Industrial Land: To Convert or Not To Convert

Recently the industrial sectors of downtown Los Angeles have come under fire from the Mayor and City Council. Some industrial landowners have asked for the opportunity to rezone and sell their land to developers for residential use. The issue at hand is that the City Council with the backing of the mayor have denied this grant to most developers because of the potential job losses that would occur. Although it may be more profitable for industrial landowners to sell off their land to residential developers, it is not in the best interest of Los Angeles due to potential job loss.

On January third of this year the Los Angeles City Planning Department released a memorandum regarding their intentions and how they plan to pursue the industrial situation in the Los Angeles community. The result which denied the request for the rezoning in Employment Protection Districts was met with much animosity by local residential developers. The plan that has been developed by Gail Goldberg (pictured at the right) who is the Los Angeles City Planning Director and Cecilia V. Estolano who is the Chief Executive Officer of Community Redevelopment Agency demonstrates how to approach this issue in the next twenty-four months as well as in the long term. This issue will have a significant impact on whether or not the Los Angeles economy will continue to grow and thrive in the years to come.

There are major consequences that could arise from the conversion of this industrial land to residential use. According to Goldberg, in the last twenty-five years there have been a million new residents to California but we have lost over 57,000 jobs. This brings up a very important question of whether or not the city should sacrifice additional vibrant industrial land that could help fix this job loss or should they allow the building of residential areas. Obviously, this is not an easy question to answer but the Los Angeles City Council has taken the direction that it will only create a bigger problem for people trying to find jobs. According to Goldberg, twenty percent of the industrial land already has been compromised and will not be able to be salvaged for industrial use. Looking at it from that perspective illustrates the need to fight off the big player developers trying to work their way farther into this industrial area. Supporters of the conversion to residential land believe that the city is only doing this to keep their sales tax revenue from disappearing. Although this may play a part in the final decision, it is not a main contributer. Goldberg makes it very clear that industrial jobs versus service jobs creates a situation that keep people in the middle class. The difference in wages is twenty-nine thousand for retail jobs versus the forty-seven thousand a year for the manufacturing jobs that are available right now.

This impact would create a huge problem for the middle class and people trying to jump into the middle class. The memorandum has set out strict guidelines for the short term and long term goals for the city of Los Angeles. They want to give the opportunity to more industrial companies to move into vacant areas and to redevelop these areas in hope and promise of additional jobs and the increase of the middle class. Truly if you look at the statistics that Goldberg presents this is the only viable option and direction for Los Angeles to take, otherwise it could potentially create a large recession within the city (Downtown Los Angeles to the right). According to the Redevelopment Agency, these developers were asking for nineteen thousand acres to be rezoned which is about eight percent of the city.

Although many people do not agree with the Mayors' and the City Councils' decision, it is difficult to overlook the burden that this rezoning could potentially have on the economy. Just because powerful real estate developers see the opportunity for big bucks in developing land for residential use does not mean it is the best answer or in the best interest of the rest of the people in the city. For example New York and Chicago have kept strong industrial sectors and continue to thrive and are good role models for cities such as Los Angeles that are redeveloping their strategy. On the other hand, cities such as San Francisco have allowed the industrial land to be turned into residential housing, creating a lack of middle class jobs and an area only the rich can afford to live in. Los Angeles previously looked at each individual situation on a case by case basis but now the potential impact is too large. This new approach which has a two year assessment, surely is only the beginning for the potential increase and improvement which will occur by adding more industry to the Los Angeles area and which in turn will help it thrive.

The strategic long and short term plan allows for the necessary improvements and investment into the industrial market. The City Council listened to arguments from both sides and made the decision in the best interest of the entire city and not just wealthy developers. Now all that needs to be done is for the plan to be followed through and implemented which should help regain and surpass the previous loss of jobs over the last twenty-five years.