Grandfathered zoning in LA
What does “grandfathered zoning” mean with respect to apartment buildings? To understand that, you first need to understand that zoning in Los Angeles has generally become stricter over time.
For a long time, there wasn’t any zoning. You could just buy a few single family homes, rip them down, and put up an apartment building. If you drive around the streets to the south of Sunset in Silver Lake, you will see some rather large buildings on streets which are otherwise full of single family homes. These are examples of buildings built before zoning.
Over time, homeowners in the city forced the government to impose some restrictions on building apartment buildings in single family areas. Now, much of the city is zoned R1 or R2, zones which generally make building apartments impossible. But what about those old apartment buildings standing in what are now R1 or R2 zones?
Well, it would have been an unconstitutional taking for the city to rip the buildings down without fairly compensating the owners. And buying out all those apartment building owners would have been ruinously expensive. So the city just left those buildings alone.
That is the meaning of “grandfathered in”. Because they’ve been in those zones since before zoning existed (or, at least, before it got strict), those buildings are allowed to stay. In fact, an owner of one of these buildings can generally get what is called a “re-build” letter from the city, which gives him the right to re-build the building if it falls or burns down, even though the zoning wouldn’t allow the owner to build the same building on the lot if it hadn’t existed in the first place.
But no one can build another apartment building on those streets. And that’s why those buildings are valuable. Because they will never have any more competition for renters than they do right now.