How Do We Maximize Apartment Stock?

LOS ANGELES—It's no secret: we have a serious housing shortage in Los Angeles. While the dearth of supply has helped fuel a development boom, some are finding ways to increase the current stock of housing by refiguring existing space or maximizing the square footage on older lots. For owners of older properties with extra square footage, there are options, but for some owners of bootleg apartments, the options are limited.

Last year, the city created a plan to help apartment owners of existing bootleg apartments legalize those units. The deal involves bringing the unit up to code—which is expected—as well as signing a 55-year agreement to rent the unit to low- or moderate-income tenants at a reduced rental rate. “That is not a bad option for owners that do not have extra lot size,” Robert Lopata, president and co-founder of property management firm LBPM, tells GlobeSt.com. “It is a pretty long period of time to make an agreement for, so I don't know how many takers they are going to get. This is one of these efforts that doesn't really work at the end of the day. I think in this particular situation, I don't think you are going to see a lot of people doing it. I don't think this is the solution, but there is something here.”

Aside from this option, Lopata says that there really isn't a pathway to legalizing bootleg units, and in some cases where the city has already shut down the unit, there may be criminal charges for owners operating it as an apartment. “There isn't a path, and we are kind of writing our own rules in terms of how to go about legalizing units,” says Lopata. “Once you open up to Building and Safety that you have a unit you want legalized, you have tipped your hand. You really have to make sure that you have done your homework, and you want to make sure that you want to go through this process.”

While the 55 year agreement is one option, to truly increase the housing supply, a better option might be to create a task force that can review the lot size and the zoning to let owners know if their space is a candidate for legalization. “You talk about the city wanting to find ways to increase their housing stock. That is certainly be a good effort,” says Lopata. “They should be helping landlords understand what they could and should do with their properties.”

LOS ANGELES—It's no secret: we have a serious housing shortage in Los Angeles. While the dearth of supply has helped fuel a development boom, some are finding ways to increase the current stock of housing by refiguring existing space or maximizing the square footage on older lots. For owners of older properties with extra square footage, there are options, but for some owners of bootleg apartments, the options are limited.

Last year, the city created a plan to help apartment owners of existing bootleg apartments legalize those units. The deal involves bringing the unit up to code—which is expected—as well as signing a 55-year agreement to rent the unit to low- or moderate-income tenants at a reduced rental rate. “That is not a bad option for owners that do not have extra lot size,” Robert Lopata, president and co-founder of property management firm LBPM, tells GlobeSt.com. “It is a pretty long period of time to make an agreement for, so I don't know how many takers they are going to get. This is one of these efforts that doesn't really work at the end of the day. I think in this particular situation, I don't think you are going to see a lot of people doing it. I don't think this is the solution, but there is something here.”

Aside from this option, Lopata says that there really isn't a pathway to legalizing bootleg units, and in some cases where the city has already shut down the unit, there may be criminal charges for owners operating it as an apartment. “There isn't a path, and we are kind of writing our own rules in terms of how to go about legalizing units,” says Lopata. “Once you open up to Building and Safety that you have a unit you want legalized, you have tipped your hand. You really have to make sure that you have done your homework, and you want to make sure that you want to go through this process.”

While the 55 year agreement is one option, to truly increase the housing supply, a better option might be to create a task force that can review the lot size and the zoning to let owners know if their space is a candidate for legalization. “You talk about the city wanting to find ways to increase their housing stock. That is certainly be a good effort,” says Lopata. “They should be helping landlords understand what they could and should do with their properties.”