A Soft-story Story: Fail to Plan or Plan to Pay
By Dee Soffer | RetroExperts
Do your due diligence right and comply with minimal cost and nuisances.
Planning is an essential part of our lives and with the new Soft-Story Ordinance it is critical. How much planning is usually a question of personalities, experience, and skills. As property owners and investors, we all want to minimize liabilities and provide the safest housing standards for our tenants. At the end of the day, thanks to many of these tenants we can enjoy the luxuries of landlordship in prime LA and to some of us, this has been our main source of income and possibly our entire retirement plan.
If you have been a property owner for more than a year or two, this is probably not the first ordinance you had to comply with. YES, this ordinance ensures that we become more earthquake resilient as a community and the safety of our buildings and tenants should always be a priority, but the level of clarity and assurance of what needs to be done, how to execute it, who should we trust to complete it, and how much should it cost is unfortunately more than before, masked with ambiguities. Therefore, fronting this ordinance, both from a financial standpoint and all the uncertainties involved require ample planning and guidance, from start to finish.
My goal in this short article is to use our experience derived in the last 3 years to shed some light as to what you, the property owner, should expect as to what needs to be done, how long it takes, and how much should it cost you.
At this point, many of you already complied or at least in the process of compliance with all engineering work involved. To-date, about almost 50% of property owners in Los Angeles and Santa Monica have already submitted the plans, and about 10% have gone through the completion of construction and received the Certificate of compliance (CofC). Cities of West Hollywood, Beverly Hills, and Pasadena are now getting their last procedures in place, so this information is in fact relevant to all property owners throughout the participant cities.
Let’s start with engineering. This is the first step of compliance. Depends of which city your property is located at, time of compliance and when notices of compliance where sent vary. Most cities require that you submit engineering plan, designed by a structural engineer, within 2 years of notice. Most engineering plans should take between 3-8 month from measurement stage to a Ready to Issue (RTI) permit date. The range of time depends on the size of your building, its complexities, and how many corrections the plan checker at the city requires to be done.
Average cost of an experienced soft-story structural engineer is around the $6000 – $9000 which usually includes the RTI’d plan, 2-3 site observations, and all needed modifications throughout the process. You should also expect to pay city plan checking fees which varies from city to city. For instance, in LADBS fees ranges between $500 – $1500 versus $2500 – $3500 in the city of Santa Monica. Sometimes there are other special fees imposed by the city due to the property’s special characteristics. For instance, if it is located on top or close to utility lines, or maintains special soil condition, or set as a historical landmark. These parameters will add about 2-3 months of clearing from the special department and about $2000-$3000 additional city fees. Be prepared to pay for mandatory Lead and Asbestos testing, as well as abatement procedures should your property found in need, this can cost you between $1500 – $4000 depends on the findings.
One of the many challenges of compliance with the Soft-Story Retrofitting Ordinance is doing construction work on a residential complex while tenants still live in their homes and even more so, finding hidden deficiencies or needing to accommodate for the implementation of the seismic elements by removing obstructions such as gates, pipes, cameras, etc.
As a general timeline, most construction projects last anywhere between 3 weeks to 4 months, sometimes even longer, if additional work is needed. The true challenge for the contractors is working on an existing structure that deteriorated over the years and sometimes engineering details specified on the plan may be different than what is found on the field after you excavate foundations or remove stucco.
No property is alike even if it may look like it. There are so many variances to each project and you must be prepared to find some plumbing or wood deficiencies. As a rule of thumb, cost of construction varies drastically due to the engineering plan designed and what seismic element is required. It is not a cookie-cutter installation and prices do vary significantly, but I promised to shed some light on costs so the going rate for installation of 1 moment frame is anywhere between $30,000 to $50,000 depends on size, shoring needs, and how many linear feet the drag line is (drag line consists of connective anchors that must be placed throughout the soft story line similar to a belt). Sometimes the plan calls for a shear wall installation, where depends on size and other factors may cost anywhere between $10,000 to $25,000. To sum it up, a soft-story property owner should expect to pay for the entire compliance service, for both engineering and construction, an average price of $75,000.
I am sure that many of you received multiple bids for your projects, and the price range is to say the least, confusing. Don’t fall into the trap of the lowest bidders, as the famous quote says, “If you think it’s expensive to hire a professional, just wait until you hire an amateur”.
In this specific ordinance there is more than just a price consideration; you need tenants’ cooperation and to rely on professional expertise. Make sure you do your due diligence on every company that provided you an estimated proposal. How many projects have they completed is a critical factor to determine their experience in this specific niche. Also, ask for referrals, speak to their clients and even more so, pay a visit at their office, meet the staff that is going to handle your project, visit a construction site and check the quality of workmanship, safety procedures, and overall demeanor.
Bottom line is that it takes a team of qualified professionals and multiple collaboration channels with all stakeholders involved for a successful compliance. In every project, no matter its size, there are two main factors that translate at the end of the day onto major savings; a well-planned design and an experienced implementation.
Dee Soffer – CEO Bringing 20+ years of multi-family real estate Management experience from her company Optima Enterprises, Inc. Performance optimization, crisis management, organization multi-site operations, leadership, strategic planning, and her unique vision for organizational structure and unity have laid the foundation for our teamwork methodology at Retro Experts. Her background in non-profit work adds to our company’s philosophy in giving back to our communities.