Sunday, April 3, 2016

How Eric Garcetti Incentivized Apartment Demolitions in 2007

On April 2, the Los Angeles Times published a report titled "More rent-controlled buildings are being demolished to make way for pricier housing". The article refers to a trio of apartment buildings in Beverly Grove that were demolished for market rate apartment units. The article states, "The developer plans to replace 12 rent-controlled units with 30 pricier apartments and three units for lower-income tenants, according to building permits." I am reminded that Eric Garcetti is responsible for the developer's ability to build a new rental property consisting primarily of market rate units that are not under the Rent Stabilization Ordinance.

The Ellis Act has provisions that a city may enact to help preserve rent controlled units in certain situations. The City of Los Angeles took about twenty years to put these tenant protective provisions into its Rent Stabilization Ordinance (RSO). Tenant activism got the city council to finally act on it. Three amendments implementing these Ellis Act provisions were added to the Rent Stabilization Ordinance in late 2006 and early 2007. During the process of proposing the amendment placing restrictions on a replacement apartment building, councilmember Eric Garcetti came up with an idea - here's a chance to get some inclusionary housing.

The amendment for a replacement apartment building gives the developer a choice. One choice, as per the Ellis Act, allows the developer to establish the market rates for all of the units, and then the rents are restricted by the RSO after that. The other choice, Eric Garcetti's idea, allows the developer to provide a certain percentage of affordable units. A careful reading of the last paragraph of subsection B of the amendment reveals the developer can meet the inclusionary housing requirement via a density bonus:

SEC. 151.28. ELLIS ACT PROVISIONS - RENTAL OF REPLACEMENT UNITS (Added by Ord. No. 178,848, Eff. 7/16/07)

B. Exemption from the Rent Stabilization Ordinance with Replacement Affordable Units. 

Units that are used to qualify for a density bonus pursuant to the provisions of either California Government Code Section 65915 or Los Angeles Municipal Code Section 12.22 A.25., or are used to satisfy any inclusionary zoning or replacement affordable housing requirement, or are used to qualify for any other public benefit or incentive, may be used to qualify as replacement affordable housing units pursuant to the provisions of this subsection.

What could provide more of an incentive to demolish rent controlled apartments? Personally, I feel the exemption is not in the spirit of the tenant protective provisions in the Ellis Act.