Can LA Real Estate Shape Building Codes in Fire Rebuild?

Some of Los Angeles real estate’s biggest names are hoping the industry can activate around fire rebuilding efforts.

At stake is the fabric of communities in which many of them live and do business.

“We have some of the brightest minds in the industry here and the idea is for us to all learn from each other and then go out and spread this information to our clients,” The Agency’s Jon Grauman said Wednesday evening to his peers.

Grauman, along with The Oppenheim Group’s Jason Oppenheim, The Agency’s Ben Belack, Revel Real Estate’s Ben Bacal and Crest Real Estate’s Jason Somers hosted the gathering of roughly 30 at a residence in the Hollywood Hills’ Doheny Estates enclave.

While the meeting had been planned well before the fires to discuss the city of Los Angeles’ Wildlife Ordinance — a proposed set of restrictions on building in the Santa Monica Mountains — Grauman said of the ordinance it’s “somewhat taken care of itself” given the activity around rebuilding after the wildfires. To be clear, the ordinance was not scrapped; consideration of it is simply paused.

The industry’s ire over the ordinance has offered a glimpse into the power it wields in mobilizing people, unlike in 2022 when some felt real estate didn’t do enough to rally against the Measure ULA ballot measure. The property tax was approved and applies a levy on property sales of $5.15 million or more.

“The momentum from the Wildlife Ordinance has galvanized the real estate industry as a whole,” Somers told the group. “Not just agents — but contractors, architects, many people — to get together and understand that if we don’t express our voice, things will be taken from us or will not be protected.”

That was the idea behind a letter penned by Belack and Oppenheim earlier this month. The letter to Gov. Gavin Newsom and L.A. Mayor Karen Bass had over 45 signatures from some of the industry’s biggest names and called out possible hurdles to rebuilding. That included the cap of the California Fair Access to Insurance Requirements Plan, permitting processes and Measure ULA as it applies to fire-impacted properties.

“I think what was cool is a lot of things that we asked for happened shortly thereafter and some are being discussed right now,” Belack said.

Understanding the law

Much of the evening centered on heavy discussion as the group sought to make sense of fast-flying executive orders that have forced agents and brokerages to quickly understand what’s legal. Some have tripped in the process.

Agents at the event buzzed over California Attorney General Rob Bonta filing charges that same day in Los Angeles Superior Court against Mike Kobeissi. Bonta’s alleges Kobeissi boosted the price on a La Canada Flintridge rental by more than 10 percent post-fire.

The price-gouging law in states of emergency went into effect when the fires started Jan. 7. However, the rule is nuanced.

If a home has been listed in the last 12 months and is now available for a lease of 12 months or less, the price cannot be more than 10 percent above what it was last marketed for.

If a home had not been listed for lease in the past 12 months, pricing must be 160 percent of fair market value as determined by the U.S. Department of Housing and Urban Development.

“The rules of supply and demand do not apply,” Belack said.

Oppenheim said during the agent gathering he had Los Angeles District Attorney Nathan Hochman and his investigators in the office to learn more about the MLS.

“He’s interested in prosecuting some bad apples,” Oppenheim said.

A representative for Hochman confirmed the district attorney discussed with the broker the MLS in connection with identifying price gougers.

“We should start by saying a lot of us didn’t know this situation at first,” Oppenheim continued. “This was a supply-demand curve that was new to us. Agents didn’t know. Landlords didn’t know. People have subsequently reduced their prices. I think the attorney general and district attorney are really looking for egregious examples and there are a couple of them.”

Building nuts and bolts

On the development side, agents are wrapping their heads around simply understanding what’s involved in rebuilding neighborhoods in a short period.

“We’re now learning more and more every day about what it’s going to take to bring back the Palisades, but also these other communities,” said Somers, whose firm manages the permitting and entitlement process for homes and other development projects.

Somers pointed to separate staffing in Los Angeles’ Department of Building and Safety that will focus solely on fire rebuilding for homeowners and developers aimed at expediting the permitting process. Somers urged agents to underscore to clients how important it is to file plans with the city before an eventual flood hits and potentially overwhelms city staffing.

Many agents are advising clients in places such as the Palisades to get to know their neighbors if they didn’t before and find out who is coming back. The idea would be to tap the same architects and contractors to get their tracts rebuilt faster.

Somers estimated, if plans start now, construction could begin in a year with move-in two years from that.

Oppenheim has a client in the Alphabet Streets — a Palisades neighborhood which gets its name from the streets’ alphabetically-arranged order — looking to do just that with her neighbors. She’s aiming to get around a dozen people to band together and have an architecture firm draft a few designs they can each pick from to achieve economies of scale.

“This is the answer to people that are rebuilding,” Oppenheim said.

Some, such as Christie’s International Real Estate Southern California’s Cindy Ambuehl, posed a question to the group on zoning.

“My real question is — are we going to get back what we lost?” Ambuehl said.

The power agent raised rumors that have been circulating that residential zoning could be changed to make way for higher-density projects.

The answer to that will be years in the making with the consensus among the group that developers or new residents will have to respect the history of the communities they’re going into.

“The Alphabet Streets are going to be built back better and stronger and more beautiful than ever before,” Oppenheim offered. “In five years, you’re going to have 500 brand new homes valued between $6 [million] and $8 million. It may not be the same residents, but it will be developers selling them to new residents.”