MONTHLY NEWSLETTER
FEBRUARY 2024
ISSUE #24
FREE!
Take one
Looking to remodel or rebuild? It’s essential
to fi nd the right team to support you and
your goals. Want to learn more? Dive into our
blog and uncover all the amazing things we
have in store.
Are you looking to begin a new project? In
our FREE Project Planning Pack, you’ll gain
access to expert insights, get answers to
your questions, and utilize budgeting tools to
make informed decisions and save money by
planning ahead. It’s all about empowering you
to achieve your vision!
RESOURCES
LEARN HOW TAXES ARE AFFECTED BY YOUR NEW BUILD/REMODEL
Who We Are, How
We Work
Project Planning
Pack
Curious about how your remodel or new
construction will aff ect your property taxes?
In our latest feature, we demystify the intricate
relationship between home improvements and
property taxes. Discover valuable insights on
how Proposition 13 infl uences property tax
assessments and gain a deep understanding
of the impact new construction or renovations
can have on your fi nances. Our feature provides
Published By: LETTER FOUR, INC. - 12822 Washington Blvd., Los Angeles, 90066
practical strategies to minimize tax increases,
considerations for income-producing properties,
and a step-by-step guide on appealing
reassessments. Whether planning a new build
or remodeling project, Lett er Four has you
covered. Explore the full guide on pages 4 and
5 for expert advice on navigating property
taxes in Los Angeles while building your dream
home and managing fi nances strategically!
Design-Build Report
The
by Letter Four
Check Out Our
Clear 4-Step Process
No Idea How to Start
Your New Project?
As we step into February, Lett er Four is working
away on some exciting, and very diff erent new
projects! We’ve have a new home inspired by
Moroccan architectural infl uences, an eclectic
Spanish refresh for a three-time repeat client,
and even a major remodel and addition in the
English Tudor style. It’s always fun to work in
diff erent design styles and tailor our projects to
our clients’ personal aesthetics! To handle our
growing workload, we’ve welcomed some new
team members who not only possess exceptional
technical skills, but also share our core values.
Just recently, we att ended a fundraiser event for
our friends and clients, Watt s of Power, to raise
money for the Teacher Fellows in their program.
We also found time to treat our staff to an epic
fi eld trip to the Luna Luna exhibit as a way to
show our appreciation for their hard work. It was
such a cool opportunity to bond, get out of the
offi ce, and dive into the amazing art of Basquiat,
Dalí, Haring, Hockney, Lichtenstein, Scharf,
Delaunay, and more!
Looking ahead, we’ve got some exciting plans in
the works to expand Lett er Four’s headquarters.
While our current offi ce space has served us well,
it’s starting to feel a bit cramped! The expansion
will create a cohesive and creative environment
that further fosters collaboration and provides
more space for the growing Interior Design
Department. Please stay tuned for our “offi ce-
warming” party and other upcoming community
events!
WHAT’S NEW AT LETTER FOUR?
Are you ready to bring your home into the present
and embrace a modern lifestyle in the home you’ve
always wanted? Discover endless inspiration on
our Before and After page and unlock the limitless
possibilities that await you.
CHECK OUT OUR NEW
REFERRAL PROGRAM!
We can hardly contain our
enthusiasm as we unveil our brand-
new referral program. From this very
moment, you have the incredible
opportunity to refer your loved ones,
friends, and even colleagues to our
outstanding services. And guess
what? By doing so, you’ll get to enjoy
exclusive rewards and sensational
discounts on our exceptional
off erings. Isn’t that absolutely
fantastic? So, what are you waiting
for? Start spreading the word and
reap the magnifi cent benefi ts today!
BEFORE AND AFTER PHOTOS
the present
ome you’ve
piration on
he limitless
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The Surprising Ways Our Design Choices Aff ect
Indoor Air Quality
Do you check your iPhone for air quality before
leaving in the morning? Living in cities like
Los Angeles can make breathing clean air a
challenge due to smog-fi lled days. Fortunately,
thoughtful
design
choices
can
improve
indoor air quality beyond temperature and
humidity, addressing pollutant presence. Don’t
feel overwhelmed; we’ve got you covered.
Design-Build Team: Why You Need One Before
Signing a Commercial Lease
Are you in search of the perfect space for your
business? Are you unsure about the complexities
involved in designing, obtaining permits, and
building out your new space? Do you need
guidance on negotiating with your landlord for
tenant improvements? Don’t worry! Our latest blog
post is here to assist you in negotiating eff ectively
to ensure the success of your business.
