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Performance Audit of the City of Los Angeles’
Process for Planning Conditions for Development

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EXECUTIVE SUMMARY

Background

In the City of Los Angeles, the General Plan and the Planning and Zoning Code govern land use. The City's General Plan contains the City's goals, objectives, policies, and programs for the development of the City, and serves as the guide for the physical development of the City. The Department of City Planning is responsible for implementing the General Plan through application of the Planning and Zoning Code and other land use regulations.

Most construction projects receiving building permits from the Los Angeles Department of Building and Safety can be constructed “by-right”, indicating that the project complies with the City’s Planning and Zoning Code requirements and does not require further approval. However, a development project is discretionary if the project or site has special circumstances for which strict application of the Planning and Zoning Code provisions is impractical.

Under the Planning and Zoning Code, the Director of Planning, Zoning Administrator, Area Planning Commissions, City Planning Commission, or City Council, each have authority as a decision maker to approve discretionary development projects. In approving discretionary projects, the decision maker may impose conditions to remedy any disparities that may result from the development, specifically to protect health and safety and ensure general compliance with the objectives of the General Plan. If the decision maker approves the discretionary development project, the Department of City Planning can issue a land use permit (“entitlement”) to the applicant once the conditions of approval have been met.

City Departments’ Roles in the Development Process

Several City departments participate in development project review and oversight. The Department of City Planning is the lead agency for approving discretionary development projects and land use entitlements. Other City departments recommend conditions of approval if the project impacts the public right of way, or other requirements within their jurisdiction.

· The Department of Public Works is responsible for the public right of way and each of the Department’s bureaus - Engineering, Streetlighting, Street Services, and Sanitation - review project applications and recommend conditions for public right of way improvements as necessary.

· The Department of Transportation is responsible for reviewing development projects’ impact on traffic, and recommending improvements.

· Other City departments, such as Housing, Fire, and Water and Power, review development project applications and recommend conditions of approval appropriate to their jurisdictions.

Once the decision maker has approved the development project with conditions and the Department of City Planning has reviewed the project plans for compliance with the conditions of approval, the Department of Building and Safety approves the final project plans for compliance with the City’s building and zoning requirements. The Department of Building and Safety oversees construction of the project on private property, including compliance with the project’s conditions of approval, and issues the Certificate of Occupancy.

The Department of Public Works Bureau of Engineering approves the final project plans for construction in the public right of way, including compliance with the project conditions. The Department of Public Works Bureau of Contract Administration oversees construction in the public right of way.

The Department of Transportation approves any project traffic plans and oversees construction and completion of traffic improvements.

Objectives and Scope

The Controller initiated the audit to evaluate the effectiveness and efficiency of the City’s process to ensure that conditions placed on development projects are met by developers.

The specific areas assessed during this performance audit included:

· An evaluation of how the Department of City Planning determines that public improvements will be conditions to be satisfied by developers;

· An assessment of the adequacy of the Conditions Development and Management System (CDMS) controls to meet the intended system capabilities and provide timely, accurate and complete information related to development project conditions;

· An assessment of how City departments confirm that conditions have been met and how instances of non-compliance by developers are handled, and specifically, how CDMS facilitates and ensures that conditions are cleared at the development phase;

· A determination of how the City tracks and accounts for all developer installed public improvements; and specifically, how CDMS facilitates and ensures that conditions have been met when development projects are completed;

· A determination of how the City incorporates developer-financed public improvements into Citywide plans and budgets; and

· An assessment of whether the City’s process for identifying, monitoring and enforcing development conditions is efficient and effective and how it compares to other large urban areas.

Methodology

We conducted the performance audit in accordance with Government Auditing Standards, July 2007 Revision by the Comptroller General of the United States. In accordance with these standards and best practices for conducting performance audits, we conducted the following key tasks:

· We held an entrance conference with the Director of Planning and her staff on August 21, 2008, to introduce HMR staff, describe the performance audit process and protocol, and request general information on the program.

