Metro Comes to Town: Tenants Will Feel the Impacts Now and Forever

Residents near to the future Wilshire/Rodeo station will be negatively affected by station construction and street closures. Those who reside on the 100 block of Reeves will be most affected by the work. Both in the short term (inconvenience and annoyance) and in the longer term (redevelopment will wallop the block). Renters Alliance has proposed several mitigations and remedies that could help residents around the Wilshire/Rodeo station project.

Wilshire-Rodeo station plan

Short-Term Impacts: Material Remedies for Tenants

According to the Memorandum Of Agreement, work will immediately commence on on pile installation (7am to 8pm weekends) and deck installation (Friday 8pm to Monday 7am). The Wilshire/Reeves staging yard will see activity 8am to 8pm every day of the week and it lies within one hundred feet of about thirty renting households. That is some potentially serious inconvenience!

We propose a Resident Impact Mitigation Fund. A mitigation fund for tenants residing within 500’ of the staging area (located northwest of the alley at Reeves) would compensate those who rent for quality-of-life impacts during the construction period. This could be calculated as a percentage of the base rent and payable to renting households through to station completion.

State law allows a tenant the quiet enjoyment of her property, yet within approximately 500’ of the future station are 119 households renting on Reeves and approximately 85 renting on Canon. Indeed 36 households rent within 100’ of the future station staging area. Since it is impractical and implausible for a tenant to negotiate a reduced rent, the Resident Impact Mitigation Fund would alleviate some of the quality-of-life impacts of construction for the only party not materially benefitted by the Purple Line extension: those who rent housing (as opposed to those who own it).

We propose a Displacement Mitigation Fund for tenants involuntarily terminated around stations. Tenants will inevitably be displaced for redevelopment induced by fast-rising property values near Metro stations. The effect will be like a slow-motion tidal wave emanating from the station to as much as one-half of a mile out.

City of Beverly Hills could adopt more extensive tenant protections under the state’s Ellis Act, which allows for tenant displacement, but in the meantime a mitigation fund could provide tenants displaced for redevelopment near the project areas with a material remedy. The tenant will already get a relocation fee, but that is a dime on the dollar when it comes to the value of an empty property to a developer.

For example, within 500 feet of the Wilshire-Rodeo station (misnamed because it’s on Reeves!) there are about 200 households renting housing. A Displacement Mitigation Fund could at the very least double the City’s current relocation fee schedule for tenants in the (within 500’ from the station).

Wilshire-Rodeo station impact map
This map illustrates a 500-foot radius around the Wilshire-Rodeo project area. Properties within the area need some help to cope with construction impacts and displacement.

Longer-Term Impacts Beg Policy Solutions

The greatest harm from increased residential density around transit hubs is twofold: that longtime tenants may be displaced and may not be able to find replacement housing; and the character of the streets around the stations will change completely.

Affordability is already a challenge for many tenants in Beverly Hills. About half of renting households are “rent-burdened,” according to census figures. That means they pay more than 30% in household income in rent. Nearly a third of Beverly Hills renting households are “severely rent burdened” in that they pay more than half of their household income in rent. Those are terms used by the federal government to gauge affordability.

Moreover, Beverly Hills has among the highest rents according to industry reports: our average rent-stabilized apartment rent is $2,365 – a figure that is pulled down by a preponderance of older, smaller units. Over the past two decades, the prevailing average rent in Beverly Hills has risen above our municipal neighbors, according to the city consultant’s analysis of conditions.

A household displaced for redevelopment, or even priced out of a unit by maximum rent increases year-after-year, may find it a challenge to remain in the city.
Second, the character of our neighborhoods will change as a result of our two Metro stations. Land values will increase under some of our character-contributing small- and medium-sized multifamily buildings, dialing-up the pressure to put that land to a “higher and better use,” as planners say.

That usually means raze-and-redevelop: low rise becomes mid-rise and 6-unit properties are replaced by 20- or 30-unit behemoths stretching over three lots. Property owners are already betting on this outcome: many have purchased adjacent lots and are waiting to redevelop.

The new units will not necessarily be affordable given the high costs of land, materials and labor; and none of those apartments will be rent-controlled under state law.

What can the city do?

Mandate a minimum percentage of new units to be set aside for low-income or very-low income. This is called ‘inclusionary’ housing. It would be a requirement on developers to do their fair share to accommodate the overall need for rental housing, and the specific affordability impacts their developments create.

Ask for more of a ‘give-back’ when we allow a developer more than our code allows. Today developers get a bonus that equates to some multiple of what he’s invested to get the bonus. Provide one extra ‘affordable’ unit and build three more than the code allows, for example. We can do better.

Mandate that tenants displaced by redevelopment have first shot at any ‘affordable’ units built under any bonus scheme. Today’s city affordable housing guidelines directs not the displaced or even the lowest-income tenants to the very few new units built through bonuses (which is in effect a public subsidy) but instead to our teachers, cops and firefighters – all of whom earn too much to qualify under federal guidelines anyway.

Reform the city’s affordable housing guidelines. The city has talked about reforming those guidelines and Renters Alliance has spoken in favor of it, but the guidelines have not yet changed.

The city is exploring each of these avenues but we will not be prepared for the impact of Metro until we have better policies that protect tenants. The impact will be much more significant, and stretch more deeply into our more vulnerable neighborhoods, than any city official has acknowledged to date. For more read our post: Wilshire-Rodeo Station Construction: Where is the Mitigation for Tenants?

We have a lot of work ahead of us to make major public investments like Metro (which came through a sales tax increase) pay off for tenants. As laws stand now we will be the last to benefit materially but the first to see the harm.