Learn More!
Learn More!
Learn More!
Jeremy Baker
Principal/Co-owner
Jeremy
is
an
expert
builder who has spent
his entire life immersed
in the art of constructing
homes. He learned the
ropes at an early age
alongside his grandfather,
a master carpenter. This
life-changing mentorship instilled in Jeremy
the value of craftsmanship. His grandfather
taught him to never compromise on the quality
of his work, and to embrace design as a key
tool. These lessons were carried with Jeremy as
WEBSITE UPDATES
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FEATURED PROJECT
San Ysidro Mid Century Modern
FEATURED STAFF MEMBER
he set out to grow his own career, with the goal
of delivering clients a superior home building
experience. This mission ultimately drove him to
partner with Lauren, founding LETTER FOUR to
build immaculate homes across Los Angeles. He
has spent these 20+ years growing his mastery
of construction and project management,
even learning the principles of design to help
him deliver breathtaking builds. Jeremy now
leads the General Contracting team, where he
helps clients plan their way toward beautiful
homes that enhance their lifestyles. His talent
shines brightest when collaborating with team-
oriented clients who want to build something
special, with an appreciation for a personal
touch and artisan skill.
Our client, a loyal customer of ours, wanted to
update her mid-century Beverly Hills home while
still paying homage to its original design. The
renovation project was extensive, incorporating
various unique design elements such as custom
fi nished millwork, specially made terrazzo fl ooring,
and a one-of-a-kind steel shower in the master
bathroom. Throughout the design process, we
emphasized the use of natural materials, from the
stunning marble in the bathrooms to the natural
wood found throughout the house. We carefully
selected and highlighted the beautiful grain and
tone of the wood in everything from the ceiling
beams to the cabinetry and built-ins, creating
a warm and inviting atmosphere. The end result
perfectly balances modern aesthetics with mid-
century charm, creating a space that is both
visually striking and comfortable to live in.
governed by California’s laws, most notably
Proposition 13. This law states that the maximum
amount of property tax cannot exceed 1% of
the property’s assessed value, plus any voter-
approved local taxes and assessments. It also
limits the annual increase in assessed value to
2% per year, regardless of changes in the market
value, unless there is a change in ownership or
new construction.
THE INFLUENCE OF NEW BUILD/REMODEL
PROJECTS ON PROPERTY TAXES
When there are signifi cant changes like a new
build or major renovation, a reassessment is
required to determine the property’s new value.
That new value will be what is taxed from then
on.
Here, it’s the Los Angeles County Assessor’s
Offi ce that evaluates the changes to your
property. This reassessment aims to refl ect the
new market value of your property after the
construction is complete. It is typically done
once all of the work has been fi nished. However,
it’s possible for interim assessments to occur
during the construction phase, depending on
the nature and duration of your project.
Once your project receives approved building
permits from local authorities, copies of the
architectural drawings are automatically sent
to the Assessor’s Offi ce. This is so that they will
have a record of the improvements you plan to
make.
Your Project’s Scope
It’s important to remember that while Proposition
13 caps the annual increase in property taxes to
2%, this cap does not apply to new construction.
HOW WILL MY PROPERTY TAXES BE
AFFECTED BY MY NEW BUILD/REMODEL?
Whether you’re building a new home or
remodeling your existing one, there are a wide
range of fi nancial considerations at play. You’ll
not only have to think about your budget for the
project itself, but also anticipate changes in your
property taxes.
As a Design-Build fi rm, Lett er Four has helped
many Los Angeles homeowners complete new
builds and renovations that have increased the
value of their properties. We understand that
this has important tax implications, and want to
prepare our clients for the impact their project
will have on their taxes.
We’ve created this post as a quick guide to
help you learn how your property taxes will
be impacted by your project, and what can
be expected as you move forward. You’ll also
discover some helpful strategies to minimize or
mitigate your property taxes.
EXPLAINING THE BASICS OF PROPERTY TAXES
Property taxes are collected by your county
government, then distributed to the relevant
local government authorities within the county.
In Los Angeles, Los Angeles County collects the
property taxes, and allocates them to individual
city (municipal) governments, special districts,
and other departments that use the funds to
provide services to local citizens.
The amount you pay in property taxes is
determined by two main factors:
1.
The assessed value of your property
2. The tax rate set by various local entities, such
as your city and local school district
In Los Angeles, the property tax system is
The newly constructed or remodeled portion of
your property will be assessed at current market
value, which could be signifi cantly higher than
the capped value of the existing property.
