220 Lasky Fire: Grief for Occupants, Opportunity for the Landlord

A structure fire at 220 Lasky on the morning of August 1st displaced eight households from their rent-stabilized housing. The cause of the fire is unknown and remains under investigation. What is known is that the fire originated in unit #3 in this 8-unit apartment building and firefighters were able to contain it. But the smoke and water damage has rendered the property uninhabitable. Nearly two weeks after the fire the landlord has yet to provide displaced occupants with the required temporary housing. It seems like the landlord is playing for time while pitching low-ball buyouts to traumatized tenants.

220 Lasky streetviewThat is not what Beverly Hills rent-stabilized tenants should expect from the landlord. Municipal Code § 9–1–108(N) requires the landlord to repair the defective or substandard structure and, in the meanwhile, provide “fair and reasonable relocation benefits” to all displaced tenants when conditions render a property uninhabitable.

That is the case at 220 Lasky. The Fire Department has deemed unsafe both the first-floor apartment where the fire originated and the apartment situated above it. Access is restricted for four other apartments where occupants can only retrieve personal belongings.

More broadly the building as a whole is not ‘tenantable.’ Civil Code § 1941.1 requires every dwelling to meet certain minimum “affirmative standard characteristics” which include electrical service, hot water and, in general, clean and sanitary conditions. Today 220 Lasky cannot meet the state standard for habitable premises as electrical service was discontinued and damage from smoke and water renders the building no clean or sanitary.

Relocation is Obligated

220 Lasky restricted use signWhen a property is damaged beyond repair the city code requires the structure to be demolished. But structural damage at 220 Lasky appears limited; and if the structure can be repaired then the landlord will most likely repair it. Tenants can return after the repair because their rent-stabilized tenancies remain in effect. The rent does not change.

In the meantime the landlord is required to relocate tenants to comparable accommodations within the city and at the landlord’s expense. Pursuant to municipal code § 9–1–108(M) relocation must meet these conditions :

  1. Relocation facilities shall be located within the city of Beverly Hills.
  2. Relocation facilities shall provide equal accommodations to include, but not be limited to, laundry facilities, exercise facilities, balconies, kitchens, pet housing/care, and parking.
  3. Storage facilities required to temporarily store tenant’s personal belongings during the period of construction shall be provided by landlord. For the security of personal belongings, storage shall be independent from other relocated tenant’s property.
  4. Moving expenses and costs shall be incorporated into the relocation plan.

The arrangements would be formalized in a relocation plan (which is a component of the Means and Method plan that is required by the city). Once the landlord submits a satisfactory plan then the Rent Stabilization Division signs-off and tenants are relocated.

But this landlord has yet to submit a satisfactory Means and Method plan approaching two weeks after the fire now. During that time not one of the displaced households has been relocated. Instead they relocated themselves to hotels (at their expense) or else bunked with family. One household commutes from Orange County. None has yet to receive a relocation benefit, to our knowledge, although the city has implied that two tenants accepted a buyout offer.

In fact the total compensation to displaced tenants has been $350. And that came not from the landlord or the city. Tenants got that money from the American Red Cross as if it were a disaster far from Beverly Hills.

The Landlord’s Bad Faith

The 220 Lasky fire shows how the city’s relocation requirement can be difficult to enforce when the landlord operates in bad faith.

The property manager first raised suspicion when he reached out immediately after the fire…but to talk about buyouts, not relocation. Joel Rodstein, CEO of North Oak Real Estate Investments, Inc., which manages the property, contacted tenants at a moment when they were most vulnerable. They were presented with the concept of a buyout when they were uninformed about their rights. That smells predatory to us.

Rodstein gave displaced tenants reason to believe that building repairs could take one to two years. That has no basis in fact. The building code § 9–1–119 requires a landlord to move expeditiously to repair “buildings, structures, or building service equipment, or portions thereof, that are or hereafter become unsafe, insanitary, or deficient or which constitute a fire hazard, or are otherwise dangerous to human life.” If the landlord fails to obtain the necessary permits within six months, then the city can declare the structure a nuisance and demolish it.

