Table 21: Proximity to Station Findings from Ppic & Other Literature Implications & Relevance for Metro 1. Transit

Recommendations 12

• R1

  Page 291
  A county leadership team under the direction of the Deputy CEO and including DCFS, DPSS, Probation, DMH and LACOE should develop a new strategic plan to refocus TAY programs on integration, efficiency and effectiveness. “The Department of Children and Family Services (the Department) supports this recommendation and is currently working in partnership with the other agencies. DCSF co-chairs the partnership meeting. In addition, there are community stakeholders that attend the monthly partnership meeting.”
• R2

  Page 291
  The Deputy CEO should develop and implement a regular and systematic process of program review and evaluation for TAY programs which include a goal of periodic streamlining of operations in DCFS, Probation and DMH. “The Department supports this recommendation and recommends that TAY programs be reviewed and evaluated via a systematic process to be developed by the Deputy CEO in collaboration with DCSF, Probation, and DMH.” 6 www.blueribboncommissionla.com 268 2015-2016 LOS ANGELES COUNTY CIVIL GRAND JURY FINAL REPORT
• R3

  Page 292
  DCFS, Probation, DMH and DPSS should develop and implement innovative programs to target high risk families and high risk children for proactive early intervention. “The Department has committed to targeting high-risk families and high-risk children for early intervention as part of our prevention strategy by devoting Title IV-E funds for the purpose of Alternate Response, Upfront Assessment and Point of Engagement. Alternated Response targets those families identified by members of the community as being at risk, but who do not meet the criteria for an in-person response by the Department. Rather than not responding to the these families, the Department has partnered with Community Based Organizations (CBOs) to refer families for intervention.”
• R4

  Page 292
  DCFS, Probation, and DMH should develop a multifaceted organizational plan including a comprehensive mentoring program that increases each child’s level of trust of the system. “The Department supports this recommendation and is working with Probation and DMH in collaborative efforts to provide care for the children under out supervision and improve the level of trust of the system.” “FY 2007-08 the Department and Probation issued a Request for Proposals for Community-Based Mentoring Programs intended to serve both the Department and Probation youth, in recognition of the need for and importance of a continuous, positive relationship with an adult. In addition, to support the commitment to provide needed services to youth in care, DMH entered into agreements with our Department and Probation, co-locating staff in the Department’s regional offices and at Juvenile Hall to provide assessments for youth and to assist staff.”
• R5

  Page 292
  The Directors of DCFS, Probation, DMH and LACOE should design and implement jointly a curriculum that addresses practical educational skills to better prepare them for independence. “The Department supports this recommendation. The Department will meet with Probation, DMH, and LACOE in order to formulate comprehensive strategies for better meeting the educational needs of TAY youth with the goal of designing a process whereby the departments work together to formulate joint curriculum plans for each youth after assessing his/her to be independent. A standard core curriculum focused on achieving independence should be coupled with a strategic plan individually designed for each youth based on 2015-2016 LOS ANGELES COUNTY CIVIL GRAND JURY FINAL REPORT 269 his/her strengths and needs. With the collaboration of all involved departments the resources, services and supports within each department can be better leveraged on a short-term and long-tear strategic basis.”
• R6

  Page 293
  Under the leadership of the Deputy CEO, DCFS. Probation, DPSS and DMH, improved programs should be provided to youth 18 to 25 who have left the system. “The Department supports this recommendation. We recommend that the involved agencies collaborate to develop an individual plan for each TAY prior to and/or after termination of jurisdiction. In addition, a seamless process enabling both pre and post TAY to access services should be enhanced to ensure improve outcomes for the population being served. Additional employment opportunities should also be considered with this recommendation.”
• R7

