I would like to address the statement made by Rent Control Board Administrator Tracy Condon in your article (“City Hall estimates 3,000 units may need major upgrades,” Jan. 9) about deferred maintenance on 3,000 rental units where she stated that the Rent Control Board has a rent increase process where property owners can petition the board if they are not receiving a “fair return.”
It is true that owners of apartment buildings may file a rent increase petition, but it probably will not accomplish anything because a “fair return” under the board‚Äôs [definition] means that a rental property is providing a fair return if the 1978 net income for the entire property has increased at 40 percent of the change in the inflation rate. The board gave up on that process for setting the general adjustments more than 20 years ago because it could not grant annual general rent adjustments by using it.
I know that the board‚Äôs rent increase process is a waste of time for the vast majority of apartment buildings because I completed approximately 200 successful rent increase petitions between 1983 and 2003 (more than 200 if individual condos are included), but during the past 10 years I was only able to complete one. That one successful petition, I-1409, was a unique situation where only one unit on a six-unit property had fair market rent because of vacancy decontrol, that unit was vacant twice during the “current year” (which caused great rent loss) and because the tenants (who were family members and friends of the former owners) ran the water bill up from approximately $900 every two months to nearly $3,000 twice during the current year of the petition.
Without a set of facts like that, the rent increase petition process is a waste of time for the vast majority of controlled rental units that have deferred maintenance.
During the 34 years of Santa Monica rent control, there was only a short period of time after the 1994 Northridge earthquake when property owners could successfully petition the Rent Control Board for rent increases on individual units (other than condos) without attempting to prove that they were not receiving a “fair return” under the board‚Äôs onerous rent increase process. Since 2004, the only rent increase petitions which have any success are individual condominium units occupied by pre-1999 tenants and have large property tax bills and no rent increases caused by vacancy decontrol.
I encourage this newspaper to do some investigative reporting and ask the Rent Control Board‚Äôs administrator to state the number of apartment buildings that have had successful rent increase decisions since 2004. I can guarantee that it will be a very short list.
James L. Jacobson