If an owner wants to demolish a rent-controlled building, should the city of Los Angeles or the tenants get the opportunity to buy it first?
The Los Angeles City Council’s housing committee endorsed the idea Wednesday. It was proposed by Councilmember Herb Wesson, who wrote in a motion that “we need to come up with solutions to keep our fellow Angelenos in their homes and stop the flow into homelessness.”
The “first right of refusal” would come into play when a property owner files an Ellis Act application.
That’s the state law that allows landlords to withdraw their property from rent control, either because they plan to demolish it or remove it permanently from rental housing use, typically to convert to condos or other for-sale units.
According to the Coalition for Economic Survival, property owners have applied to strip 1,348 rental units from rent control under the Ellis Act so far this year.
“Large developers and land speculators have taken advantage of the Ellis Act by purchasing rent-controlled buildings, evicting the tenants, and replacing the existing buildings with market-rate, luxury developments, upscale condominiums, and non-rental commercial uses,” Wesson’s motion says.
Under his proposal, either the city, the tenants, or “mission-driven” affordable housing developers would be given the option to buy the property instead.
Beyond that, it’s unclear how exactly the proposal would work. The housing committee is asking the full council to task the housing and community investment department and city attorney with drafting an ordinance that would provide more details.
“This sounds like a terrific idea to me,” said Councilmember Paul Krekorian, who serves on the housing committee. But he said he wanted to learn more about the potential advantages, disadvantages, and risks. “Our council has a tendency to not think” ordinances through, he said.
Representatives from two local land trusts said it would bolster their efforts to keep property affordable and within the control of communities.
“Our neighborhood has a lot of rent-controlled buildings,” said Roberto Garcia of East LA Community Corp. “We want to make sure that if their building is sold they have access to buy it.”
In a letter to the housing committee’s chair, Damien Goodmon, a community organizer in the Crenshaw area, said it would give the city the opportunity to “replace exploitative for-profit [owners] with owners dedicated to preserving housing unit affordability.”
“Passing the motion... would preserve the number of affordable units for poor and working-class Angelinos, and spare tenants of the traumatic process of eviction and harassment,” he wrote.
The Apartment Association of Greater Los Angeles and the California Apartment Association oppose the proposal.
It would restrict and “unfairly encumber” mom and pop property owners, said Danielle Leidner-Peretz director of government affairs for the Apartment Association of Greater Los Angeles. In a letter to the committee, she said it could “unnecessarily” delay the potential sale of the property or discourage “potential buyers from making a purchase offer in the first place.”
Leidner-Peretz urged the council to focus instead on policies and incentives to encourage more housing production as a solution to the city’s housing crisis and shortage.
Correction: An earlier version of this story stated City Councilmember Gil Cedillo introduced the proposal. It was introduced by City Councilmember Herb Wesson and “seconded” by Cedillo.
Comments
Is this first right if the property is for sale, or do they force the owner to sell if they want to demolish it and build something else? One doesn’t seem like a big deal but the other seems like unlawful taking.
By CaliSon on 11.15.19 9:46am
There is a glaring disconnect with how this proposal is supposed to work and what community advocates are expecting. Plus, surprise surprise, the community advocates already have what they are advocating for.
This proposed ordinance would have a "first right of refusal" that would come into play when a property owner files an Ellis Act application. Developers who issue Ellis Act eviction do NOT want to sell the property at that time. Those developers want to tear down the existing buildings and build a bigger project. Only once the new bigger building is built, do they want to sell and most likely, the sale will be of condo units.
But the community advocates want the right of first refusal when a building is sold . "We want to make sure that if their building is sold they have access to buy it." So by the time this proposed ordinance comes into play – when the Ellis Act evictions are issued – would already be way past the time the property was sold since a developer would have already bought the property and then issued the Ellis Act evictions.
Plus, and this is the kicker, the community advocates already have the access to buy the property. The property was put on the open market where anyone could buy it as long as they are willing to pay more than anyone else. Of course they can’t pay more than anyone else because they are either tenants who need the rent controlled apartments (so they aren’t going to be able to raise the money to buy a property priced for future market-rate use) or they affordable housing developers who don’t have a bunch of cash sitting around to, again, pay market-rate price for a project that won’t have market-rate density.
Plus, any ordinance will have to have some sort of deadline so any developer will just wait out the deadline knowing that none of these affordable housing groups will be able to come-up with the cash before the deadline. So the end result will be just taking a few months longer to make the same market-rate project happen.
In short, this is a particularly ass backward proposal that won’t accomplish what it is trying to do and will just make building new housing even harder.
By I Like Buildings on 11.15.19 12:15pm
"In short, this is a particularly ass backward proposal that won’t accomplish what it is trying to do and will just make building new housing even harder."
Strong contender for the epitaph on LA’s housing affordability tombstone.
By disqusted on 11.15.19 3:15pm
I rather agree, ILB – the market price/funding would still be an issue, as they are for the tenants now. I understand the motivation though – I guess we all can.
By BornPedestrienne on 11.15.19 10:40pm
For some strange reason, the city doesn’t want to build blocks of cheap buildings and then rent control them.
It could build high-rise apartment complexes, for example, in Skid Row and rent them to the poor, $500 for a 2-bedroom.
It only wants to control somebody else.
By Ivan III on 11.15.19 9:46am
Impossible since the city spends 6-700K per "affordable" unit. If they trimmed the cost down, stopped paying inflated wages, hiring only union labor, getting bids outside of the 3-4 companies they use , etc then the prices would drop and they could be building the units themselves. but why cut costs when you can just raise taxes to cover the cost next go around!
By Or_NAH on 11.15.19 1:18pm
"Impossible since the city spends 6-700K per "affordable" unit"
Huh? Where are you getting this idea? It’s wrong.
