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Los Angeles Times

Wednesday April 06, 2016

L.A. Takes Step Toward Legalizing Bootlegged Apartments

By Emily Alpert Reyes
 

Bob Daignault, director of marketing with the Apartment Assn. of Greater Los Angeles, looks over a vacant "bootlegged" unit in an apartment building in Los Angeles last year. (Genaro Molina / Los Angeles Times)

Los Angeles lawmakers took a step Wednesday toward legalizing some "bootlegged" apartments, arguing that the city must spare them as it grapples with an affordable housing crisis.

A City Council committee backed a new ordinance that would smooth the way to legalization for apartments that are deemed safe and habitable but never got city approval.

In recent years, an unusual alliance of landlords and tenant advocates has been pushing for a new "amnesty" program that would ease the way to legalize such apartments if they met safety standards. Hundreds of apartments have been closed annually in the wake of city inspections, forcing out renters.

"Rents are going up very quickly, and incomes are not," said Adam Murray, executive director of Inner City Law Center, which backed the proposal. "We have to do anything we can do to maintain the affordable housing that we have."

But that rare partnership between tenant groups and landlords fractured when L.A. finally hammered out the wording of its proposed law, which would require landlords to guarantee some affordable units for more than half a century if they want to get a smoother path to legalize bootlegged apartments.

"No one is going to apply," said Harold Greenberg, an attorney and former landlord who sits on the board of the Apartment Assn. of Greater Los Angeles. "It's going to be like a lot of things that the housing department has — it sounds good, but no one's going to take advantage of it."

"Bootlegged" apartments were created without city blessing, often by walling off a bedroom or converting other space. Landlords say that in some cases, they have taken over old buildings without realizing that one or two of the apartments were not legally permitted.

Housing inspectors say many of those illegal apartments are nearly identical to lawful ones because they were carved out of legally permitted apartments. In such cases, the chief barriers to legalizing them are not construction or safety issues, but city codes that restrict how many apartments can be built there or how many parking spaces must be provided.

Landlords already could try to legalize them under existing rules but have complained that the long and costly process discouraged them from doing so.

Under the new law, the city would be able to relax some of the rules that often stop such apartments from being legalized, allowing more density and loosening parking requirements.

In return, landlords who seek to legalize bootlegged units will have to provide some affordable apartments at those buildings — and guarantee that they remain affordable for at least 55 years, under a legal covenant documented with the county recorder. City Councilman Felipe Fuentes, who had pushed the plan, called it "a very, very good trade."

But the 55-year requirement troubled the Apartment Assn. of Greater Los Angeles, which had championed the idea of legalizing safe but illegal units.

"It becomes a potential dealbreaker" for landlords who have bootlegged units, said James Clarke, government affairs consultant with the group.

Instead of coming forward to legalize apartments, "a lot of these owners will remain in the shadows and possibly wait until they get cited to go through the process," Clarke said.

Rick Otterstrom, a board member with the apartment association, added that even if a landlord was cited for illegal units, he or she might not find it economically sound to agree to the affordable housing guarantee, instead choosing to knock down a wall to fold an illegal unit back into a legal one.

Tenant advocates countered that a lasting guarantee of affordable housing was an important tradeoff for allowing landlords to avoid city citations and legally rent out more apartments.

"The city is giving something to landlords — but they can't give something for free," said Larry Gross, executive director of the Coalition for Economic Survival.

Fuentes said that whether or not landlords came forward on their own, city inspectors would ultimately find illegal units. "The choice becomes, I think, an easy one: Do you take the unit out of productive use, or do you avail yourself of a program like this one?" he said.

Under the proposed ordinance, the exact number of affordable units that landlords must provide would depend on how much extra density or other zoning modifications they are seeking in order to legalize bootlegged units.

To gain legal blessing, apartments could not have other city code violations. And the bootlegged apartments must have existed before December 10, 2015 — a rule meant to prevent landlords from hastily dividing up more apartments for city approval.

The new rules would only apply to bootlegged apartments in multifamily zones, which has made the plan less politically sensitive than targeting the illegal units tucked into areas zoned for single-family homes. A few neighborhood councils have cautiously backed the idea.

Nonetheless, the idea has alarmed some neighborhood groups that contend it will pinch parking in crowded areas and reward landlords who have flouted the law. Some are skeptical that the city will hold landlords to their promises about affordable housing.

"There's no enforcement," said Elizabeth A. Pollock, president of the Del Rey Residents Association. "There's no guarantee that the units will in fact go to the people that need inexpensive housing."

Backers of the plan argue that legalizing existing apartments will not worsen crowding or parking woes. "The people are already there," Gross said. "It's not like we're creating something new."

But Murray said residents were right to raise concerns about how the city would enforce the affordable housing requirements. "It will require diligence" from the city and tenant groups, he said.

Los Angeles has become a poster child for unaffordable housing. Across the county, the median rent, adjusted for inflation, surged 27% between 2000 and 2013 — yet inflation-adjusted median household incomes for renters fell 7%, according to a California Housing Partnership Corporation report released last year. It estimated that more than 500,000 more affordable rental homes were needed for poor renters countywide.

The proposed law is slated to be discussed at another City Council committee before going to the entire council for a vote.


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