L.A. Should Not Be City’s Major Landlord : Housing: Develop strategies now, such as transferring the buildings to tenants, to deal with rental crisis.
A study released in December paints a dire picture of Los Angeles’ rental housing market. It showed renters’ incomes dropping, percentage of income paid in rent increasing, owners’ revenues decreasing, maintenance being deferred, vacancies increasing, mortgage foreclosures rising, standards dropping, gangs and drug dealers moving in, adjoining buildings being affected and neighborhoods sliding out of control. Gary W. Squier, the city Housing Department’s general manager, warns: “We are at a fork in the path of housing policy . . . We can let the market take its course and stand back as real estate and neighborhoods go through a shakeout process, as has already occurred in most Rust Belt cities; or we can intervene to reverse the decline of housing and neighborhoods.”
Thirty years ago, New York City faced a similar problem and decision. Los Angeles needs to look at the lessons from New York on how to respond to this problem before we replicate the South Bronx here.
New York initially tried to get tough with the landlords trying to make a profit in the shakeout--in the worst cases, we would call them slumlords. Two common ways slumlords attempt to maintain profitability are by decreasing maintenance and not paying property taxes. The city tried receivership laws, threatening to take over properties to force their maintenance, and shortened the period of delinquency from three years to one year before the government foreclosed to collect back taxes.
Neither the receivership nor tax collection policies changed the landlords’ behavior or the downward spiral. More than 100,000 rental units were transferred into city ownership after tax foreclosure.
The city also began transferring title of distressed buildings to residents or to community-based nonprofit development organizations. Earlier tenant ownership and community nonprofit ownership programs were dramatically expanded, although not in proportion to the enormity of the problem.
The Los Angeles study tells us that the core of the New York problem, low tenant incomes inadequate to pay rents, is now with us. Los Angeles needs to act now or risk becoming the de facto landlord of major parts of the city. The city should measure the dimensions of the problem by examining the number of tax delinquencies (we have a five-year rule before foreclosure) and arrearages in water bills (water is not shut off even when the landlord does not pay the bill).
If, as suspected, the problem is at risk of becoming massive, we must decide on long-term measures to deal with it. Assuming we do not want Los Angeles to own this housing stock, the city should act as broker for the transfer of the troubled housing stock to community groups or to the tenants. This would require a collaborative program to make the building economically viable following the transfer.
We are fortunate to have an extensive network of community-based nonprofit development organizations that can respond. We have not, as in New York, fully plumbed the potential of tenants as possible owners, although an experiment in that direction is under way in the Pico-Union area. Such a policy would increase homeownership in areas of the city where it is low. If we wait until the buildings are empty, as often happens now, it may be too late to save the structures.
When the Los Angeles Housing Department was created in 1988, the mayor for the first time in the city’s modern history stated that housing was a municipal responsibility. At a time when federal housing policy is being restructured to give more responsibility to local government, Los Angeles must become more aggressive and innovative in this field. We need to respond to this impending crisis in the same way we responded to the aftermath of the earthquake; the problems revealed in the rent study can also create ghost towns.