  Page 293
  Under the leadership of the Deputy CEO, DCFS, Probation and DMH in consultation with LACOE and other school districts, should develop a plan and a timetable for a comprehensive information system to capture all records on all children in the system. The plan should include: cost elements to develop and operate the system, a proposal for funding and a timetable for implementation. Progress on development and implementation should be reported every four months to the Board of Supervisors. “The Department agrees with the above recommendation and recommends that school records be made easily accessible to DCSF and Probation. The Department currently has our own system that tracks the educational assessment, referrals to life skills classes and completion, any financial assistance, including transportation to college, even out of state, and appliances CIO/CEO regarding time frames for such automated system.” 270 2015-2016 LOS ANGELES COUNTY CIVIL GRAND JURY FINAL REPORT V. RECOMMENDATIONS 12.1 County of Los Angeles and the Department of Children and Family Services should establish more non-Department of Health Services Transitional Age Youth drop in centers which provide showers, meals, internet access, peer support groups, linkage to educational services, employment assistance, medical treatment information and transportation. This should be completed 12.2 Los Angeles County and the Department of Children and Family Services should create financially driven incentive programs which are tied to the academic performance of foster youth. For example, the Department of Children and Family Services should reward foster care providers whose wards graduate from each level including elementary, middle and high school with a “B” average or better. This should be accomplished 12.3 Los Angeles County and the Department of Children and Family Services should create a mobile app which will allow Transitional Age Youth to access the multitude of services available to them. This should be completed 12.4 Los Angeles County and the Department of Children and Family Services should immediately start to reanalyze and implement the recommendations made by the Civil Grand Jury of 2007-2008 pertaining to foster care youth. These recommendations are still valuable. Implementation of these recommendations will ensure greater success for Transitional Age Youth. VI. REQUEST FOR RESPONSE California Penal Code Sections 933(c) and 933.05 require a written response to all recommendations contained in this report. Such responses shall be made no later than ninety (90) days after the Civil Grand Jury publishes its report (files it with the Clerk of the Court). Responses shall be made in accordance with Penal Code Sections 933.05 (a) and (b). All responses to the recommendations of the 2015-2016 Civil Grand Jury must be submitted on or before September 30, 2016, to: Presiding Judge Los Angeles County Superior Court Clara Shortridge Foltz Criminal Justice Center 210 West Temple Street Eleventh Floor-Room 11-506 Los Angeles, CA 90012 2015-2016 LOS ANGELES COUNTY CIVIL GRAND JURY FINAL REPORT 271 Responses are required from: Los Angeles County: 12.1, 12.2, 12.3, 12.4 Department of Children and Family Services: 12.1, 12.2, 12.3, 12.4 VII. ACRONYMS BOS Board of Supervisors CGJ Civil Grand Jury DCFS Los Angeles County Department of Children and Family Services DHS Los Angeles County Department of Health Services DMH Los Angeles County Department of Mental Health LACOE Los Angeles County Office of Education LAUSD Los Angeles Unified School District TAY Transitional Age Youth VIII. COMMITTEE Rene Childress Co-Chair Rita Hall Co-Chair Heather Preimesberger Secretary Francine DeChellis Edna McDonald Patricia Turner 272 2015-2016 LOS ANGELES COUNTY CIVIL GRAND JURY FINAL REPORT RENTER OR LANDLORD: WHO BENEFITS? RENTER OR LANDLORD: WHO BENEFITS? I. EXECUTIVE SUMMARY The City of Los Angeles (City) has an ambitious program that requires a building code inspection of every residential rental unit in the City at least once every three years.1 The Systematic Code Enforcement Program (SCEP) is administered by the Los Angeles Housing + Community Investment Department (HCIDLA). Since inception of SCEP in 1998, the inspection of each unit has not been completed as frequently as the Los Angeles Municipal Code (LAMC) requires. An annual fee to fund SCEP is assessed to the owner of each residential rental property in the City.2 Landlords are permitted to pass on 100% of the fee to their tenants, whether or not a rental unit is inspected on schedule, according to the LAMC.3 Residential rental units in the City that were constructed before 1978 are generally subject to rent control under the Rent Stabilization Ordinance (RSO).4 The LAMC allows automatic annual increases in rental rates by 3% and up to 8% annually depending on economic conditions.5 The percentage increase amount generally correlates with the Consumer Price Index (CPI). There is a 3% floor on annual rent increases because the RSO permits a 3% increase in annual rent even if the CPI is below 3%.6 II. BACKGROUND The 2015-2016 Los Angeles County Civil Grand Jury (CGJ) reviewed the SCEP.7 The focus of the investigation was on the frequency of SCEP inspections. Additionally, the CGJ reviewed the RSO, in particular the provision that defines the amount of annual rent increases that a landlord may charge a tenant in a rent stabilized unit.8 1 LAMC §§161.301 and 161.353. LAMC § 161.352. LAMC § 151.05.1. LAMC §§ 151.00 through 151.30. LAMC § 151.06 (Automatic Adjustments); based on the CPI based on data from the U.S. Department of Labor, Bureau of Labor Statistics for the Los Angeles-Riverside-Orange County area (hereafter “RSO allowable rent increases”). See RSO allowable rent increases. LAMC §§ 161.201 through 161.604. See RSO allowable rent increases. 