LA law requires that Pacific Palisades rebuilding after fires must include low-income housing

Housing and land use experts say a Los Angeles city law could require the Pacific Palisades to include “affordable” housing to replace older buildings, and for new buildings where owners cannot definitively prove that their rental apartments had no low-income renters in the past five years.

The new Resident Protections Ordinance taking effect soon requires that “In Higher Opportunity Areas and Moderate Opportunity Areas, units deemed or presumed to be occupied by persons or families above the lower income category shall be replaced with low income units.” The RPO applies to units “subject to a form of rent or price control through a local government’s valid exercise of its police power.”

In the city of Los Angeles, which includes the Pacific Palisades — a “High Opportunity Area" — all apartment buildings built before October 1978 are subject to the city’s rent control ordinance, which means all units in such buildings would need to be replaced with units “affordable” to lower-income renters even if the existing tenants were high income.

For buildings after October 1978, owners must be able to prove that in the last five years before the fire that the tenants were all higher income, or the city will automatically apply “the percentage of Extremely Low Income, Very Low Income and Low Income Households in the same proportion as their share of all renter households within the City of Los Angeles,” which would result in requiring proportional replacement with extremely low, very low, and low income housing if owners do not have complete records for the past five years.

This also means that “affordability” is likely to be determined based on citywide median household income that is half the Palisades amount.

If all units in RSO buildings must be replaced with units affordable to lower-income households making up to about $80,000 per year for a family of four, rents would be about $2,000 per month. For the units in newer, non-RSO buildings that must be affordable to very-low-income households making up to about $50,000 for a family of four, rents would be about $1,300 per month.

Before the fire, a market-rate two-bedroom apartment cost between $4,000 and $5,000 per month, requiring a monthly annual household income of $160,000 to comfortably afford, which means that the RPO replacement requirements could significantly alter the area’s demographics — and even bar higher earning residents from renting out homes at their old addresses.

“Under the Resident Protections Ordinance, in most cases landlords will be required to replace apartments burned down in the Palisades with low income units,” said Los Angeles Housing Production Institute director Joseph Cohen on X. “Displaced residents will then find themselves ineligible to return because they won’t meet the income requirements.”