Earthquake Retrofits May Qualify for Cost Recovery

A major worry apartment owners face when undertaking earthquake retrofits, major renovations or repairs is the impact that construction could have on their tenants — and whether their Tenant Habitability Plan (THP) will add significant expenses to their project.  Extra costs might include precautions to minimize impacts, such as 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.

A THP has been mandatory for all earthquake retrofits and other improvements requiring permits for structural, electrical, plumbing, or mechanical work performed in the City of Los Angeles since 2005. It is required to apply for the Cost Recovery Process, which helps apartment owners recover some of the costs of their retrofit project. Once approved by the Los Angeles Housing Department  (LAHD) the benefits of the THP may include:

• Keeping tenants in their homes so that owners can avoid costly relocations,
• Approval of a Cost Recovery Process includes maximum rent increases of $38 per unit for up to 120 months until 50% of the total retrofit costs are passed through to and recovered from tenants.
• The cost recovery period may be extended until the full approved amount is collected.

The THP program was intended to facilitate landlord investment in Primary Renovation Work without subjecting tenants to either untenantable housing conditions or forced permanent displacement.  Landlords are required to mitigate temporary untenantable conditions by enabling tenants to safely remain in place during construction or through temporary relocation to alternative housing.

Be Sure Your THP is Done Correctly

A good engineer who is experienced in earthquake retrofits should be able to design your project with minimal disruptions to tenants, thereby avoiding loss of parking, and temporary or permanent relocation.  Given the risks and benefits associated with these projects, we at Optimum Seismic recommend that all soft-story apartment owners ask about the THP process when seeking bids for engineering and construction. Retrofit construction, in most instances, should not significantly disrupt the quality of life for your tenants.  Some potential questions to ask prospective retrofit firms include:

• What is the overall time frame for the project?
• What hours does the contractor intend to work?
• What is the plan for accommodating tenants during construction?
• Will tenants be able to park in their usual spots at night while the project is ongoing?

In all instances, it is 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.  Tools and other potentially hazardous materials and items are stored safely out of harm’s way.

Optimum Seismic prides itself on serving its clients well in this process, and we are happy to discuss these and other aspects of your project as a part of our complimentary consultations. Call Optimum Seismic today at (833) 978-7664 for more information.

Is your building one of the 5,000 within the City of Los Angeles that is still in need of seismic retrofitting? Call Optimum Seismic today at (833) 978-7664 for a free evaluation.

Ali Sahabi, a licensed General Engineering Contractor (GEC), is an expert in seismic resilience and sustainability. He is Co-Founder and Chief Operating Officer of Optimum Seismic, Inc., which has completed more than 3,500 seismic retrofitting and renovation projects for multifamily residential, commercial, and industrial buildings throughout California.