As the cost to rent in Los Angeles continues to creep up, the Los Angeles City Council unanimously approved a new set of regulations on Wednesday aimed at deterring owners of rent-controlled buildings from taking their units off the market.
The new rules make it tougher on landlords in a couple of ways.
To raze rent-controlled apartments in order to build higher-priced new ones, landlords will have to make an equal number, or 20 percent, of the new units affordable—whichever is larger. Landlords will also have to pay for the relocation of tenants evicted under the state’s Ellis Act and file annual reports with the city on the status of units withdrawn from the rental market.
The Ellis Act allows landlords of rent-controlled apartment buildings to mass-evict tenants under certain circumstances, including when they plan to convert the units to condos or tear down the building and redevelop the property, for example, with a hotel.
Last year, close to 1,400 units were taken off the rental market citywide due to Ellis Act evictions—an increase of more than 25 percent since 2015, when 1,075 units were removed.
Tenant advocates say the loss of these units can affect affordability citywide, and most LA renters already spend more than 30 percent of their income on housing.
Councilmembers have argued the Ellis Act, which was originally meant to help landlords exit the rental business, has lately been abused by speculative developers looking to demolish older buildings in order to build newer, market-rate projects.
Tenant advocates at the meeting praised the new rules, particularly a requirement that landlords restart the Ellis application process if vacated units end up back on the rental market. Recently, the city has seen a number of well-publicized cases in which landlords evict tenants only to re-rent the units on short-term rental sites like Airbnb.
But the regulations have also faced criticism. Several members of the LA Tenants Union who spoke at the meeting questioned whether the city would be able to properly enforce the new requirements.
Meanwhile, as the Los Angeles Times notes, others have questioned whether the ordinance’s affordable housing requirements will discourage the construction of new housing.
Marie Rumsey, director of legislative affairs for the Central City Association, told the committee that the ordinance represented a “significant shift in policy.”
She pointed out that, under the new rules, a developer replacing a 10-unit building with a project with 300 units would be required to make 20 percent of those units affordable—a significantly higher number than those removed from the market. The cost of adding those affordable units could make some developers shy away from major projects, Rumsey said.
In approving the ordinance Wednesday, the council also asked the City Attorney and Los Angeles Housing and Community Investment Department to research further ways to protect tenants from Ellis Act evictions.
- LA is considering tougher rules regulating rent control evictions [Curbed LA]
- The number of Ellis Act evictions in LA rose again in 2016 [Curbed LA]
- LA Housing Department Wants to Clamp Down on Mass Evictions [Curbed LA]
- Rent-Controlled Tenants Were Evicted, Then Found Their Apartments on Airbnb [Curbed LA]
Comments
Rent control is broken. Eliminate it!
By stvrr on 04.20.17 4:06pm
Message: Stop building in LA. We don’t want more density, we just want to be able to say "I am the generous kind soul who advocated for [so-called] ‘affordable housing’" so we can get re-elected.
Symbolic gestures that only harm renters. Thanks a lot.
By MMVic on 04.20.17 4:08pm
Los Angeles just shot themselves in the foot.
What developer in their right mind would agree to this?
This will only add to the housing crunch.
By bettershelter on 04.20.17 5:05pm
This is a GREAT move to protect the majority of Los Angelenos, more and more who rent as the price to purchase a home sky-rockets. Yes, obviously we need more density and more projects being built on sites like parking lots, but the overwhelming driving force behind the call for more density is to BRING DOWN HOUSING/RENTAL COSTS (Or at least slow it down so ppls salary increases can keep up). If we just start demolishing all of our Rent Control/Affordable/Low income housing for these "Luxury Units" being built, we will end up like San Francisco where the city has to subsidize teachers living costs because NONE can live near the cities schools.
The free market has limitations, and can often times be exploited (if you need proof, you obviously haven’t been paying attention for the past 30 years. From corrupt CEOs raising the price of life saving drugs by 300% in a month, to the financial crash, to predatory lending practices, to For Profit "Universities" like the now defunct Trump University). Rent Control is NOT the main issue, in fact its the only thing protecting the majority of LA renters. The problem is (1) Lack of Density/Supply. Replacing our supply of affordable housing, with un-affordable housing is not the answer.
Maybe just maybe if developers would built more units that were Affordable for the majority of ppl in LA (Not Low Income, but Affordable), then we could remove Rent Control. But Removing Rent Control, without first providing Affordable options is incompetent at best.
And SOOOOOO many people think Rent Control is equatable with Low-Income Ghetto housing. No…over 65% of LA’s apartments are under rent control, and obviously over 65% of LA is not full of ghetto slum low income houses. The incorrect uneducated generalizations are why many have such a negative taste towards Rent Control.
By USCTrojan90 on 04.20.17 5:35pm
65% of the apartments. That leaves 35% of the apartments, plus all the single family homes and commercial districts. Most of LA’s houses are kept up nicely. It is these apartments where the landlord has no incentive to keep them up that are the biggest offender.
By LA Denizen on 04.20.17 5:51pm
LA Denizen – My previous apartment (2 years ago) was Rent Controlled, 1 bedroom at $1700 (which is far from Affordable for many ppl, but arguably within market rate threshold for that time period), building was beautifully maintained, pool, parking garage, balconies and all, on Hollywood Blvd, right near Runyon and walkable shops, ect. Perfectly fine neighborhood, technically in the Hollywood Hills. My Landlord seemed to have no issue maintaining it.
