Short answer: 5% of rent-stabilized units, converted into or replaced by a larger number of owner-occupied, market-rate, and low-income affordable-housing units

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California’s Ellis Act allows a landlord to leave the rental business and evict existing tenants in 120 days. West Hollywood tenants who are seniors (62+) or disabled get a full year.

The landlord also has to pay the tenants a relocation fee set by the City. The fee ranges from $6,180 for a typical tenant in a studio apartment to $20,600 for a low-income household. Later in this report, we look at what it might cost them to rent a replacement apartment in West Hollywood.

According to a recent report to the City Council, 764 rent-stabilized units have been “Ellis-ed” — removed from the rental market — since 1986. That’s 5% of rent-stabilized units. This is the key table taken directly from the City report:

201610-ellis-numbers

Note: SFR means single-family residence. Source: City of West Hollywood, “Information on properties removed from the rental market using the Ellis Act, subsequent new construction, and affordable housing,” staff report to the City Council, October 17, 2016.


What happened to the Ellis-ed units

The City broke the numbers down by subsequent use. About 37% of the units (and half of the properties/buildings) have stayed off the market. Either the owner occupied an existing unit or they combined two or more units into one single-family residence.

Source: Same as above.

Another 37% of the Ellis-ed units were on properties where new construction has been planned and/or completed. We assume most of those units were demolished and replaced by new market-rate apartments or condominiums.

About 16% of the units were converted to a new use, such as a bed and breakfast or non-profit affordable housing. The remaining 10% of the Ellis-ed units were returned to the rental market.


Illustration of what happened to the Ellis-ed units

The chart below is an illustration of what happened to the Ellis-ed units, based on the City’s numbers and a series of assumptions. We start with the rent-stabilized units that were Ellis-ed on the left. Some were replaced by a larger number of newly constructed units. Most of the new units were probably market-rate, but some were inclusionary affordable-housing, set aside for low-income households.

201610-ellis-sankey

Sources: Same as above; our analysis.

Another set of units shifted from rentals to owner-occupied. Some units were combined into single-family residences in the process.

Among the units with a change of use, some became non-profit affordable-housing. Others stopped being housing altogether. A small group of units were returned to the rent-stabilized housing market.

The illustration shows that rent-stabilized units were lost, converted into or replaced by a larger total number of owner-occupied, market-rate, and low-income affordable-housing units.


Replacement rent for Ellis-ed tenants

For most Ellis-ed tenants, the biggest cost is probably not the move but the increased monthly rent of a replacement apartment. Depending on how long they’ve lived in their rent-stabilized unit, their current rent may be significantly below market. Even if they find another rent-stabilized apartment in West Hollywood, the move-in rent will be at the higher market rate.

Our replacement rent calculator gives a sense of how much more it may cost an Ellis-ed tenant to rent another apartment in West Hollywood.

The chart below summarizes the calculator’s results for replacing a two-bedroom unit. In general, the longer the tenant has lived there, the bigger the rent differential. A tenant who moved in before 1996 could be facing an 80% increase in their housing costs.

Notes: Current rent for pre-1996 tenants was assumed to be the 2014 average reported by the City plus the maximum allowable increase for 2015. Current rent for other move-in years was assumed to be the original rent plus maximum allowable increases through 2015. The original rent was assumed to be the average move-in rent for that year reported by the City. Move-in rent for 2015 was assumed to be the City-reported average for 2014 plus the same percentage increase as 2013 to 2014. Sources: West Hollywood annual housing reports; our analysis.


http://wehobythenumbers.com/wp-content/uploads/2016/10/201610-ellis-sankey.jpghttp://wehobythenumbers.com/wp-content/uploads/2016/10/201610-ellis-sankey-300x300.jpgDavid WarrenBusinessHousingPerformance (effectiveness)development,renting
Short answer: 5% of rent-stabilized units, converted into or replaced by a larger number of owner-occupied, market-rate, and low-income affordable-housing units| California's Ellis Act allows a landlord to leave the rental business and evict existing tenants in 120 days. West Hollywood tenants who are seniors (62+) or disabled get...