There’s always something to howl about.

Los Angeles City Rent Control: Read it and REAP.

I notice my sidebar title is “Investor”.  OK, I can run with that.  But please don’t expect fun and easy tips on how to get rich quick.  I haven’t quite mastered that yet. 

However, as the owner, operator and manager of a few residential rental units within the City of Los Angeles,  I can speak with a little authority on understanding and coping with rent control regulations.

Like any bureaucracy, Los Angeles Housing Dept is alphabet soup of departments, divisions, and special programs.

The acronym that most strikes fear into the heart of Los Angeles property owners is REAP: Rent Escrow Account Program.    Which basically means that if the City determines your property is “unsafe” or “untenantable”, the city collects your rent and places your money in a city escrow account, after first reducing the amount due based on a sliding scale of whether the conditions are “nuisance” or “hazardous”.   You don’t have access to the money.   Administration fees are charged, the City pockets any interest earned.  

But then, the City makes the needed repairs with the money, right?  Hmm, no, not automatically.  The tenants or the property owner must petition for a release of escrowed funds, with the burden on the property owner to show “financial hardship preventing payment of such services beyond a mere negative cash flow for the property.”

“Mere”?

Back in 2001, city controller Laura Chick admitted that the REAP program was “broken“.  To me “broken” implies something that no longer works, but did in fact work at some point in time. 

Speaking as a pragmatist, REAP never worked.  It takes money to make repairs.  Reducing a property owner’s cash flow reduces his or her ability to make the needed repairs.

What would work?  Speaking again as a pragmatist, make low-cost/no-cost funds available to rental property owners for the sole purpose of repairing their properties.