L.A. landlords and tenants will share earthquake retrofit costs under deal approved by City Council

Renters and apartment owners must equally share the financial burden of earthquake retrofitting, the Los Angeles City Council agreed Wednesday, capping a more than year-long debate that allows the city to begin implementing the most sweeping mandatory seismic laws in the nation.

After many housing studies and heated meetings with landlord and tenant groups, city staff proposed a compromise that the City Council unanimously voted to move forward: Owners can pass half the retrofit costs to tenants through rent increases over a 10-year period, with a maximum increase of $38 per month.

"This is a deal that's been a year in the making. And it's the best deal that we could have," said Councilman Gil Cedillo, the head of the City Council committee that mediated the plan. "It took a lot of work to get this done. Those meetings initially were not pleasant .... We’re very happy to get both groups together."

This follows the city’s adoption of an ambitious law that requires an estimated 15,000 buildings across Los Angeles to be retrofitted. The law, signed in October by Mayor Eric Garcetti, caps decades of efforts to strengthen two types of older buildings that proved deadly in past earthquakes: brittle concrete buildings that dot L.A.'s major boulevards and wood-frame apartment complexes with weak first floors. About 65 people died when these types of buildings collapsed during temblors in 1971 and 1994.

Past efforts to require retrofitting — or simply identify the most vulnerable buildings — died at City Hall over the question of cost. Landlords have long been concerned with the financial burden of retrofitting, which could cost as much as $130,000 for a wooden apartment and millions for a larger concrete building.

Tenants have worried that owners would be allowed to recoup all the retrofitting costs through significant rent increases. In 2013, San Francisco passed a landmark law requiring owners to retrofit vulnerable wooden apartment buildings but allowed the costs to be passed on to renters — even those protected by rent control — over a 20-year period. Compliance so far has not been an issue, officials said, and exceptions have been made to help ease the burden on tenants with the lowest incomes.

In Los Angeles, lawmakers grappled with the controversy of passing all the costs on to tenants in a city that already has some of the nation’s highest rents.

Under existing L.A. housing laws, which have rarely been applied to seismic retrofitting, property owners technically could do so through a rent increase of as much as $75 per month.

The 50-50 cost-sharing plan approved Wednesday took more than a year of committee hearings and discussions with building officials, engineers, and owner and tenant groups. Many concerns have now been addressed, both sides acknowledged.

Officials, for example, agreed to allow owners to also pass on half the cost of a building’s seismic evaluation, as well as the interest they would pay on any loans taken out to fund the retrofits, said Jim Clarke of the Apartment Assn. of Greater Los Angeles. 

"Is it the best we could get or expect? Probably," said Clark, adding that these considerations make a huge difference for many older, mom-and-pop property owners who invested their retirement nest egg in an apartment building and rely on the rent as income.

Tenant advocates said any rent increase would be a burden, but a $38 maximum increase per month is more acceptable than $75.

"It’s somewhat of a win-lose situation," said Larry Gross, executive director of the tenant advocacy group Coalition for Economic Survival. "Any increase to tenants today has a detrimental impact on their financial stability. On the other hand, we made significant progress on softening the blow. Tenants were looking at paying for the full retrofit cost and looking at $75-a-month increases. We got that cut in half."

With the cost-sharing debate resolved, the issue becomes how the retrofit laws will be implemented in the coming months. Tenant and owner groups worry that a sudden demand for thousands of mandatory retrofits will create price surges for qualified structural engineers and construction contractors.

Housing and building officials must also consider whether they have adequate staffing to process all the retrofit permits and the rent increases. The process needs to be streamlined and not complicated, said Beverly Kenworthy, executive director of the Los Angeles division of the California Apartment Assn.

"There is still a big fat question mark out there. There are a lot of things that have been left open-ended,” Clarke said. "This ordinance ... It'll probably be modified over the next five, 10 years."

Under the new retrofit law, property owners will have seven years to strengthen “soft-story” wooden apartments and 25 years to strengthen concrete buildings. Soft-story buildings have weak first floors because they often are built over carports and held up with slender columns.

The Los Angeles Department of Building and Safety is finalizing a list of roughly 13,500 soft-story wooden buildings that officials suspect need retrofitting. Once the list is finalized, officials will first issue a courtesy letter to every owner explaining the new law and the mandatory retrofit timeline.

It will take longer for city officials to identify which concrete buildings will be included in the new retrofit regulations, officials said. There are an estimated 1,500 buildings — including landmark structures in downtown, Hollywood and Westwood — that may require close scrutiny.

Both tenant and owner groups acknowledge that the retrofits need to be completed, but hope lawmakers won’t consider this the end of the issue. The city needs to continue to find financial aid options for these retrofits, they said, such as low-interest loans, permit fee waivers and tax breaks.

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"We look to them to be as aggressive in continuing to seek those funds as they were aggressive in getting the mandatory retrofitting passed in the first place," Gross said. "It's part of the equation."

A retrofit tax credit bill proposed by Assemblyman Adrin Nazarian (D-Sherman Oaks) passed the Assembly and Senate last year, but failed to get the governor’s signature.

Cedillo, who was on his way to meet with Nazarian after Wednesday's meeting, acknowledged these concerns and said the city would continue to lobby the state for funding options.

"Why are we waiting for an earthquake and then committed to spending billions of dollars, when we can spend millions of dollars before the earthquake, avoid the trauma, avoid the loss of affordable housing, and do so in a preemptive manner that costs us less," Cedillo said. "I will continue to make that argument to the governor and hope that we make some progress."

Follow @RosannaXia for more news about seismic safety. 

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