-Appeared on Apartment Association California, Southern Cities (AACSC).
A key worry among apartment owners faced with any major renovation, repair or alteration of their building is the impact that construction could have on their tenants — and whether the outcome of their Tenant Habitability Plan will require added expenses.
These extra costs might include paying for additional precautions to minimize impacts, establishing alternative parking when assigned spaces are unavailable, or even covering the costs for tenants to move to other living quarters until construction is done.
But a THP in the city of Los Angeles can also bring many cost benefits, including helping to secure approval for a Cost Recovery program that includes rent increases of $38 per unit until 50 percent of the total retrofit costs are passed through to tenants. Many other cities share a similar THP/Cost Recovery policies.
Make sure your THP is done right
Your THP can mean the difference between keeping tenants in their homes, and paying for their relocation. It can also determine whether your project qualifies for the city’s Seismic Retrofit Cost Recovery Program.
It all boils down to whether you had your retrofit project successfully engineered. A good engineer will be able to design your retrofit with minimal disruptions to tenants.
It’s a very rare occurrence to have to move a tenant for retrofitting a soft-story building, but it can happen. Permanent relocation is required when work creates an uninhabitable condition for 30 days or more, or if the construction takes 30 days longer than the completion date stated in the THP. Be sure your project is engineered to minimize impacts to tenants.
Benefits of the THP and Cost Recovery Process
A THP is mandatory for all retrofits performed in the city of L.A. — and it is required to apply for the Cost Recovery Process, which helps apartment owners recoup some of the costs of their retrofit project. These benefits include:
- Up to 50 percent of total seismic retrofit costs may be passed through to tenants, if approved by the Los Angeles Housing and Community Investment Department (HCIDLA).
- The maximum rent increase is $38 per month per unit for 120 months. The recovery period may be extended until the full approved amount is collected.
How to Verify Experience with THPs
Given the potential cost of having to relocate tenants while the retrofit is being done —and the benefits of a Cost Recovery Program under the THPs, we advise all soft-story apartment owners to ask about the THP process when getting a bid for a project. Retrofit construction, in most instances, should not significantly disrupt quality of life for your tenants.
Some potential questions to ask include:
- What is the overall time frame of the project?
- What hours do you intend to work?
- What is your plan for accommodating tenants during construction?
- Will my tenants be able to park in their usual spots at night while the project is ongoing?
In all instances, it’s important to find a contractor that can minimize the impact on tenants, maintain a safe and tidy construction area, and keep parking areas operational before and after regular business hours. Insist that trenches are covered with material strong enough to drive on. All work areas should be cleaned daily and tools and other potentially hazardous materials and items are stored safely out of harm’s way.
Check with your city for more information on the THP and Cost Recovery process. Optimum Seismic prides itself on serving its clients well in this process, and we are happy to discuss it as a part of our free consultations.