2015-2016 LOS ANGELES COUNTY CIVIL GRAND JURY FINAL REPORT 273 A. Systematic Code Enforcement Program Before SCEP was initiated in 1998, rental units were not required to be routinely inspected by the City for critical habitability problems that violated state and local building codes.9 The City’s stated goal in enacting SCEP was, “…to eliminate substandard housing conditions in rental units.”10 HCIDLA is responsible for administering SCEP. The aspirations of SCEP were recognized in 2005, when it earned the City the Innovations in American Government Award.11 Problems such as defective water heaters, poor plumbing and mold are addressed during inspections. CGJ witnessed habitability deficiencies first hand when they accompanied a HCIDLA building inspector on inspections in various locations throughout the City. CGJ noted that many units passed inspection because they were well-maintained by conscientious landlords and tenants. If the SCEP inspector discovers deficiencies, the owner will receive a Notice to Comply with City and state codes. If the violations are not corrected in a timely manner,12 the city will place the property into the Rent Escrow Account Program (REAP).13 When a property is in REAP there may be reductions in the rent that the landlord may collect from a tenant.14 Additionally, a REAP notice is recorded against the property title, and administrative fees are charged to the landlord. The most serious consequence is referral to the Los Angeles City Attorney.15 1. SCEP inspections are behind schedule An inspection of each rental unit is required “...at least once every three years.” 16 There is no authority for longer intervals between inspections. However, according to HCIDLA, after a rental unit is inspected, it takes more than three years to perform a subsequent inspection. HCIDLA has informed the CGJ that SCEP inspections are behind schedule because the department does not have a sufficient number of staff qualified to perform such inspections. California Civil Code § 1941.1.1 et seq. LAMC § 161.353 et seq. (Added by Ordinance No. 172,108, Effective July 15,1998). Presented by the Harvard Kennedy School Ash Center for Democratic Governance. Rent Stabilization Bulletin-THE SYSTEMATIC CODE ENFORCEMENT BULLETIN, p. 3 (“The Owner will be allowed up to 30 days to make the repairs (depending on severity of the deficiencies).” 13 LAMC §§ 162.00-162.12. LAMC § 162.05. LAMC § 162.04. Ibid. 274 2015-2016 LOS ANGELES COUNTY CIVIL GRAND JURY FINAL REPORT Example: A building passed a SCEP inspection in 2006, the next mandatory inspection was completed in 2011, more than 2 years late. Moreover, the next inspection, due in 2014, was not performed until 2015, according to the LAMC. See Figure 1. Figure 1. FREQUENCY OF INSPECTIONS OF AN ACTUAL SAN FERNANDO VALLEY APARTMENT PROPERTY Cycle Inspection Date Time Since Last Inspection I No data - II 2/19/06 - III 6/13/11 5 years and 4 months IV 3/06/15 3 years and 9 months Source: CGJ with data provided by HCIDLA. HCIDLA publishes a Rent Stabilization Bulletin (Bulletin) to inform the public about various provisions of the program. However, the Bulletin does not inform the public about the three year deadline, “Under SCEP, HCIDLA thoroughly inspects the City’s residential rental properties once every four years.”17 (The Bulletin should accurately inform the public that inspections of each rental unit are required in intervals of every three years.) Alternately, the city should amend the section of the LAMC that defines the mandatory frequency of intervals between SCEP inspections. See LAMC, section 163.353. 2. Accelerated schedule Inspections may also be complaint-based.18 Complaint-based inspections are put on an accelerated schedule, when there are serious risks to health and/or safety such as no heat, gas or water.19 The CGJ witnessed complaint-based inspections first hand and found certain tenant’s living conditions to be deplorable. According to information provided by HCIDLA to the CGJ, once a complaint inspection has confirmed violations, the unit is placed on an accelerated SCEP inspection cycle. 3. 