Dear Mr. Krugman: You’re Wrong About Rent Control

RC 01 Apts

An open letter to economist Paul Krugman.

Dear Mr. Krugman,

I want to start off by saying that I’ve followed your column in the New York Times over the years, and I have tremendous respect for you. Since I have no background in economics, I appreciate your clear, straightforward approach to breaking down the issues. And more important, I appreciate the fact that you speak out against the dishonesty and fraud that are all too common in this country. There have been times when I really needed to hear the voice of reason, and you have been that voice.

But as much as I respect you, I have to say I think you’re dead wrong about rent control. In fact, I think most economists are wrong about rent control. Not that I have anything in my background to give me any credibility. You went to Yale and MIT. I went to LACC. But in spite of my utter lack of any credentials that would give me the right to talk about this issue, I hope you’ll read on at least a little further. Because when it comes to rent control, I think you, like the vast majority of economists, have failed to do your homework.

Just to give you an idea of the sloppy thinking that characterizes most discussions about rent control, let’s talk about Los Angeles. I live in LA, and I can’t tell you how often I’ve heard that rents are high in LA because of rent control. I’ve been repeatedly told it constrains new construction, which means we have low supply, which means we can’t meet the demand for new housing, and that drives prices up.

But there are a number of problems with this argument.

First, most of the people who talk about LA don’t even understand the difference between the City of Los Angeles and the 87 other cities that make up the County of Los Angeles. Some of these are embedded within the City’s boundaries. While the City of LA does have a Rent Stabilization Ordinance, there are only four other cities (Santa Monica, Beverly Hills, West Hollywood and Thousand Oaks) that have any kind of rent control. Median rents in Culver City, Burbank and Pasadena are as high or higher than the City of Los Angeles, despite the fact that these cities have no rent control ordinance on their books. And within the City of LA you’ll find considerable variation in housing costs. Rents in the corridor between Santa Monica and Downtown tend to be the highest. Rents in parts of the Valley (Arleta, Pacoima, Sylmar) and in the Harbor Area (Wilmington, San Pedro) are usually considerably lower. By itself, this seems to suggest that there are other factors besides rent control which may have a larger impact on rental costs.

Second, those who oppose rent control generally point to coastal cities like LA, San Francisco or New York, all of which have outrageously high housing prices. But absolute dollar amounts aren’t the best gauge of affordability. Really we have to look at prices relative to income, in other words we have to look at rent burden. According to a 2016 report by Abodo , the Miami-Fort Lauderdale-West Palm Beach area was at that time the most cost-burdened rental market in the US. A report from HUD the following year came to the same conclusion. While prices in the Miami area are well below those in New York or San Francisco, wages are also much lower, and renters are getting hammered. This is in spite of the fact that Miami has no rent control. Another report from Abodo that breaks down rent burden by generation finds that a number of urban areas in Florida appear high in the rankings, including Daytona Beach, Lakeland-Winter Haven, Cape Coral-Fort Myers, and Orlando. No Florida cities have enacted rent control, because state law prohibits them from doing so. Supply siders tell us that if landlords are allowed to charge whatever the market will bear, this will incentivize new construction which will generate more supply and bring prices down. That hasn’t happened in Florida. Renters there have been struggling for years, and somehow market forces have failed to bring relief. And while the Los Angeles-Long Beach-Anaheim area does appear on Abodo’s 2016 rent burden ranking, it’s interesting to note that it comes in at number five. None of the first four urban areas on the list have rent control.  (I should also point out that Long Beach and Anaheim do not have rent control.)

All the economists opposed to rent control insist that endless reams of research back their stance. Again, I’m not an economist, and I certainly haven’t spent as much time with the research as they have, but what I’ve seen doesn’t impress me. For all the talk of irrefutable data, the studies I’ve looked at seem very limited. They generally focus on a narrow selection of markets, sometimes just one market. They often base their conclusions on data that has a questionable relationship to rent control. They generally look at the housing market in isolation, without any effort to see rental prices as part of the larger picture. And they generally don’t acknowledge that there are a lot of different ways you can structure rent control.

No question, the forms of rent control used in the first half of the 20th century were a failure. I agree that setting absolute caps on housing prices stifles new construction and only encourages black market housing arrangements. But the forms of rent control adopted in some cities over the past 50 years are much different from their predecessors. For instance, in LA the Rent Stabilization Ordinance passed in 1978 only applies to apartments built before that year, so it doesn’t discourage new construction. It allows annual rent increases of 3%. Because the ordinance includes vacancy decontrol, rents are reset when a tenant moves out. It also has a mechanism that allows landlords to charge additional amounts to pay for capital improvements and major repairs. I have to laugh when I hear that rent control inevitably leads to poor maintenance of residential units, creating unsightly and unsafe slums. I often pass through Santa Monica, Beverly Hills and West Hollywood, all of which have a form of rent control, and I haven’t noticed any festering swaths of urban decay.

RC 10 ELA Bandana

Residents protesting gentrification in East LA.

While I can’t claim to have read every research paper on rent control published in the last 50 years, I have read a sampling, and as I said before, I’m not impressed. To go into specifics, I’d like to talk about a couple of papers that have been widely cited, and then another more recent study….

First let’s take a look at Gyourko and Linneman’s study from 1987, which analyses the allocation of benefits under rent control. They focus on New York City, and they use a lot of impressive formulas to compare the distribution of family income with the distribution of benefit-adjusted income under rent control. I don’t pretend to understand the math. I’ll just assume that all the numbers they come up with are absolutely correct. Their conclusion is that, “[I]f the primary social benefits of rent control are distributional impacts, they were not successful in New York.” They go on to say, “Economists have long predicted that racial discrimination could result in markets where nonprice rationing occurred. Blacks and Puerto Ricans in the controlled sector received lower benefits than their white counterparts.”

I’m sure they’re right when they say that calculating the dollar amounts shows an uneven distribution of monetary benefits. Unfortunately, they’re missing the whole point of rent control. It was never intended to ensure the equal distribution of monetary benefits. The purpose of rent control is to provide housing stability and to minimize the considerable economic and social costs of displacement. It does offer equal protection to all those who live in rent-controlled apartments, regardless of their race, which is why it blows my mind that the authors have the nerve to state, “Economists have long predicted that racial discrimination could result in markets where nonprice rationing occurred.” Are they kidding?! They’re saying rent control results in racial discrimination? Like discrimination never happens when we let the free market rule? This statement is so absurd it really calls the authors’ judgment into question. How clueless do you have to be to blame rent control for a social evil that’s woven into the very fabric of this country?

Another issue that comes up, not just in Gyourko and Linneman’s paper but in others, is the idea of a “rent subsidy”. This is the difference between the rent controlled price for a unit and what someone would pay on the free market. As an example, the authors say “…. if the monthly rent for a controlled apartment was $500 and this unit would have rented over $700 in the uncontrolled sector, the monthly rent control subsidy would be $200.” This is interesting, because it assumes that the free market price is the result of some kind of rational process. But is it?

Let’s look at a recent incident at an apartment complex in City Terrace. The building was sold to Manhattan Manor, a real estate investment group, and because it wasn’t covered by rent control, they decided to jack up the rents. One tenant had their rent go from $1,250 to $2,000 overnight, a 60% increase. Since the building wasn’t covered by rent control, and the tenants couldn’t afford the increase, the new owners started eviction proceedings. But the tenants fought back, and the case went to court. Far from siding with Manhattan Manor, the jury found that the unit had significant habitability issues and that the new owners had failed to make basic repairs. In fact, not only did the jury reject the owners’ bid to evict the tenants, they determined that the unit was only worth $1,050 per month in its current condition.

