CITY HALL — The Rent Control Board will discuss a proposal Thursday to close a half-million dollar gap in its budget by raising registration fees and, for the first time, forcing landlords to share in some of those costs.
The measure would bring an annual registration fee levied on Santa Monica’s estimated 26,350 rent-controlled units from $156 per year to $180, the first increase in that fee since 2006.
That will make Santa Monica’s the second-highest registration fee in the state after Berkeley. Unlike in the past, however, landlords would be expected to pay half the cost of the annual registration fee rather than passing it through to tenants.
Santa Monica is the only city in which landlords had the ability to pass on the full cost of the registration fee, according to a report to the Rent Control Board.
The change hinges on a demand for the Rent Control employees’ services from landlords as well as a recent finding that over 60 percent of the rent-controlled apartments in Santa Monica had been raised to market-rate rents since the late 1990s, said Tracy Condon, administrator for the board.
“[O]wners are free to set the initial rent for new tenancies and they may take all their costs into consideration doing so,” Condon said. “As our recent report shows, half of the market-rate units are occupied by people who moved in in the last four years. The high turnover rate gives owners the opportunity to re-establish rents fairly frequently.”
The agency runs an apartment listing service for owners and seminars to teach new owners the ins and outs of rent control. Employees also spend a lot of their time processing the registration forms that come in every year.
That explanation doesn’t sit well with Wes Wellman, president of the Action Apartment Association who will present against the increase Thursday night.
The Rent Control Board is grappling with an operating deficit that could stretch to nearly $500,000 next year without the $2-per-month increase. The budget gap comes from rising healthcare and pension costs for employees, despite the fact that the Rent Control Board has cut its staff in half since 1995.
“They’re looking to turn the spotlight away from compensation and pretend that it’s a fairness issue,” Wellman said.
The agency has taken some steps toward reining in those costs. Employees contribute 9 percent of their compensation toward retirement, and the City Council created a second tier of retirement benefits for employees hired after July 1, 2012.
The state Legislature took that one step further in the California Public Employees’ Pension Reform Act of 2013, which established a third and lower tier of benefits for those hired on or after Jan. 1, 2013.
The fee increase is actually in the middle of a range of proposals put forward in February. The highest, which would have raised fees by $3 per month, would have kept the Rent Control Board in the green through the 2017-18 fiscal year, according to projections at the time.
No decision on the fee will be made until June 13.