How RSO Can Help Cover Costs of the Seismic Retrofit Work Program
by Ben Nicolas
on Tuesday, November 15th, 2016 at 8:36am.
Many of you may remember the horrific damage done
by the 6.7 magnitude earthquake that shook Northridge, CA in 1994, or maybe
even Loma Prieta during 1989.
Thankfully, Los Angelenos haven’t been hit that hard since, but there is still
much work to be done.
What many considered long overdue, on November
22, 2015, the Los Angeles City Council put into effect the Earthquake Hazard
Reduction Ordinance, establishing mandatory standards to reduce
earthquake hazards and damage. The law determines that seismic
retrofitting on soft story buildings is an effective method of work that
benefits the structural integrity and safety of the whole building. It protects
the safety of Los Angeles residents and properties alike. The City has also
determined owners and tenants of soft story buildings should share the cost of
work equally. This being the case, the bad news is the mandatory work can be
costly. The good news is lawmakers are seeking financial aid options such as tax breaks, and the Rent
Stabilization Ordinance can help you to recover costs. So how exactly does the
RSO affect cost recovery?
·By now you should have received an Order to Comply (sent out
approx. April 2016) to have your soft building inspected by a contractor.
·You need a waiver OR a Tenant Habitability Plan is required.
·The RSO does not require the landlord to obtain tenant’s
approval for improvement.
·Seismic Retrofit Work is not cause for eviction.
·Failure to abide by the THP may result in denial of a cost
·Seismic Retrofit Work Program requires tenants to be given a THP.
·Failure to abide by an accepted THP is a legal reason for
·Tenants must pay an HCIDLA approved rent increase once proper
notice is provided by the landlord
SRW Cost Recovery*:
·The SRW allows for a 50% pass-through.
·The maximum pass-through rate is $38 per month for a max of 120
·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 and
cannot be added as a permanent rent increase (Note: No cost recovery rent
increase can be given until the current lease expires, unless the lease
provided by the Housing and Community Investments Department of Los Angeles Community
Meeting on Seismic Retrofitting Work, attended on November 9, 2016.
you’d like to know if your property is a soft story building you can find out