Now, in Gyourko and Linneman’s view, the new landlords were just exercising their right to reset the rent to what they believed they could get on the free market. And from the economists’ perspective, if the building had been rent controlled, the tenants would have been receiving a “subsidy” of $750 a month. But a jury, after looking at basic habitability issues, decided that the unit wasn’t even worth the $1,250 that the tenants had originally been paying. So the idea that the free market somehow sets fair prices through a rational process seems suspect. And this isn’t an isolated incident. Scenes like this are playing out all over LA, and I suspect, throughout the country. Real estate brokers routinely advertise “underperforming” properties, and in the current environment, with speculation running rampant, investors are happy to snap these buildings up. For many of these investors, the condition of the apartment isn’t a primary consideration in determining what to charge. All they care about is getting the highest possible return on their investment. Unfortunately, in many cases, deciding an apartment’s “fair market value” is just a matter of picking the highest number they think they can get away with.

But let’s move on to Glaeser, Luttmer, 2003. I give them credit. Their paper is one of the few I’ve seen that actually compares cities with rent control to cities without. They look at rental data in New York, Chicago and Hartford, and also create a baseline by taking a sample of Metropolitan Statistical Areas (MSAs) across the US. They even break the demographics down by income, household size and education. They’re certainly making an effort to take variables into account. And you could make the argument that the three cities they focus on are similar in a number of ways

Still, there are significant differences that could have an impact on Glaeser and Luttmer’s calculations. To start with, New York is unique. It’s by far the most populous city in the U.S., as well as a financial, educational and cultural center. It’s the point of entry for thousands of immigrants annually and its port is a global shipping hub. The authors use census data from 1990, when New York’s population was 7.322 million, Chicago’s was 2.786 million, and Hartford’s was 137,296. You could still make the case that New York and Chicago are major urban centers and roughly similar when it comes to income and demographics. But the comparison to Hartford, with a population roughly one fiftieth of New York’s, is really questionable.

And while I respect Glaeser and Luttmer for taking the trouble to look at MSAs all over the US to set a baseline, the vast majority of these urban areas have little or nothing in common with New York in terms of population, demographics, employment, income, housing stock, and climate. The idea that we can use the numbers for these areas to set some kind of “normal” to use as a comparison with New York just doesn’t make sense. If your main interest is in working out intricate math problems, the authors’ approach probably sounds great. But if you’re actually looking for answers to complex questions about housing affordability, it just doesn’t make it.

But the biggest problem when it comes to comparisons, even if we’re just talking about New York and Chicago, is density. In New York in 1990 there were 24,165 people per square mile. In Chicago in 1990 there were 11,905 per square mile. In other words, New York is over twice as dense in terms of population as Chicago. Even though the two cities are roughly comparable in terms of housing units per capita, the cost of real estate in New York is way higher, which means the cost of housing is going to be way higher. So while the median income for the two cities is in the same ballpark, you’re going to get less apartment for your buck in New York. Because of this, even if New York didn’t have rent control, you’d expect to see a difference in the kind of housing that New Yorkers could afford compared to the rest of the country.

There are other problems with Glaeser and Luttmer’s paper. On the first page, in talking about mechanisms for rationing goods, they say, “If the allocation mechanisms are not perfectly efficient, then the analysis illustrated by Figure 1, which implicitly assumes that the rationing under rent control ensures that apartments go to the consumers who value them most, is wrong.” The authors seem to be saying that rent control is failure because it’s not “perfectly efficient”. This is an interesting way to define failure when it comes to the housing market. Is the free market “perfectly efficient” when it comes to allocating housing resources? Of course not. When it comes to housing, perfect efficiency is nothing more than an abstract concept. Glaeser and Luttmer base their argument on their own false assumption. They make a claim for rent control that its supporters never have. I’ve never heard anyone claim that rent control is perfectly efficient. Let me repeat, the point of rent control is to provide stable housing and to prevent displacement.

But let’s get to the crux of Glaeser and Luttmer’s argument. For these two academics, the efficient allocation of assets is their Holy Grail. How do they define that in the housing market? “The baseline apartment characteristic used to estimate misallocation is the number of rooms in the apartment.” Huh. Interesting. So they look at the data for New York, Chicago and Hartford, and what do they find? “Our methodology suggests that 21 percent of New York apartment renters live in apartments with more or fewer rooms than they would if they were living in a free-market city.”

Really? That’s the criterion they use? Whether New Yorkers are living in “apartments with more or fewer rooms than they would if they were living in a free-market city.” Honestly, this seems pretty arbitrary. If the outcome was that a lot of New Yorkers were living in apartments with too few rooms, that would fit in with the standard argument that rent control decreases supply. But in their minds, having too many rooms is just as bad as having too few rooms. They say that, according to their calculations, “…the overall percentage of New York renters that are living in apartments that are the wrong size is 25.8%….” And what’s the right size? It’s a ratio they came up with by crunching data for a selection of U.S. cities, most of which are completely different from New York when it comes to employment, income, housing stock, and demographics.

Glaeser and Luttmer seem to believe there’s some kind of ideal that will result from the “perfect allocation” of housing resources, and that the free market will achieve that ideal. But even though all of us want to live in a place where there’s enough room to be comfortable, the key issue for renters is affordability. While Glaeser and Luttmer worry about the right number of rooms, you can see increasing numbers of tenants worried about just making rent in cities like Miami, Portland, and Austin, none of which have rent control. And the free market doesn’t seem to have helped tenants in Clark County, Nevada, where official data says that there were 30,000 evictions in 2016 alone. Interestingly, most housing experts in the area agree that the actual number is much higher, since many tenants who fall behind on rent just leave to avoid having an eviction on their record.

Ultimately, I have to say that Glaeser and Luttmer’s work isn’t very convincing. I give them credit for crunching a lot of numbers, but their conclusions seem pretty arbitrary. Like many economists who tackle rent control, they’re more focussed on the numbers than they are on reality. Rather than looking at the pressures the economy brings to bear on renters, rather than examining the impacts of speculative real estate investment, rather than measuring the social impacts of displacement, they spend their time counting the number of rooms a household has. And because in New York they find that those numbers don’t add up according to an an ideal ratio they’ve decided on, their verdict is that rent control is a failure.

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Downtown LA now offers “boutique apartment lofts”.

The most recent study I looked at was the 2017 paper from Diamond, McQuade and Qian, a trio of academics at Stanford. Their work was just as disappointing as the others. Like Gyourko and Linneman, these folks have decided they can analyze the impacts of rent control by looking at a single city. They feel perfectly comfortable making sweeping statements about the negative effects of rent control without considering what tenants are dealing with in other cities governed by the free market.

The folks from Stanford study decades of data from San Francisco and find that rent-controlled units are more likely to be removed from the market through legal conversions than units not covered by rent control. They argue that because of these conversions the supply of rental units shrinks and therefore rental prices rise. “We conclude that this led to a city-wide rent increase of 7% and caused $5 billion of welfare losses to all renters.” Well, that may sound logical on the face of it, but without comparing their data with rent increases in free market cities, it’s pretty meaningless. To claim any certainty about the actual rate of rent increases due to conversions you’d need to do more than study a single city. You’d have to compare your results to other cities without rent control to see if rents rose even without such conversions. Like, maybe Orlando, where Apartment List reports that rents rose 5.3% from August 2017 to August 2018. Or how about Denver, where a June 2018 report from Zumper says that in a single year the rent for a one-bedroom rose 16%.

This isn’t the only questionable conclusion that the folks from Stanford come to. Check this out….

“Taken together, we see rent controlled [sic?] increased property investment, demolition and reconstruction of new buildings, conversion to owner occupied housing and a decline of the number of renters per building. All of these responses lead to a housing stock which caters to higher income individuals. Rent control has actually fueled the gentrification of San Francisco, the exact opposite of the policy’s intended goal.”

This is fascinating. Because the authors see an increase in high-cost housing, they come to the conclusion that rent control accelerates gentrification. But this is based on the assumption that San Francisco housing prices only increased due to conversions, which is ridiculous. The fact is, real estate investors looking for the highest rate of return will do whatever’s required to squeeze more money out of a building. Sure, in San Francisco they resort to conversions to free themselves from rent control. But in markets without rent control they’d just jack up the rent as high as they pleased, and the end result would would still be the displacement of low-income residents by high-income residents. Free market cities like Portland, Austin and Denver have gentrified rapidly over the past 15 years.

