Los Angeles considers amnesty for illegal apartments to ease shortage

LOS ANGELES — Just a block north of trendy Melrose Avenue, tall palm trees, 1920s-style homes and small apartment buildings line a quiet street. One of the homes was long ago converted into multiple apartments. There’s just one problem. There are 11 units, but the owner got permits for only 10. City inspectors cited him, and now the elderly resident of that illegal unit faces possible eviction.

There are thousands of illegal apartments like these in this housing-strapped city. They are not up to code but not necessarily unsafe. But they have been rented out without the certificate of occupancy blessing of the city’s Department of Building and Safety.

Now all this could change. The Los Angeles City Council, desperate to get more affordable housing on the market, is considering an amnesty of sorts for landlords and property owners who have rental units but no city permit.

If the proposed ordinance is approved, penalties would be waived and the permitting process accelerated. The city would work with landlords to bring bootleg units — many are two-bedroom apartments converted to two one-bedroom units — up to code. Landlords would still have to comply with building and safety codes but could apply for waivers from strict laws that require a certain number of parking spaces per tenant and limit the number of units on lots.

“Los Angeles, like most cities in California, is facing a housing crisis,” said City Councilman Felipe Fuentes, who introduced the measure to the housing committee last month. “There is an absolute need to preserve as many units as possible. … This is a win-win-win for the city, the tenants and the property owners.”

It’s a win for the city because it will be able to collect taxes on these shadow units and ensure their safety. And in a rare show of unity, tenants and landlords agree.

“The tenants win because they maintain affordable housing, and the property owners win because it increases property value and they can obtain the rent legally,” said Larry Gross, the executive director of the Coalition for Economic Survival, a Los Angeles nonprofit.

“People are already living in these things, so there’s no impact on residential street parking, and most of the council is agreeing with us,” said Jim Clarke, the executive vice president of the Apartment Association of Greater Los Angeles, which represents landlords.

Since 2010, city inspectors cited 2,560 illegal units, and in more than 1,700 of those cases, landlords kicked out tenants and kept the apartments empty. Only 201 were brought up to code to meet building and zoning regulations.

“We lost affordable units, and those tenants who lived there were evicted,” Gross said. “The city is discovering more and more illegal units, probably more than any time in its history. Given that the city has a severe housing crisis and the likelihood that these units have existed for many, many years, some are habitable or have the potential to be habitable.”

It’s estimated that there are up to 5,000 units without permits, not including the granny flats or in-law suites above garages or in poolhouses, which San Francisco approved last year in a similar “sunshine” measure to help alleviate its housing crunch.

Los Angeles housing advocates included such units in a proposal four years ago but homeowners’ associations objected, citing concern over street traffic.

This time, the amnesty would extend only to small apartments in multifamily housing, which tend to be more affordable and covered by rent control laws. City attorneys have been asked to draft an ordinance and take it to the City Council for consideration this summer.

“It’s going to have a two-edged effect — not only protect the current housing stock but reactivate units that are dormant right now,” Clarke said.

Some of the apartments might have been carved out of rental managers’ offices, recreation rooms or basements.

“If they’re impossible and present a serious life-threatening situation or health issue to the tenant, well, of course we wouldn’t be able to save those,” Gross said.

“We think it’s a great policy,” said Lisa Payne, the policy director of the Southern California Association of Non-Profit Housing, which represents developers of affordable housing. “It’s another tool for addressing the affordable housing crisis.”

Los Angeles is short 500,000 affordable homes and apartments. Research by the association found that in L.A., the average rent for a two-bedroom, one-bath apartment is $2,197 a month. “To make that affordable [spending no more than 30 percent of household income on rent], you have to make over $40 an hour and over $87,000 a year,” Payne said.

The hope is that owners of all illegal units will come forward if the measure passes, since they would face no penalties and a faster and less costly permitting process. Landlords would still have to pay for any cost of bringing units up to code and could not pass it on to tenants.

The owners of one apartment downtown — a studio without a kitchen but a full bath that rented for about $750 a month — took it off the market and paid the evicted tenant thousands of dollars to relocate while it goes through the tedious permitting process, which can take up to nine months, according to the apartment association.

Passing the ordinance may put more housing on the market, but it won’t lower rents, warned Reuben Duarte, a land use planner with the Los Angeles law firm of Gresham Savage Nolan & Tilden.

“It doesn’t necessarily have an impact on market conditions … whether or not they’re illegal units,” he said. “When I see an uptick in illegal units, the prices are so high that you’re essentially seeing a black market in housing.”