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Proposed LA Earthquake Retrofit Plan Passes Hurdle

City Council’s housing committee unanimously approves legislation.

By Nik Bandak

Earlier this year I wrote about Mayor Garcetti’s push to gain approval of his seismic retrofit proposal titled “Resilience by Design.” The plan would force owners of wood framed and concrete buildings located within the City of Los Angeles to seismically retrofit their buildings to help prevent catastrophic damage in the event of a major earthquake.

Last month the plan was unanimously approved by the Los Angeles City Council, with Garcetti stating, “Today’s actions will save lives.” Few can argue with the mayor, as geophysicists at NASA’s Jet Propulsion Laboratory believe there’s a 99-percent chance that a 5.0-magnitude earthquake, or greater, will hit the Los Angeles metro area within the next two-and-a-half years.

With the new rules in place, building owners are now forced to consider the financial repercussions. Questions linger as to whether owners will be solely responsible for the cost of seismic retrofits, especially after Governor Jerry Brown vetoed AB 428, which would have allowed owners to apply for tax breaks equal to 30% of the retrofit costs. It remains to be seen if financial incentives will be offered to building owners who upgrade their properties; the city council is still contemplating ways to effectively share the cost of improvements. What we do know is the current law allows owners of residential properties to increase monthly rents by as much as $75 to help pay for retrofits. If adopted, similar cost-sharing plans could impact commercial tenants depending on the negotiated terms in their leases.

The Los Angeles Department of Building and Safety will soon start issuing courtesy notices to approximately 13,500 owners of wood apartment buildings and 1,500 owners of concrete buildings who can expect to receive orders from the City to perform seismic retrofits on their properties.

What Tenants Can Do Right Now

As I wrote back in March, every commercial tenant should take steps now to ensure building upgrades won’t negatively impact their bottom line. As building owners are faced with the costs of retrofitting, they will attempt to shift those expenses onto tenants. Consult with a qualified tenant representative to review your lease and evaluate your options so you can avoid those future pass-through costs.

Nik Bandak is a vice president for Hughes Marino, an award-winning commercial real estate company specializing in project management, tenant representation and building purchases, with offices in San Diego, Orange County, Los Angeles, San Francisco, Silicon Valley and Seattle. Contact Nik at 1-844-NO-CONFLICT or nik@hughesmarino.com to learn more.

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