Who Will Pay for Earthquake Retrofits? The City Council Takes Up That Question on Monday

The West Hollywood City Council on Monday will decide whether and how to require tenants of rent-stabilized apartment buildings to share part of the costs incurred by landlords to retrofit those buildings that have been deemed vulnerable from damage by an earthquake.

The Council’s decision is likely to have a major impact on the city’s residents, 78% of whom are renters living in the 93% of city apartment buildings that are rent-stabilized.

The draft ordinance prepared by the city’s Human Services and Rent Stabilization Department includes limits on how much of the cost of a retrofit could be passed along to tenants and on which tenants might be affected. The limitations include:

— Capping at 50% the share of the cost of the retrofit that tenants would have to pay, with payment of that share spread over a ten-year period.

— An additional absolute cap of $38 a month per unit per month. In other words, if the cost of the retrofit allocated over 10 years equaled $100 a month per apartment, the landlord could only charge $38 a month.

— Exempting tenants who are very-low income and who also suffer from a disability or are 62 years old or older from paying any portion of the retrofit cost.

— Limiting the retrofit costs that tenants would have to share to those incurred by the landlord after April 1 for so-called “soft story” buildings and to Aug. 7 for “non-ductile/ pre-Northridge Moment Frame” buildings. Those are the beginning dates established earlier by the City Council for the five-year period landlords would have to complete the retrofits for soft-story buildings and the 20-year period for non-ductile/pre-Northridge buildings.

Soft story buildings, commonly built in the 1950s and 1960s, are wood frame buildings with an open ground floor that is generally used for parking. These open ground floors are especially vulnerable to collapse during earthquakes, but can be reinforced via a steel frame around key pillars. There are an estimated 780 vulnerable soft story buildings in West Hollywood. Less common are non-ductile concrete buildings (an estimated 120), which are buildings with rigid and unbendable concrete walls that are unlikely to flex during an earthquake. Also less common are 31 pre-Northridge steel moment frame buildings, which have load-bearing steel frames in which the beams are rigidly connected to the columns. Many such buildings were found after the 1994 Northridge earthquake to have suffered fractured columns because the steel was not flexible enough.

— Applying the retrofit cost sharing only to those tenants occupying a unit at the time the building owner has received a permit to begin the retrofit process. In other words, someone moving in after the process has begun would not be required to pay a portion of the cost.

— The retrofit share amount would not be considered a portion of the tenant’s rent. That means the annual authorized percentage increase in rents of rent stabilized apartments could not be levied on the retrofit payment. If a tenant did not pay the pass through, that would not be an allowed cause for eviction.

The ordinance calls for the city to verify the actual cost incurred by a landlord and to verify that the work has been completed. A building owner would have one year after completing the retrofit to submit an application to the city for permission to implement the cost-sharing plan. Property owners with outstanding code issues or who have been required to decrease rents for failure to properly maintain a building would not be eligible for the pass-through program.

A “drive by” survey by Degenkolb Engineers identified 820 buildings in West Hollywood that might be vulnerable to earthquake damage. Because that survey was done from the street, owners of those 820 buildings will have to hire their own surveyors to determine whether their buildings actually are at risk.

Degenkolb has estimated the rough cost of retrofitting a wood soft story building to be between $40,000 and $160,000, with the amount dependent on how many steel frames would need to be installed in buildings that now have vulnerable wood framework. The non-ductile concrete and pre-Northridge steel moment frame buildings typically would require more complex work that could be more costly than new construction. Degenkolb evaluated six buildings ranging from two to 12 stories and came up with estimates ranging from $879,000 to $31.7 million in retrofit costs. It’s report warns that those numbers cannot be used by building owners to estimate their own costs, given the complexity of each individual building.

One alternative to the proposed cost-sharing ordinance would be to allow owners of rent-stabilized buildings to use a current provision in city law under which they can appeal to the city for a rent increase to cover the actual costs to them of building maintenance if those costs mean they are no longer getting a reasonable return on their investment.

The retrofit cost-sharing proposal has been somewhat controversial, with tenants who have attended community meetings on the matter objecting that they shouldn’t be required to share the cost of maintaining a building they don’t own. However, City Council members and city officials have expressed concern that owners of rent-stabilized buildings might decide to sell them and get out of the rental business if they are forced to cover the costs by themselves. Under the state Ellis Act, building owners can evict rent stabilized tenants if they leave the rental business. Typically the property would be sold to another developer who would turn it into condominiums. In fact, local real estate agents in recent months have been approaching owners of rent-stabilized buildings to encourage them to put those buildings on the market.

The proposed ordinance is near the end of the City Council’s lengthy Monday night agenda, which may result in fewer residents turning out to address the matter. The City Council meeting begins at 6:30 p.m. in the City Council Chambers, 625 N. San Vicente Blvd. south of Santa Monica. Parking is free in the five-story structure behind the chambers with a ticket validated in the lobby.