File photo
File photo

Landlords will be able to increase their tenants’ rents by 1 percent this year, according to a release by the Rent Control Board.

The increase, called a general adjustment, is effective Sept. 1, although the board will consider a cap on the total dollar amount of the rise at a public hearing on June 13.

For the first time, the general adjustment is calculated based on the consumer price index, a measure of the increase in cost of goods and services. Rents can go up by 75 percent of CPI, or roughly 1 percent this year.

It’s a much simpler calculation than the previous “pie” method, in which a number of different costs were factored in, some of which a landlord could pass on to his or her tenants.

Some costs, like property taxes, were fixed. Others, like cash flow, were based on inflation.

In 2012, Rent Control Board officials conducted a study looking back at general adjustments since rent control took effect in Santa Monica in the late 1970s. The study found that rents had increased by roughly 77 percent of CPI over the course of those years, leading rent control staff to suggest a flat 75 percent increase.

The move was meant to cut down on the cost of calculating the general adjustment, which consumed both time and resources.

Landlords complained, saying that the new method would cheat them out of revenue, but voters approved the calculation when they passed Measure GA in November 2012.

That year, the general adjustment was 1.54 percent, and in 2011, landlords had the freedom to increase rents by 3.2 percent.

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