The Rent Control Board (RCB) favors freezing base rents for all controlled units if Proposition 10 passes to allow time for permanent solutions to be developed.

At their Oct. 11 meeting, the RCB approved a conceptual plan that would prevent any increase in rents for new tenants pending an amendment to the City Charter. The proposal would redefine “base rents” as whatever rent was paid when Proposition 10 is made official and would allow for regular annual adjustments thereafter.

Proposition 10 repeals a state law known as the Costa Hawkins Act a state law that allows rent control units to be set to market rates when a new tenant moves in. Costa Hawkins also prohibits the expansion of rent control to newly built units and exempts some kinds of homes entirely from rent control rules.

Prior to Costa Hawkins passage in 1995, Rent Control Boards had the authority over year-to-year increases and new tenant rents. If Prop 10 passes, local authorities would regain control over rents for new tenants however, Santa Monica’s rent control rules are part of the City Charter and a repeal would cause some conflict with overlapping judicial mandates.

The Charter only provides two ways to define base rent: either as 1978 levels with annual adjustments or as market rate if the tenancy qualifies for rent decontrol under state law. Costa Hawkins is the only state law related to decontrol so its repeal would only leave the 1978 definition. However, a strict rollback could violate the constitutional rights of property owners leaving the Board with no legal option unless the Charter is amended. Charter amendments can only occur by a public vote and the first opportunity to address the confusion would be 2020, leaving two years of conflicting rules.

While the Board initially debated a variety of solutions to the conundrum, staff said further research suggested the board didn’t have as much authority as they first thought to find a solution.

Commissioner Nicole Phillis said freezing rents is the right strategy.

What I am absolutely certain we are empowered to do is to enact basically a regulation that would preserve the status quo and I think that’s the most prudent and responsible thing for doing here tonight,” she said.

She acknowledged a rent freeze would be harder on landlords with tenants that have never reset to market rates, or did so long ago. She said there are other measures available to landlords such as petitioning for a rent increase or possible taking in Section 8 tenants whose housing benefits may exceed the base rent.

The Commission removed a clause from the proposed regulation that would have set a specific expiration on the interim freeze saying the sunset clause wasn’t necessary given the need to revise the rules in the Charter.

Chair Anastasia Foster said the Commission has limited authority to address all the concerns raised in the discussion and probably wouldn’t be able to please everyone.

“There are competing interest here there are competing scenarios and I don’t think anything we decide up here will entirely please every constituency or every stakeholder out there. There are small property owners, large property owners, people who’ve bought recently who are under diff economic pressures than people who bought a long time ago or perhaps inherited a building.”

If Proposition 10 passes, the RCB would officially adopt the language for an interim freeze on base rents at their November meeting.

editor@smdp.com

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3 Comments

  1. Perform an analysis of long term tenants in rent controlled units. Determine if they qualify for low or moderate income housing. Make rent controlled housing for those truly in need, not the current lottery system. Tenants who have done well should free up their units for those truly in need.

  2. This is absolutely crazy. And people wonder why rent is so high and it is impossible to find affordable housing in Santa Monica. The reason is rent control! It does not benefit the lower class and forces landlords to take rental units off the market. Santa Monica makes it so difficult to build housing, restricting supply but thinks the solution is to throw up more obstacles for property owners. It is such backwards thinking!!!

  3. This is an unconstitutional taking of property rights. For example, the 1979 charter was about controlling currently rented “rental” units. Until recently, if an owner occupied the same small studio apartment since 1977, they’re entitled to set whatever rent they want when it finally goes on the market. This is because this studio was not a rental at the time the 1979 rent control charter passed (so it was never covered by rent control). Now sneaky corrupt Santa Monica regulations were recently changed to claim that if you have lived 40 years in a “residential” unit (as opposed to “rental unit”), you have no rights to set an appropriate rent. Santa Monica has begun considering all potential residential units (even if they are substandard and haven’t been rented in fifty years) as “rental units” under the rent control law. Next, they’ll force you to list your “vacancy” or pay a penalty (and then bring your place up to code). Then they’ll force you to take a mentally ill person, a child molester or a Section 8 tenant (already required). You can then be sued for anything the crazy person does to another tenant. Costa-Hawkins only protects home owners, not people with just two rental units and unused “accessory dwellings.” And guess why those dwellings go unused, too much liability to rent them out and the fact that Santa Monica keeps changing the rules and lying about what the rules are supposed to be. Btw, I’ve never heard of any landlord being allowed to raise rents. A few years ago the Rent Control Board ruled that as long as the landlord isn’t losing so much money they can’t continue to make routine repairs, they are getting a “fair rate of return.” Also, the Rent Control Board asks landlords requesting a raise to prove what their expenses were on the building back in 1978 and what the rents were. This is true even if you just bought the building. The Rent Control Board can use its own formula if you don’t have 1978 paperwork — they often decrease the rents for a broken screen, bad window lock, etc. or do an inspection and then access huge penalties (or even landmark your building so the land becomes worthless for development). They do all this to force you to sell to their friends for 20% of the real worth of the property without Santa Monica’s corrupt practices.

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