Rent Control Board Unlikely To Pursue Immediate Reform in 2018 Election

Tuesday, April 3, 2018
Kate Cagle
Santa Monica Daily Press

As tenant advocacy groups gather signatures to put rent-control reform on the November ballot, Santa Monica’s Rent Control Board is looking at the local possibilities if it succeeds. At their March meeting, the RCB expressed doubt it would be able to build consensus fast enough to draft a tandem measure to immediately expand its authority to either limit rents or expand rent control to more units if the Affordable Housing Act passes.

The Board, which supports the repeal Costa Hawkins, the statewide law that limits local rent control laws, would need to draft language for a measure to give to City Council by June to make the 2018 election. The City Council has the final authority to submit a local ballot measure by August. Several members said the timeline was simply too tight.

“I’m really concerned about the fact we would be rushing this in a matter of three months. I don’t think that’s good policy. I don’t think it’s enough time to study the impacts. I’m very uncomfortable with doing it,” said Board member Nicole Phillis who pushed to table the discussion of a tandem ballot measure. The RCB did not make any definitive motion in March, but will likely have another go at talks in April.

Landlords showed up in force at the meeting to address the RCB on a number of items, including the possibility of statewide reform. Critics say the measure could worsen the state’s housing crisis.

Santa Monica had one of the most progressive rent control laws in the country until legislators in Sacramento passed Costa-Hawkins, which allowed landlords to reset rents after tenants move out of rent-controlled apartments. It also blocked cities from expanding their reach into newer apartment buildings. Only units constructed before 1979 fall under rent control jurisdiction here, about 27,375 units.

About thirty percent of those apartments are still occupied by long-term tenants who pay well below market rate rents, according to the board’s most recent annual report. Last year, 361 of those tenants gave up their apartments for the first time allowing landlords to reset the rent for the first time since Costa-Hawkins became law.

One landlord told the Rent Control Board those tenants are typically “carried out in coffins” rather than give up their cheap seaside apartments. Another landlord, Scott Richardson, said he currently loses money on his 8-unit rent-controlled building in Santa Monica but has kept it as a long-term investment knowing he will eventually be able to increase rents when tenants move out. Richardson said more stringent rent control rules could damage the value of the $2.5 million property he took out a loan to purchase.

“If you hurt us, all housing goes away in this town,” Richardson said. “I promise you I will Ellis every single person in my building…before I let you guys wipe out my equity.”

A recent Stanford study found rent control laws in San Francisco decreased available housing because landlords took steps to exempt themselves from the law, usually by converting apartments into condominiums. New construction, which is exempt from rent control, caters to high-income earners. Here, the city has lost nearly 2,000 apartments to the Ellis Act since 1985.

Board member Todd Flora repeatedly sought to assuage landlord fears by clarifying the RCB would not likely roll back rents to 1970’s levels. In fact, Chairperson Anastasia Foster asked staff to come back next month with ideas to address increases for extremely low rent apartments when they turn over.

If the RCB does not ultimately move forward with a measure to amend the city charter this year in the event of the Affordable Housing Act’s passage, the next ballot would be in November of 2020. The board will look at the possibility of a special election in future meetings.

Tenant advocates have gathered more than 25 percent of the signatures needed to put the Affordable Housing Act on the November ballot. The measure would allow local jurisdictions to limit the amount owners charge new tenants, in new construction and single-family homes. The measure could have a significant impact on state and local government tax revenues, according to the California Secretary of State’s office.

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