Rent Control Board to consider who pays for mandatory seismic retrofits

Kate Cagle
Daily Press Staff Writer

Tens of thousands of dollars are on the line for the owners of rent-controlled buildings this week, as the Rent Control Board (RCB) considers whether to allow them to pass along earthquake retrofit costs to their tenants.

Their decision will impact the rents of as many as 10,000 individual apartments in the City, according to staff estimates.

The City’s earthquake retrofit program requires owners of nearly every building in the city to review the structural integrity of their property and fix any vulnerabilities in the event of an earthquake. Nearly 2,000 commercial and multi-family residential buildings need to be evaluated as part of the program.

Of those, the RCB estimates nearly 1,300 are in their jurisdiction and all but twelve are so-called “softstory” buildings with second floor units sitting over a carport.

Some of those buildings may have already been retrofitted and will not need any more construction. After the Northridge earthquake in 1994, the RCB allowed owners to pass along 100 percent of earthquake-related repairs and retrofits to tenants as permanent rent increases.

At that time, about 2,500 individual apartments had been red or yellow tagged as uninhabitable, according to a City report.
But that was a different time. City leaders were eager to repair those units and get people back in their homes.

It was also before Costa-Hawkins, the statewide law that crippled Santa Monica’s stringent rent control laws. About 70 percent of rent control apartments have experienced turnover since 1999, ostensibly allowing owners to pass along remodeling and repair costs to new tenants.

In recent decisions, Board members have stressed concern over an affordability crisis in the city, as market rates rise year after year. The median monthly rent for a studio apartment is $1,800, up 16 percent from the prior year, according to an annual report on rental rates. A one-bedroom rent-controlled apartment rents for about $2,195.

Some owners argue they should not shoulder the cost burden of mandatory retrofits, especially for rent-controlled tenants who are not low-income. Landlord Mathew Millen wrote the Board in anticipation of Thursday’s meeting, claiming he has a husband and wife tenant with a combined income of $25,000 a month paying just $952 in rent.

“Their rent does not cover the expenses of operating the property. They will have no financial burden if required to pay the pass through costs,” Millen said. Adding “suppliers do not provide a discount for goods and services even though the tenant is renting at a significant discount.”

The discussion in Santa Monica will follow decisions in three other cities with similar earthquake retrofit programs underway. In nearby Los Angeles, 50 percent of costs may be passed through with a monthly cap of $38 per unit.

In San Francisco, 100 percent of costs may be passed through with a monthly cap of ten percent of the current rent (averaging about $74).

In those cities, the cost of retrofitting a typical soft story building ranges from $60,000 to $130,000, according to date from the RCB.

Berkeley only allows building owners to pass through costs after submitting a net operating income analysis. So far, city leaders there have received just one petition.

The Board will hear public comment on the issue Thursday, Oct. 12 at 7 p.m. in City Council Chambers inside City Hall.
kate@smdp.com

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