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.
Hughes Marino’s industry leading Construction Management team has unmatched expertise in every type of commercial building project from tenant improvements to ground-up build-to-suits. With decades of experience in California and beyond, our project managers, engineers and LEED APs offer practical insights for the construction management professional.