· We reviewed (1) the conditions development and tracking process, including interviews with key City officials, community members, and developers, and (2) documentation provided by City departments. At the conclusion of these activities, we developed a more detailed plan for conducting subsequent performance audit activities.

· We conducted field work to research key elements of the City’s program with additional interviews, and collection and analysis of data. At the conclusion of field work activities, we developed preliminary findings, conclusions and
recommendations.

SUMMARY OF AUDIT RESULTS

The City of Los Angeles has not established an adequate process for reviewing, approving, and overseeing development projects that ensures that the final project conforms to the intent of the decision maker. No single City department manages development projects from the project review through project construction and completion. The Department of City Planning does not manage other City departments’ review of proposed projects, and does not actively monitor compliance with the projects’ conditions of approval once the building permits have been issued. In the absence of a single point of management, development projects can materially change during the project plan review and project construction and completion, resulting in the final project being different from the project as it was approved by the decision maker.

Key audit findings are noted below:

Key Findings

The City of Los Angeles’ community plans, which represent the Land Use Element of the General Plan, are outdated and not specific enough to consistently and predictably direct the development project approval process.

Though the City’s development project approval process allows for discretion on the part of the decision makers for proposed projects not covered by the Planning and Zoning Code, projects are subject to a larger degree of case-by-case discretion than would be necessary if community plans were well-developed. Most of the City’s 35 community plans were last updated in the mid-1990s, with some dating from the 1980s. The Department of City Planning is in the early planning process to update 12 of the 35 community plans. The New Community Plan Program is expected to extend over ten years.

Decision makers use administrative procedures to address perceived shortcomings in the Planning and Zoning Code and the community plans. While discretion and flexibility in imposing conditions is often cited as a means to achieve compromise, using internal policies rather than Planning and Zoning Code or specific plan requirements to impose conditions can result in subjecting different applicants to different requirements.

The Department of City Planning recommends conditions of approval that are not clear or specific.

The Department of City Planning has not established quantitative criteria to use as the basis of conditions of approval for common development issues for which there are no standards in the Planning and Zoning Code. Consequently, decision makers impose conditions without clear justification. Our audit disclosed, for example,

· Planning staff recommended conditions requiring a number of parking spaces for a college campus without clear criteria, resulting in far more spaces than required by the Code.

· Use of conditions that lack specificity, such as “attractively landscaped”, which risk misinterpretation by the public, applicants, contractors, and City staff.

The Department of City Planning does not actively manage other City departments.

Though Planning is the lead agency for approving applications for discretionary development, other City departments often do not provide recommendations for public improvements prior to the public hearing and issuance of the determination letter, resulting in an approval without all requirements being fully disclosed and documented.

Conditions are redundant in some instances and the numbering system is cumbersome, resulting in project applicants, their contractors, and City staff not being able to easily track compliance with these conditions. Non-uniform application of conditions results in ad hoc rather than standardized procedures, subjecting different applicants to different
requirements.

The Mayor established a “12 to 2” Committee to address problems in interdepartmental processes to approve and oversee development projects. While it was intended to address the leadership role of the Planning Department in the land use entitlement process and be a forum for discussing interdepartmental oversight of development conditions, it currently appears to be focused on systems processes, rather than management issues.

Department of Building and Safety’s modifications can materially alter the project from the initial project plans that were submitted to and approved by the decision maker.

After the decision maker approves the project the applicant must submit the final project plans, incorporating the conditions of approval, to the Department of City Planning. At the same time, the applicant submits detailed building plans to the Department of Building and Safety for approval of building permits. While the Department of Building and Safety cannot modify conditions imposed by the decision maker, it can modify building plans to meet building or zoning requirements.

· For a mixed-use, 350 residential unit project that was subject to numerous conditions of approval, the applicant later submitted a request to the Department of Building and Safety to permit exterior balconies. While it was appropriate that the request was submitted to Department of Building and Safety because the balconies would be close to the property line, potentially in violation of building codes, the addition of balconies significantly changed the exterior appearance of the project, and may have impacted Planning’s initial approval decisions.

