Losing Affordable Housing in L.A.?

Loophole Allowed Demolition of Affordable Units to Escape Rent Stabilization

By a unanimous vote, the Los Angeles City Council adopted an ordinance to close a loophole threatening the city's supply of rent-stabilized apartments.

Under a California law known as the Ellis Act, landlords may exit the business of renting residential property by converting their property to commercial or for-sale residential, with some restrictions. This has resulted in a loophole allowing property owners to demolish their rent-stabilized apartment buildings and build new apartment buildings with no rent restrictions.

"Los Angeles has the country's worst housing crisis," said Council President Eric Garcetti. "By hearing from all interested
parties in a series of open hearings, this council has passed a law that, without placing undue burden on property owners, will stop people from bending the rules to evict low-income tenants and will encourage the production of new affordable housing."

"Our goal was to find something that was balanced and fair without penalizing the most vulnerable residents of this city, who are running out of options on where they can live," said Councilmember Ed P. Reyes.

"Democracy and public policy were well-served by this ordinance," said Councilmember Bernard C. Parks. "It allows for the preservation of necessary critical and affordable housing, but does not eliminate the issues that create the construction of new housing."

"The new revision clarifies the rights of tenants and the rights of property owners," Councilmember Bill Rosendahl said. "We now have more options to protect renters and preserve affordable housing."

If a landlord evicts the tenants of an apartment building with the intent of leaving the rental property business, demolishes the building, and builds a new rental building, the ordinance adopted by the council provides two options:

1. The owner may raise the initial rents to market levels. Further rent increases in the new building are then regulated under the terms of the Rent Stabilization Ordinance.
2. The owner may designate up to 20% of the building's units affordable to tenants earning 80% or less of the area median income. A building with 20% affordable units may then take advantage of the available building-envelope incentives regarding parking, setbacks, and height.

Properties with four units or fewer where the owner occupies one of the units are exempt from these provisions.

Contacts:
Garcetti/Josh Kamensky, (213) 473 7013
Reyes/Tony Perez, (213) 473 7001
Parks/Purvi Doshi, (213) 473 7008
Rosendahl/Safiya Jones (213 473 7011)