Seriously, the authors are totally clueless on this point. They’re so busy fondling their data that they completely ignore the reality of what’s been happening in San Francisco. As the Bay Area has become a tech hub, wave after wave of high-paid employees have flocked to the city. Seeing this, real estate investors have bought up all the units they can in order to capture some of that cash. Even if San Francisco had never enacted any kind of rent control, prices would still be rising like crazy. Low- and middle-income tenants would still be getting hit with exorbitant rent increases as housing speculators swarmed over the city to cash in on the tech boom. These conversions aren’t the cause of higher prices, they’re just a tool. Given the rise of the tech sector in San Francisco and the flow of global real estate investment into the city, prices would be shooting up with or without rent control, and the end result would still be massive displacement of low-income residents.

Mr. Krugman, you seem pretty cool, so I hate to make sweeping generalizations about economists. But after looking at these three papers, and others on rent control, I have to say their authors all have one thing in common. They’re so focussed on crunching numbers they seem completely out of touch with reality. These academics have certainly spent a lot of time compiling data and working out complex equations, but did they even spend five minutes talking to renters in the cities they were studying? They analyze rental markets in terms of dollar amounts and the number of rooms, but did they spend any time looking at how renters are struggling in the current housing market? Did they even consider looking at displacement in free market cities like Miami, Portland and Austin? Did they ever consider that speculative investment could cause rapid distortions in the housing market that would leave renters out in the cold?

No. They look at isolated datasets and after adding up the numbers they come to the conclusion that rent control is incontestably bad. But their work is narrow and shallow. Of the three studies cited here, only one of them actually compares rent controlled cities to free market cities. And in that case the authors state that rent control should be perfectly efficient, without ever asking if the free market is perfectly efficient when it comes to housing. They claim that rent control distorts the housing market without considering whether other factors could distort the market as well.

But I want to be clear. I’m not saying you should come out in favor of rent control. I’m saying that, based on the research I’ve looked at, no economist should come out against it. It’s entirely possible that there are other, better papers I missed, and if that’s the case, you can dismiss me as an ignorant fool. But the studies by Gyourko, Linneman and Glaeser, Luttmer have been widely cited, which seems to indicate that economists give them credence. Honestly, I can’t understand why. While I’m sure these academics worked hard to produce their papers, the results are a meaningless exercise in crunching numbers. These people need to spend less time on their laptops and more time in the real world.

I admit I’m biased. I live in a rent-controlled apartment, and if it wasn’t for LA’s Rent Stabilization Ordinance I would have had to move out a long time ago. But I still say that the economists who argue against rent control haven’t done the research necessary to support their arguments. If you’re still with me at this point, you might be saying, Okay, so what kind of research should we be doing?

I’m glad you asked.

First, a credible study on the impacts of rent control shouldn’t be focussed just on rent control. It should look at housing accessibility in both controlled and free markets. It should cover a range of major US cities. It should include data covering at least a 20 year period, and 30 or 40 years would be even better.

Second, it should look at various measures of accessibility. I think the level of rent burden is the best indicator for tenants, but it would probably also be good to look at homeowners and gather data on their level of mortgage debt. A thorough study would also examine data on evictions and foreclosures, but the first category could be tricky. In LA we have data on evictions under the Ellis Act, but Ellis is only invoked for rent-controlled units. If tenants leave because the rent rises sharply, or because the landlord offered them $3,000 to get out, or because the owner threatened to call ICE on a family of undocumented immigrants, there won’t be any record of their departure. And while most cities would have records of cases where tenants are evicted through a legal process, I bet those cases rarely reflect the real rate of displacement.

And third, how about actually going out into the world and talking to the people who are struggling to keep a roof over their head? How about making this an interdisciplinary study that ties housing accessibility to income, education, location, race and culture? How about looking at housing in the context of the real world, instead of looking at it as a set of numbers on a spreadsheet. The thing that makes me angriest about the papers these economists have produced is that they seem completely cut off from the world around them. When I read that the Bureau of Labor Statistics says the median annual wage for economists was $102,490 in May 2017, can you blame me if the words “ivory tower” come to mind?

I realize a study like the one I’m talking about would cost a lot of money and take years to produce. But it’s time for economists to get out of libraries and conference rooms and spend some time in the world the rest of us live in. The rising cost of keeping a roof over your head is dragging millions of people down across the country. We’re in the middle of a nationwide housing crisis. While the majority of economists feel comfortable slagging LA and New York for having rent control, they don’t seem to want to ask why the free market is failing renters in cities across the nation. If the free market is supposed to naturally produce affordable housing, then why are tenants in cities like Portland and Chicago pushing for legislation to limit rent increases?

Mr. Krugman, if you’ve read this far, I want to thank you for hearing me out. The reason I decided to direct this letter to you is that, of the economists I’m aware of, you seem to realize that economics isn’t just about graphs and algorithms. It’s about people. It’s about whether people can find a job, whether they can put food on the table, and whether they can keep a roof over their head. As you know, in spite of the fact that unemployment is nearing historic lows, there are millions of tenants across the US who are struggling to make rent. Over the last fifteen years, real estate investment has become a global force, with investors targeting cities around the planet looking for the highest possible rate of return. This has caused housing costs to soar in cities as diverse as Los Angeles, Chicago, Toronto, London, and Hong Kong. The argument that we can build our way out of this crisis doesn’t seem credible, since the vast majority of new units built in these cities are far too expensive for the average citizen.

It’s time for economists to stop asking whether or not rent control works. They need to start asking whether the housing market, regulated or not, is working for the millions of Americans who are living a paycheck away from the street. They need to step outside the university campuses and the think tanks and take a good hard look at how difficult it is for average citizens to keep a roof over their head these days. Economists need to look beyond individual cities. They need to start asking bigger questions. They need to make an effort to see human beings as something more than numbers on a spreadsheet.

Until these economists open their eyes wide enough to look at the big picture, their research won’t be worth the paper it’s printed on.

RC 20 VC

Predatory Development: Crossroads Hollywood

CH Sunset Project Site EDIT

New development is necessary. In order for a city to grow, in order for its economy to stay healthy, it’s important to have new construction to bring investment to communities and adapt to the city’s changing needs. But new development isn’t always a good thing. New projects bring new impacts, and the larger the project the more important it is to consider carefully how it will affect the surrounding community. Most large projects are a mixed bag. Pro-business groups will inevitably argue that they bring tax revenue and jobs, and both of these are important. But large projects can also have serious negative impacts, and we need to weigh those, too. Often it’s a matter of trying to figure out if the good will outweigh the bad, and in many cases it’s hard to say for sure.

On the other hand, in some cases it’s pretty easy to make the call. Crossroads Hollywood is a clear example of predatory development. While the backers of the project tout its benefits in terms of tax revenue, jobs and economic activity, they completely ignore the downside. And the downside is considerable.

First, let’s take a look at what this whole thing entails.

Crossroads Hollywood includes about 1,381,000 square feet of floor area, consisting of 950 residential units (of which 105 are for Very Low Income Households), 308 hotel rooms, and approximately 190,000 square feet of commercial space. The project does include the preservation and rehabilitation of the historic Crossroads of the World mall and the Hollywood Reporter building. All other buildings on the project site would be demolished, including 84 Rent Stabilized apartments. The developers are also asking for a Master Conditional Use Permit to allow the sale of a full line of alcoholic beverages at a total of 22 establishments, and another Master CUP to allow eight uses with public dancing and live entertainment.

I’ve gotta say, it’s pretty ambitious. The investors behind Crossroads, Harridge Development Group, are thinking big. They’re also thinking only of themselves and the massive profits they’ll reap from this project. They don’t really give a damn about the community. If approved, Crossroads Hollywood will be devastating for the environment, devastating for housing, and devastating to the health and well-being of the Hollywood community.

Let’s take a look at the project’s environmental impacts….

These days any developer is going to tell you their project is good for the planet. They learned long ago they need to play that angle to sell it to the public. But Harridge’s claims about Crossroads being environmentally friendly are mostly just hype.

