Seismic Retrofit Cost Back on the Rent Stabilization Agenda! [Updated]

City Council at the July 24th August 7th study session will continue a long discussion about how to fix structural deficiencies in about 300 residential ‘soft-story’ wood frame buildings (where the building overhangs outside parking). These buildings comprise nearly a quarter of the city’s rental housing stock. And they provide most of the city’s relatively-affordable housing. So the issue of cost looms large in the discussion. Should renting households help with “cost recovery” by paying half of the cost?

The prediction is that a 6.7 magnitude earthquake (like Northridge) will occur in Southern California sometime over the next 30 years. That’s a 97% probability though over a relatively long time frame. Especially for those who rent. Policymakers must weigh the cost of mitigating the high-impact but low-probability risk today against the cost of damage to life and property tomorrow.

Residents of so-called ‘soft story’ buildings fared the worst in the Northridge quake. As Tuesday’s staff report notes:

A soft-story building refers to a multi-story, wood- frame structure that contains parking or other similar open floor space that causes soft, weak, or open-front wall lines, or the majority of the ground floor or basement portion of the structure contains an open floor space, and there exists one or more stories above. Many of these buildings are particularly vulnerable to major damage or collapse in a major seismic event.

A survey of city properties identified about 300 soft-story wood frame buildings built before 1978 and 80% have 10 or fewer units each. All told they are home to about 2,000 households — a quarter of all renting households in the city.

The survey findings were first presented to City Council in 2016 and thereafter the seismic retrofit discussion has progressed slowly.

The Key Question for Tenants: Who Should Pay?

On Tuesday City Council will consider a draft ordinance (in the staff report) to mandate an accelerated timeline: two-and-a-half years to complete the retrofit on all of these properties. Later this fall, Council will discuss who should pay.

We’ve been here before: the question of whether to pass on to tenants the cost of seismic retrofitting was part of the rent stabilization discussion in the winter of 2017. Let’s turn back the clock to January of 2017 when staff to the Human Relations Commission provided to a City Council liaison committee a presentation about seismic retrofit. Here’s the agenda for that meeting. Generally no members of the public attend a liaison meeting, but we always check every agenda for surprises like this one!

That #2 seismic presentation item attracted the eye because why would it be teed up here except to position it to be included in the rent stabilization ordinance? In this case, councilmembers Lili Bosse and Kathy Reims went to bat for tenants; they did not get behind the idea. So when Human Relations Commission recommendations went to City Council a week later there was no seismic cost-share recommendation.

The next month, the staff report for the February Council meeting took another run at it. Tucked into the staff report was a recommendation that Council pass 100% of seismic costs on to tenants. Somebody on staff really wants tenants to pay for this landlord property upgrade! Proposed was to allow landlords to pass through any government-mandated program. At the time, seismic retrofit was the only government-mandated program being talked about. This would have been added to the Municipal code:

Section 10. The City Council hereby amends Chapter 6 of Title 4 of the Beverly Hills Municipal Code to add new Section 4–6–11 thereto to read as follows:
4–6–11: EXPENDITURE S MANDATED BY LAW: Unless otherwise provided by law, including a requirement of the Municipal Code, the landlord may pass through to the tenant of an apartment unit the cost of any improvement mandated by any government statute, rule, or regulation that became effective on or after January 1, 2017, allocated among all the dwelling units of the building based on the square footage of the apartment units and annualized in accordance with the straight line depreciation schedules allowed under the federal income tax laws. – Draft urgency ordinance 2/24/17 (emphasis mine)

Staff had tucked that change into the draft urgency ordinance presented to Council on February 24th. If Councilmember Lili Bosse had not read carefully, and then persuaded fellow councilmembers to instead make it part of the rent adjustment process, we tenants would have been stuck with 100% of the seismic cost.

And that’s where it stands today: the landlord can recoup for seismic retrofit only to the extent that he can show that the rent stabilization ordinance changes have economically harmed him (inclusive of seismic costs).

Another Bite at the Apple!

Now City Hall is coming back for another bite at the seismic retrofit pass-through apple. While seismic retrofit “cost recovery” was not included in the scope of the rent stabilization policy discussion (which I discussed in an earlier post), it may yet figure into the Council discussion. The tip off comes in the staff report for next Tuesday’s City Council meeting. Included is a matrix of who was asked for input into the draft seismic ordinance. a tenants-representing group is not on the list!

Council council will consider the seismic retrofit program at the Tuesday, August 7th study session at 2:30 p.m. in Council chambers. There is bound to be some talk about tenants footing the landlord’s bill.  Do you want to lend your voice? Contact Renters Alliance.

[This post has been updated to reflect a postponement of the seismic cost recovery item from 7/24 to 8/7.]