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(Bloomberg) -- Los Angeles voters rejected a ballot measure that would have put a moratorium on most construction in the city, ending a battle between developers and an AIDS nonprofit that bankrolled the campaign for the initiative.

With 31 percent of voters in support and 69 percent against, the plan known as Measure S, introduced by the Coalition to Preserve L.A. and funded by the AIDS Healthcare Foundation, failed on Tuesday. The initiative would have halted most development for two years, with supporters contending that the pause would stop luxury construction, allow builders to focus on affordable housing and give lawmakers a chance to amend the city plan. 

Opponents said the measure would cripple the city’s economy and stop construction of affordable housing as well as luxury units. Many also criticized the AIDS nonprofit for squandering funds on a development battle rather than using them for patients. Foundation President Michael Weinstein has said his critics are wrong, and that the group backed Measure S as part of its advocacy for AIDS patients, many of whom are homeless or have low incomes.

Measure S cost both sides millions of dollars. The AIDS Healthcare Foundation gave almost 99 percent of the more than $5.2 million spent in support of the initiative as of March 1. Large developers were among the primary backers of the opposition, with CH Palladium LLC giving about 45 percent of the more than $4.7 million raised.

CH Palladium was the company hoping to build two 28-story towers in Hollywood, next door to the AIDS Healthcare Foundation’s Sunset Boulevard offices. Last year, Weinstein and the foundation filed a lawsuit against the developer and the city, alleging the skyscrapers violated L.A.’s general plan.

The outdated plan was at the crux of the battle. The city’s zoning laws haven’t been updated in more than 20 years, and most large-scale projects now require additional approvals. Supporters hoped the moratorium would spur the lawmakers to overhaul L.A.’s zoning rules, while critics said halting development would hold the city back, especially in the middle of a housing crisis.

Developers have been unable to keep up with demand for housing in the second-largest U.S. city. L.A. is the country’s third-priciest market, after San Jose and San Francisco to the north, in terms of mortgage affordability, according to Zillow. The city’s homeless population rose 11 percent in 2016 from 2015.

Opponents to Measure S included Los Angeles Mayor Eric Garcetti, California Governor Jerry Brown, the Los Angeles Area Chamber of Commerce, labor unions and the antipoverty group United Way of Greater Los Angeles.

To contact the reporter on this story: Nicole Piper in Los Angeles at npiper@bloomberg.net.

To contact the editors responsible for this story: Daniel Taub at dtaub@bloomberg.net, Crayton Harrison at tharrison5@bloomberg.net, Christine Maurus

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