The State of California has designated Crossroads Hollywood an Environmental Leadership Development Project. (ELDP). In order to qualify, the developer has to show that it won’t result in any net additional emissions of greenhouse gases (GHGs). But a project on the scale of Crossroads represents a huge increase in square footage, so it’s to be expected that there will be a huge increase in energy use. The report by the California Air Resources Board (ARB) estimates the Crossroads project will produce 9,440 MTCO2e (Metric Tons of Carbon Dioxide Equivalent) during demolition and construction, and then 14,294 MTCO2e during the first year of operation, though they say that number will decline each year over the life of the project. This is a huge increase in emissions. So how can the State say it achieves a net reduction?

Simple. The developer buys carbon credits. Like many other states, California has an exchange where businesses that aren’t producing their maximum allowed CO2 emissions can sell what they don’t produce as “credits”. Other businesses that want to offset their own emissions can buy the credits to satisfy regulators. So while Crossroads Hollywood will be putting tens of thousands of tons of additional GHGs into the atmosphere, the State says that buying credits actually makes the project carbon neutral. There are people who have reservations about the carbon credit system, but it’s become widely accepted as a tool for reducing global warming, so let’s go along with the idea that this does represent a net reduction in CO2 emissions.

The problem is that this project isn’t just producing massive amounts of CO2. It’s also spewing out tons of ozone, nitrogen dioxide, and particulate matter. This is bad news for the people who live in the area. The South Coast Air Quality Management District (SCAQMD) has evaluated cancer risk from air pollution in its Multiple Air Toxics Exposure Study IV (MATES IV). You can see by the map below that Hollywood is near the top of the scale.

Crossroads Air Quality MATES IV from EIR

But it gets worse. After going through pages of boiler plate language about localized significance thresholds and standard methodologies, the Crossroads Environmental Impact Report (EIR) gets around to analyzing impacts during the construction phase of the project. After listing nearby sensitive uses, including Selma Elementary School/Larchmont Charter School (same campus), Hollywood High, and Blessed Sacrament School, and acknowledging that young people are at higher risk of chronic lung disease from air pollution, the EIR claims, “…, localized construction emissions resulting from the Project would result in a less-than-significant air quality impact.”

Give me a break. Four years of construction, including demolition and excavation, thousands of diesel truck trips and extensive use of heavy machinery will have “less-than-significant” impacts on the kids at these schools? And it’s also important to point out there have been projects under construction on Selma for years now, many of them within three blocks of Selma Elementary. These kids have been inhaling construction dust and diesel fumes since 2015, and the folks behind Crossroads want to keep that going til 2021. But don’t worry. It won’t harm the students a bit.

So let’s talk about transportation. I will give the authors of the EIR credit. Usually traffic assessments for projects like these are ridiculously dishonest. In this case, the EIR acknowledges that traffic is already bad in the area, and that the project will make it worse. Here are a few shots of what it looks like at rush hour.

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Northbound traffic on Highland, the western boundary of the project.

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Traffic heading west on Selma toward Highland.

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Traffic heading north on Las Palmas toward Selma.

The EIR does analyze existing weekday rush hour conditions as required by the California Environmental Quality Act (CEQA). The problem here is, Hollywood is a special case. In addition to really awful congestion at rush hour, you can also have heavy traffic at night and on weekends because of the constant parade of concerts, movie premieres, food fairs and other miscellaneous events. There are multiple happenings in Hollywood every month, many of them involving street closures. And don’t even ask what it’s like during the Hollywood Bowl season.

I wouldn’t expect the authors of the EIR to include all this, because they’re not required to. But they should at least talk about additional traffic generated by the eight live entertainment venues that are included in the project. Crossroads Hollywood isn’t just meant to be a place where people live and work. It’s intended to be a destination. While I’m sure some of the spaces offering entertainment will be fairly small, it seems likely that at least one of them will be a dance club offering live DJs. And I wouldn’t be surprised if popular singers and bands start showing up on a regular basis. Which means that a community already overwhelmed with events that draw tons of cars and disrupt transit will have to bear an even heavier load once Crossroads is up and running.

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Apartment building to be demolished if the project is approved.

And what about the impacts that eight places featuring live entertainment will have on the LAPD’s workload? Not to mention the 22 establishments selling alcohol. Incredibly, the EIR doesn’t even discuss these things in the section dealing with police protection. They conclude again that project impacts will be “less-than-significant”. Obviously the authors of the EIR haven’t seen the research indicating that high alcohol outlet density has been linked to higher rates of violent crime.  Back in 2014, LAPD Chief Charlie Beck wrote to the Department of City Planning (DCP) pointing out that the “oversaturation” of alcohol outlets in Hollywood was contributing to increased crime, including robbery, shootings, rape, and assault. The DCP obviously paid no attention, because they’ve gone on granting liquor permits, and violent crime in Hollywood has risen every year since then. LAPD stats for Hollywood as of April 21 show violent crime has gone up 28.9% over the same period last year. The LAPD is understaffed, and doing their best to cope with a difficult situation. Too bad the DCP has no interest in helping them out. Apparently the folks at City Planning have no concern for the safety of Hollywood residents, or for the people who visit the area. And it looks like Harridge shares their total indifference.

This same indifference extends to the project’s noise impacts. Remember, the developer is asking permits for live entertainment in 8 venues. It seems like at least some of these will be outdoors. Check out this table from the EIR that lists the spaces where they plan to have amplified sound.

CH Outdoor Uses

It’s hard to say how much overlap there will be, since they don’t distinguish between those spaces intended for live performances and and those that will just have recorded sounds. But it’s pretty clear that there’s going to be a lot of music, and a lot of it will be outdoors. The EIR acknowledges that there could be significant impacts from noise, but don’t worry, they have a plan to take care of that. What’s their plan? They’re going to build a 12-foot wall on the project’s eastern boundary, between Crossroads of the World and Blessed Sacrament Church. And according to the EIR, that fixes everything.

This is so ludicrous it’s hard to believe they expect people to buy it. A single 12-foot wall is going to addres any concerns about noise. Live outdoor performances have been a problem for years in Hollywood. Area residents can tolerate a lot, and nobody gets bent out of shape if someone puts on a show during the day. But in recent years more and more club owners have been pushing the limits at night. There have been a lot of complaints about DJs ripping it up on rooftop bars in the small hours. The EIR’s claim that amplified music will only be heard in the immediate vicinity is bull. People who live in the hills have told me they can hear late night noise from down on the boulevard, and they’re not happy about it.

But Crossroads Hollywood wasn’t meant to benefit the community. It was meant to benefit the investors who are hoping to reap huge profits. This project will put more cars on the road and more poison in the air. It will create more crime than the LAPD can handle and more headaches for residents trying to get a good night’s sleep. And what do we get in return? Yeah, there’s the tax revenue, but the City is already seeing record revenues and still can’t balance its budget. More housing? Yeah, the vast majority of it priced way beyond the reach of most people who live in Hollywood. When we put the 105 Very Low Income units gained against the 84 Rent Stabilized units lost, we see a net increase of 21 units that will be accessible to the low income families that really need housing. The gain of 21 units will quickly be erased by the project’s gentrifying impact. If Crossroads is built, you can expect to see a lot of other investors buying up apartments and kicking people out. And will the project create jobs? Sure, mostly low-paying jobs in bars, restaurants, and hotels. Most of the people who will work there could never afford to live there.

This is predatory development. A project designed by investors for investors. The reason the EIR doesn’t see any serious problems for the community is because the needs of the community were never considered in any meaningful way.

It’s just about money.

Next week the City will be holding a hearing on Crossroads Hollywood. If you want to show up and speak your mind, here’s the info.

Tuesday, May 15, 2018, 9:00 am

Los Angeles City Hall
200 North Spring St., Room 350

ENTER ON MAIN STREET.

CH Crossroads of the World

Crossroads of the World

 

West Hollywood Is Taking Action. Why Can’t LA?