I bring this real life example up to show ppl that their impression of Rent Control is often times inaccurate. 65% of LA’s housing stock being rent controlled (I believe that "more than 65%" is referring to rental properties, not ALL properties) does not equate to Low Income, Ghetto Slums, like most ppl want to claim it is. My landlord also was NOT struggling, so the notion that landlords who own Rent Control properties as being massive victims at threat of going under…is a fallacy at best.
I hear astronomically more stories about Renters being prices out and drowning, then Landlords falling under…
By USCTrojan90 on 04.20.17 6:54pm
You’re comment ignores the basic principle that the single greatest factor is decreasing cost is to increase the supply. In your socialist rant about the free market you note, in passing that, "The problem is (1) Lack of Density/Supply. " By disincentivising an increase in rental units, as the city has done, you are keeping the number of rental units the same while the number of people (the demand) continues to increase. For example, if the owner of a 10 unit rent controlled complex wants to tear it down and build 30 units, they now will not do so because of the regulations making it too costly. Thus, while 10 people have rent control units, the other 20 people now have no place to live and thus, rents increase. This is Economics 101. We need to encourage growth so that the number of rental units is more than the number of renters and then, rent prices come down.
By LADude on 04.21.17 1:39pm
If you don’t understand how LA’s zoning prevents developers from building anything by luxury units, you have not looked into zoning and its effects on the market for even 5 minutes.
By goingup on 04.24.17 5:45pm
A lucky few will win (or have an inside connection to) a new subsidized apartment, paid for by the other renters in the building. Building a 300 unit complex is time consuming, arduous, and expensive. Which is why not many are built in LA. Someone has to pay for the construction, so it will be the 240 renters paying hundreds more per month for the entitled 60.
By LA Living on 04.21.17 8:43am
The example mentioned in the story is not realistic but address the point. Zoning will never allow 10 unit APT land to go to 300 unit. This rule actually will make the newer APTs more expensive (someone has to pay for 20% low income housing). Landlord are always stuck with bad rent control tenants but tenants are never stuck with a bad landlord because they always have option of moving out. No?
By High Rent on 04.21.17 11:58am
"This rule actually will make the newer APTs more expensive…" This is commonly said but is just plain wrong. Landlords charge as much as the market will bear for their units – doesn’t matter how much it cost to build, tenants will pay only what they are willing to pay. So the builders cost to build the affordable units is irrelevant to how much the market rate units will rent for.
Then you go on to say something correct: "someone has to pay for 20% low income housing." That someone is the property owner who sells the property to developer. The amount a developer is willing to pay for a property is a fairly simple formula:
Amount Developer Is Willing To Pay For The Land = Amount Final Project Will Sell For After It Is Leased-Up (the "stabilized" value) subtracting All Costs To Develop (including All Costs To Build the Affordable Units) plus Developer’s Profit.
So if the costs to build increase because affordable housing has to be included, the amount developers are willing to pay for the land decreases – so the "someone" that is paying for the affordable units isn’t the future market rate renters but the land owner when they sold the property.
By I Like Buildings on 04.21.17 3:44pm
Ok I’ll bite. You’re unfortunately incorrect as to who pays for this, but I like your thinking enough to respond.
The marginal renter always pay for it through the lack of supply of new housing. Your selling landlord isn’t actually going to sell below a certain price. This is a price that is functionally capped by whatever governmental restrictions exist that make building otherwise economically viable units (REAL building costs+risk premium to developers) uneconomical. It is effectively a price cap. Absent these restrictions, the only barrier to entry would be whatever the competing use is (parking, current building, etc). When you lower that price cap, all you do is decrease the supply of affordable inputs (land) available to developers, which directly leads to an increase in rents and a reduction in new units bring supplied.
By Pragmapraxis on 04.21.17 8:03pm
UscTrojan and Like Buildings don’t understand how market economics work. They either don’t know or try to avoid thinking about it via willful ignorance—-I assume the latter.
By LeBasque on 04.22.17 5:21pm
Oh and let me guess, your some fool who believes the free market is some infallible perfect system right?? Your constant call for deregulation is a perfect example of Willful Ignorance. Why were regulations put in place?? Because the free-market was not working out as you ppl claimed it would, leaving hundreds/thousands sometimes millions of ppl in the dumps (can someone say Financial Crash). The free-market has its positives, obviously, but claiming as though it hasnt and isnt being exploited is nothing more than defecated fecal matter.
All of you anti-Rent control ppl want to pretend as if we removed Rent Control that landlords/free market would just magically reduce rents. You forget that part of the equation is Landlords trying to maximize profits often times at all costs, regardless of its affects on the urban fabric, which requires more than the top 5% to remain healthy.
So once again, if the Un-regulated/De-regulated Free Market is the solution for eveything, why were regulations put in place in the first place?? Hmmmm probably bc the Free-Market was failing the citizens it was meant to support.
By USCTrojan90 on 04.25.17 6:18pm
So to combat the problem of unaffordable housing caused by over-regulations, they impose more regulations that further increase the costs to own the property.
By LADude on 04.21.17 1:32pm
Only in the minds of Curbed’s ace reporters could a developer turn 10 units into 300.
By smartalex on 04.22.17 8:38pm
Only in the minds of Curbed’s ace reporters could a developer turn 10 units into 300.
By smartalex on 04.22.17 8:39pm
Only in the minds of Curbed’s ace reporters could a developer turn 10 units into 300.
By smartalex on 04.22.17 8:39pm
The more regulations you IMPOSE on landlords, treating them more and more like criminals really, the higher rents will be in the long run. Has anyone noticed the cities with rent control have the highest rents? And the highest property values.
By wehoboy on 04.28.17 7:10pm