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Thursday, Jun 30, 2022

Landlords Want to Help Police, but Difficult Now

Los Angeles area apartment owners are reacting with a mix of support and hesitancy in response to a Los Angeles Police Department housing initiative that is asking landlords to voluntarily subsidize units for police recruits for two years.

The department says it lost 633 officers in the last fiscal year but was able to hire only 75. One big reason it is having difficulty attracting recruits is the high cost of rent in Los Angeles.

Backers of the plan say a rent break would help potential officers afford to come aboard. And in the week since the plan was announced, they said they are getting “inundated” with support.

However, several apartment owners are reluctant because many have lost money with local governments’ recent decisions that have cost them.

Aaron Cohen, the chief operating officer of private investment real estate company CGI Plus , said he supports the initiative and likes the idea of having police officers live on CGI properties. However, he said he would want the recruits to provide security to their complexes in return for providing subsidized rates to them, eliminating the cost of apartment patrols.

“Offering a discount without any kind of service in return to balance out net operating income of the property… it just makes it makes it even harder to run the property and (is) not affordable,” Cohen said.

Cohen, among others, cited Los Angeles County’s pandemic-inspired eviction moratorium and rent increase freeze as factors that have put CGI into a squeeze that makes it difficult for the company to be completely on board with the subsidized rates.

The eviction moratorium recently was extended into next year, at least for some renters, and apartment owners have complained that some tenants are making no effort to pay any rent, straining them financially.

Steve Soboroff, who has been a police commissioner for 9 years and who is spearheading the initiative, said that the housing plan will make it so that owners cannot ask recruits to provide private patrol services in exchange for subsidized rates.

Steve Soboroff

“I’m not discounting the business of being a landlord,” Soboroff said. “Being a mom-and-pop apartment owner is very difficult right now, but I have to put that aside.”

He added that the department also is telling apartment owners that they cannot require recruits to put LAPD stickers on their windows or identify themselves as being in the police academy.

“They’re not going to save money on their security,” he said. “What they’re going to have is a hell of a great tenant.”

Soboroff and Los Angeles Police Chief Michel Moore unveiled the plan April 6 to the Business Journal.

The plan is split into two parts. Besides the direct subsidy of roughly $1,000 a month that apartment owners would grant to police recruits, the other part calls for donations to a fund that could help pay for recruits’ rent. Soboroff said he has received early pledges that total $145,000 as of April 12.

Under the plan, the recruits would get a rent break for two years. That would be long enough to get them through the six months of police academy training and let them get rooted in a career in Los Angeles.

The math

Recruits receive $71,000 a year from the start of their training. Soboroff figures that if recruits paid about 40 percent of their after-tax monthly income in rent, that it would equate to $1,500. Taking into account the higher cost of living in Los Angeles, Soboroff and the department are scouting for landlords to subsidize rent above that amount, which could clock in at around $1,000 a month for one unit.

He added that many donors have asked to meet and discuss the program to help recruits make up the difference between $1,500 and the discounted rent. “Sometimes it could be $200 a month and in extreme circumstances up to $1,000 a month,” he wrote.

Soboroff said he has been inundated with support, citing the likes of Sherman Oaks real estate management firm Moss & Co. and real estate developer G.H. Palmer Associates. Moss oversees more than 13,000 residential units across Los Angeles, Orange and Ventura counties and Palmer more than 15,000 Southern California apartment units according to its website.

“(Landlords) want to know how it works and they’re excited about it,” Soboroff said, “I already have a couple of super promising units that would be almost half price that may be a block from the L.A. city line.”

TruAmerica Multifamily Chief Executive and President Robert Hart also pledged his support. “I’d certainly rather rent to hard working police officers that are paying their rent versus tenants that are taking advantage of the COVID eviction moratorium,” he said.

“We’ve got to help our community through better community policing and more police officers, so I think it’s a worthwhile investment.”

The current eviction moratorium protects tenants into next year. But by June, the protection will only apply to renters who earn up to 80% of the area’s median income. Tenants seeking protection after June 1 are supposed to self-certify that income requirements are met.

Soboroff emphasized that the housing program is a landlord-tenant relationship as opposed to a landlord-city or landlord-LAPD relationship.

“If the tenant isn’t a good tenant, the landlord should throw him or her out. If the landlord is not a good landlord, the tenant should leave. We’re not going to get engaged in those kinds of details.”

Evictions costly

However, those details are what other property managers such as Matt Williams of Williams Real Estate Advisors are concerned about.

Williams volunteers with the Los Angeles County Sheriff’s Department through the delivery of protestant services to county prisoners in addition to owning the real estate company, which has more than 800 units under management. He says he likes the program in principle, but that in some cases, issues with a tenant are not as simple as throwing them out.

“The problem is that it can cost anywhere from $15,000 to $30,000 in legal fees for a contested eviction. This doesn’t include losing rent for two to six months during the eviction process,” Williams said. “For a small mom and pop owner, putting in the wrong tenant could negatively hit their cash flow and cause them to not cover other bills such as property taxes, insurance, utilities, mortgage payments, trash service, landscaping, repairs and maintenance, etc.”

The matter of recruits not making it through the academy is also a concern for Williams, who said that he would like to know how such a risk would be handled should a recruit not graduate while renting a subsidized unit. Williams, like Cohen, pointed to local governments’ renter policies and moratoriums as another reason behind the reluctance to fully commit to the housing program.

“If the police force really wants the housing community to step behind it, we would love the commissioner to champion better housing policy and reduced housing regulation,” Williams said. “But we don’t see any empathy, people just want more and more from us, and you only have a generous heart for so long.”

Lotus West Properties President Ari Chazanas held a similar sentiment, saying that he would like to see the LAPD stand alongside landlords, voicing and making more public the grievances landlords have about their current circumstances.

“I think that will go a long way with landlords if the LAPD kind of sided with us in a way,” Chazanas said. “They have half a million dollars to spend and get the word out on this and show that landlords aren’t bad and that city (leadership) is on the wrong side of both landlords and LAPD.”

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Paola Mendez
Paola Mendez
Paola Mendez graduated from Los Angeles Valley College, then transferred to University of California, and now serves as a Receptionist and Office Assistant to the Los Angeles Business Journal. Paola wears many hats in different departments and is trilingual in English, Spanish and French.

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