| Commercial Lending Solutions presents |
The Legislative Edge |
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| Issue No. 17 |
Friday, October 16, 2026 |
Los Angeles |
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| Where California housing law meets developer returns |
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| West Sunset Boulevard, a short walk from the site. Photo: Benoît Prieur, public domain, via Wikimedia Commons. |
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This week's deal
What a Hollywood Lot Is Really Worth
The 100% affordable stack, a vacant lot by the Hollywood/Highland station, and what the dirt is really worth.
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By Trevor Damyan
President, Commercial Lending Solutions |
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New format, same goal. Every Friday: one state incentive, one real listing, the numbers, and how I'd finance it, in about three minutes. This week I ran a vacant Sunset lot five ways. Only one worked.
| This week, in short |
| Incentive |
100% affordable near transit |
| Site |
7045 W Sunset Blvd |
| Answer |
The land is worth $2.15M with it, nothing without |
| Loan |
$16.29M construction loan, 63% of cost |
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| 01 |
The Incentive the law, and who qualifies |
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Go 100% affordable near transit, and the state gets out of your way.
Under the state density bonus law, a 100% affordable project near a major transit stop gets no density cap and no parking requirement. LA's AHIP program makes it ministerial: no hearing, no CEQA. Add a nonprofit partner and the welfare exemption can take property tax off the table too. |
 | | Hollywood/Highland, 0.33 miles from the site. |
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| Does your site qualify? |
| ✓ | Within half a mile of a major transit stop |
| ✓ | Zoned for multifamily, five or more units |
| ✓ | Nothing rent stabilized to replace (vacant is easiest) |
| ✓ | All but the manager's unit affordable, most at 80% AMI or less |
In effect now. Sources: Gov. Code 65915, LA AHIP (Ord. 188477), Rev. and Tax. Code 214.
How we finance 100% affordable and ED1 projects →
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| 02 |
The Site a real listing, live this week |
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7045 W Sunset Blvd, Los Angeles, CA 90028
 | | The block from above, the lot outlined in navy |
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 | | Street map: 0.33 mi to Hollywood/Highland Metro |
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 | | Up close: the parcel in navy |
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| The property |
Asking $3,995,000 |
Lot 12,000 SF, vacant |
Zoning C2-2D (Hollywood) |
To Metro 0.33 mi, B Line |
A vacant lot on Sunset between La Brea and Orange. No tenants, nothing to replace. Base zoning gets you 30 apartments. The 100% affordable route gets you about 100 studios with no parking. It was listed for a million more in 2023.
See the listing on LoopNet (active October 15, 2026). No affiliation with the seller or broker.
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Run your own parcel
Our parcel tool, Land to Yield, shows what any Los Angeles parcel can become under SB 79, the City's new ordinances and base zoning, with every source linked.
Analyze a parcel on Land to Yield →
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| 03 |
The Numbers what the land is really worth |
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Without the incentive, this lot is worth less than nothing.
| Start with what the finished building is worth, subtract every cost |
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| The seller is asking $3.995M. Land values are break even, after every cost and the interest on the loan. |
I'll be blunt. New construction in LA costs about what the rents will support, before you pay a dollar for land. So the real question is what the dirt is worth. With the stack, about $2.15 million to break even. Without it, nothing.
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“The seller has already come down a million. I don't think they're done.” |
| The budget: Stack at a $1.5M offer, 100 units |
| | Total | Per unit |
| Land and closing 6% | $1.53M | $15K |
| Hard costs 70% | $18.13M | $181K |
| Soft costs and contingency 14% | $3.63M | $36K |
| Impact and permit fees 5% | $1.27M | $13K |
| Interest reserve and loan fee 5% | $1.19M | $12K |
| Total project cost | $25.75M | $258K |
Want the full P&L? Hit reply and I'll send you the workbook.
Assumptions: 100 studios of 400 SF at a $1,875 blended rent vs. 30 market rate units at $2,930; $340 per SF hard cost; 5.50% exit cap; welfare exemption granted. Break even includes all costs and financing.
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| 04 |
The Financing how I'd put the debt together |
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How I'd finance it (at a $1.5 million purchase)
| The capital stack, $25.75M total cost |
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| $16.29M construction loan |
$9.47M your equity |
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| Term sheet |
| Construction loan | $16.29M |
| Loan to cost | 63% (lenders go up to 75%) |
| Rate | SOFR + 3.00%, about 6.87% today |
| Term | 29 months, interest only |
| Sized by | 1.20x coverage at 6.5%, 30 year amortization |
| Perm takeout | $16.29M, pays off the construction loan in full |
Lenders will go up to 75% of cost, but on a deal like this the income sets the loan: 1.20x coverage at 6.5% on a 30 year amortization. That's why it lands at 63%. The upside is that the perm pays it off in full, so there's no surprise at conversion. First, though, lenders want your nonprofit partner signed and a contractor who has built micro units at this cost.
See today's loan rates by program →
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Have a site near a Metro stop you've been told is too expensive? Send me the address and I'll run it both ways.
Or just email me. It comes straight to me. Ready now? Start a loan request.
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Talk soon,
P.S. This is the first issue in the new, shorter format. Tell me what you think, good or bad. Just email me.
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About us. Commercial Lending Solutions arranges construction, bridge, and permanent loans for developers across California, and we underwrite every deal against the newest housing law.
5665 W. Wilshire Blvd #1284, Los Angeles, CA 90036 | O (310) 758-4042 | CA DRE #02244836
trevor@clscre.com | www.clscre.com | Track record | landtoyield.com
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| Disclosures. For information only; not legal, tax, investment, zoning, appraisal, or lending advice. Consult your own counsel before relying on any law described here. Law current as of October 12, 2026. Density bonus and AHIP provisions per Gov. Code 65915 and LAMC 12.22 A.39 and A.40 (Ordinances 188477, 188788 and 188789). Welfare exemption per Revenue and Taxation Code 214(g); eligibility depends on ownership structure and financing and should be confirmed with tax counsel, and Los Angeles has asked grant issuers to stop approving exemption grants without city sign off, so this structure carries policy risk. 2026 rent limits per the TCAC and LAHD schedules. Listing details from LoopNet listing 42202912, active October 15, 2026. The featured property is an active third party listing used for illustration only; Commercial Lending Solutions has no relationship with the property, seller, or listing broker, and nothing here is an offer to buy or sell it. Figures are illustrative estimates on stated assumptions, not projections. Loan sizing is illustrative: up to 75% of cost, limited by 1.20x coverage at a 6.5% sizing rate on a 30 year amortization. Map and parcel data: Los Angeles County eGIS. Aerial imagery: USDA NAIP via USGS The National Map. Photo: Benoît Prieur, public domain, via Wikimedia Commons. Photo: public domain, via Wikimedia Commons. Rates reference SOFR as of Oct 8 and Oct 9, 2026 and change daily. Loans are subject to underwriting, credit approval, and market conditions. |
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