I am a real estate broker and property owner.  My principal residence is within the proposed Miracle Mile HPOZ. Since 2002, I have chosen to restore and revitalize 13 homes in Los Angeles.  I retain the architectural integrity and aesthetic details of every property I renovate and I prefer my neighbors to care for their property as I have mine.  Anyone would think that based on the above, I would be a proponent of the proposed Miracle Mile HPOZ.  I am not.  I am fervently against the proposed HPOZ.  Below are the bullet points (with detailed explanations and proposed solutions below) as to why  is why I do NOT support it and why I think the Cultural Heritage Commission should decide against creating the proposed Miracle Mile HPOZ:

• Restricts a property's "Bundle of Rights"
• Prevents a property from achieving its "Highest and Best Use"
• Abolishes the "Freedom of Choice"
• Promotes "Obsolescence and Economic Loss"
• Increases renovation and maintenance costs
• Prevents the natural evolution of Los Angeles

1.     Bundle of Rights.  When a homebuyer decides to purchase real estate, one is not simply purchasing the building, but a bundle of rights that belong to the land at the time of purchase.  The Bundle of Rights includes the right of possession, the right of control, the right of exclusion, the right of enjoyment and the right of disposition, mineral rights, air rights, and the right to demolish the structure.  These rights add value to the purchase price.  There is a monetary value associated with each of these rights.  If the proposed Miracle Mile HPOZ were to be implemented, it would restrict the Bundle of Rights for which the property owner has paid. This restriction will most certainly result in an economic loss for approximately 80 properties including mine within the proposed Miracle Mile HPOZ district (see paragraph 3 below). 

 Proposed Solution:  Allow properties purchased before the proposed HPOZ to be “grandfathered”, thereby allowing the existing property owners to retain the Bundle of Rights for which they paid.

 2.     Highest and Best Use.  Every piece of real estate is said to have a “highest and best use”. This principle in real estate states that “highest and best use” is the reasonable, probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, financially feasible and that results in the highest value. Keeping the aforementioned in mind, one can understand why some real estate is considered either “under-utilized” or “obsolete”, meaning that the structure and/or land has come to the end of its useful life.

 While the proposed Miracle Mile HPOZ guidelines does allow, in some circumstances, the right to add square footage onto a home, this is not always financially feasible.   Variables that affect the feasibility of adding on are the existing yard setbacks, placement of the existing structure on the parcel of land, and the costs of retrofitting/rebuilding an older foundation. Even with the right to alter some aspects of the existing structure, it leaves homeowners unable to achieve the “highest and best use” if it is determined that “highest & best use” means demolishing “contributing” or “altered contributing” structures.  Property owners are deprived of receiving the full financial benefit of the real estate they purchased when a property is “under-utilized,” “obsolete,” and not performing at its “highest and best use”.  If a structure cannot be razed, the parcel may never achieve its “highest and best use” and/or value. 

 Proposed solution.  Create a demolition exemption for property owners that can show that the proposed Miracle Mile HPOZ will result in a financial loss for their individual property.

3.     Choice vs. restrictions.  Property owners should have the right to choose how to use their land as long as it conforms to local laws and zoning codes at the time of purchase.  The operative word is “chosen”.  As a property owner, I “chose” to restore and revitalize 13 homes in Los Angeles because it made the most sense at that point in time.  The right of choice is the foundation of democracy, the foundation of our country, and it is important to preserve those rights from bureaucratic policy.

 Becoming a property owner in Los Angeles often means saving money to use towards a down payment for a decade before it becomes a reality.  Homebuyers need to save $160,000 or more to purchase property in the Miracle Mile.  They have an equitable financial interest in their property, in the City of Los Angeles, and in their neighborhood once they spend their money as a down payment.  In contrast, the Cultural and Heritage Commission which governs the city’s HPOZ districts does not have an equitable financial interest in the real estate affected by the regulations they create.  

 Proposed solution.  Allow property owners within the proposed Miracle Mile HPOZ district to choose whether they want their individual property to be included in the HPOZ.  If they choose “yes”, they will be included within the HPOZ in perpetuity.  If they choose “no”, the HPOZ guidelines shall not apply. This honors our country’s fundamental right: the right of choice. A property’s fate shall be decided by its owners who have a financial equitable interest in the real estate. 

 4.      Obsolescence and economic loss. My principal residence and about 26 other single family   residences within the district of the proposed Miracle Mile HPOZ are in a unique situation.  They are rapidly becoming obsolete due to their small square footage.  The land that they sit on would become more valuable than the existing house if developers were permitted to raze and build new construction. 

 The average square footage of Miracle Mile’s Single Family Residences (SFR’s) is 2,055 square feet.  My house and the 78 other single family homes that are similar to mine are less than roughly 1,500 square feet.  If the proposed Miracle Mile HPOZ takes effect, the value of our homes will be monetarily capped because of the size of the existing structure. In essence, the land will be of no use to a developer who could convert the property into its “highest and best use”.

