LA City Council votes to explore enacting rent freeze on residential units with expired or soon-to-expire affordability covenants

LOS ANGELES (CNS) - The Los Angeles City Council today voted unanimously to explore enacting a rent freeze on residential units with expired or soon-to-expire affordability covenants like the one at Hillside Villa Apartments, which the city is hoping to purchase to prevent significant rent increases.
  "The city is at risk of losing thousands of affordability housing units through the impending expiration of regulatory rent covenants. Regulatory covenants are recorded on a property to ensure the long-term affordability of units, often in return for a public subsidy or housing density bonus," Councilman Gil Cedillo's motion reads. "Many covenants are now reaching an expiration date, which would effectively remove the affordability requirements, and allow an owner to raise rents to market rate."
  The motion instructs the Los Angeles Housing and Community Investment Department, with assistance from the city attorney, to report on recommendations to implement an immediate rent freeze on units with expired or soon-to-expire affordability covenants based on safety findings regarding tenant displacement during the coronavirus pandemic. The freezes would continue until comparable housing units are provided.
  HCIDLA was also instructed to develop recommendations and options for tenants to relocate to comparable low-income housing units and for the city to potentially fund an extension on affordability covenants citywide to prevent widespread displacement.
  "With the city at risk of losing thousands of affordable housing units through the impending expiration of regulatory rent covenants, I am taking the first step of preventing homelessness by keeping people in their homes," Cedillo said.
  California law allows landlords to raise rents to market rate in the initial year following an affordability covenant's expiration, and some rents are increased up to 300%, Cedillo said.
  The council has been pursuing ways to purchase the Hillside Villa Apartments following the expiration of its covenant. On a 14-0 vote with one member absent on Feb. 10, the council instructed City Administrative Officer Richard Llewellyn "to seek and take all necessary actions" to find $45 million to initiate the acquisition of the apartments.
  The 124-unit affordable housing development, located at 636 N. Hill Place, was constructed with loan assistance from the then-Community Redevelopment Agency of Los Angeles. In exchange for the loans of about $5.5 million, a 30-year affordable housing covenant was negotiated with the property owner. That agreement expired in August.
  Tenants were paying around $900 to $1,200 a month, but are now looking at rent increases of up to $3,200 a month, officials said.