Los Angeles is exploring a sweeping rent freeze on apartments whose affordability covenants with the city have expired or are set to run out.
A motion by the City Council instructs city staff to present recommendations to maintain rent prices using data on tenant displacement since the pandemic, according to the Los Angeles Daily News.
Affordability covenants are signed between landlords or developers and the city. Most involve an agreement from the landlord to keep units “affordable” for a period of time — typically more than a decade or two — in exchange for some financial incentive from the city.
Incentives include density bonuses, low-interest financing, and rent subsidies. In most cases, landlords are free to bring rents to up to market rates once the covenant expires.
The Council’s move stems from a year-old debate over Hillside Villa rental complex in Chinatown. The property’s covenant expired last year and landlord Thomas Botz planned to raise rents before the pandemic hit.
Housing advocates pushed the city to act to prevent that. In February 2020, City Councilman Gil Cedillo proposed seizing the complex through eminent domain, although that appeared to be more of a bargaining tactic to entice a sale rather than a realistic proposal.
Since then, Cedillo has suggested using federal coronavirus relief dollars to buy Hillside Villa.
Last month, the Council set a goal to buy 10,000 below-market-rate apartments over the next decade to preserve them as affordable.
Statewide the pandemic has put hundreds of thousands of renters at risk of eviction according to a UCLA study released last spring. There is concern that landlords will evict scores of renters once state and local evictions measures expire. A study issued in November by the Federal Reserve Bank of Philadelphia found that California renters would owe their landlords a total of nearly $1.7 billion by the end 2020.
[LADN] — Dennis Lynch