned away a very connected developer who happens to be on trial for bribery.”