L.A. plan could raise stakes for condo projects

After hearing from a nearly packed chamber of feisty tenants and anxious landlords, the Los Angeles City Council on Wednesday voted to dramatically raise the relocation fees that condominium developers must pay before kicking out residents of rent-controlled apartments.

The move, which doubled some and nearly tripled other current fees, marked a significant escalation in the condo conversion wars that have swept the city over the last five years -- particularly on the pricey Westside -- as a dwindling stock of affordable housing has been rapidly outpaced by a growing middle-class population.

Even after more than three hours of debate, several council members acknowledged that the city still needs a broader housing policy and must build more units.

“I can name a lot of people who in all honestly, even with relocation fees, will not be able to move and live in the same community that they have for years,” Councilwoman Wendy Greuel said. “And that’s what gets to our heartstrings.”

Putting a human face on the debate were dozens of tenants who spent the day at City Hall. Among them was Esther Escamilla, who lives with her husband and two children west of downtown in a $466-a-month apartment slated for conversion. Her husband makes only about $600 a month buying used cars and selling the parts.

“Our whole life is rooted here,” said Escamilla, 42. “My kids are used to going to the schools in the area. My husband and I love living here.... We can barely make ends meet as it is. They told us there is nothing we can do.”

The public testimony reached an apex when Hollywood resident Kerby Norris -- soon to be forced from her apartment -- tearfully pleaded “Help me!” to the council as she clutched the hand of her 9-year-old, Matthew.

The council voted 9 to 5 for the new fees, which range from $6,810 to $17,080. They all agreed the fees should be raised, but were divided because the new law would allow developers to adjust relocation fee amounts based on variables such as age, length of tenancy and income. Voting against were Greuel, Eric Garcetti, Janice Hahn, Tom LaBonge and Bill Rosendahl.

Landlords and developers had lobbied for that provision, fearing they might have to pay a high set fee to tenants who could afford to accept less.

About 61% of L.A. residents are renters, and there are about 600,000 rent-controlled units in the city. About 12,000 apartments have been converted to condos or demolished since 2001, with the Westside and the area around Studio City hardest hit. Tenant complaints reached such a pitch last year that the council agreed to look at policies that might slow the pace without discouraging development.

Los Angeles has had a law on the books since 1981 that allows the council to deny a condo conversion permit based on several conditions. After city lawyers told the council last year they weren’t enforcing the law because of concerns over its legality, the council ordered them to begin using it.

In deciding to set fees based partly on a tenant’s income, the council majority ignored protests from the city’s planning chief, housing chief and members of the Planning Commission, all of whom supported a simpler, fixed structure.

Planning Director Gail Goldberg, for example, said that when she ran the planning agency in San Diego, officials decided to get rid of the so-called means-based approach because it was difficult to administer and mediate tenant-landlord disputes.

Because the fee hikes did not pass with at least 10 votes, a second vote will be required next week. The measure is expected to again pass.

The current relocation fees are $3,450 for most tenants and $8,550 for those who are 62 or over, disabled or have minor dependent children. If the law is approved next week and Mayor Antonio Villaraigosa signs it, the new fees would take effect in late May. A Villaraigosa spokesman said that the mayor won’t decide whether to sign the law until the second council vote.

The fee hikes approved Wednesday are:

* $6,810 to tenants who have lived in their apartments less than five years (or $14,850 for those older, disabled or with minor children).

* $9,040 to tenants who have lived in their apartments more than five years (or $17,080 for those older, disabled or with minor children).

* From $9,040 to $17,080 to tenants whose income is 80% or below the area’s median income -- $55,450 for a family of four, regardless of the length of tenancy.

Under the new plan, building owners will be required to hire relocation assistance providers to ensure tenants get the proper amount. Developers would pay a fee to cover the cost of disputes the city ends up mediating.

Councilman Herb Wesson said the new fees were a good compromise because tenants and building owners each got some of what they wanted.

“Generally, when that happens it’s a sign that you’re close to doing the right thing,” he said.

Also Wednesday, council members delayed voting on a law that would give them the power to slow condo conversions by denying developers a permit to demolish buildings.

Last summer Councilman Bill Rosendahl asked for a moratorium on conversions in his 11th District, which includes the hot real estate markets of Brentwood, West Los Angeles, Venice, Playa del Rey and Pacific Palisades. Rosendahl’s motion has yet to be scheduled for a hearing in the housing committee.

Among developers, response to the fee increases has been mixed. Some building owners have complained loudly that rent control keeps them from making any money, and the higher fees are so burdensome they won’t be able to convert to condos. Others, however, said the new assessment system would prevent developers from having to give large amounts of money to short-term tenants.

Kate Bartolo, a vice president in the development firm the Kor Group, said the new system is very fair and will serve more of the city’s neediest residents.

“We’re trying to give more money to people who stayed [in rent-controlled apartments] longer because they are the ones who are going to have the biggest sticker shock when trying to find a new apartment,” she said.

Goldberg, the city’s planning chief, said the solution probably involves providing incentives to developers to build apartments for the middle class.

Larry Gross, executive director of the Coalition for Economic Survival, believes the new fees are a plus for low-income tenants, but the city should do more to preserve existing affordable housing until more is created.

“Otherwise, we’re just spinning our wheels,” he said.

Also attending was Kathryn Mendelson, 61, who has lived for 27 years in a Silver Lake apartment near Glendale Boulevard and Waverly Drive.

The building was sold last year, and Mendelson is being evicted from her $624-a-month unit. She is mildly hopeful that the higher relocation fees will help her buy a home.

“Silver Lake is a hot spot, and the owners know that they can get a lot of money for it,” she said.

“Developers are going to have to stop gouging tenants,” she said, “and tenants have to understand that the landlords are under a lot of pressure to not only make ends meet, but get a profit to meet market price demands.”

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steve.hymon@latimes.com

francisco-varaorta@latimes.com

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Relocation fees

To help tenants move from rent-controlled units, landlords would pay them:

* From $6,810 to $14,650 if they lived there less than five years.

* From $9,040 to $17,080 if they lived there more than five years.

* From $9,040 to $17,080 if their income is 80% or less of $55,450 for a family of four.

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Source: Times reporting