100% of inspection fees may be “passed-through” to tenants The annual SCEP fee for each residential rental unit in the city is $43.32. The fee is assessed to the landlord. However, the LAMC allows a landlord to “pass-through” 100% of the fee to the tenant as a charge of $3.61 per month, in addition to rental payments.20 Information provided to the CGJ by HCIDLA, indicates that a total of 17 Rent Stabilization Bulletin-THE SYSTEMATIC CODE ENFORCEMENT PROGRAM (SCEP), p.1. hcidla.lacity.org/system/files_force/documents/SCEP_English.pdf? 18 LAMC § 161.351. LAMC § 161.353. See also HCIDLA Rent Stabilization Bulletin # 52-3.25.2015; Telephone number for complaints is 866-577- 7368; online complaints may be filed at the HCIDLA website at: http://hcidla.lacity.org in-person at HCIDLA Public Information Counter. Rent Adjustment Commission Regulations § 370.00; Fee allowed provided landlord is not delinquent in the payment of annual fee to HCIDLA; landlord must serve the tenant a 30-day written notice. http://161.149.40.43/hcidla- library?field_document_category_tid=145&combine=RAC+&date_filter%5Bvalue%5D%5Bdate%5D=01%2F01%2F1999&date_filter _1%5Bvalue%5D%5Bdate%5D=08%2F20%2F2015 2015-2016 LOS ANGELES COUNTY CIVIL GRAND JURY FINAL REPORT 275 approximately $42.5 million in SCEP fees and nearly $500,000 in delinquent fees were collected in the first 4 months of 2016. Property owners are charged the $43.32 fee annually for each rental unit, whether or not the units are inspected in the current year of payment.21 For example, if a unit is inspected once every three years, $129.96 will have been collected. (Calculation: 3 yrs. x $43.32= $129.96.) If the inspection is once every four years, $173.28 in fees will have been collected for each unit. According to HCIDLA the SCEP Trust Fund has not been audited in years. The CGJ interviewed key staff members of the Los Angeles City Controller (Controller), who stated that due to budget constraints and limited staffing of auditors, periodic audits have not been conducted. The CGJ recommends that the City either allocate sufficient funds so that the Controller may begin to perform periodic audits of the SCEP Trust Fund; or amend section 161.352 of the LAMC which sets the frequency of SCEP inspections. B. Rent Control In Los Angeles Rent rate increases in residential rental units in the City built before 1978 are subject to rent control under RSO. Rental units constructed after 1978 are not subject to rent control. Approximately 641,000 units in the city are under rent control.22 1. Allowable automatic rent increase Landlords may increase the rent under RSO by 3% annually, even when there is a downturn in certain economic conditions. When the economy is very strong the annual rent increase percentage may be up to 8%.23 The annual rent increase adjustment normally mirrors the CPI,24 however, there are exceptions. For example, in years when the CPI is below 3%, or even negative, a tenant still may receive a 3% rent increase, at the landlord’s discretion. For example, a tenant with a $2,500 monthly rent may still be subject to a $75 per month increase when the CPI is less than 3% even when it is in negative territory. See Figure 2. LAMC § 161.353. According to data provided to the CGJ by HCIDLA. LAMC § 151.06 (Automatic Adjustments). LAMC § 151.07 A.6. The CPI average for the twelve (12) month period ending September 30 of each year. 276 2015-2016 LOS ANGELES COUNTY CIVIL GRAND JURY FINAL REPORT Figure 2. ANNUAL RENT INCREASES ALLOWED UNDER THE RSO Beginning % Increased Rent Allowed Rent (July CPI 1 each yr.) 8% $ 2,500 8% $ 2,700 7% $ 2,500 7% $ 2,675 6% $ 2,500 6% $ 2,650 5% $ 2,500 5% $ 2,625 4% $ 2,500 4% $ 2,600 3% $ 2,500 3% $ 2,575 CPI less than 3% 2% $ 2,500 3% $ 2,575 1% $ 2,500 3% $ 2,575 0% $ 2,500 3% $ 2,575 -1% $ 2,500 3% $ 2,575 $ 2,500 3% $ 2,575 Source: CGJ with data provided by HCIDLA It is not uncommon for the CPI to be below 3%. It has been lower than 3% every year since 2010. For example, in 2010 when the CPI was -.062%, the LAMC authorized a 3% increase in annual rents in rent stabilized units. See Figure 3. Figure 3. ALLOWABLE RENT INCREASES SINCE 2006 YEAR CPI INCREASE ALLOWED 2006 4.45% 4% 2007 4.79% 5% 2008 2.97% 3% 2009 4.14% 4% 2010 -0.62% 3% 2011 1.17% 3% 2012 2.24% 3% 2013 2.10% 3% 2014 1.55% 3% 2015 1.19% 3% 2016 0.80% 3% Source: CGJ with data provided by HCIDLA In the CGJ’s opinion, the 3% automatic increase is unfair to low to moderate income tenants when the CPI is below 3%. 2. Property tax break for landlords for declines in market value Property owners may receive property tax reductions on their real estate when the Fair Market Value (FMV) of their property declines. When the FMV is lower than the 2015-2016 LOS ANGELES COUNTY CIVIL GRAND JURY FINAL REPORT 277 factored base year value (Proposition 13 value), the Assessor is required to enroll the FMV.25 California assessors refer to this as “Decline in Value.” Example: An 18 unit apartment building in the City of Los Angeles that is under rent control received Decline in Value property tax reductions. For example, in 2014 and 2015, the FMV of the property was lower than the Proposition 13 value. Since property taxes are based on the lower of the two values, the property owner received substantial reductions. In 2014 his property tax bill