IMG_1488

Level Furnished Living in Downtown LA

A friend just sent me an article from Wehoville. Last year the City of West Hollywood issued a ruling that Korman Communities, operator of the AKA extended-stay hotel, was breaking the law by offering units as short-term rentals. There are actually 190 units in the complex, which was originally approved by the City as residential condominiums. When the site was purchased by Korman, they announced that the units would instead be offered for extended-stays. This is key, because this use is allowed, since guests would be residing there for more than 30 days.

But after doing some research, Interim Director of Planning John Keho concluded that the 110 units in the west tower were actually being offered as hotel rooms. He found evidence on-line that AKA was promoting the building as a hotel and decided the City had to put a stop to it. Korman is appealing the decision, and there will be a hearing this week.

The reason I’m bringing this is up is that there’s a similar situation at Level Furnished Living (LFL) in Downtown LA, and City Hall has done absolutely nothing about it. The project was approved back in 2013 as 303 residential condominiums and 7 commercial condominiums. But when it actually opened, the units were being offered not as condos but for extended stays. Again, this is legal, because the guests are staying for longer than 30 days. But last year the LA Weekly reported that the units were being offered for short-term stays. In other words, they’d become hotel rooms. This is not legal.

And what has the City of LA done about it? Absolutely nothing. The owners of the building claimed they were working with the Department of City Planning (DCP) to get a transient occupancy permit. This may be true, but the DCP hasn’t approved anything yet, and the building is still operating as a hotel. In other words, while the folks at City Hall are telling us we have a housing crisis every chance they get, they’re allowing the owners of LFL to turn over 300 residential units into hotel rooms.

So what does the City have to say for itself? I was at a meeting last month where a guy from the City Attorney’s office spoke. He first told us that they just didn’t have the staff to go after illegal short-term rentals (STRs). He went on to say these cases were really difficult because the City had to send inspectors out to the site to actually see that there were guests who were staying there illegally. This was tricky, because inspectors worked during the day, and tourists were usually only in their rooms at night. So, according to him, the City’s hands were tied.

What rubbish.

How hard is it to find evidence that LFL is offering units as hotel rooms? I just went to Hotels.com and did a search. It came up right away. I punched in some dates and found I could stay there for as little as one day.

LFL from Hotels Book One Night 180313 CROPPED

But is that really evidence? Even if they’re posting on Hotels.com, maybe no one has ever actually booked a room as a short-term guest. So I went to Yelp! next, and found these reviews….

“My family decided to travel back to LA over Thanksgiving. Since we are a family of four with two little kids we didn’t want to inconvenience anyone by staying in their home. That being said, since we had kids we needed to also have a kitchen and ample living space for our brief stay, enter Level Furnished Living.”

“I ended up staying at Level after a nearby hotel messed up my reservations multiple times and could not host me. The staff at Level were so accommodating and wonderful! We were given an early check in time and they answered all questions we had.”

“Last weekend I traveled to LA for a fun filled weekend of football. On Saturday I watched a great game between the Texas Longhorns and USC. The next day I saw one of thenew LA teams the Chargers play my home team the Miami Dolphins. Now even though those experiences were great, I had to give kudos to the place were I stayed. Which wasLevel Furnished Living!”

People do really seem to love the place. And I should point out that some guests who posted reviews had stayed for months. But it’s clear from these postings that LFL is offering units as hotel rooms.

So why hasn’t the City taken action? Back in 2016, when short-term rentals were becoming big news, City Attorney Mike Feuer held a press conference and announced that he was going after four apartment owners who had illegally turned units into STRs. But we’re coming up on two years since that press conference, and last time I checked none of those cases had been resolved. Feuer is good at putting on a show for the media. Not so good when it comes to cracking down on wealthy developers.

And would Feuer even have to file a suit against LFL? No. The City could start by simply sending a letter to the owners saying that the City had evidence that the building is operating as a hotel, and telling them to either shape up or face the consequences. If they failed to comply, then the City could open an investigation. I don’t care how short staffed they are. This isn’t a duplex where the landlord is making some extra cash on the sly. This is a tower with over 300 units in the heart of Downtown. It was approved as residential housing. The DCP keeps approving new luxury towers in Downtown, insisting that the area needs more housing. Why isn’t it cracking down on people who are illegally taking housing off the market?

Actually, the answer is simple. City Attorney Mike Feuer, Councilmember Jose Huizar and Mayor Eric Garcetti really have no interest in providing housing for the people of LA. They also have no interest in prosecuting wealthy deveopers, no matter how many laws the developers break. They’ll give you a lot of excuses, but in reality they just don’t give a damn.

Bottom line, the City of West Hollywood is taking action. The City of Los Angeles is not.

If you want to read about city officials who actually feel it’s their responsibility to serve the public, here’s the story from Wehoville.

AKA Appeals City Decision that Its Short-Term Luxury Rentals Are Illegal

To Have and Have Not

Bilt Where Will

I was so bummed. I desperately wanted to go to UCLA’s 32nd Annual Land Use Law & Planning Conference. Unfortunately, the $535 registration fee was a little too pricey for me. But just the thrill of being close to all the movers and shakers who were attending the conference drew me to Downtown. Even though I couldn’t afford to go in I just stood on the sidewalk across from the Biltmore, gazing up at the windows where I knew the attendees were debating lots of heavy issues.

Bilt Angle

The conference brochure definitely made it sound cool. They had a bunch of high-powered attorneys and consultants on hand to talk about CEQA reform, the housing crisis, infrastructure and other important stuff. And beyond all those big, heavy issues, they even found time for a session entitled Community, Health, and Planning for Environmental Justice. I mean, okay, they kind of jammed that into a half hour slot along with about half a dozen other topics, but I’m sure they covered everything they needed to.

Unfortunately, my reverie was interrupted by a bunch of noisy protesters who were standing nearby, holding signs and chanting slogans. What were they complaining about? Well, they were angry because one of the speakers was Sacramento superstar Scott Wiener, the Senator from San Francisco. The protesters had a problem with a bill the Senator just introduced, SB 827, which takes zoning authority away from cities. Wiener says if we override local zoning to allow developers to build housing up to eight stories along transit corridors, we can solve both our housing problems and fight climate change. Doesn’t that sound great? According to Wiener, his bill will let developers build tons of new units so housing prices will definitely go down. And because the new units are close to transit, everybody will dump their car and jump on the train.

I wonder if anybody at the conference asked Wiener about a recent report from UCLA that shows transit ridership is way down in Southern California, even though local officials have been approving pretty much any crazy project developers propose as long as it’s near transit. If so, I really would’ve liked to hear his response. I’m sure Wiener had a ready answer for the cynics who point out that in New York housing is still outrageously expensive even though the city has been building tens of thousands of new units every year. And so what if cities like Vancouver and Toronto have thousands of units sitting empty while middle-income and low-income families struggle to pay the rent? Foreign investors need homes, too, although, okay, maybe they don’t always really need them.

Bilt Speaker

At lunch all the power players adjourned to the Gold Room, where they heard the keynote address from Richard Rothstein, author of The Color of Law: A Forgotten History of How Our Government Segregated America. Rothstein apparently talked about how federal, state, and local governments have implemented and upheld racist policies to create and maintain segregated communities since this country’s inception. Of course, he’s absolutely right. I wonder if he spoke about the fact that many of these policies were formed as a result of intense lobbying by development and real estate interests that wanted to protect their investments? Kind of like the development and real estate interests that are pouring money into Sacramento right now. It would’ve been nice to hear what he had to say about research from the Urban Displacement Project, which shows that current government policies promoting transit-oriented development have resulted in gentrification, pushing low-income people of color away from transit hubs in LA and the Bay Area.

Bilt Hand

Even though I was standing across the street, I could feel the soothing vibrations emanating from the collective wealth and wisdom gathered inside the Biltmore. So what if most of these people make six figures, live in single-family homes, and drive nice cars? So what if most of them rarely ride transit and never had to worry about getting evicted? They’ve got college degrees and lots of money and they go to a lot of conferences. They’re well qualified to tell the rest of us what to do about housing and transit.

