With a statewide referendum on rent control gathering signatures for the November ballot, a city lawyer is arguing Santa Monica needs its own initiative to stop an unintended consequence if it passes: 1970’s rent for 2018 move-ins.
The Rent Control Board’s (RCB) general counsel is now warning if voters repeal Costa Hawkins in November, the City Charter defines the rent ceiling as the base rent in 1978, meaning a landlord could have to charge any new tenant (without an existing lease) rent as low as $560 for a studio apartment in the Pico Neighborhood.
“As units turn over, this would result in rent rollbacks and could, conceivably, cause significant economic dislocation,” wrote J. Stephen Lewis in a memorandum to the RCB. “In the absence of any state law providing for a vacancy rent increase, the Charter appears to include no definition of ‘base rent ceiling’ other than that which pegs it to the 1978 rent.”
The Board will discuss Lewis’s memorandum and recommendations at the April 12 meeting at 7 p.m. inside City Council chambers at City Hall, 1685 Main Street.
Supporters of the Affordable Housing Act must gather 365,880 signatures by June 25 in order to get on the measure to reform rent control on the state ballot in November. As of Feb 26, they were 25 percent of the way there. Today was the deadline for volunteer circulators to turn their petitions into organizers, according to the Alliance of Californians for Community Empowerment (ACCE).
In the meantime, the RCB must grapple with a series of “ifs,” even if landlord groups have vowed to ultimately defeat the measure.
Layers of local and state laws passed over the last forty years have complicated Santa Monica rent control rules and created drastically different rental rates among neighbors. From 1978 to 1999, the RCB restricted rent to a base ceiling, only raising the rent slightly over time with an annual adjustment every year. The state legislature passed Costa Hawkins in 1999, which established vacancy decontrol throughout California and allowed landlords to charge new tenants whatever they want.
While voters amended the City Charter to align with Costa Hawkins, the wording suggests the system should revert back to vacancy control if the law suddenly disappears. About thirty percent of current tenants still pay rent based on the 1978 ceiling. One landlord recently wrote to the Board she has a tenant paying $540 per month for a 1,300 square-foot, two bedrooms, two bath unit. The market rate for a similar size apartment averages about $2,500 per month if leased today.
Lewis proposes a ballot initiative that would establish a new ceiling tied to the rent in effect on April 1, 2018, or the median rent established over the last three years for a unit of comparable size in the same area of the city. He says an amendment would prevent rollbacks while also “prevent the continuing escalation of rents.”
At their March 22 public meeting, the RCB appeared unlikely to pursue immediate reform for the 2018 election because of time constraints. The repeal of Costa Hawkins would give cities the first opportunity in decades to expand rent control to new construction. While they kept the door open for discussion, the Board did not have a consensus on what reform would look like.
Lewis told the Daily Press after the public meeting he began to consider what would happen if the RCB does nothing and voters repealed Costa Hawkins. He looked at the Charter and saw the loophole where a tenant could move into an apartment and argue for a rent reduction.
“That’s not a frivolous argument based on what the Charter (currently) says. I think it would be irresponsible for me to take note of the issue and then keep that to myself,” Lewis said. He said the city of Berkeley (which also has a City Charter and a progressive rent control history) is looking at their own potential need for an initiative.
The board’s top staffer, Tracy Condon, says staff is moving forward “out of an abundance of caution.” It is ultimately up to the City Council to place local initiatives on the ballot, so the RCB would need to make their recommendation by June to give the Council enough time to finalize any measure.
During the March meeting, Board Member Todd Flora sought to assuage landlord concerns over any actions the RCB may take to reform local laws, saying at one point “I don’t think we do this with the knowledge that there’s going to be rollbacks. I think that would be fairly crippling to a number of people who’ve invested money.”
Ironically, Lewis discovered, it’s actually inaction that could lead to rollbacks.