While most news stories lead with controversy, in order to avoid any confusion, let’s start with what city officials can actually agree on: the City Council debate tonight is not about Proposition 10, the controversial ballot measure that would undo a key rent control restriction in the State of California.
Rather, the debate is about how to stop a potential calamity here if it passes: 1978-level rent on new 2018 and 2019 leases. Officials worry the sudden collapse of Costa-Hawkins could be disastrous for rent-controlled landlords who rely on “vacancy decontrol,” the imperiled state policy that allows them to charge all new tenants market rate rent. Without the law, turnover could arguably plunge the rent on a unit to as low as $580 a month in some areas of the city.
Staff has drafted a local ballot measure that could set the base rent to 2018 levels in the event Prop 10 passes. Tonight the Council will consider whether to place it on the November ballot.
“To me, what is appropriate and necessary is we do something to avoid a catastrophic reduction in allowable rents such that property owners have no choice but to Ellis their buildings,” Councilmember Kevin McKeown said during a June 26 discussion of the issue. “If we did that to our voters … shame, shame, shame on us. We have to be prepared.”
The issue involves the particular wording in the City Charter defining the “rent ceiling” as the base rent in 1978. In April, the Rent Control Board’s top attorney, J. Stephen Lewis, warned the passage of Proposition 10 could automatically plunge City policy back more than two decades, to the time where there was no market-rate reset and every new tenant basically paid the base rent, whether they signed a lease in 1978 or 1988.
Lewis said the potential for disaster is mitigated by the fact current tenants paying market rate rent would not see a decrease since their apartments are governed by their individual lease.
The controversy lies in what, if anything, to do about it. Only voters can amend the City Charter and there’s no guarantee that Proposition 10 will even pass. Over the past few months, city leaders have actively pondered “what ifs” to assess the likelihood of catastrophe.
After Lewis’s April warning, the Rent Control Board considered whether to place a companion measure on the local ballot to either amend the City Charter or expand Rent Control. On the night they were set to debate, angry landlords packed the meeting room and jammed their inboxes with emails against Prop 10. Facing a lengthy earful during public comment, the RCB abruptly canceled the discussion.
“I really don’t think this is going to pass and I’m going to propose something bold…to avoid a lot of the unpleasantness that’s about to come our way from about thirty people,” Commissioner Todd Flora said, as he moved to indefinitely postpone the Agenda item.
Since then, Proposition 10 has gained significant steam, with endorsements from the California Democratic Party, the ACLU, the California Teachers Association, and Los Angeles Mayor Eric Garcetti, among others.
Flora himself supports Proposition 10.
“But a few months ago, when this issue was brought before the Rent Board, there was a feeling a Statewide measure was not likely to pass,” Flora said in an email to the Daily Press. “Several civic leaders weighed in privately, sharing my instinct that stirring the pot would therefore be unproductive. So, I moved we table the item, thinking it would lower the temperature among angry landlords who wrongly assumed the Rent Control Board would revert rents back to 1978 levels. But our assurances apparently didn’t alleviate their concerns and the Council feels the need to have the contingency in place.”
With the time to draft a local initiative dwindling, landlords are still as angry as ever. So, for the first time in city history, the Council is considering a voter initiative to make a major change to Rent Control rules without an endorsement from the Board.
Lewis told the Daily Press he sees the potential move by the Council as both “unsettling” and unnecessary.
“That would be an unsettling precedent,” Lewis told the Daily Press. “It has always been my view that the Board could, at least, enact regulations that would in some fashion maintain the status quo (if Proposition 10 passes).”
Lewis said temporary regulations could give the Board (and landlords) breathing room until 2020, which is the next time voters could change the City Charter. Over the next two years, the Board and the community could have a much broader conversation over how to expand or limit rent control.
In June, the Council picked up the issue with a broader discussion on rent control, but given the time restriction, asked staff to return with a narrowly tailored initiative to change the base rent to 2018 levels. The resulting staff report confirmed the Rent Control Board has sufficient legal authority to “achieve the same basic ends as the proposed ballot measure” through regulations.
“Staff recommends that the Council consider the administrative approach in part because, while the Council has the authority to place a ballot measure regulating base rents before the voters, the Charter vests the Board with exclusive powers with respect to all rent control issues, including the setting of base rents,” said the report by Deputy City Attorney Heidi Von Tongeln.
The decision on what to do ultimately rests with the Council tonight. In June, McKeown argued a ballot initiative would give landlords financial security
“People are scared, as they should be,” McKeown said. “There’s panic in the streets and we can forestall that here in Santa Monica.
When asked what would happen if Proposition 10 passes, but a local initiative to reset the base rent fails, Lewis said he didn’t know.
“I wouldn’t want to speculate,” Lewis said.
Tonight, it’s the Council’s job to do just that.