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Help renters be buyers

As condo conversions spread, L.A. must innovate to provide affordable housing.

January 21, 2007|Marc B. Haefele | MARC B. HAEFELE is a regular commentator on KPCC radio. His work appears in the Jewish Journal, Citybeat and on CitywatchLA.com.

LOS ANGELES faces an enormous rental housing crisis. Condominium conversions are taking thousands of apartment units off the market, which is driving up rents even as the number of people who can only afford to rent increases. About 12,000 rent-controlled apartments have been converted into condos or demolished in the last five years -- 8,000 of them since 2005. And, according to city housing figures, more than 60% of Angelenos live in apartments, and the average monthly rent is $1,600 citywide.

But housing activist Paul DeSantis envisions tens of thousands of new condominium owners in Los Angeles -- without the necessity of evicting tens of thousands of apartment dwellers. His proposed law, submitted to City Councilman Bernard C. Parks, would avoid mass evictions by giving qualifying tenants an opportunity to convert their apartments into condos and buy them.

DeSantis says a similar law worked in Santa Monica, where he lives, for nearly a decade. It was controversial, he says, but it gave thousands of tenants the opportunity move up to homeownership.

Michael Hill is one of them. On his 500-square-foot rooftop deck, the retired teacher told me how he got his dream condo, just six blocks from the beach in Santa Monica, for $90,000.

Using the city's Tenant Ownership Rights Charter Amendment, he and three fellow renters bought their four-unit building from their landlord 19 years ago at the then-market rate of about $300,000. After obtaining their own financing, the four then transformed their units into condos. "We were a waiter, two phone company employees and me, an LAUSD teacher," he said. "Without the law, we would never have become homeowners." Hill estimates his unit is worth $750,000 today.

The amendment has been in limbo for a decade because city officials say it was too favorable to landlords and, of the condo conversions it authorized, too few remained in the hands of the original tenants, despite a city fund created by a tax on each sale to help low-income buyers. The statute is still on the books, but the city no longer seeks the necessary state authorization for the special tax. Even so, renter advocates say it's an approach worth considering in a legislative environment that, they contend, favors developers over tenants.

Santa Monica is something of a renters' paradise. Santa Monicans for Renters' Rights, an advocacy group, has dominated City Hall politics since the late 1970s. But such state laws as the 1986 Ellis Act and the 1995 Costa-Hawkins Rental Housing Act have given apartment owners greater authority to evict tenants and demolish or convert their buildings to condos or commercial use.

But an L.A. law modeled after the Tenant Ownership Rights Charter Amendment would enable many tenants in targeted buildings to become condo owners. Such ownership would not only benefit renters, it would boost the surrounding community.

"You have a tremendous new emotional investment in your property," contended Hill as he pointed to the deck that he and his neighbor owners built to upgrade their properties. "We raise orchids; we grow vegetables. [Ownership] is a huge difference."

Santa Monica's tenant-ownership amendment, approved by voters in 1984, was a compromise between the city's landlords and renter activists. It required that two-thirds of a building's tenants agree to convert their units into condos and that half buy them. But many tenants did not complete the conversion, said former Santa Monica Mayor Dennis Zane, who helped create the law. Most of them remained as renters.

DeSantis' proposed L.A. version of the Santa Monica law would, like the original, eliminate costly property upgrades mandated by the city-- such as two parking spaces per unit and new electrical wiring -- when apartments are converted to condos. Instead, any apartment building that's up to city code could be converted to condos purchasable by tenants. This cost reduction could be an incentive for landlords to sell their units to tenants.

DeSantis says there's plenty of private financing available to help tenants convert their apartments, but Hill says an independent finance agency, either governmental or private nonprofit, would make conversions easier.

Ultimately, the solution to the city's rental housing crunch will require the construction of more affordable housing. But an L.A. version of the Tenant Ownership Rights Charter Amendment could supplement this construction and foster a middle-class presence in the city.

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