 Under the proposed Miracle Mile HPOZ, adding-on square footage is permitted, but it is not always feasible to do so.  As an example, I use my own home; a 2 bedroom, 1 bath, 1,200 square foot home. If I were to add square-footage onto the rear of the home, it would almost replace my entire back yard.  Therefore, if this HPOZ goes into effect, I will always possess a 2 bedroom, 1 bath home with a little over 1,200 square feet.  Since it would not be permitted to raze it, I could never enlarge my living quarters. 

 Our neighborhood is in the process of increasing in value and will continue to do so. The Miracle Mile will become accessible to Downtown Los Angeles professionals with the completion of the Purple Metro Line. The new construction of modern houses increases neighboring property values in the Miracle Mile.  Today new construction homes in the Miracle Mile are selling for approximately $2.7 million.  In the next real estate “up cycle” those same style new construction homes will be selling for $3.5 million.  When that day arrives, my lot will be worth more than my house.

 As this change takes place in the near future, a smaller home would be less attractive to most corporate-earning professionals than a larger house similar to the majority of the single family homes in Miracle Mile.  It is not just about square-footage, but also a bed/bath count relevant to present day familial dynamics. Today’s demands are very different than the dynamics of a few generations ago when 2 small bedrooms and 1 bath were considered ample.  There will be a market for professionals who can afford multi-million dollar properties in the Miracle Mile.  The proposed Miracle Mile HPOZ will prevent homeowners from selling their house to a developer for the “highest and best use”.  Accordingly, the result will be a financial loss.

 Proposed solution. Create a demolition exemption for homes that meet specific existing square footage criteria.

 5.     Increased renovation costs.  Imposing architectural restrictions on properties within the proposed Miracle Mile HPOZ will result in increased renovation costs for homeowners because the work would have to replicate the original building style and materials.  Although these renovations appear aesthetically superior, they typically cost much more due to the materials and unique sizes/finishes used to replicate the original architecture.  The increased costs would be an unfair burden of responsibility placed on property owners, some of whom may already have a limited income.

 Proposed solution.  Offer property tax and/or city tax incentives to help offset the increased costs for property owners who continue to upgrade and maintain their property in accordance with HPOZ guidelines.

 6.     Evolution of a city.  Within the Miracle Mile, there have been many changes in recent years.  Single family homes have been demolished and new construction homes built.  Multiple parcels have been cleared and new mixed used developments built.  It is unfortunate for residents who occupy buildings that are in the process of being razed.  No one wants to relocate and move if currently happy and comfortable as is. I empathize with these residents. However, upsetting as this is to some people in our community, there is obviously a need for large, single family homes.  We know this because the homes sell.  There is obviously a need for new, mixed-use housing communities.  We know this because they units do not remain vacant.  

Although change may be disturbing, it is also the natural evolution of a city.  As Angelinos, we have been striving to grow in density and create a desperately needed transportation network. Theoretically, in order to grow in density, we need more housing. Preventing developers from giving us the solution to density does not propel this city forward, it holds Los Angeles back. 

Proposed solution. New developments should offer neighborhood/community benefits from their proposed project like greenspace.  Doing this enables the community to benefit from new projects. More dense housing allows Los Angeles to grow vertically.  The point of building our metro line network is to make it usable by as many people as possible.  This will help accomplish that goal.  

 7.      No evidence of increased property values.  There is no concrete evidence that the creation/enforcement of an HPOZ will increase property values.  What does increase property values is the desirability of a neighborhood by upwardly mobile homebuyers, curb appeal, general pride of ownership and the sale of more expensive homes like large new construction homes selling for the $2,600,000 to $2,700,000 range.

 Due to HPOZ renovation restrictions and increased renovation costs, a homeowner who has excess funds to renovate their property in compliance with the HPOZ rules and regulations, will do so.  However, the homeowner with excess funds would have probably upgraded their home similar to the guidelines even without the HPOZ.  In effect, there is no net gain with a homeowner who has discretionary funds. Conversely, there is a net loss with the proposed Miracle Mile HPOZ for the homeowner with limited funds; here is why. 

A Homeowner who has limited funds for renovations, will not be able to adhere to more costly architectural renovations required by the HPOZ guidelines.  A limited income means exactly that “a limited income”; there is no choice in spending money or not spending money; there is no extra money.  The proposed HPOZ will encourage these property owners to continue down the path of deferred maintenance.  There is no HPOZ enforcement if a homeowner lets their property fall into disrepair, only renovation restrictions in the future.  I

n short, limited income homeowners will be encouraged to do the opposite of what the proposed Miracle Mile HPOZ hopes to accomplish. Roughly 400 properties within the proposed Miracle Mile HPOZ district transferred title before 1996.  This indicates that these are long term homeowners that may be in the retirement phase of their life on a limited income.

Proposed solution:  Allow renovation exemptions from the proposed Miracle Mile restriction from homeowners that meet income and/or age requirements.

 Please give time and consideration to the former points and sign the petition against the proposed Miracle Mile HPOZ as it stands now.