DOWNTOWN — The anxiety and suspense was growing in the Retail Clerks Hall, a nervous yet excited crowd awaiting the results of a charter amendment that had been defeated just the year before.
As the results came in showing that what was considered one of the nation’s strongest rent control laws had passed in Santa Monica, the scene turned electric.
It was the beginning of a new era in the beach city, but whether it was a negative or positive one is still being debated three decades later.
Advocates maintain that the ordinance, approved by approximately 54 percent of voters on April 10, 1979, protected residents against exorbitant rent increases that were becoming more common at the time, while opponents argue that the law has forced landlords to subsidize the living expenses of their tenants, claiming that many who benefit from it are wealthy enough to afford a market rate unit or even a house.
“I think the most positive is that it’s stabilized the population in Santa Monica,” Judy Abdo, a former mayor who campaigned for the charter amendment, said.
Robin Sherry has lived at The Shores, a beach-front luxury apartment complex in Ocean Park, for 27 years, renting a two-bedroom unit for which she pays slightly more than $1,400. Residing in a rent-controlled building has allowed her to afford what would otherwise be an expensive unit despite living on a fixed income and having to pay for multiple surgeries.
She suspects that many long-time residents would not be able to live in Santa Monica if rent control didn’t exist.
“Santa Monica would not be the same place if it weren’t for rent control,” she said.
Wes Wellman, the president of the Action Apartment Association, which represents local property owners, said the law has turned Santa Monica into a “rich white single’s club,” changing the demographics of the town.
“The big inequity of rent control is that there is no means test so that you have welfare for the rich,” he said. “There are many people receiving subsidies that economically don’t need them.”
There are nearly 30,000 rent-controlled units in Santa Monica, approximately 1,500 of which would qualify for an exemption under a provision that allows owner-occupied buildings of under three units to be withdrawn. Since the passage of rent control, about 1,900 units have also been removed via Ellis Act evictions.
The units are spread fairly evenly over the city but the area north of Wilshire Boulevard and east of 14th Street have the highest concentration at 22 percent, while Downtown has the least with just 4 percent. The median rate of a one-bedroom unit under rent control is $792, while those that have been vacated and recontrolled under the 1999 Costa-Hawkins Rental Housing Act, which allowed landlords to lease available units at market rate, is $1,506, according to a recent report by the Rent Control Board on the impact of vacancy decontrol.
More than 15,000 units have been decontrolled at least once in the past 10 years, representing about 54 percent of total registered rent control units.
Vacancy decontrol has long been criticized by rent control advocates who believe it is removing affordable units in the city, some saying that it also creates an incentive for landlord harassment.
“It gives landlords a big incentive to harass people and try to get them out because if they do and don’t get caught breaking the law, they can get a higher rent,” Denny Zane, one of the founders of Santa Monicans for Renters’ Rights, said. “When rents are controlled well, that eliminates the incentive to try to harass people.”
Wellman said that prior to vacancy decontrol, there was a problem of property owners who felt they had a disincentive against maintaining their properties.
“I feel Costa-Hawkins has come a long way toward mediating that as a problem,” he said.
Rent increases are approved on an annual basis by the Rent Control Board, which adopts the general adjustment based on a formula that takes increases or decreases to several expense categories into consideration, including property taxes, refuse and fire inspections. Some components are based on actual increases, while others are determined through the consumer price index. The board adopted a rent increase of 1 percent for next year, the lowest since 1999. The adjustment did not take into account CPI, which was a negative 2.7 percent.
Bob Mehlman has lived in his rent controlled unit in the Wilshire-Montana neighborhood since 1994, paying about $760 for a one-bedroom.
“I do know that a lot of people would have left Santa Monica had there not been rent control,” he said. “It’s inevitable, the upscaling of Santa Monica, but rent control slowed it down considerably.”
How it all started<p>
There was a tsunami coming and the city’s renters could see it.
Zane said it was a giant wave of development, condo conversions and increases in the value that developers were seeing in Santa Monica during the 1970s.
It was a time when the rent increases were starting, in some cases $100 a month, he said.
“We only now know how big that tsunami was because the way it reflects itself is in the dramatic increases in property values and the dramatic increases in home prices and dramatic increase in rents in vacancy decontrolled units,” Zane said. “If we had not had rent control, it would have forced the evacuation of 75 percent of the city.”
Wellman said the issue took hold during an inflationary period in the real estate market, similar to what was experienced in the city just a few years ago. He said there were isolated incidents of buildings selling at high prices with below market rents.