But the protesters kept disrupting all the good vibes I was getting from the Biltmore. I guess some of them are facing eviction, or they’ve already been evicted, and they’re ticked off because they’re losing their homes. Yeah, okay, that’s a bummer. But they need to trust the folks inside the Bltmore. All we need to do is listen to people like Scott Wiener and let developers build tons of new housing around transit. Just because the median income for people living around rail lines in LA is mostly between $30,000 and $40,000 a year, and they could never afford the new units, which usually start around $2,000 a month, is no reason to keep the developers at bay. I’m sure at some point we’ll have such a housing glut that these new units will lose 50% of their value, and then the families that were kicked out could return to their neighborhoods.

So, okay, it could take decades. And yeah, it might never actually happen. But that’s no reason to rethink policies that are displacing the poor and destroying communities.

Is it?

Bilt No Nos

 

Turning Housing into Hotel Rooms

Met Upper

The Metropolitan on Sunset

If you needed any more proof that City Hall has no real interest in solving our housing crisis, you should have come to the September 12 hearing held by the Central Area Planning Commission. On the agenda was an appeal of a decision by the Department of City Planning (DCP) to approve a Conditional Use Permit (CUP) for transient occupancy at the Metropolitan Lofts on Sunset near Van Ness. There’s a long, complicated story behind this, but basically the owners want to be able to turn apartment units into hotel rooms. Susan Hunter, of the LA Tenants Union (LATU), filed an appeal to try and overturn the CUP. But the Commissioners sided with the owners, and gave them the go ahead to allow transient occupancy at the Metropolitan.

The September 12 session was actually continued from the August 8 hearing when the appeal was first heard. Taken together, these two hearings were a mind-numbing demonstration of the DCP’s arrogance and callousness. It has never been clearer that the DCP’s culture is geared toward serving private interests rather than the general public. Most of the Commissioners, along with DCP staff, bent over backwards to make allowances for the owners of the Metropolitan, while throwing the building’s tenants, and renters in general, under the bus.

The story of the Metropolitan is long and complicated, but to give you some background, here’s a brief recap….

The building originally started as a hotel back in the 80s. It ended up getting a reputation as a place to party, and by the 90s it was getting a lot of attention from the LAPD. After a while the owners decided they’d be better off turning it into an apartment building, and the DCP signed off on that in 2006. In their determination letter, the City Planning Commission said the conversion of the Metropolitan’s 52 units was consistent with both the General Plan and the Community Plan, and stated that the change would, “provide increased opportunities for residential living in Hollywood where it is appropriate and needed.”

Fast forward about 10 years. Hollywood has always been a hot spot for tourism, and with the advent of Short-Term Rentals (STRs), property owners can make a bundle posting units on AirBnB or any of the other popular sites that offer “home sharing”. This is especially attractive to landlords, who realize they can make a lot more money by getting rid of tenants and opening the door to tourists. The folks who own the Metropolitan were thinking they could cash in by turning the building back into a hotel, but they came up with a very creative way to do it. They didn’t just ask the City to turn the place back into a hotel, they requested a zoning overlay to make it into a Transit Occupancy Residential Structure (TORS), while maintaining the residential use. This way the owners could use the units as either apartments or hotel rooms, depending on how they feel on any given day.

Do you see a problem here? The small group of tenants who were still left at the Metropolitan sure did. You see, the owners decided they weren’t going to wait for the City’s approval. They actually allowed a company that specializes in STRs, Senstay, to start offering some units to travellers. The tenants started to see all kinds of strangers wandering up and down the halls with their luggage trailing behind. They found themselves letting in guests who didn’t have a key because there was no front desk to help visitors. They sometimes had to wait to use the laundry rooms because housekeeping staff was there ahead of them. And they started to worry about break-ins because things were getting stolen. These problems were piled on top of the problems they already had to deal with, like lighting that didn’t work, long periods when the AC was down, and elevators that were frequently out of service. And to make things even worse, they were required to pay fees for utilities, trash, and sewage through an on-line service which often added late charges for bills paid on time, in addition to a “convenience fee”.

It’s pretty clear that the Metropolitan owners don’t care about their tenants, and would like to get rid of them. Jerry Neuman, the owners’ representative at the hearing, claimed that they treated their tenants well, and that they didn’t intend evict anybody. That doesn’t jibe with the facts. All the residents I spoke to at the Metropolitan confirmed the problems listed above. And while the owners claim they’re not removing housing to make way for hotel rooms, they had allowed the number of tenants to dwindle to 15, and offered those who still remained money to leave. This sounds to me like they’re planning on turning the Metropolitan back into a hotel.

Which brings us back to Senstay. To give Commission President Jennifer Chung-Kim credit, she confronted Neuman with evidence supplied by appellant Hunter that the Metropolitan owners had been renting rooms to tourists for a while. Neuman’s response was one of the few amusing moments in an otherwise grimly depressing ordeal….

“As I understood it, that was a corporate lease. That was not…. I don’t…. and we…. our understanding…. and we have not rented our facility for temporary occupancy.”

But let’s take a look at the way Senstay presents itself on its own web site….

“Building upon Airbnb’s monetization and subsequent creation of a new asset class, we are passionate about bringing our own meld of ‘the sharing economy’ and traditional real estate investing to our clients.”

Senstay exists to facilitate STRs. That’s the business it’s in. When Commissioner Chung-Kim handed him the document, Neuman finally realized his clients were busted, and he decided not to say any more on the subject. There’s some ambiguity about whether the LA Municipal Code allows individuals to rent their homes as STRs, but it is illegal for landlords to turn multiple apartment units into STRs. So did the Commission follow up on this? Did they turn to the representative of the City Attorney’s office, who was sitting right there with them, and ask for an investigation? Did they recommend that the Housing & Community Investment Department take action against the owners for illegally offering apartments as STRs? Nope. They did nothing. They let the Metropolitan owners off the hook without any consequences whatsoever. The Commission just let it slide.

With the exception of Vice President Daphne Brogdon, it seemed like the Commission was ready to give the Metropolitan owners pretty much whatever they wanted. At the August 8 hearing, Brogdon repeatedly questioned the wisdom of allowing 52 apartments to be turned into hotel rooms in the middle of a housing crisis. She pointed out that allowing this dual use could be a precedent, leading to other landlords making the same request.

Neuman’s response? “As much as you may say that Hollywood…, that we have a housing crisis, we have an equal amount of crisis in the number of temporary occupancy units available in Hollywood.” It’s true that tourism is booming, and there is a demand for more hotel rooms throughout the city. But there are 25 hotels within a 1 mile radius of the site, and in Hollywood there are 13 more either under construction or currently making their way through the approval process. On top of all this, AirBnB alone offers hundreds of listings in the Hollywood area, without even counting those offered by platforms like VRBO, Oasis Collections, Housestay, and One Fine Stay. Oh, and let’s not forget Senstay. Honestly, I haven’t heard any stories about tourists sleeping on the street because they couldn’t find a hotel room.

But there are thousands of homeless people sleeping on LA’s streets, and Ellis Act evictions continue to climb, with over 1,000 rent-stabilized units being taken off the market annually. It’s amazing that in Neuman’s eyes the lack of hotel rooms for tourists represents a crisis equal to the lack of housing for residents.

So it was great to have Brogdon at the August 8 hearing to ask tough questions about adding the transit occupancy use. Unfortunately, that was her last day on the Commission. When the hearing continued on September 12, her seat was vacant, and no one was left to speak up for the tenants.

And speaking of the tenants, where were they during all this? None of the tenants that Hunter was representing made it to the August 8 hearing. It’s not always easy for people who work to make it to City Hall at 4:30 pm on a work day. But 4 of them showed up for the continuation in September. They came down because they wanted to speak about the habitability issues they’d experienced at the Metropolitan, and about the difficulty of living in a building that had already been partly converted to a hotel, and about their fears that the owners were planning on getting rid of them.

