Seismic Shift for Safety

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The need to protect our affordable housing stock and keep Angelenos safe in an earthquake is paramount and undisputed. It’s something that virtually all policymakers, business operators, rental property owners as well as renters agree on.

The efforts by Mayor Eric Garcetti and his science adviser for seismic safety, Dr. Lucy Jones, to create a roadmap for seismic readiness are commendable. Their plan, Resilience by Design, presents a series of specific action items that, when completed, will certainly make Los Angeles better equipped to minimize loss of life and serious injuries, restore infrastructure and transportation, and prevent permanent damage to our local economy in the aftermath of a major earthquake.

Probably the biggest public safety component of the plan is to assess and retrofit wood-frame, soft-story buildings and concrete structures built before 1980’s tougher seismic building codes. The mayor has a set a five-year time line for this work to be completed on the estimated 15,000 rental properties that are affected.

The Apartment Association of Greater Los Angeles, on behalf of our membership of 20,000 owners and managers of residential rental properties, agree that these improvements are necessary for the safety of renters and to preserve the housing stock in Los Angeles. We fully agree that these upgrades are needed.

However, the devil, as they say, is in the details.

Los Angeles is a city that faces an affordable housing crisis. The demand for affordable rental housing far exceeds supply. As a result, balancing the long-term need for seismic upgrades with the city’s immediate shortage of affordable housing is the key to making this process work for everyone.

For apartment owners, a mandated retrofit would trigger a little-known improvement program in the city’s rent stabilization ordinance that allows for a 100 percent pass-through of improvement costs to tenants. Though this increase would have a monthly cap of $75, it is still bad business for our city and building owners, and would be difficult for many renters to manage.

This is something apartment building owners simply want to avoid. From a business standpoint, many owners fear raising rent would cause their tenants to relocate. From an economic standpoint, higher rents decrease the stock of affordable housing. The best possible solution is funding sources outside the pocketbooks of owners and renters.

Tax credit

In March, Assembly member Adrin Nazarian (D-Los Angeles) and the mayor unveiled state legislation that would provide a five-year, 30 percent state tax credit to property owners for seismic safety improvements to their vulnerable buildings. The credit would be awarded upon completion of the retrofit and have a deadline of Dec. 1, 2021.

The mayor calls it an important step in making his Resilience by Design plan a reality. Likewise, the Apartment Association wholeheartedly endorses this proposal as one ingredient of a funding stew that’s needed to make these upgrades in a way that doesn’t adversely impact the supply of affordable housing in the city or the ability of current owners to retain tenants or add units. But it is just one step and much more is needed.

Our members have suggested additional ingredients for this funding stew: exemptions on local business gross receipts tax, rebates on property taxes, additional state tax credits, and grants from agencies such as the Federal Emergency Management Agency or the Department of Housing and Urban Development. These ingredients should be made available to property owners and construction companies alike so that speedy retrofits are a priority for all involved.

Since we do not know how many Southern California contractors have the certification and capability to complete this type of work, we are also advocating for an extension or some flexibility in the mayor’s five-year time line.

We understand and agree with the need to protect our neighbors and tenants. We are ready to get to work right away to make retrofits happen. In a city where the cost of living is already out of control, we need to find an adequate funding solution to ensure that safe housing is also affordable.

James B. Clarke is executive vice president of the Apartment Association of Greater Los Angeles.

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