Seismic Retrofit Pass Through Rate City By City

It can be a misconception that if you own a rental property you are extremely wealthy with millions in liquid capital. Some may picture Daddy Warbucks or Scrooge McDuck counting his gold pieces in a vault. However in reality, many multi-family property owners in California only own the one building. Many of the buildings have been passed on by inheritance or death of a spouse. Others use that piece of property as their only source of retired income.  Many of the property owners affected by the soft-story retrofit ordinance may not have the money in the bank to pay for the retrofit work and that must be addressed.

In order to assist property owners with some of the costs that are associated with the seismic retrofitting of their buildings, “pass through programs” have been implemented in certain cities. A pass through program is essentially a way that the burden of cost can be lessened for property owners. Based on the type and size of the building as well as what reinforcement it requires, the cost of a retrofit can vary considerably. For example, a 4 unit 3 story building on Haight Street in San Francisco costs $120,000 to retrofit but a 6 unit 3 story building on Dolores Street costs less than half the price of the aforementioned building. Regardless if the price is $200,000 or $20,000, it is still an expense that many property owners are not able to incur alone.

The pass through program seeks to provide relief to property owners, many of whom rely on their building as a sole source of income. So far San Francisco seems to offer the highest pass through rate, allowing property owners to pass through 100% of the cost to tenants. However, this pass through cannot happen overnight. There are limits on how much property owners can increase the rent per year. In San Francisco that limit is no greater than $30 a month or a 10% increase of the tenant’s existing rent (sfrb.org).

Los Angeles does not have as hefty as a pass through rate as San Francisco does. The maximum pass through rate in Los Angeles is 50%, which must apply to all rental units in the building. This can be implemented through a rent increase of $38 per month for 120 months, according to the Los Angeles Housing and Community Investment Department (hcidla.lacity.org/seismic-retrofit).

Santa Monica and West Hollywood have not yet established a pass through program. West Hollywood City Council has stated that they will consider potential pass through options in the coming months (weho.org)

We (and your city council members) understand that the mandatory retrofitting of buildings puts a significant financial strain on building owners. This is why pass through programs and other financing options are available. Collectively, building owners and tenants will make themselves and their homes safer through seismic retrofitting- the importance of which cannot be priced.

In the end, whether the property owner chooses to pass costs through or not, one thing that landlords and tenants can agree on is that the retrofit work is a necessary action to protect the building structure, personal property and many lives from major loss.

 

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