The Seismic Retrofit Work Program. How Properties Subject to the Rent Stabilization Ordinance (RSO) Can Recover Costs

Transcription

1 The Seismic Retrofit Work Program How Properties Subject to the Rent Stabilization Ordinance (RSO) Can Recover Costs

2 What is the Seismic Retrofit Work Program? November 22, 2015: the Earthquake Hazard Reduction Ordinance (EHRO) mandated seismic retrofitting to existing wood-frame buildings with soft, weak, or open-front walls and to existing non-ductile concrete buildings. February 12, 2016: The City determined that the costs of the EHRO mandate should be shared equally by owners and tenants. RSO was amended to provide for a temporary rent increase to owners so that they might be able to maintain a reasonable return on their rental property while completing the seismic retrofit work that protects the safety of LA residents and properties.

3 SOFT STORY BUILDINGS

4 SOFT STORY EARTHQUAKE FAILURES

5 ORDER TO COMPLY Los Angeles Department of Building and Safety (LADBS)

6 STEP ONE: THE THP PROCESS 1. Hire Engineer to Design Plans 2. Building & Safety Plan Check 3. Clearance Summary Worksheet 4. Tenant Habitability Plan (THP) Handled by HCIDLA S Code Division Mitigate tenant impact during construction Provide relocation assistance for work longer than 30 days Waiver or THP REQUIRED

7 What is a Tenant Habitability Plan (THP)? A THP is a document that mitigates the impact of major construction on tenants while work is in progress. Property owners must ensure that tenants can safely remain in place during construction by identifying all affected tenants and potential disturbances to tenant units. The THP provides for temporary relocation to tenants when the work makes the rental unit Untenantable.

8 SEISMIC RETROFIT IN PROGRESS

9 SEISMIC RETROFIT IN PROGRESS

10 COMPLETED SEISMIC RETROFIT WORK

11 STEP TWO: SRW Cost Recovery The SRW Program allows for a 50% pass-through. The maximum pass-through rate is $38 per month for 120 months. Costs are amortized over 120 months. Costs are divided equally by the number of units benefitted. Interest cost is based on 10-Year Treasury, plus 1% If the permissible pass-through exceeds the cap, the cap is collected until the full cost approved by the Department is collected. The rent increase is a TEMPORARY rent surcharge.

12 Which Units Can Get a Cost Recovery Rent Increase? 1. SRW is considered a common area improvement. 2. All units on the property benefit from the improvement. 3. Units occupied by tenants prior to the completion of the work. Note: No cost recovery rent increase can be given until the lease expires, unless the lease provides otherwise.

13 How Does the RSO Affect Cost Recovery? Owners The RSO does not require the landlord to obtain tenants approval for any improvement. Seismic Retrofit Work is not cause for eviction. Failure to abide by the THP may result in denial of a cost recovery application. Tenants Seismic Retrofit Work Program requires tenants be given a THP. Failure to abide by an accepted THP is a legal reason for eviction. Tenants must pay any HCIDLAapproved rent increase once proper notice is provided by the landlord.

14 Any Special Considerations? Applications from properties in REAP can be accepted and processed but approved rent pass-throughs cannot be assessed on tenants until 12 months after the property is released from REAP. Any portion of the SRW paid for with public funds is not eligible for this monthly increase until the landlord is immediately obligated to repay the public funds. Compensation for any portion of the money spent on SRW from insurance, court-awarded damages, federal or state subsidies, cash rebates, and federal or state tax credits must be deducted from SRW costs before amortizing the costs among the units.

15 Seismic Retrofit Work (SRW) Application File an SRW application within 12 months of completing the work. Include documentation for all direct and related SRW costs, including costs for temporary relocation, e.g. contracts, invoices, proof of payment, permit fees. Proof of an accepted or waived THP is MANDATORY. Include a complete tenant list. An online application is available at

16 Application Assistance

17 Application Assistance

18 Application Assistance

19 Application Assistance

20 Application Assistance

21 The SRW Application Process 1. HCIDLA receives application with supporting documentation within 12 months of completing the work. 2. Analyst reviews and mails an Initial Notification to Landlord and Tenants. 3. If necessary, Landlord also receives a separate letter requesting any missing information. 4. Tenants have 10 days to object to the increase. 5. Analyst processes the application: reviews documentation and tenant objections. 6. Analyst mails the Final Determination to Landlord with the approved rent surcharge for each tenant affected and to each tenant with their respective approved rent surcharge. 7. Landlord and Tenants have 15 days to file an Appeal with the Hearings Section, if they disagree with the Final Determination.

22 Rent Adjustment Appeals Where can I get a Request for Hearing Form? The Request for Hearing form is included with the Final Determination. It can also be obtained by: Calling the Hearings Unit: (213) hcidla.gmhearings@lacity.org Visiting an HCIDLA Public Counter. Online at:

23 Where Do I Go For Help? Websites: Rent Stabilization Hotline: RENT(7368) Visit one of our public counters Monthly RSO Topic Workshops: RSVP Online at HCIDLA.LACITY.ORG/RSOWORKSHOPS By Phone at