A coalition of apartment owners has sued the Rent Control Board alleging the board’s prohibition on charging tenants for water use is a violation of state vacancy decontrol laws.
Representatives from the Rent Control Board said they had received the suit but had not had time to analyze or respond to the allegations.
In Santa Monica, the Rent Control Board sets the annual rent increase for occupied rent-controlled apartments. However, when an apartment is vacated, the Costa-Hawkins Rental Housing Act allows the property owner to set the unit to market rate.
In addition to the rent, tenants of Rent Controlled apartments pay for their own utilities such as gas, electric, television, internet and telephone services. However, many rent controlled tenants do not pay for their water bills.
Newly constructed buildings have individual water meters and tenants can pay their own bills. In a majority of Santa Monica’s apartments, rent controlled or otherwise, a master meter exists with the bill falling on the building owner.
The suit claims landlords of rent controlled units have requested the ability to negotiate an agreement with new tenants to pay a proportional share of the total water bill but the board has refused to allow the arrangement.
“This policy of the Rent Control Board places owners of buildings master metered for water at a competitive disadvantage with owners of newer buildings and forces them to pay for the water used by the tenants,” said the suit.
According to the suit, agreeing to pay a proportional amount of the total bill at the time of a new tenancy is part of the landlords’ rights under Costa Hawkins. While the amount the tenants would pay will vary per month based on use, the landlords say the varying amount does not violate the Rent Control Board’s authority to set rates.
“Simply stated the dispute is whether an agreed rental rate that includes a proportional sharing of water is permissible under the Costa Hawkins Act,” said the suit. “The landlords contend that it is and the Rent Control Board contends that it is not.”
Landlords contend court action is necessary due to increasing water rates and the ongoing drought.
Santa Monica’s water rates are scheduled to increase 9 percent over the next two years leading to a 41 percent increase between 2014 and 2020. The Board has said vacancy decontrol allows landlords to factor water into the market rate rents charged when a unit is vacated. However, landlords contend even if the initial rents included some allowance for water, the board’s prohibition on paying a proportional amount means landlords will pay the full cost of any increases implemented after the lease was signed.
Landlords also contend drought measures hurt landlords. They claim rates are likely to increase yet again to account for the declining revenues caused by water savings and they say penalties associated with overuse are paid by landlords not the tenants who use the water. The result, according to the suit, is tenants are not motivated to save during the drought.
“The combined effects of the 41% higher water rates already imposed on landlords, the pressure to increase the rates more due to mandatory cutbacks, and the imposition of fines on landlords for excessive tenant use of water make the Santa Monica Rent Control Board’s policy of prohibiting the propionate passing on of water charges in buildings master metered for water extremely inconsistent with the intent and meaning of the vacancy decontrol statue,” said the suit.
The board has discussed allowing landlords to pass through a percentage of any overage fines but no final decision has been made on what the percentage would be or how it would be calculated.