CITY HALL A decade after a controversial state law allowed rent-controlled units to be set at market rate once they were vacated, the rental housing market in Santa Monica has become more expensive.
That’s according to a recently-released report by the Rent Control Board about the impact that vacancy decontrol, which was enacted in 1999, has had locally.
The study states that as of the end of 2008, about 15,340 rent-controlled units have been leased at market rate since the Costa-Hawkins Rental Housing Act was put into place to combat strict housing provisions in cities like Santa Monica and Berkeley.
The figure represents about 56 percent of the total 27,296 units registered with City Hall, up from about 54 percent in 2007.
“While that seems like a lot, I believe the fact that 44 percent of the units are occupied by long-term tenants show quite a bit of stability in Santa Monica among tenants in rent-controlled apartments,” said Tracy Condon, the administrator for the Rent Control Board.
The Rent Control Ordinance does not apply to buildings constructed after 1979 when the law was adopted, Condon said, adding that all rent-controlled tenants, whether they are long-term or paying market rate, have the same protections under the ordinance.
With vacancy decontrol, the study concluded that that the number of affordable units has gone down. About 81 percent of the 15,340 units that have been leased at market rate over the past 10 years were considered affordable to very low-income households before the rent increase. That number has dropped to 13 percent today.
The number of rent-controlled units being shifted to market rate for the first time has gradually gone down over the past few years. The study also found that units affected by vacancy decontrol are more likely to be rented multiple times.
“There’s much less incentive to stay in place once you’re paying market rate,” Condon said. “If you moved into a unit on Sixth and Wilshire for $1,500 and look down the street and see a similar unit for rent at $1,400, there’s much less incentive to stay in place.”
Carl Lambert, the president of the Action Apartment Association, said that while rent control itself is a failed proposition, the addition of vacancy decontrol has allowed landlords to improve the quality of life for their tenants by having more money to maintain and paint their buildings.
“Since the imposition of rent control in 1979, the rent controlled-units were being rented by wealthy cardiologists and were not going to the students and the needy,” he said. “What rent control should do is apply a means test for the rent-controlled units and to determine if any of the tenants are needy.
“I would say most of them aren’t.”
With the economic downturn, Condon said that rent is starting to finally level off. But the number of units affordable is continuing to drop.
The study found that affordable units at every income level for every bedroom size has dropped over the past 10 years.
The more than 15,000 units that have been shifted to market rate would have been considered affordable to a household whose income was 60 percent of the adjusted county median before the rent increase.
After the fact, only studio apartments are close to being affordable to those earning 120 percent of median income, the study stated.
“The sad thing is that as the report shows, new tenants need to have much higher income to be able to afford the market rate units so that suggests that either higher income people are moving in to town or people are moving in together into apartments so they can afford these much higher rents,” Condon said. “The bottom line is after 10 years of vacancy decontrol, we have lost a lot of units that were once affordable to very low income people and now the vast majority of those units are affordable to people making 100 to 120 percent of AMI.”