Tuesday, January 20, 2009

City of Los Angeles Rent Escrow Program May Be Hundreds of Multi-Million Dollar Lawsuits Waiting To Happen (A Federal Racketeering Case?)

Zuma Dogg has been contacted over the way the City of Los Angeles under Mayor Antonio Villaraiogsa is treating landlords under REAP (Rent Escrow Account Program).

The mayor tries to portray an image of trying to help the low-income people living in rent control until; while trying to appear "business friendly" and appeasing to landlords who are housing these low-income people. But it appears as though the mayor is putting pressure on the landlords, who in turn, have to put pressure on the renters. And it ends up the landlords are being forced to sell the properties to developers who kick out the renters and convert them to luxury condo housing.

Here's what is happening:

The city will notify a landlord, who is housing low-income people in rent control units (some only paying $400 a month) that the building needs "astetic" improvements. The bank says, "Well gee, we won't loan you the money for that unless you pass the cost on to renters to make back the money." The City says, "Oh no, you can't pass along the increase to the poor low-income renters. (Even though they are only paying $400 a month, and usually have several people living in the unit.)

THEN, since the landlord can't keep up with the city's treadmill of compliances to compy with...they are deemed a "bad landlord," placed into the REAP program, and the city collects the rent from the tenants via REAP.

SO, instead of allowing the landlord to raise the rent to $600 a month (still the most amazing deal in town) which would allow the tenants to remain, the landlord is forced to sell the building to a developer (connected to the right city official) and they kick out the renters and convert the building to an expensive condo.

The mayor may SAY he cares about these people, but once they are evicted from their building, do you think they can find anywhere else in the city to live at a price anywhere close to what they were paying? OF COURSE NOT! So they are being pushed to the outskirts, to places like Palmdale.

It seem kinda like racketeering the way the city is operating the rent escrow program. There is a Federal lawsuit being filed against the city.

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