By Right Zoning – Pacifica Urban Builders

BY-RIGHT ZONING – ELIMINATING ENTITLEMENT APPROVAL RISKS

Amid a housing affordability and supply crisis, policymakers are increasingly turning to zoning reforms

Los Angeles and Other Cities Have Removed the Single Biggest Development Risk for Multi-family Housing

The city of Los Angeles and California in general have adopted “by-right” zoning codes to allow for the development and increased density on single-family zoned lots and lots zoned for multi-family.
When a zoning code is considered “by-right,” the City/County approval process is streamlined so that projects like ours that comply with the zoning standards receive approval directly from agency staff without any discretionary review process or public input/hearings. These are truly by-right projects that are fast to permit (no entitlements) and fast to build.

Greater Density is Possible on Many Sites

The most common type of zoning for PUB’s acquisitions is RD1.5 zoning, which allows for a 1500 sq. ft. lot size per unit. An example would be an RD1.5 lot that has an existing single-family home on the site (tens of thousands of these lots have been identified just in Los Angeles County) and is 6000 sq. ft. in size. We would convert this lot from a single-family home into 5 units using a combination of the zoning and multi-family ADU Ordinance. PUB can consistently source these projects.
Whether your lot is zoned as R1, RD1.5, or multifamily, we are able to increase the density to 5-10 units

Continued Legislation is Advantageous to PUB Business Model

The State of California recently passed updated legislation regarding Accessory Dwelling Units (ADUs), further expanding the scope of permissible housing density. These changes override certain previous zoning restrictions, now allowing additional units that were not previously permitted. This legislative shift has unlocked significant real estate potential across the state, creating a tremendous opportunity for property owners to optimize the value of their land. These developments directly support and enhance PUB’s business model by enabling higher-density housing solutions in areas that were once limited by restrictive zoning.

SOURCING & UNDERWRITING

PUB Has Carefully Mapped “By-Right” Areas for Development

PUB has identified the areas of Los Angeles with the appropriate “by-right” zoning standard,
LA County alone has approximately 30,000 lots that are consistent with the Company’s business plan.

The Company Maintains an active pipeline of properties at any given time

Acquisitions

Acquisitions Program Overview

On-Market Sourcing: Constantly searching on MLS for development sites meeting PUB criteria. At any given time, PUB may have up to 5-10 on-market offers out.
Off-Market Sourcing: Digital mapping services allows PUB to target specific site criteria such as lot size and zoning, as well as ownership info.
Management of Deal Flow: PUB carefully tracks deal flow and conducts an extensive;, but quick DD processes, weekly Investment Committee meetings, weekly Asset Management / Project Management meetings

Site Acquisition Criteria

Generally a minimum,5000 SF lot, with a preference for RD 1.5 lots with a SF home on site.
Focused only on “by right” developable parcels – remove this line
Purchase price contingent on market rents, zoning & size of parcel
Able to close within 17-30 days, simultaneous with abridged DD

Due Diligence

Due Diligence Checklist

Zoning (Setbacks, Height, FAR)
Overlay Zones / Q Conditions
Tenants / Tenant History / Ellis Act / RSO
Title Review
Disclosure Review
Contract Review (Rent back period / lease for rent back?)
Preliminary Architectural Layout
Third Party Market Evaluation
Engineering Issues (BOE, Special Grading Area, Street Trees)
Phase 1 report
Survey
Soils report

HIGH DEMAND PRODUCT

Property Features

Top-of-Market, high-end Finishes

Each unit comes with its own control room, consolidating all electrical, plumbing, heating, cooling, security and Wi-Fi systems into one space
Stainless steel appliances
Washer + dryer in each unit
Smart-home features such as Nest thermostats and Ring doorbells in each unit
Large windows & high ceilings, providing ample natural light
Provide parking for most of the units
Decks for open space
EV chargers are provided for each unit, and solar panels are incorporated into for most of the units

Lease-Up Positioning & Tenanting

Appeal to Broad Range of Tenants Including Shared Housing & Extended Families

Properties are focused around urban, infill locations in large employment centers, within the Greater L.A. County
Middle-income and low-income workers must typically move further away from their jobs in urban city-centers due to lack of rent affordability
PUB’s family-friendly, achievable housing solution allows middle income renters access to a quality living space, in primary, gateway markets
4 to 6-unit structures that provide mostly 3-4 bedrooms and 3 to 4 bathrooms per unit within a variety of floor plan configurations
Tenants frequently rent out units alongside roommates, in order to pay lower rent/person while still enjoying high-end apartment finishes & ample living space

Property Highlights

Completed projects have taken an average of just 12 weeks to reach 100% lease-up; while traditional multifamily projects can take much longer to fully stabilize at market rents

Pro Forma average Rent/Bed of completed projects is $1,549/month; allowing middleincome renters access to high-end product in infill locations

High-end amenities comparable to those offered at traditional luxury class multifamily properties