was reduced by an estimated amount of $5,263.69; in 2015 the savings was approximately $5,560.06. See Figure 4. Figure 4. ACTUAL PROPERTY TAX REDUCTIONS FOR A BOYLE HEIGHTS APARTMENT OWNER (RSO PROPERTY)* Proposition 13 Fair Market Enrolled Value Est. Tax Year Value Value (FMV) (lower of FMV or Prop. 13) Savings 2014 $ 1,727,928 $ 1,296,000 $ 1,296,000 $ 5,263.69 2015 $ 1,762,451 $ 1,296,000 $ 1,296,000 $ 5,560.06 APPROXIMATE SAVINGS IN PROPERTY TAXES IN 2014 AND 2015: $10,823.75 *Note: The amounts in Figure 4 include publicly-available information provided to the CGJ by the Los Angeles County Assessor. According to public records in the Los Angeles County Assessor’s Office, in 2014 owners of RSO properties received over $9 million in property tax reductions. In 2015, the reductions were over $6 million. In the same year that a landlord may receive a substantial reduction in property taxes, the tenant may receive an increase in rent. There are no provisions in RSO to reduce a tenant’s rent if the current rent level is higher than current fair market rent. Example: A tenant lives in a large apartment complex of rent stabilized units and the rent has been increased each year under the provisions of the RSO. The rent for his current unit is higher than fair market rent. The choice the property management gives the tenant is to move to another unit in the complex in order to pay fair market rent, or to stay in the unit subject to a 3% increase in the rate, or leave the complex. In this case the tenant had to move within the complex so he would pay fair market rent. California Revenue and Taxation Code § 51(a). 278 2015-2016 LOS ANGELES COUNTY CIVIL GRAND JURY FINAL REPORT III. METHODS AND PROCEDURES The CGJ accomplished the following: • interviewed Housing + Community Investment Department General Manager, senior management and the Director of Code Enforcement, • interviewed senior staff of the Los Angeles City Controller’s Office, • accompanied a Housing Inspector during SCEP inspections, • observed a General Manager’s Meeting, • attended a Rent Escrow Account Program Code Enforcement and Billing Information Workshop, • interviewed property managers and tenants, • reviewed system generated Rent Stabilization Cycle Reports, • reviewed various system generated Inspection Reports, • reviewed Los Angeles County Assessor’s Office public data on the assessed values of properties under the Rent Stabilization Ordinance, • reviewed certain HCIDLA procedures, • analyzed Systematic Code Enforcement Program Inspector staffing statistics, • reviewed HCIDLA’s SCEP financial report, • interviewed a Los Angeles City Councilmember, and • reviewed certain sections of the LAMC. IV. FINDINGS 1. SCEP inspections of all rental unit properties in the City of Los Angeles are required at least once every three years per the LAMC. 2. SCEP inspections of each rental unit in the City of Los Angeles have not been performed at least once every three years as required by the LAMC. 3. HCIDLA is responsible for administering the SCEP. 2015-2016 LOS ANGELES COUNTY CIVIL GRAND JURY FINAL REPORT 279 4. The SCEP Trust Fund has not been audited by the Controller in years. 5. The Rent Stabilization Bulletins omit informing the public that SCEP inspections are required at least once every three years, per the LAMC. 6. The SCEP fees are collected annually from the landlord for each rental unit in the City; 100% of the fees may be passed on to the tenant. 7. HCIDLA does not have sufficient staff to perform timely SCEP inspections. 8. HCIDLA disseminates information to the public on SCEP and the RSO in the Rent Stabilization Bulletin. 9. Under the RSO, annual rent increases from 3% to 8%, depending on the current CPI, are permitted in rent stabilized units. 10. Landlords may be eligible for reductions in property taxes on their rental properties when Fair Market Values decline due to economic conditions. 11. The annual rent increases permitted under the RSO may result in rent that is higher than fair market rent. 12. HDICLA does not have a sufficient number of qualified inspectors to perform SCEP inspections at each rental unit in the City every three years as required by LAMC. V. RECOMMENDATIONS 13.1 The City of Los Angeles Housing + Community Investment Department should inspect each rental unit in the City of Los Angeles at least once every three years as required by the Los Angeles City Municipal Code. or 13.2 The City of Los Angeles should, within three months, amend section 163.352 of the Los Angeles Municipal Code that states the mandatory interval between Systematic Code Enforcement Program inspections. 13.3 The City of Los Angeles Housing + Community Investment Department should, within three months, accurately inform the public that inspections of each rental unit in the City of Los Angeles are required at intervals of every three years. 13.4 The City of Los Angeles should, re-evaluate the 3% floor on automatic annual rental increases, when the CPI is lower than 3%. Allowable rent increases 280 2015-2016 LOS ANGELES COUNTY CIVIL GRAND JURY FINAL REPORT
• R8

