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CES In The News
Los Angeles Daily News
Friday February 12, 2007

Condos Trump Rental Homes
Apartments Lost Despite Directive

BY KERRY CAVANAUGH, Staff Writer

This Picture Did Not Appear In the Original Version of This Article
Three months after the Los Angeles City Council ordered the immediate enforcement of a decades-old law that could be used to deny condo conversions, nearly 100 rental apartments have been approved for conversion in the San Fernando Valley.

The 1981 rule permits city officials to veto conversions of rental apartments into for-sale condos if a neighborhood vacancy rate for rentals is below 5 percent and the conversion will have a significant impact on the market.

But even though the vacancy rate is roughly 3 percent in most L.A. neighborhoods, the council directive hasn't slowed the loss of affordable rental housing.

And the unabated pace of conversions is angering groups that have lobbied for a moratorium on conversions after the loss of more than 12,000 rent-controlled apartments in the last five years.

"Losing one more unit has a cumulative impact on our affordable-housing crisis," said Larry Gross of the nonprofit Coalition for Economic Survival, a local grass-roots organization that fights for the rights of people with low and moderate incomes. "They should be denying these things (conversions)."

Some City Council members also are frustrated the Planning Department has not denied or restricted conversions.

"We intended for them to follow the law," said Councilman Ed Reyes, who co-sponsored a motion on the issue. "The way they've been interpreting the law is very one-sided. We want to hold the staff accountable for following the direction of the council."

But planning officials are wary of enforcing the old law, fearing a lawsuit if they deny an application. Some developers have warned that using the vacancy rate as a measure conflicts with the Ellis Act, a state law that says cities can't stop property owners from getting out of the rental business.

Demolitions feared

Planning officials also don't want to encourage demolitions, like those knocking out rows of rent-controlled apartment buildings in Studio City and Valley Village.

"To be responsible, you want to create a solution that doesn't have a worse, inadvertent impact than you started with," said Principal City Planner Jane Blumenfeld, who has been developing new condo-conversion rules. "We worry about crafting a solution that results in more demolitions."

Still, there is a feeling of desperation among some longtime tenants. While city officials have proposed increasing relocation fees to $9,040 for most tenants - and $17,080 for the elderly, disabled and parents with small children - some worry they won't be able to find another affordable home in their neighborhood.

Chet and Judith Mesisca have lived in their two-bedroom Sherman Oaks apartment for 10 years and pay nearly $1,100 a month rent.

Similar-size apartments in the area rent for roughly $2,000 a month, so the Mesiscas were troubled to learn their landlord recently filed to convert the 100-unit building to condos.

"It's certainly going to blow us away," said Chet Mesisca, a senior citizen who works part time. "There's no place to go because rents are way, way out of whack here. It would mean moving out of the state."

And he questioned why the city can't enforce its own rule.

"There is a law on the books. They were absolutely told to apply the law, and they still haven't applied the law."

Thousands evicted

When it was created, the law was designed to protect communities facing mass evictions during a real estate boom. But officials in the City Attorney's Office and the Planning Department opined that the Ellis Act, which the California Legislature passed in 1986, overruled the city's law.

That wasn't such a big deal through the 1990s, when there were few conversions. But when the L.A. real estate market took off this decade, surging numbers of conversions were routinely approved.

In 2005 alone, tenants of more than 5,000 rental units were evicted to make way for condo conversions and demolitions. By the end of last year, the city tracked evictions from more than 12,000 rental units since 2001.

Amid growing concern, rental-housing advocates proposed a moratorium. While that effort foundered, they pushed the city to simply begin denying conversions under the vacancy rule. The council agreed, but implementation has been the problem.

"The shame of it is we have had this law on the books for years, but we have never had the mechanisms to apply it," Planning Commission President Jane Usher said. "The work is not in place and standards are not in place."

To deny a conversion, the city also must show it will have a significant cumulative effect on the rental market. But guidelines on what constitutes a significant impact aren't clear.

Data questioned

The Apartment Association of Greater Los Angeles also has raised concerns about vacancy-rate information, which is calculated from Department of Water and Power electricity-meter customers but might not accurately count all vacant units.

Blumenfeld wants a study to develop clear criteria on the vacancy rate and what constitutes a cumulative effect.

Council President Eric Garcetti has pushed the Planning Department to include guidelines that condo conversions in low-vacancy areas can be approved if more than half the tenants are willing and able to buy their units or the developer is willing to set aside 30 percent of the units for moderate-income families.

But developers say city leaders would be stifling conversions, which are often the cheapest homes on the market and the most accessible to first-time buyers.

Developer Brian Dror recently converted 160 rental apartments in Van Nuys into condos selling from $195,000 for a studio to $295,000 for two bedrooms.

Previous rental tenants were charged less and received help to apply for state and federal homebuyer assistance.

"There are solutions," Dror said. "Stopping the conversions is not going to solve the housing crisis. It isn't going to make the slightest bit of a dent in it. The only way is to build through it."


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