But they never got the chance to speak. Commission President Chung-Kim decided that since they’d already heard public comment on August 8, there was no need to hear any more. She had mentioned earlier that it was difficult to reopen public comment once it had been closed. Somehow, though, she had no problem doing exactly that back in August when she wanted to hear from the owners’ rep. Toward the close of that session, Chung-Kim wanted to get Neuman’s input on a possible compromise, and it seemed pretty simple to reopen public testimony. But in September somehow that wasn’t possible. This is actually something I’ve often seen at hearings held by the DCP’s various Commissions. They always seem more than willing to let the developers and their reps babble on endlessly, but public comment is usually strictly controlled. At the August hearing and the September continuation, Jerry Neuman had ample opportunity to talk about why his clients needed the CUP, and I’d be willing to bet he spoke more than any other individual in the room. But the tenants Hunter was representing, the people most affected by the change of use, weren’t allowed to say a single word.

Met Hearing 1

A shot of the September hearing.

I’ve been to a number of Commission hearings over the years, and I do feel like there’s definitely a bias in favor of owners and developers. But maybe it’s just me. Maybe I’ve got a chip on my shoulder. Or maybe, since the Commissioners are appointed by the Mayor, they all just share his enthusiasm for aggressive gentrification and rampant displacement. But there could be other reasons, too. It’s interesting that the owners’ rep at this hearing was Jerry Neuman of Liner LLP. In case you haven’t heard of Liner, they’re one of LA’s top lobbying firms. In fact, in the Ethics Commission’s 2nd quarter lobbying report for 2017, Liner ranked number one in terms of payments received, racking up $2,310,565. Pretty impressive. And one of Liner’s top clients is Harridge Development Group. If you take another look at the Ethics report, under the section for clients, you’ll find that Harridge is number 10 in terms of payments reported, having shelled out $118,765. But that’s actually kind of misleading. If you really want to know what kind of money Harridge is throwing around, you should take a look at the number 2 spot on the list. This is where you’ll find Crossroads Associates LLC, which is behind Crossroads Hollywood, a massive complex planned for Sunset and Highland, and even though the name is different, this is also a Harridge project. For this project the client has paid out $393,837, and the recipients were the swell folks at Liner LLP.

So what does all this have to do with the Metropolitan? If you look at the applicant for the Metropolitan’s request to the DCP, you’ll see Brad Woomer, 5825 West Sunset Boulevard, LLC. The company is just another anonymous LLC, but it turns out Woomer is the Chief Financial Officer for Harridge. So the people behind the request for transient occupancy at the Metropolitan just happen to be the same people who figure so prominently on the Ethics Commission’s lobbying report. And the firm handling the request is none other than Liner LLP, which ranked number one in terms of payments recieved in the same report. Liner is definitely well connected. Among the agencies they’ve lobbied for the Crossroads project are the City Attorney, the City Council, Building & Safety, and of course, the Department of City Planning.

But maybe this has nothing to do with how the Metropolitan hearing went. Maybe I’m just a crazy conspiracy freak with nothing better to do than pore over Ethics Commission reports and show up at grindingly dull Commission hearings. (Seriously, I think I need to get a life.) Whatever the reason, the Commissioners voted to deny the appeal and grant the CUP. The Metropolitan owners can now legally turn residential units into hotel rooms. And since this does seem to be a precedent, it opens the doors for other landlords to do exactly the same thing.

Still, the Commission had to make it look like they were taking care of the tenants. So between the August and September hearings, Neuman met with DCP staff to work out a set of conditions that were supposedly going to make everything okay. The conditions included granting the remaining tenants a 4 month extension on their lease, and the option to move to a part of the building where they would be consolidated, the idea being that this would resolve conflicts with short-term guests. The Commission acted as though they were doing everything they could to protect the tenants, but it’s really all a game, because the City rarely enforces any of these conditions. Even when violations are brought to the City’s attention, enforcement is generally so lax as to be meaningless. Agreements like these are put in place to make it look like the DCP is doing its job. Once the hearing is over, it’s just a lot of language to be stuck in a file and forgotten.

So that was it. The Commissioners denied the appeal. The Metropolitan owners got their CUP. And after it was over the tenants stood outside the hearing room, realizing that the City had thrown them under the bus. For me it was one more maddening demonstration of the City’s staggering disregard for the rights of LA’s renters. I can’t imagine how the tenants felt. The DCP seemed to be saying to them, “We just don’t give a damn about you.”

The appellant, Susan Hunter, who’s a friend of mine, was frustrated, but has refused to give up. She’s been working on trying to find legal representation for the tenants so they can get relief from the courts. This isn’t her first fight, and it won’t be her last. I have to give credit to Susan for her tenacity, and to all the others in this town who keep pushing for some kind of justice. It’s got to be tough to keep going when the deck is clearly stacked against you.

P.S.
In the post above I mentioned Jerry Neuman’s claim that the owners had no intention of evicting anybody, and that they just wanted the option to post vacant units for transient occupancy. Well, since the hearing I’ve been told by Susan Hunter that the tenants she does not represent have been told to vacate the premises. They’re supposed to be out by Christmas.

Met Side

 

Downtown Artists Fight Eviction

AE 01 Coming Soon

Artists are being forced out of the Arts District. This isn’t news. It’s been happening for years. The news is that now the artists are fighting back.

On Saturday, November 4, two groups of artists facing eviction organized a parade to bring attention to the rampant displacement that threatens their community. Earlier this year the residents at 800 Traction were told by the new owners of the building that they’d have to leave. Also this year, the people behind the Artists’ Loft Museum Los Angeles (ALMLA) were hit with a steep rent increase that seems intended to force them out. So the two groups have gotten together to let the world know that they’re not going quietly.  On Saturday, November 4 they staged a parade through Downtown.

AE 10 Skel Pharm

The parade started in Little Tokyo.

AE 12 Angel 1

Took a right on Alameda.

AE 14 Crowd Alameda 3

Then the protesters headed down Alameda toward Fourth.

The parade started in Little Tokyo, cut down Alameda to Fourth, then wended its way along Seaton, Fifth and Hewitt, finally winding up at 800 Traction. It was an interesting walk. Protesters waved signs and displayed artwork. Two giant skeleton figures towered over the crowd. A few cars honked to show their support.

AE 16 Crowd Alameda 4

A momentary pause on Alameda.

AE 18 Crowd Seaton 2

Marching along Seaton.

AE 20 Merrick

And then up Merrick.

We passed in front of the building that holds ALMLA, which is actually a brand new enterprise. Michael Parker and Alyse Emdur have lived in this space, along with other artists, for 16 years. Parker says that in just the last 6 years their rent has risen by 200%. The latest increase is beyond what they can pay, and Parker believes it was designed to force them out. So the artists at 454 Seaton decided to create ALMLA, which they hope will draw attention to their situation, and to the larger wave of displacement that’s sweeping across Los Angeles. Just before the museum’s opening, the landlord went to court to shut the event down. Fortunately he failed.

I used to hang out in this area back in the 80s and 90s. It’s depressing to see some of the changes that have taken place. While most of the buildings remain, with the onslaught of gentrification many of them now house chic boutiques and pricey restaurants. Anonymous LLCs have bought up a lot of the real estate, and investors seem bent on turning this part of Downtown into something very close to a suburban mall.

AE 40 Shop

Shop in the Arts District.

AE 42 Restaurant

Eat in the Arts District.

AE 44 Creative Campus

Gentrify the Arts District.

Like I said, we ended up back at 800 Traction. A number of the artists who live in this building have been here for decades. Some were among the first wave of artists to move to the area back when it was more or less a decaying industrial ghost town. And most of the current residents at 800 Traction are part of the Japanese-American community, which is crucial to this story. This community has hung on in spite of successive waves of forced displacement going back to WWII. In the early part of the 20th century, Little Tokyo stretched far beyond its current boundaries. There were numerous Japanese-owned businesses and Japanese cultural institutions in the area between Alameda and the LA River. The first assault was the internment of Japanese-Americans after Peal Harbor. Since then City Hall has carved out one piece after another. And now these artists, after years of working within the community, are threatened with eviction.

AE 50 Golf 2

A performance featuring two of the Downtown elite enjoying a round of golf.

AE 52 Golf 4

They seemed to agree that gentrification wasn’t happening fast enough.

