Wilshire-Rodeo Station Construction: Where is the Mitigation for Tenants?

Do you live in near the future Metro station at Wilshire and Reeves? If so you are likely to experience construction-related disruption from the project. But If you rent housing near the future Purple Line station, your problems are only beginning. Households near the station are quite likely to be displaced over the coming years, so I’ve asked City of Beverly Hills to consider strong-arming Metro for compensation. Read on!

Take a look at this map. The shaded portion captures apartment houses within 500 feet of the future Metro station at Wilshire and Reeves. With just a few exceptions these are rental properties; nearly all of them are two-story antiquated buildings nearing 80 years old (or older). Yet they are just a two-minute walk from the most significant mass transit investment in a generation: the Purple Line extension.

One need not be clairvoyant to be able to see that many of these buildings will fall to the wrecking ball. The older the property and the smaller the unit profile, then the more likely it is to be redeveloped simply because these older properties do not fit with today’s market for rental housing. A steep rise in underlying land values near the station will exert enormous pressure to redevelop or sell.

Moreover, a building that is under the same ownership as an adjacent parcel may fall sooner. The developer of an individual property faces challenges (like a cap on floor area and parking requirements) that greatly limit return-on-investment. Combined parcels afford development efficiencies, however, and that’s why our city encourages developers to purchase R–4 (residential rental) parcels in twos-and-threes.

To put this threat in perspective, advocates of density near transit talk about the potential to redevelop whole swaths within a quarter-mile and half-mile of a major transit station. Here I am talking only 500 feet.

I have approached City Hall about negotiating into the Metro Memorandum of Agreement (MOA) two programs to compensate tenants for the short-term disruption of construction and the longer-term displacement of households. (Read the correspondence.) The draft MOA will be up for City Council discussion on July 17th and the final MOA agreed shortly afterward.

It is important that tenants stake our claim because businesses already have a mitigation fund and landowners, developers and condo owners stand to win BIG from this massive public investment. Tenants won’t see any upside for many years and even then many of us will see the downside: higher rents and displacement.

July 11, 2018

Re: Comment on Memorandum Of Agreement For Contract C1120 Of The Purple Line Extension Project

Residents near to the Wilshire/Rodeo station will be negatively affected for an extended period due to clearance of staging parcels, station construction and street closures associated with every step of the project. Moreover, those who reside on the 100 block of Reeves immediately proximate to the station work will be most affected by work including pile installation (7am to 8pm weekends) and deck installation (Friday 8pm to Monday 7am). The Wilshire/Reeves staging yard – within 100’ of 30 renting households – will see activity 8am to 8pm every day of the week.[1]

I respectfully suggest the consideration of several mitigations and remedies that could apply to residents who rent housing around the Wilshire/Rodeo station project area.

Proposal: Resident Impact Mitigation Fund

Description. All tenants proximate to station construction will find the conditions of their tenancy degraded by impacts related to construction. 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. Calculated as a percentage of the base rent perhaps, and payable to renting households beginning at the adoption of the memorandum of agreement and continuing through to station completion, a Resident Impact Mitigation Fund would begin to alleviate the impact of construction for the only party not otherwise materially benefitted by the Purple Line extension: those who rent housing.

Rationale. Residents who rent housing enjoy no material benefit from the public investment in the Purple Line extension but we do experience the immediate and unavoidable impacts of station construction. State law is interpreted to allow 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.

These residents will experience a reduction in quality-of-life and the ‘quiet enjoyment’ of their premises will be materially impacted too. Yet it is impractical and implausible for any tenant to negotiate a reduced rent when asking rents appear to be increasing by a double-digit percentages year-over-year. Moreover, any Chapter 6 rent-stabilized tenant who would negotiate a rent decrease knows her tenancy can be involuntarily-terminated for raising the question.

Finally, the neighborhood proximate to the future station is unlike other Purple Line extension project areas: this is a quiet residential block of low-to-medium density multifamily housing; Reeves is a low-traffic local street; and it is only 55’ wide. Construction of the Wilshire/Rodeo station (and staging area in the meantime) is a disproportionate impact relative to other project areas.

Proposal: Displacement Mitigation Fund for Tenants Involuntarily Terminated Near Wilshire/Rodeo Station

Description. The Purple Line extension portends considerable disruption to existing neighborhoods around station locations. Within one-quarter mile of the future station the threat of dislocation is greatest, yet City of Beverly Hills allows no-just-cause eviction to commence with only 60 days notice. That precludes protections afforded by the state’s Ellis Act for redevelopment, condominium conversion, or use of a rental property for any other purpose. City of Beverly Hills should adopt more extensive tenant protections in accord with the Ellis Act, but in the meantime a mitigation fund should be established to provide displaced tenants proximate to the project area with a material remedy to supplement the relocation fee for which a household may already qualify.

Rationale. Tenant displacement as a consequence of transit investment is not a bug but a feature: we anticipate greater residential density around transit hubs yet we know that residents who rent housing will be displaced from their homes. Longtime residents in particular will find it difficult to find replacement housing. And few tenants will be able to return to their community and enjoy proximity to the future station: the neighborhood will become unaffordable. This pattern of investment and redevelopment will play out around the Wilshire/Rodeo station too.

There are two remedies for tenants who may be involuntarily terminated due to redevelopment around the Wilshire-Rodeo station:

The City should consider extending Ellis Act protections to all households displaced from rental housing within one-quarter mile of the Wilshire/Reeves future station. Under Ellis, an owner of residential rental housing is permitted to exit the business only when 120 days notice has been provided to tenants; and upon request any senior (62+) or disabled resident may continue to reside for one year. Currently few tenants (if any) would be able to realize those protections because they can be evicted with 60 days notice. A modified rent stabilization ordinance could extend to them Ellis protections.

A Tenant Displacement Mitigation Fund could begin to compensate households that we know today will be dislocated from current residences in the immediate project area. A fund that would double the City’s current relocation fee schedule for tenants in the immediate proximity of station construction (500’) would begin to provide displaced tenants with the resources to find replacement housing. There are 204 households renting within 500’ of the future station. Of those 119 live on the same block-face as the future station and will likely see the greatest impact over the longer-term.

City of Beverly Hills already mandates a relocation fee for any involuntarily-terminated tenancy. But arguably it is insufficient to secure replacement housing in today’s tight market for rental housing – let alone do battle with their displaced neighbors when housing costs rise even further out of reach.

Adding to the injury, to the extent that displaced households can find housing, often the supply is a mismatch to need. Very few units of rental housing has been created in Beverly Hills over the decades, and those units that may be termed ‘affordable’ in some regard are much fewer. Just a handful of units have been constructed or are even in the pipeline. Affordability for displaced households is a problem that will only get worse.[2]

A mitigation fund for displaced tenants only seems fair as it would at least cushion the blow of relocation for tenants displaced from the vicinity of the future station. Otherwise we are left with less than $10,000 per household (on average given the profile of the housing stock around Wilshire-Rodeo).