Rodstein seems to be running out the clock. He has submitted at least two relocation plans that were unacceptable to the city and each submit-and-review process consumes valuable time. Meanwhile tenants pay for a hotel or they bunk with family. Time is on the side of the landlord when a tenant is not relocated and running out the clock only increases the pressure to agree to a buyout.

Rodstein’s tentative buyout offers are laughably low. The dollars talked about where no greater than the city’s baseline relocation fee which is itself too little. In this case tenants have the option to decline. And that suggests a greater buyout amount (especially given today’s high asking rents).

What is an appropriate buyout? It is impossible to say but one thing is for certain: it is higher than what a landlord will offer; and an offer should capture some or all of the value of the vacancy to the landlord. But really it is far too early to talk about buyouts anyway. Tenants must understand the options available to them before considering a buyout. And tenants will not be in a position to fairly evaluate an offer if they are not temporarily housed.

Who Benefits from Denying Tenants Their Temporary Relocation?

It can only benefit one party when the landlord deals in bad faith with tenants: the beneficial owner who reap the return-on-investment from the property.

Here the landlord-of-record is Migdal BH Properties, LLC. The limited liability company structure allows the beneficial owners to pass-through their return on investment as personal income while at the same time protecting the beneficial owners from liability (hence the name). Besides 220 Lasky this LLC controls two other rental properties in the city: 141 South Canon and 335 North Palm.

There are three beneficial owners listed on the Migdal BH Properties, LLC papers filed with the Secretary of State:

Each of these Migdals is listed as an LLC ‘manager or member’ (not to be confused with property manager North Oak). These are the people who ultimately cash the rent checks from the properties. The 220 Lasky property has been in the family for decades, according to tax assessor records, so the Migdals are likely taking seventy or seventy-five cents out of every rent dollar in net income. Presumably each sleeps comfortably in their own bed while tenants displaced from 220 Lasky fend for themselves.

Incidentally the Migdal family as a whole controls twelve rental properties across Beverly Hills. In addition to 220 Lasky there are four other rent-stabilized buildings on Lasky plus another seven rent-stabilized properties across the city. The Migdal family may own three rented condominiums on Tower Drive.

  • 237 N ALMONT
  • 141 S CANON DR
  • 129 S CRESCENT
  • 340 S ELM
  • 220 S LASKY
  • 244 S LASKY
  • 248 S LASKY
  • 252 S LASKY
  • 256 S LASKY
  • 335 N PALM
  • 337 N PALM
  • 234 S TOWER (condominiums)

That is no mom-and-pop operation!

Our Take

From the conduct of Joel Rodstein of North Oak, it seems that Dr. Mark Migdal and family have one objective: to separate displaced tenants from their rent-stabilized tenancies. Because the tenants can choose to stay, the only option available to the landlord is to buy them out. And from the way this has been handled to date there are lessons to be learned!

  • Tenants need not agree to a buyout — or any kind of “mutual agreement” which the city is currently (if tacitly) endorsing as an alternative to relocation. The tenancy is guaranteed so long as the tenant pays rent or the landlord exits the rental business.
  • Time is on the landlord’s side…. but only while tenants are not yet relocated. That allows the landlord to run out the clock. But once relocated and hotel bills accumulate, then time is on the tenant’s side to strike a fair buyout agreement.
  • Tenants in this instance have leverage to demand a robust payout. The buyout amount is always negotiable but one thing is for certain: the value of a rent-stabilized tenancy is greater than most tenants realize. Landlords, in contrast, understand exactly the value to them of a voluntary vacancy and are often willing to pay handsomely to be rid of a rent-stabilized tenant. Don’t leave money on the table.
  • Insist on all communication in writing. If the landlord is not willing to commit it to an email or text, then he will not stand behind it later. Document everything.
  • Insist on your relocation benefit. This means pressuring the city to stand up for tenants. That pressure can be direct by calling the Rent Stabilization Division or the city manager; or it can be political pressure through contacts with City Council. In any case ask why the landlord has not met his obligation when tenants are displaced.

Have you been displaced from rental housing by a fire or other calamity? Please Please get in touch with Renters Alliance!