The Department of City Planning lacks department-wide documentation standards for clearing conditions on development project plans and maintaining records.

Each staff planner documents his or her plan review differently. Although the planner stamps and signs the final project plans, indicating that the plans incorporate the conditions of approval, auditors were unable to determine how the plans conformed with each condition of approval.

Also, although the Department of City Planning has procedures for organizing formal files, no standards exist for required document retention. For example, copies of approved project plans for six of the 17 completed development projects reviewed could not be located.

The Department of City Planning does not actively monitor project compliance with the determination letter’s conditions of approval once the building permits have been issued.

In the absence of a single point of management, development projects can materially change during construction and completion, with the final project being different from the project as it was approved by the decision maker. These material changes can result from changes to project plans to meet building code requirements or address design errors, unforeseen field conditions or other construction problems. Neither the Department of City Planning nor the Department of Public Works have established procedures to ensure that the Department of City Planning reviews project changes.

· For example, the Department of Public Works Bureau of Engineering approved Interim Change Authorizations that changed specific conditions of approval without notifying the Department of City Planning, including (1) reducing a pedestrian walkway from six feet to four feet, and (2) changing street lights from ornamental to a different type.

None of the City departments directly involved in the development process have adequate controls to ensure that the project complies with the conditions of approval.

The Department of Building and Safety does not have the expertise to enforce specific landscape and architectural design conditions, and the Department of City Planning does not review implementation of these conditions in the constructed project.

· Although the Department of Building and Safety requires the project’s landscape architect to certify compliance with the conditions of approval, we found inconsistent documentation of this process.

· Also, while the project architect or engineer certifies to the Department of Building and Safety that the project complies with structural design requirements, it does not certify compliance with other architectural design related conditions.

The Department of Public Works does not ensure that conditions of approval for public improvements are implemented.

· A school received a temporary Certificate of Occupancy although it had not installed required traffic improvements, potentially in violation of existing City ordinances.

The Department of City Planning’s new data management system (Condition Development and Management System, or CDMS) automates many of the Department’s manual processes but the system alone does not fully address processes for managing development project conditions of approval in an adequate manner.

Envisioned as a centralized database to manage the City’s conditions of approval and ensure post-approval review for land-use entitlements, CDMS will provide an automated tracking tool, but will not change current processes for distributing hard copies of project applications to other City departments, nor give the Department of City Planning the ability to require City departments to review project applications and submit recommendations for conditions of approval in a timely manner, nor ensure conditions have been met.

· Though the Department of City Planning intends for applicants to eventually be able to submit their applications electronically, allowing for electronic distribution of site plans to all approvers through CDMS, there is currently no specific funding or implementation plan to develop this capacity.

· While CDMS can facilitate creating conditions and track their approval by responsible City departments, it will not ensure that conditions are clearly written or contain the necessary specificity. Further, although CDMS allows for electronic clearing of conditions, it does not create documentation standards for staff to note when approving that conditions have been met.

· CDMS will add a third City departmental system to track development conditions; however, there is no formal plan to coordinate these systems, or ensure all systems will contain the same information regarding approval status. CDMS system design did not consider integration with other citywide systems because the City’s Information Technology Agency has not played a role in its development.

City departments do not consistently track, plan or budget for maintenance of public improvements installed as a result of conditions of approval for development projects. In addition, Some City departments do not collect sufficient fee revenues to cover the costs of maintaining public improvements.

Although project applicants pay the costs of installing public improvements, only some departments track and recover maintenance costs for these improvements. No departments systematically track public improvements imposed as development project conditions of approval as part of their fiscal planning process.

Some City departments do not collect sufficient revenues to cover the costs of maintaining public improvements, particularly those imposed as conditions of approval for development. Specifically, the Urban Forestry Division of the Bureau of Street Services Street Tree Maintenance, Inspection and Clerical fees, the Bureau of Street Lighting Street Lighting Maintenance Assessment, and the Bureau of Sanitation Stormwater Pollution Abatement Charge revenues are not sufficient to recover the costs of maintaining public improvements.

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