The City Council last week moved to protect the city's residential hotels, many of them Downtown, from demolition or conversion to market-rate apartments.

The ordinance, passed Tuesday, May 6, by a unanimous vote, took effect immediately, less than three weeks before a two-year temporary moratorium on such conversions was set to expire.

Ninth District Councilwoman Jan Perry, who initiated the initial moratorium and the new law, said it would help people at all income levels. "This ordinance is a positive step in the right direction and will help us preserve and rehab this important affordable housing stock," she said.

The law does not prohibit property owners from converting or demolishing residential hotels, but lays out strict guidelines that make it difficult and expensive to do so. A similar set of guidelines was adopted by the Community Redevelopment Agency in 2006, but applies only to properties in the Central City. The new ordinance is citywide.

Though the initiative was mostly well received by both affordable housing and development advocates, some said that the requirements on developers planning conversions should be more stringent, while others argued that landlords should be allowed greater flexibility.

City Housing Department General Manager Mercedes Marquez classified the law as a compromise. "This is a progressive ordinance that balances the critical need for low-cost housing versus an owner's right to dispose of property," she said.

Mixed Approach

According to the Housing Department, there are currently 336 residential, or Single Room Occupancy, hotels in the city, with a total of 18,739 units. More than 60% of those residences are in council districts nine and 14, which encompass the Downtown area, with many concentrated in and around Skid Row.

In 2005, the City Council adopted a yearlong moratorium on SRO conversion or demolition in order to preserve the low-income housing stock in rapidly gentrifying areas. There was particular concern in Downtown Los Angeles, where many aging buildings were being converted to upscale apartments or condominiums in a then-hot real estate market.

"I was concerned that we might lose that window to preserve probably the greatest symbol of permanent affordable housing," said Perry. "I wanted to make sure we didn't lose that opportunity."

The council eventually extended the moratorium to May 24 of this year, while housing officials worked on the permanent ordinance approved last week.

Under the new law, residential hotel owners who demolish units must either replace them within two miles of the building, or pay the city for the cost of a new site plus 80% of the replacement construction costs.

If developers choose the former option, they may build fewer replacements (the exact number will be determined by the Housing Department on a case-by-case basis) if they equip the residences with amenities such as individual bathrooms and kitchens.

Owners also may convert hotels into affordable housing, with at least 10% of the units reserved for very-low-income tenants, defined as those who earn up to 30% of the Area Median Income, which translates into $15,950 a year for an individual (according to U.S. Department of Housing figures). Hotels with more than 250 units can include 20% market-rate apartments.

Several Skid Row area affordable housing advocates at last Tuesday's council meeting argued that the very-low-income set-aside should be tripled. Marquez, however, said that the income requirements are based on ratios that would make developers eligible to receive state money.

"What is important here is to give people flexibility in terms of the funding," she said, in order to encourage investment in affordable projects.

Perry said there are currently 718 units of very-low-income housing in the pipeline Downtown, and that the area has room for more mixed-income developments.

"When you have mixed-income communities, it creates a more diverse experience in learning how to live together and influence each other," she said. "It creates a sense of upward mobility."

Representatives of the Central City Association expressed concern over the appeal process for landlords to attempt to remove their buildings from the Housing Department's residential hotels roster. By allowing Housing officials to both make the initial assessment and hear appeals, "the city is establishing a questionable precedent," said Veronica Perez-Becker, vice president of legislative affairs for the CCA. "Appeals should be conducted with more objectivity."

The owners of the Cecil Hotel on Main Street have tried to remove their 600-room building from the residential hotel list for nearly a year, and last week filed suit against the city. At the council meeting, one of the Cecil's owners, Michael Ross, said the hotel primarily serves tourists and that his team had not been treated fairly by the city.

Marquez would not comment specifically on the Cecil, but said that getting off the residential hotel list "is meant to be difficult."

"Just because you say you're not a residential hotel, that doesn't mean you're not," she said.

Despite concerns over elements of the ordinance, most supported it. Perez-Becker called it a "fair compromise," while Becky Dennison, executive director of the Los Angeles Community Action Network, a low-income homeless advocacy organization, termed it "a huge step in the right direction."

Richard Smith, 73, an 11-year resident of the Ellis Hotel on Sixth Street, agreed. "It is absolutely vital," he said. "Without that type of housing, I'd be much worse off."

Contact Anna Scott at anna@downtownnews.com.

page 11, 5/12/2008

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