Certain types of construction are excluded from
reassessment. For example, repairs, maintenance,
and additions that do not add signifi cant value to
the property might not trigger a reassessment.
Also, specifi c improvements, such as those for
energy effi ciency or accessibility, may qualify
for tax exemptions.
Generally, property upgrades are considered
new construction if they:
•
Signifi cantly improve or expand the structure
•
Physically alter the land
•
Update the structure or major fi xtures to be
“like new”
The Assessor may consider the costs incurred
during the project, including everything from
materials to the contractor’s pay and overhead.
One common approach is using standard per-
square-foot construction costs for similar
types of projects in the area. These costs
are typically based on industry averages and
local construction cost data. This cost-based
approach is usually taken when the work done
does not elevate your property to a “like new”
condition.
It’s important to note that we are not required to
submit actual construction costs to the Assessor.
At Lett er Four we aim to minimize the extent of
the work that’s shown in the permit drawings,
while of course still accurately documenting
and engineering the project. We do this in order
to keep the project valuation down to limit the
additional taxes assessed.
If your property is “like new” after the
improvements, the Assessor will base the value
on the price that similar properties recently sold
for, considering the value of both the structure
and the land it’s built on.
Income-Producing Properties
If your property is used to generate income
through renters, this will be a point of
consideration for the Assessor. When your
improvements are expected to help you earn
more through higher rent fees, that increased
revenue will be factored into your property’s new
value.
When it comes to adding an accessory dwelling
unit (ADU), you can expect an increase in
property taxes, but one that is often modest.
The Los Angeles County Offi ce of the Assessor
will perform a reassessment of property taxes
upon your ADU’s completion - however, this
reassessment does not trigger a complete
reassessment of your entire property.
Instead, a blended assessment is performed,
where the added value of the ADU is assessed
independently, and the assessed value of your
principal home remains unchanged. The value
of the new ADU can be determined by either
the total cost of construction, or through a
comparative market analysis. The ADU’s value will
usually be assessed at an additional 1% tax rate
on your existing tax bill, and will be capped at 2%
under Prop 13. So if your ADU were to be valued at
$250,000, then your tax bill would likely increase
by 1% of that: $2,500.
STRATEGIES TO MITIGATE PROPERTY TAX
INCREASES
To manage potential tax increases, you have a
few options:
•
Consider the timing of your project. Property
tax assessments in Los Angeles are based on
the status of your property on January 1st
each year. If your project is completed after
this date, the increased value may not be
assessed until the following year.
•
Keep detailed records of your project to
ensure accurate assessments. This includes
retaining all architectural plans, building
permits, contracts, invoices, receipts, and
change orders related to the project. Keeping
a log of all of this can provide a clear and
comprehensive overview of the project’s
scope and expenses, and can be invaluable if
you need to contest a reassessment. This is
where working with a professional Architect
and/or Builder can pay dividends.
•
Take advantage of exemptions that can
reduce your overall tax bill. These could
include energy effi ciency and accessibility
upgrades. If your project entailed seismic
retrofi tt ing or fi re safety improvements, you
may qualify for temporary exemptions.
•
Make use of applicable special designations.
If your home is a historic property, you may
be eligible for property tax relief via the Mills
Act.
Appealing the Reassessment
While it’s not easy, the most eff ective way to
soften the blow of a big tax bill is to lower it
altogether. If you believe the new assessed
value of your property post-construction is not
refl ective of its fair market value, you have the
right to appeal the assessment.
This process involves providing evidence to
support your claim of a lower value. This could
include a number of documents, such as sales
data on comparable properties in your area, a
professional appraisal report conducted by a
licensed real estate appraiser, photographs of
your property, or even repair estimates from
contractors who can verify your property needs
work that would reduce its market value.
You will need to fi le your appeal between July
2nd and November 30th, and pay a $46 fi ling fee.
After fi ling, a hearing will be held in which the
Assessment Appeals Board reviews and makes a
judgment for your case.
Calculating your property tax increase in LA
County
While it’s not possible to make an exact
calculation before your project has ended, it is
possible to make a rough estimate of how much
your property taxes will increase.
For a simple estimate based on your home’s
projected value, you can use Smart Asset’s
easy Property Tax Calculator tool. But actually
determining an accurate value increase requires
some extra work, so we’ve provided more detailed
steps below to help you fi nd a more precise
fi gure.
1.