“To justify the price, the new owners would have to adjust the rents to market to justify the price they paid for the building,” he said. “These were only isolated examples relative to the number of units in the city.
“But the false impression was created in that in-place tenants were under threat.”
In response to concerns, then Councilman Nat Trives said he decided to put forth a plan to have a property mediation judge resolve issues between landlords and tenants, flying up to Sacramento to discuss the proposal with Gov. Jerry Brown, who reportedly said that he would appoint a judge if the City Council passed it by resolution.
“When I left the city going up north, we had four votes, and when we came home, we had three votes,” Trives said.
Led by the local senior population, renters mobilized and campaigned for a rent control measure in the 1978 election, hiring a then 30-year Zane who had just moved to the city two years prior.
Their efforts eventually failed and rent control advocates pointed the blame to the placement of Proposition 13, which caps property taxes, on the same ballot.
“Landlords promised their tenants if they voted for Prop. 13 that they would not raise their rents because the taxes would be stabilized or reduced,” Abdo said. “But in fact, Prop. 13 did pass and rent control did not, but rents still went up.”
After the defeat of rent control came the formation of a new political organization called Santa Monicans for Renters’ Rights (SMRR), which decided to give the charter amendment another try and at the same time push two of its own candidates to the 1979 City Council election — Ruth Yannatta Goldway and William Jennings.
Zane said the campaign was more organized the second time, having extra time to strategize and raising significantly more money — $50,000 as opposed to $10,000 in 1978.
The charter amendment received opposition from property owners, who believed that the statute did not provide for a means test.
“It was giving rent control protections to people who do not need it,” Rosario Perry, a Santa Monica land use attorney, said. “What we said then and today 30 years later is the same.”
Along with rent control, SMRR also celebrated the victories of Goldway and Jennings. The only regret that year was that the organization didn’t back a third candidate, noting that Councilwoman Christine Reed was up for re-election, Zane said.
About 15 SMRR-backed candidates have been elected to the council since then, including Zane. The organization has also held the majority on many other organizations, including the Board of Education, Rent Control Board and Santa Monica College Board of Trustees.
The organization currently has a 5-2 majority on the council.
Zane said he believes that rent control has saved the city.
“There are certainly those who believe in a prosperous economy, but not one that’s achieved at the sacrifice of residents,” he said. “In that respect, Santa Monica has actually had both — rent control has protected its people from the worst abuses, and subsequently, SMRR has led efforts like the promenade and the pier revitalization.”
Some of the biggest commercial projects were approved between 1984 and 1988, Zane said, including the Water Garden, Arboretum and several luxury hotels, totaling about five million square feet during that time. It was four years when SMRR did not have a majority on council.
But Wellman said that the once bedroom community has turned into an overdeveloped business center in the past 30 years, tripling the daytime population and creating gridlock in the city.
“They claim to be no growth but they presided over massive commercial development,” he said.
Bob Kronovet, who last year became the first non-SMRR backed candidate to win a seat on the Rent Control Board, said he believes the charter amendment has destroyed the motivation of tenants to move on to home ownership.
“Many tenants are so wrapped up in discounted units that they haven’t moved,” he said. “In many ways, it’s handicapped tenants from relationships.”
He also said that the law has created tension between the tenant and landlord, believing there should be no conflict between the rights of both parties.
Some opponents have also said that the rent control law should be revised so that protections are afforded to those who fall under a certain income level. Perry said that renters who don’t live in the unit should not be entitled to protections.
“There should be a law saying if you have an apartment or own a home in L.A. County, you shouldn’t (have) rent control in Santa Monica,” he said.
Abdo, who today serves on the SMRR steering committee, said the law also had the effect of stabilizing the community.
Previous to rent control, many Santa Monica residents didn’t even realize that they were living within the city limits. The result was transiency for tenants who moved from apartment to apartment.
“After rent control, everyone knew they lived in Santa Monica if they didn’t before,” she said. “It brought people together, understanding they lived in a community and could commit to being part of a community as opposed to being forced to move because their rent was going to go up.”
Some opponents have also made the argument that rent control forces market rate tenants to subsidize the rents for others. Zane refuted the claims, saying that landlords are trying to compete with other cities for tenants, adding that the uncontrolled part of the market decides what rents will be.
“They take whatever they can,” he said. “It’s not a subsidy, it’s a protection against consumer exploitation.”
For Arleen Hendler, rent control has meant that she can stay in her two-bedroom apartment.
The painter and former L.A. Unified School District teacher moved to The Shores in 1985 so that her daughter could attend Santa Monica schools.
“We’re really lucky to be living here,” she said. “I feel very fortunate.”