Peter’s POV – September 2017

CONSTRUCTION DEVELOPMENT TO BE AN EVEN MORE TAXING BUSINESS

It seems like there is just no end to the ways bureaucrats dream up to try and choke the market based economy. The newest twist is to slap a “linkage fee” on new developments in the city of Los Angeles. Based on mayor Eric Garcetti’s proposal, the Los Angeles City Council would levy a $5.00 per square foot fee on new commercial development and a $12.00 or more per square foot fee on new market rate residential development. Residential projects with five or fewer units would pay $1.00 per square foot. This additional revenue would go toward City controlled low income housing. Is this just another way to allow government to take over the free market economy? Do we really want the government to take over the housing industry? What would be the effect of this additional expense on new developments?

There is no question about the shortage of housing in Los Angeles or, for that matter, in the entire state of California. Housing is becoming more and more expensive, rents are getting astronomically high. Who is to blame?

There are several factors to consider. California is, was and always will be the place to be, mostly because of the marvelous geographical location, climate and the excellent opportunities for people to advance their careers. You can ski for almost 8-10 months of the year, like this past rainy season has proved with its enormous amount of precipitation. You can play tennis for basically 12 months of the year. The lifestyle of Californian people is very casual, just to name a few good things.

As they say California is not following any trend, it sets the trend.

When I came to California in the ’70s the population was about 18 to 19 million people, if I remember correctly. Today we’re pushing 40 million people. That means that we are more than twice as many people for the same real estate area as we had 40 some years ago. People come and will continue to come to California in the future. There is no stopping of that. Supply and demand dictates that more people on the same real estate area will push prices up. It’s basic supply and demand economics.

How do we help control prices going thru the roof? The answer is YIMBY instead of NIMBY!

In my humble opinion we shouldn’t make developments more expensive as this new “linkage fee” would do, but make construction and development less expensive and less regulated. One of the best ways to achieve this is the newly passed ADU state law or SB 1069 that allows a second unit on the same lot. As everybody knows by now, this very new state law allows a second unit to be built on the same lot with very relaxed parking requirements. By promoting private low budget developments like ADU’s, the government or cities would be kept out of the business of development and small developers including owners of single family homes would build thousands and thousands of low income units for rent. More available rental units will definitely push rental prices down. If the government wants to help, it should provide low interest rate loans to help home owners to build these second units. People know better than the government what is good for them if you give them an incentive to make a profit.

Very soon the popular phrase of Not in my back yard or NIMBY will change to: Yes in my back yard or YIMBY.

Keep the government out of the business of development and
construction!!!

SECOND CLASS CITIZENS? OR THERE’S MORE TO THE SOFT STORY

We are well into the so called “soft story retrofitting” season. Contractors, engineers and even City’s plan check are busy handling the hundreds of projects at hand. We are all learning how to make this very important task the smoothest and most economical process for everybody. Contractors are learning how to deal with the unforeseen, existing conditions, engineers are finding the most economical retrofitting methods, carefully choosing between steel moment frame design or cantilevered column application or plywood shear wall design, just to name a few different ways to get to the right and most economical solution. In many cases after the construction has started and existing conditions are revealed a total redesign is needed. On several job sites the existing, but hidden and now newly revealed conditions, were proven to be technically enough, that only additional structural calculations were needed for the City to exempt the building from costly retrofitting. Our office was successful in several of these situations.

And this is only the beginning. The City of Los Angeles has not even sent out all the “order to comply” notices to all the building landlords. Other cities like Santa Monica and West Hollywood have passed similar, and in some cases more extensive, retrofitting ordinances, with many other cities working on their own. Everything is working fine for a safer building environment in our communities. So what’s the problem?

During my countless visits to these buildings I noticed a paradox. The soft story conditions occur usually – but not always – in one end of the building where the parking is located. There are mostly two or maybe three units sitting on top of this area. The rest of the building – could be as big as 10-16-20 units or more – has no “soft story” condition. This ordinance mandates that this “soft story” condition in the back of the building be retrofitted because the building has 4 units or more. OK. I agree that the tenants of these 2 or 3 units over the parking area should be protected. So what is my problem?

My problem is that there are countless smaller buildings where a very similar situation occurs. There are 2 or 3 units over the same parking area creating a hazardous condition for the people living above, but this will not be corrected because the building has only 2 or 3 units all together, therefore not part of this ordinance. Why? Are these people second class citizens?

I strongly believe that this is a very good ordinance protecting a large part of the population living in dangerous buildings. But then why not include everybody regardless of the size of the building? And there is a light at the end of the tunnel.

When the City of Santa Monica introduced its ordinance, it included buildings with 3 units or more. Improvement over the City of Los Angeles 4 unit or more criteria, but not perfect. Until the City of West Hollywood came along with no limitation of limits. Any building with soft story condition regardless of the number of units has to be retrofitted. Kudos for the building officials of the City of West Hollywood.

I strongly urge the building officials in all cities to protect all tenants and basically all people – in case of a condominium project – living in these smaller but equally dangerous buildings and extend this very progressive and proactive ordinance to all similarly dangerous buildings regardless the number of units.

What do you think, am I right?

BATTLE OF THE SEXES?

In these politically hyper-charged days, can we even call a man a man or a woman a woman anymore? I remember the days when at the culmination of any wedding ceremony the pastor, minister or wedding official declared: “With the power vested in me I declare you husband and wife…. ” Today it can also be husband and husband, wife and wife, and soon, who knows, it may just be person and person. (Interesting fact, recently in North Carolina teachers were told they can’t call students “boys and girls” and instead were asked to refer to the youngsters as “students and scholars”.

But don’t be overly discouraged. Recently I’ve read a very encouraging statistic about home ownership and the percentages of the people buying homes. And there is hope.

Of course as it always has been and continues to be the largest group of people buying homes are married couples. It make sense of course. Married people are the base of a family unit, having children and creating an environment where traditional family values will flourish. This group represents about 54% of the buying population, no surprises. The surprise comes when you’ll learn who is in second place.

Single women!

Single women are the next group representing about 18% of home buyers ahead of unmarried couples and single men.

The statistic did not mention the single woman as a single buyer, a single person, a single human, a single individual or even a single creature, but a single woman! It spells it out; woman!

The hell with political correctness; she is woman, hear her roar!

In the same report the writer acknowledges that millennial women clearly beat millennial men in college enrollment 45% to 38%, millennial women with bachelor’s degree beat millennial men with the same degree 38% to 31%

So, in the battle of the sexes… I think women are the clear winners.

Sorry guys.

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