Hanging out with the other party guests, I felt like the room was filled with a kind of giddy energy, but there was also an undercurrent of tension. I spoke with Nancy Uyemura and Jaimee Itagaki, and they gave me the latest news about 800 Traction. The building’s new owners, DLJ Real Estate Capital Partners, had hired a property management firm, Pearson, that seemed intent on sabotaging the gathering. Pearson had called the cops before the party, apparently believing they could shut it down, but it went on as planned. They also sent security guards to keep an eye on the tenants and guests. Harrassment in situations like this is commonplace, and Pearson is doing their best to make things uncomfortable. Uyemura said that the tenants at 800 Traction were told in May that they had to leave, and they were supposed to be out by August. Recently they received an unlawful detainer notice. Their hearing date is in December.

AE 60 Party 1

Protesters gathered at 800 Traction after the parade.

AE 62 Security

I hope the security guards enjoyed the party.

AE 64 Sketch

Artists sketched their take on what’s happening Downtown.

The attempt to evict the artists at 800 Traction is bad enough, but there’s another layer to this story that makes it even more disturbing. DLJ has decided to go through the process of designating the building a Historic-Cultural Landmark, which will enable them to get significant tax breaks for renovating the structure. They hired GPA Consulting to do the research for the nomination. GPA’s report talks at length about the building’s architect and Beaux Arts revival style and the food processing industry. They even mention Al’s Bar and LACE. But somehow they completely avoid any mention of the Japanese-American community that thrived in the neighborhood for decades. They also neglect to mention that the current residents have deep ties to the current Japanese-American community, and that some of them were among the first artists to move to the neighborhood back in the 80s.

In other words, GPA’s report completely whitewashes the community’s history. At the Cultural Heritage Commission (CHC) hearing where the nomination was considered, some attendees pointed this out, among them Dorothy Wong, herself a preservation consultant. Wong was baffled by the fact that the report didn’t refer to Little Tokyo once, and made no mention at all of the Japanese-American artists who had lived and worked at 800 Traction for decades. To their credit, the CHC agreed that the report was incomplete and chose to defer their decision until further work was done.

This may seem like a small victory, but it goes to the heart of what’s happening in Downtown. Ruthless investors are kicking artists and others out of the area so they can turn it into a sanitized, upscale urban destination. The Mayor and the City Council are doing everything they can to help make that happen. The people who have lived and worked in the area for much of their lives, the people who built communities and kept them going through tough times, are being told to leave. And while City Hall makes a great show of preserving historic structures, they’re destroying the communities that gave those structures life.

It’s hard to say whether the artists at 800 Traction and ALMLA will win this battle. They’re a determined group, and they seem committed to fighting til the bitter end. But LA has become increasingly hostile to artists, and the Mayor’s vision for Downtown is all about handing the area over to developers.

What have real estate investors put into this community? Money. What do they want out of it? More money.

What have the artists put into this community? Their lives. And what do they want? To continue working with and for the community, as they’ve been doing for years.

Find out more by following these links.

800 Traction

ALMLA

AE 90 Skel Sun

Tenants Raise Alarm at Historic Schindler Apartments

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The speculative real estate binge that’s sweeping across LA right now has drawn a swarm of unscrupulous people willing to do whatever it takes to make a profit. In talking to community members over the past few years I’ve heard some hair-raising stories, but nothing that tops the reports I’ve heard from the tenants of the Sachs Apartments in Silverlake.

To give you some background, the Sachs Apartments (also known as Manola Court) were created by architect Rudolph Schindler for interior designer Herman Sachs. They’re a stunning example of Schindler’s work, a collection of buildings that step gracefully down a hillside, connected by steep stairways and terraced paths. The City of LA has recognized the importance of the site, naming it a Historic-Cultural Monument (HCM) in 2016.

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A view of the Sachs Apartments from Edgecliffe.

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Another view from Edgecliffe.

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A gate leading to a walkway between two buildings.

The Sachs Apartments were purchased by the current owners some years back. While there are three names listed on documents filed with the City, the person who has been dealing with the tenants and supervising the “restoration” is Paul Finegold. I’ve been hearing a lot about Mr. Finegold lately, and most of the comments have been pretty negative.

To start with, a number of tenants claim that Finegold has been harrassing them, and they believe he’s doing his best to get rid of them. There have been reports that he doesn’t maintain the units properly, and is slow to act when problems come up. I wanted to learn more, so last Thursday I showed up for a meeting of the Urban Design & Preservation Advisory Committee of the local neighborhood council. The only item on the agenda was the situation at the Sachs Apartments, and there was plenty to talk about. A number of tenants attended. They talked about water leaking through the ceiling, workers leaving debris on the site, and respiratory issues that may be related to dust from construction. Apparently Finegold has posted at least one unit on AirBnB, and the tenants said the guests are often out of control. One woman said she found a couple having sex right in front of her apartment.

And there’s more. According to the people at the meeting, three tenants have already been evicted by Finegold, who claimed that he, his mother, and a resident manager were moving in. But according to the current tenants, neither Finegold nor his mother nor the manager are living on the site.

Beyond all that, a lot of people are asking whether Finegold is restoring the Sachs Apartments or wrecking them. Remember, this is a Historic-Cultural Monument designed by someone who played a key role in LA’s architectural history. Having pledged to do a careful restoration of the site, Finegold is receiving substantial tax breaks under the Mills Act. But tenants say he’s made significant alterations, reconfiguring the interiors of some units and removing the bathroom from one. They also claim workers have cut down 4 mature trees and removed tiles designed by the original owner, Herman Sachs. Former tenant Judith Sheine, an authority on Schindler’s work, has expressed her concern that Finegold’s crews are doing damage to the complex.

I decided to go to the LA Department of Building & Safety (LADBS) web site to check out some of the permits that Finegold has pulled. Here are some excerpts….

“REMOVE FULL BATH ON FIRST FLOOR AND CREATE A POWDER ROOM ELSEWHERE ALSO ON FIRST FLOOR. NO CHANGE TO PLOT PLAN.”

“CONVERT A 3 UNIT APARTMENT TO A 4 UNIT APARTMENT WITH INTERIOR ALTERATIONS.”

“ADD NEW BATH; REMOVE AND REPLACE SELECTED WINDOWS; NEW ROOFING; NEW COLOR COAT EXTERIOR PLASTER”

Is it really okay to do all this with a building that’s been designated as an HCM? Was LADBS aware that this is a historic building? Obviously, any structure that’s over 80 years old is going to need some work to comply with current codes, but removing a bathroom? Converting one structure from 3 to 4 units? Remember, Finegold is getting tax breaks under the Mills Act for the work he’s doing, and that means he’s required to follow the Secretary of the Interior’s Standards for Rehabilitation. Historic Resources Group, a widely respected consulting firm, helped Finegold file the Mills Act application. Do they know what’s going on at the Sachs Apartments?

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A view of the Sachs Apartments from Lucile.

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Far corner of the building on Lucile.

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Another view of the building from Lucile.

And to top it all off, now Finegold has applied to convert 5 of the units to a bed and breakfast. That may seem like a small number, but remember, we’re in the middle of a housing crisis. And based on their experiences with Finegold, some of the tenants are worried that he eventually plans to convert the whole complex to a bed and breakfast.

So, will the Department of City Planning (DCP) reward this guy by allowing the change of use? Seems likely. In spite of the fact that City Hall keeps telling us that we don’t have nearly enough housing, the DCP has shown itself to be more than willing to work with owners who want to remove rental units from the market. The DCP has heard all about the tenants’ concerns, and so has Councilmember Mitch O’Farrell’s office. But so far nobody from the City seems willing to stand up and ask what the hell is going on at the Sachs Apartments.

If you think somebody from the City should be asking questions, maybe you could let them know you’re concerned. Send an e-mail to DCP staffer Azeen Khanmalek, and be sure to copy Councilmember Mitch O’Farrell.

How about this for a subject line?

Investigate Possible Damage to Historic Sachs Apartments

Azeen Khanmalek, Department of City Planning
Azeen.Khanmalek@lacity.org

Councilmember Mitch O’Farrell
councilmember.ofarrell@lacity.org

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