By LosFeliz$ean on 11.15.19 1:44pm
The complex cost $34,000,000 to construct and it contains 54 units for an average price of $630,000 per unit, inclusive of the building amenities.
https://la.curbed.com/2019/11/14/20963725/isla-intersections-affordable-housing-homeless
By LADude on 11.15.19 1:50pm
C’mon man. You also read that $12 million of that was soft costs for other than building the housing units. Moreover, HHH kicked in $11.6 million of the cost, so that’s around $220K per unit from those funds. There were other avenues of public funding, but the rest is privately financed, so the idea that one can take the total cost of a complete development and divide by the number of units to arrive at what the "city spends" is just wrong. Not kinda, sorta wrong, but 100% WRONG.
By LosFeliz$ean on 11.15.19 2:28pm
You’re playing games with the numbers and how you define what the "city spends". The building cost $34mm to construct and it provided 54 units. So bottom line is that the cost of each unit added to the homeless housing supply was $630,000. The point of the two posts you are commenting on is that the city needs to construct high rises with cheap rent, and that the city cannot do that as long as the units they are building cost $630,000. Their comments are correct and your comment is trying to craft a narrative that twists the facts. Fact: Total cost $34,0000. Fact: 54 units developed
By LADude on 11.15.19 4:53pm
It is not true to say "the city spends 6-700K per affordable unit" because it simply does not. I have no idea what you’re trying to argue about here.
You’re on a roll lately, must be from those $750 2-bedrooms in the 626.
By LosFeliz$ean on 11.16.19 9:40am
$34,000,000 is being spent on the project which will produce 54 units. The city isn’t "funding" or "financing" the entire $34mm, but that amount is being spent. Again, you are arguing over words but the results, or lack thereof, is what really matters.
And I’m still not sure why you’re bringing up the results from my apartments.com search for 2 bedroom apartments. I ran the search and it indicated how many results there were. If you have a problem with that, call apartments.com.
By LADude on 11.18.19 10:19am
I don’t know what makes you crazier, the overarching need to be right even when it is crystal clear that you’re wrong or that you actually think there are 2-bedroom apartments for $750 in Alhambra. I’m left wondering if you actually believe your own BS.
By LosFeliz$ean on 11.18.19 1:20pm
" it is crystal clear that you’re wrong"
$34,000,000 is being spent on the project which will produce 54 units. Still trying to figure out how I’m wrong. Kinda sounds like you won’t admit that you are wrong for blindly supporting these projects.
By LADude on 11.18.19 2:41pm
So, do you agree that "the city spends 6-700K per "affordable" unit"?
By LosFeliz$ean on 11.18.19 3:30pm
Still wrong. I hope to vote down all of these outrageous costing housing projects that fix nothing.
By dustbuster2k5 on 11.19.19 9:32pm
Come on man, I buy a $10mm plaza, take a $9mm conduit, and have $300k in closing costs.
The property only cost me $1.3mm!
The mental gymnastics brainwashed fuckpuppets such as yourself go through must be exhausting.
2 + 2 = 5
By Prepare Your Angus on 11.16.19 10:24am
Soft cost are still cost associated with building the apartments. Every developer has to pay some.
By Constituents on 11.18.19 8:00am
cost is cost. no matter where the money comes from if it’s spent to build then it goes in the cost column. – If the city didn’t think that the 11.6mm or the 12mm for soft cost counted they wouldn’t have included them in the press release for the cost total.
soft cost, soil samples, permits, loans, structural engineer, plans, etc it all goes in the "cost" column and it all counts against the bottom line. units/total cost= price per unit.
"men lie, women lie, numbers don’t" – Jay to the Z
By Or_NAH on 11.19.19 11:51am
It’s the "city spends…" part that is wrong, and you know it. The city does not "spend" the total cost of the development.
By LosFeliz$ean on 11.19.19 1:21pm
HHH is funded by the taxpayers. But who controls that fund? Who gets to decide where that money is SPENT? The city. When the reports come out about homeless housing what do they say? "The city of LA SPENT amount on homeless housing this year" – it’s pretty easy to understand. The money may come from a bond, tax, or loan. But the city is still the one spending and paying.
I feel like you’re basically arguing over wordage. Do you want me to say: "the tax payers spent X per unit combined with the city spending X per unit and the land cost X, and the plans cost X; so in totally the units cost 6-7K each"? – because either way it’s worded the units cost are still very high Compared to what a private company could build a similar development for.
ps: they’re called "soft COST" not "soft freebies". It’s in the damn name
By Or_NAH on 11.19.19 2:22pm
Around $200K per unit is not outrageous and that’s around what HHH funds have averaged. And yes, it would be proper when remarking on how much taxpayer funds are spent to use the amount that taxpayers actually spent and not the total cost of a development which the taxpayer most assuredly did not finance in full.
By LosFeliz$ean on 11.19.19 2:58pm
You’re a fussy bottom ain’t ya bud?
By Or_NAH on 11.19.19 3:00pm
C’mon man. Overstating taxpayer costs is a cheap way to play the ‘waste-fraud-and-abuse’ card. Just be honest. It’s all our money after all, you’re not "fooling" anybody (smart anyway).
By LosFeliz$ean on 11.19.19 3:05pm
Not sure how I’m "overstating tax payer cost" when in the city’s own words they spent the money. You need to take the binoculars off cause you’re missing the forest for the trees.
City: we need X amount to build this but only have Y, where can we come up with the rest? – new tax! Then we will have the money to spend.
city spends money
You: well it actually didn’t cost that because it wasn’t the cities money they had to tax to raise funds. So in reality they only spent Y and we spent Z, so in total X was spent. But that’s not the actually figure even tho that’s what the cities own numbers say.
By Or_NAH on 11.21.19 6:41am