Seismic retrofitting is not for the faint of heart

What happens in Los Angeles often impacts surrounding communities. Specifically, the earthquake safety laws signed in October 2015 by Los Angeles Mayor Eric Garcetti are considered to be the toughest in the nation. It requires that the owners of an estimated 15,000 buildings most at risk of collapse during a major quake make the structures stronger.

The affected properties include non-ductile concrete buildings (not including detached single-family homes or duplexes built before 1977) and wood-frame apartment complexes built on top of carports. Property owners will have seven years to fix wood apartments and 25 years to fix concrete buildings under the new ordinance.

Considering Los Angeles sits in the heart of California earthquake country, the ordinance ends years of debate on whether the City of Los Angeles should force building owners to retrofit structures that could fail. Other cities could follow in Los Angeles’ footsteps.

The two most dangerous types of buildings that are targeted in the ordinance are brittle concrete buildings and wood apartment complexes with weak (also referred to as soft) first stories. One architectural term for the latter is a Dingbat building. Once popular in the 1950s and 1960s, these boxy, two- or three-story apartment houses are readily identifiable by their overhangs that shelter street-front parking. The Northridge Meadows apartment complex was a similar building that unfortunately collapsed in the 1994 Northridge earthquake causing major property damage and loss of life.

Similarly, the 1971 Sylmar earthquake also resulted in numerous concrete-building collapses. Renewed focus has begun to center on the need for seismic upgrades of concrete buildings following the collapse of two concrete office towers in New Zealand’s earthquake in 2011.

The issue is not only injury, loss of life and property, but the economic impact caused by the collapse of residential and commercial sectors that could take years or even decades to recover.

The retrofit program officially kicks off in February when the city begins mailing retrofit orders to landlords of affected wood-frame buildings, who will then have one year to submit plans to either retrofit or demolish the structure. However, they can forego either of those scenarios if they can prove retrofitting is unnecessary. Building owners then have two years to get permits and seven years to complete the retrofits.

With mandatory retrofitting, the required seismic upgrades will be costly. It is estimated that wood apartment retrofits would cost $60,000 to $130,000, while taller concrete buildings could cost millions of dollars to strengthen.

Gov. Jerry Brown vetoed AB 428, a bill by Assemblyman Adrian Nazarian (D-Sherman Oaks), which would have allowed owners to apply for a tax break equal to 30% of the retrofit costs. It is not known if a similar bill will be introduced in the future. “The problem I have is the way they’ve gone about it,” Brown said referring to the passage of the ordinance and his subsequent veto. “They’ve identified the problem. They’ve established a set of rules and guidelines for the property owners to comply with the new ordinance and make their buildings safer, but they’ve done so without providing an easy and reasonable means of funding all this extra work.”

Earle Wasserman, chairman of the board for Mission Valley Bancorp, is also past president of the Apartment Association of Greater Los Angeles. Through Wasserman’s leadership and industry insight, Mission Valley Bank has created financing programs that provide the necessary funds for property owners to get the job done.

Specialized lending makes it possible for qualified businesses to get the financing they need, often times with much more flexible terms than more conventional loan options. For all types of commercial financing -- retrofitting, refinancing or new purchases – consult with a trusted advisor banking professional to determine next steps.