Housing supply, or lack thereof, continues to be a hot topic across the state of California. That’s why a recent story, cracked by Robin Urevich of Capital & Main and Gabriel Sandoval of ProPublica, is so unsettling. It’s compounded by another disturbing story highlighted by C.C. de Vere for Empty Los Angeles. At first, they may seem like they’re about completely different topics. But both draw our attention to how easily Los Angeles real estate is being abused… if it’s being used at all. We’d recommend reading both pieces in their entirety since we’ll just be going into an overview. But they highlight different types of property mismanagement and how it’s keeping the city’s housing supply needlessly low.
Renting Out Low-Income Housing to Tourists
The first story of abused housing supply starts several years ago when certain Los Angeles area hotels converted to studio apartments. Their units would no longer be used for visitors, but for low-income residents. Or so they allegedly stated. The city then classified these properties as “residential hotels.”
California state declares a residential hotel to be properties encompassing six or more units reserved for permanent housing. These residential hotels were added to a database to ensure they remained strictly for use by permanent residents.
Anyone familiar with the housing situation in LA can likely guess what happened next. Recognizing that they could make more money renting these units to tourists on a nightly basis instead of low-income residents on a permanent basis, the landlords converted these units to transient hotels. And not necessarily cheap ones. One hotel examined in Urevich and Sandoval’s investigation was charging $235 per night.
A Legal Violation Made More Obvious by Housing Supply Shortages
According to the 2008 law that restricted these hotels to use as low-cost housing, this is actually illegal in the city of Los Angeles. Of the over 300 residential hotels added to the city’s database, Urevich and Sandoval discovered 21 hotels in alleged violation. And while there is a process allowing residential hotels to convert to transient hotels, this does not appear to have been employed by any of the properties in question. This is likely due to the costly consequences of removing low-income housing from LA’s housing supply. Such consequences include replacing the housing units or paying into a city housing fund.
The 21 residential hotels that Urevich and Sandoval investigated had removed over 800 low-income units from the city’s housing supply. They were instead blatantly marketed as tourist accommodations. Ads were plastered across booking sites, review sites, and search engines. It seemed that no effort was made to hide the allegedly illicit use of these units. Why? Because the Los Angeles Housing Department (LAHD) was not enforcing the law.
The Housing Department’s Potential Oversights
Speaking to ProPublica, LAHD claimed they simply didn’t have the resources to enforce the law. Specifically, LAHD cited difficulty obtaining warrants to investigate the hotels suspected of renting housing units for short-term use. But ProPublica’s investigators accessed over 10,000 pages of LAHD records and found some fairly shocking oversights while combing through the reports.
One residential hotel was investigated by LAHD inspectors while clearly displaying short-term rental advertising. Another was cited for illegal construction, but not their own displayed short-term rental marketing. In a third situation, a hotel manager directly told the inspector that the hotel was for short-term use. While this was recorded, it was not further investigated.
Upon ProPublica’s publication of its findings, they were informed by an LAHD spokesperson that the department was “aggressively reviewing and investigating” the 21 hotels in question. Mayor Karen Bass’s office also reached out to LAHD, requesting a plan of action. LAHD has stated it will provide a report by the end of the month.
Abandoned Apartment Complex Contributes to Housing Supply Woes
Meanwhile, another scene threatening the city’s housing supply is unfolding in Los Feliz. As reported by C.C. de Vere of Empty Los Angeles, a 29-unit Midcentury Modern complex is sitting abandoned… and slipping into decay. This property, which is under the area’s rent control restrictions and not listed under the Ellis Act provision, could be serving to house many prospective Angelenos.
A closed case from May cites stagnating pool water in the property’s central swimming pool area. However, the pool has since been drained. You can see photos of the property snapped by a concerned (though anonymous) neighbor at the Empty Los Angeles site. According to the neighbor, the apartment complex has sat uninhabited for years.
A Common Thread Hurting LA’s Housing Supply
These two stories illustrate some of the reasons why low housing supply persists. Thanks to the vigilant investigation of these reporters, the city appears to be taking action on the alleged misuse of residential hotels. We’ll see if it amounts to anything.
But the issue of the vacant apartment complex is just one example of a scene you can find in virtually any neighborhood in Los Angeles. And the potential solutions are diverse and complex. Should it be torn down? Should it be renovated? And what kind of hurdles would need to be jumped for either of these?
These are questions that stretch far beyond the constraints of this blog. But with housing supply across the state continuing to be in high demand, we anxiously await movement forward.