Assess Your Property’s Current Value: First,
determine your property’s existing assessed
value, which can be found on your most
recent property tax bill or offi cial home
appraisal.
2. Determine the Increased Value Due to
Construction: The reassessment will consider
the value added by the new construction or
major renovation. You can estimate this by
considering the cost of the project, or by
working with a professional like Lett er Four.
3. Calculate the New Assessed Value: Add the
estimated increased value to the existing
assessed value to get the new assessed
value of your property post-construction.
4. Find the Applicable Tax Rate: Look for the Tax
Rate Area (TRA) code on your property tax
bill. You can also look up TRAs on the County’s
TRA map. Once you’ve found your TRA, enter
code on the Los Angeles County Auditor-
Controller’s website to fi nd the Total Year Tax
Rate for your area. For instance, a TRA code
of “00013” resulted in a 2022/2023 tax rate
of 1.16552%.
5. Calculate Your New Property Tax: Multiply
the Total Year Tax Rate by your property’s
new assessed value to estimate your new
property tax amount.
Remember, this is a simplifi ed method to
estimate your property tax increase. The actual
calculation might be more complex, especially if
your project involves exemptions or other special
considerations. For a precise calculation and to
understand how specifi c aspects of your project
might aff ect your taxes, it’s advisable to consult
with a tax professional or the Los Angeles County
Assessor’s Offi ce.
As an example, let’s use the average property tax
rate in Los Angeles County: 0.82%. The tax on a
house valued at $880,000 is approximately $7,216.
But if a renovation project were to increase the
value to $1.5 million, the property tax would rise
to $12,300.
PLANNING THE PRACTICALITIES OF YOUR
PROJECT
By
making
informed
decisions
throughout
your custom home or remodeling project, you
can eff ectively prepare for its impact on your
property taxes. Collaborating with professionals
like Lett er Four ensures that every aspect of your
project is not only aligned with your vision, but
also thoroughly documented and planned with
your reassessment in mind.
Need some guidance in the fi rst stages of planning
your project? Download our free Project Planning
Pack to get a complete walkthrough. We go over
all of the key considerations, and even provide
helpful exercises to clarify your design goals and
make rough estimates of your project budget.
FAQ
How soon can I start construction?
Project timelines ultimately depend on several
factors:
•
Project
Scope:
Bigger,
more
complex
projects inevitably take longer to prepare
for, especially if the scope grows through
the planning phase.
•
Time of year: Seasonality can aff ect the
availability of materials and labor. The busy
season for construction is spring through
mid-fall, meaning your project may see
some slowdown if you’re aiming to build at
the same time.
•
Site/Location Complexity: We can’t build
until the site itself is ready for work, and
that can take quite a bit of preparation and
permitt ing on its own.
•
Your Decisiveness: Considering all of your
options is incredibly important, but it takes
time. Being able to make decisions quickly
will keep your project moving forward.
•
Required
Approvals
and
Permitt ing
Backlogs: It always takes some time for
permitt ing authorities to issue approvals.
Many of these departments have backlogs
of projects to review, especially during the
busy season.
•
Your Readiness to Start Construction: Do
you need to pack up and move out? Do you
have the funds in place? Your preparedness
will determine how quickly we can break
ground.
On average, earmark 6 to 10 months from the
start of your project to secure permits RTI
(Ready To Issue) for projects without special
approval requirements. This includes time
needed to perform proper Due Diligence,
prepare the design and create the technical
drawings and engineering, and (if you’re working
with Lett er Four), perform at least two pricing
exercises to confi rm that the design works with
your budget. These steps are covered in detail
by our CLEAR 4-Step Process.
It’s important to keep in mind that the planning
timeline is infl uenced by the clarity of your
vision and budget. If you need a lot of time to nail
down your design, or you request changes later
in the process, you can expect that timeline to
be extended by weeks or even months.
Still not sure where all of this puts you? We’re
happy to give our insight. Book a call to talk
with our Principals.
How can I ensure I’ve chosen the right
team?
Selecting the right team for your residential
project is pivotal for ensuring a smooth process
and a successful outcome. Many homeowners
make the mistake of going straight to a
contractor or interior designer to start their
project, which is a major misstep that results
in delays and unanticipated costs. Let’s look
at what you should consider before signing on
with any fi rm:
Consider Scope of Services Off ered
We know we’re a litt le biased, but we recommend
giving preference to a Design-Build fi rm like
Lett er Four, which provides comprehensive
architectural design, general contracting, and
in-house interior design services. This approach
ensures that all of the phases of your project
unfold smoothly, with perfect collaboration
among a single team.
