Several years ago, Los Angeles’ principal city planner Jane Blumenfeld approached David Reddy of R & D Architects about a Venice condominium project he had designed. Though condos, the units were conceived as freestanding houses with generous provisions for light and air. Blumenfeld was interested in using the project as an example of what might be possible under a new ordinance then in the works.

That first draft became what is known as the City of Los Angeles Small Lot Subdivision Ordinance. Passed in 2005, the ordinance has created a unique housing option that is neither a traditional single-family home nor a condominium. The law allows architects and developers to subdivide an existing commercial or multifamily lot into smaller parcels, and build properties that from the ground up essentially have their own foundations, walls, and roofs.

These hybrid homes provide an alternative to condominium or apartment living that is still more affordable than single-family residences in the same neighborhood. Instead of the homeowner association dues that come with condominium ownership, small lot buyers have the benefit of fee-simple ownership in exchange for adherence to restrictions that typically prohibit owners from painting their home a particular color, for instance, or significantly altering the building’s exterior. The upshot is changing the residential face of LA—and offering a rare dose of optimism for the city’s developers and architects.

Now that the first crop of nearly a dozen properties has sold, projects are beginning to dot the map from Venice to Sherman Oaks to Eagle Rock, and everywhere in between. According to Ric Abramson of Workplays, these homes are well suited to both first-time homebuyers and those who want the benefits of homeownership without the hassles of property upkeep.

Many of these developments sport a decidedly modern aesthetic with clean, geometric exterior forms and open floor plans with lofty interiors. Sustainability is another common thread, incorporating green building materials, natural light and ventilation, and high-efficiency HVAC systems.

While the program can be a boon for homebuyers, it poses its share of challenges for architects. According to Reddy, small lot projects have very different kinds of design challenges than do condominiums, even though the two types of projects are alike in many ways. “Each small lot property is considered separately,” he said. “And it requires working through the different and sometimes competing agendas between planning and building and safety.”

And others note that small lot projects are hardly immune from the economic downturn. Derek Leavitt, of the newly formed architecture firm Modative, has worked on a handful of small lot projects and calls the current economic climate a double-edged sword. Dropping real estate values have caused two of his firm’s small lot projects to stall—the seven-unit Faye Avenue Art District Dwellings and the six-unit Venice Boulevard Urban Dwellings. But the long term may provide more opportunities in this market niche, he said. “As land prices and construction costs continue to drop, it makes small lot subdivision projects more feasible.”

Michael Pinto, design principal of Osborn Architects, has also contended with shifting economic realities while trying to navigate the approval process. Developers purchased land for Osborn’s Cumpston project with the intent to create five separate units for sale. But city officials determined that the site was fit for only four units, a decision Pinto is attempting to appeal. “The financial feasibility of four is sketchy in this economy,” Pinto said. “We’re pushing for five.”

The full impact of the small lot ordinance remains to be seen. Despite the small number of projects in the pipeline, Reddy thinks it has the potential to significantly reshape housing in Los Angeles. “These projects change the densities in neighborhoods,” he said. But, he added, “It doesn’t increase it to the extent one would have with conventional condominium projects or apartment buildings.”

So what’s next on the horizon? Ocean breezes and sandy beaches might soon be going hand-in-hand with some upcoming small lot projects. Gail Goldberg, the city’s director of planning, is working on a policy initiative that would allow for increased density along the Los Angeles coast, and small lot projects could well become a component of such coastal-area upzoning.

Some believe that even if small lot numbers could reach five to ten percent of residential neighborhoods, it would make a big difference in keeping the city affordable—and in style. “It’s an attractive choice for some people who are looking for housing,” Abramson said.