  Page 261
  HCIDLA disseminates information to the public on SCEP and the RSO in the Rent Stabilization Bulletin.
• R9

  Page 262
  Under the RSO, annual rent increases from 3% to 8%, depending on the current CPI, are permitted in rent stabilized units.
• R10

  Page 262
  Landlords may be eligible for reductions in property taxes on their rental properties when Fair Market Values decline due to economic conditions.
• R11

  Page 262
  The annual rent increases permitted under the RSO may result in rent that is higher than fair market rent.
• R12

  Page 262
  HDICLA does not have a sufficient number of qualified inspectors to perform SCEP inspections at each rental unit in the City every three years as required by LAMC. V. RECOMMENDATIONS 13.1 The City of Los Angeles Housing + Community Investment Department should inspect each rental unit in the City of Los Angeles at least once every three years as required by the Los Angeles City Municipal Code. or 13.2 The City of Los Angeles should, within three months, amend section 163.352 of the Los Angeles Municipal Code that states the mandatory interval between Systematic Code Enforcement Program inspections. 13.3 The City of Los Angeles Housing + Community Investment Department should, within three months, accurately inform the public that inspections of each rental unit in the City of Los Angeles are required at intervals of every three years. 13.4 The City of Los Angeles should, re-evaluate the 3% floor on automatic annual rental increases, when the CPI is lower than 3%. Allowable rent increases 280 2015-2016 LOS ANGELES COUNTY CIVIL GRAND JURY FINAL REPORT