Ask Plenty of Questions in Your Consultation
Session
Treat the initial consultation as an interview
where you can gauge the fi rm’s methods,
approach, and experience in residential projects
similar to yours. Ask about their protocols,
services, and how they facilitate collaboration
with you throughout the project.
Inquire about their design process, involvement
in construction, the team working on your
project, and their pre-design services. Ask for
examples of how they’ve tackled challenges
in past projects and how they plan to manage
your project’s budget, scope, and timeline.
Need help with the questions you should ask?
Check out our Project Planning Pack!
Be Wary of These Warning Signs
Beware of red fl ags like a lack of clarity
in
explaining
the
design
process,
miscommunication, clashing styles, or a poor
approach to collaboration. These could indicate a
lack of experience, professionalism, or alignment
with your project’s needs.
Check References and
Reviews
It’s always worthwhile to
learn about the experiences
of
other
clients.
Check
references, reviews, and the
fi rm’s portfolio to assess their
track record in executing
residential projects similar to
yours.
Look for Compatible and
Collaborative Communication
Ensure
the
fi rm
values
your
input,
understands
your vision, and is open to
eff ective communication and
collaboration
throughout
the
project.
Does
their
communication style match
yours? If you’re experiencing
friction when communicating,
they may not be the best
Can you get out of the maze?
fi t. You’re going to be collaborating for a long
time on what’s likely one of the most important
projects of your life - fi nding a team you “click”
with is essential!
If you’re looking for a way to do a “test run”
with Lett er Four, our Project Action Plans off er
a great opportunity. Try one of these limited-
service packages to nail down some of your
planning while seeing if we’re a match.
How will I be kept informed about the
progress of my project?
Keeping you updated is a critical part of our
workfl ow. We update every client every week.
You’ll receive a detailed weekly email which
notes work completed, upcoming work for the
week ahead, schedule updates, decisions we
need you to make, and general progress. This
way, you will always know the status of your
project.
During construction, regular progress meetings
are scheduled, both on-site and as Zoom calls.
Comprehensive progress reports are shared,
which include updates on construction, photos,
budget, and schedule status.
We also require that all stakeholders or decision-
makers be present for these meetings so that
no one is left out of the loop. Communicating
with these standards in place allows us to
manage your project with the highest level of
success, guaranteeing everyone has a clear
understanding of what’s happening at any time.
Learn what steps to expect throughout
planning and construction by viewing our
CLEAR 4-Step Process.
STRAWBERRY SHORTCAKE
Ingredients:
•
Fresh strawberries
•
Shortcake biscuits or sponge cake
•
Whipped cream
Instructions:
1. Wash and hull the strawberries, then
slice them into thin pieces.
2. If using shortcake biscuits, split them
in half horizontally. If using sponge
cake, cut it into individual serving-sized
pieces.
3. Place a layer of strawberries on the
bott om half of each biscuit or cake
piece.
4. Top with a generous dollop of whipped
cream.
5. Place the other half of the biscuit or
cake on top.
6. Serve immediately and enjoy!
Feel free to customize your strawberry
shortcake by adding other fruits or drizzling
chocolate sauce on top.
LOCAL FAVORITES +
STAFF PICKS
Flowerboy Project
816 Lincoln Blvd, Venice, CA 90291
Litt le Dynamite Pizza
11736 Washington Pl, Los Angeles, CA
90066
Menott i’s Coff ee Stop
12430 Washington Blvd, Los Angeles, CA
90066
RECIPE
FUN FACT
Concrete has been the most popular building
material throughout history.
Over the course of time, concrete has been the
unrivaled choice for construction, captivating the
imaginations of builders and architects. The Ancient
Romans had their own secret recipe, using lime,
seawater, and volcanic ash. The Hoover Dam once
held the record for the largest concrete structure,
while the Grand Coulee Dam now takes the crown.
With the housing market’s recovery, the demand
for concrete specialists and equipment is on the
rise. Manufacturers are now seeking to make a
more eco-friendly cement which meets industry
performance standards. This innovative cement
relies on room-temperature electrolyzers instead
of fossil-fueled furnaces and utilizes a variety
of zero-carbon input materials, aiming for a zero
carbon footprint.
CONTACT US
(323) 275-1140
12822 Washington Blvd.
Los Angeles, CA 90066
info@lett erfour.com
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