This is the third in a series of articles on housing in Santa Monica. Other topics have included workforce housing, the role of development agreements in producing affordable housing, and the importance of providing housing for all income levels to preserve the historic diversity of Santa Monica.
We cannot end this series of articles on housing in Santa Monica without talking about rent control. Although substantially weakened by state legislation over the years, Santa Monica's rent control law remains a major tool for protecting the affordability of our rental housing and maintaining our economic diversity.
In 1979, Santa Monica residents voted for an amendment to the City Charter that created one of, if not the most, radical rent control laws in the country. For years, our rent control law defined the progressiveness of the Santa Monica community and earned us the title of "The People's Republic of Santa Monica." Passage of this initiative was a major victory for a burgeoning group of young activists, Santa Monicans for Renters' Rights (SMRR), and its allies, many of whom were senior citizens facing escalating rents and threats of eviction because of condo conversion.
The increasing threat to secure housing for Santa Monica tenants, particularly seniors, was viewed as a community-wide concern. The question was asked whether property owners should be free to make obscene profits at the expense of vulnerable renters. The answer was "no" and rent control was born (in 1979, about 80 percent of the housing units in Santa Monica were renter-occupied, which certainly contributed to the outcome of the election).
Rent control is implemented by the five-member Rent Control Board, which is elected by Santa Monica voters. The program is administered by the administrative staff and its own in-house attorneys and hearing officers. In the early days, landlords brought hundreds of lawsuits against the Board, and most of the significant rulings were in favor of the Board. There are now a little over 28,000 rental units under rent control, which represents about 70 percent of Santa Monica's rental housing supply (the Charter Amendment applies only to housing units built before 1979).
As a result of strong lobbying by the real estate industry, the State Legislature has done much to weaken our law. The first attack came in the form of the Ellis Act in 1985. The Ellis Act allows a landlord to "go out of the rental housing business" by converting the use of the building or demolishing it altogether, as long as the replacement project is not rental housing.
To date, almost 2,000 rent controlled units in Santa Monica have been removed from the rental housing supply under the Ellis Act.
In 1995, the Legislature passed the Costa-Hawkins Act, which allows a landlord to increase the rent on a vacated unit to market rent when a tenant leaves, though the law did not go into full effect until 1999.
Before Costa-Hawkins, Santa Monica's rent control law had forbidden this "decontrol" by maintaining rents on vacant units at their rent-controlled levels. Needless to say, vacancy decontrol has had a major negative impact on the affordability of our rental housing supply. In its 2014 Annual Report, the Rent Control Board found that almost 70 percent of rent-controlled units (almost 19,000) had been re-rented at least once since decontrol was put in place. Under Costa-Hawkins, once a new tenant moves in, the rent is re-controlled but at the new (usually higher) rent.
The good news is that more than 30 percent, or about 9,000 units, remain at lower, pre-decontrol levels. This is certainly good news for seniors and others who are the most vulnerable to major rent increases since the Rent Control Board limits rent increases to 75 percent of the Consumer Price Index (CPI). Last year, for many tenants living in rent-controlled units, that translated to a maximum rent increase of 0.8 percent of the previous year's rent.
What impact has decontrol had on rents in pre-1979 buildings in Santa Monica? A typical one-bedroom rental unit that has been de-controlled at least once now rents for $1,629 a month and requires an annual income of $81,450 to afford. A similar one-bedroom unit, which is occupied by a long-term renter and has not been decontrolled, rents for $862, which requires an annual income of only $43,100 to afford (this is assuming that people do not, or should not, spend more than 30 percent of their income on rent).
But, even though the decontrolled rents may seem high, they provide existing tenants with stability, since the rents can only be increased by the annual General Adjustment adopted by the Rent Control Board, which was 0.8 percent in 2014.
The City has responded to these attacks on rent control with several important measures. First, our Condominium Conversion Ordinance makes it illegal to convert existing apartment buildings into condos unless the citywide vacancy rate exceeds five percent for a period of 90 days, which is unlikely to happen in our lifetime. Since being able to decontrol their rental units is a strong incentive for property owners to "encourage" existing tenants to vacate, the City Council voted in 2014 to strengthen the City's Tenant Harassment Ordinance and clarified behaviors that can be considered harassment. This is especially important as policies that constrain new housing from being built contribute to skyrocketing market-rate rents.
The Rent Control Agency has enhanced its public outreach effort by holding regular seminars, with the Consumer Protection Division of the City Attorney's Office, for tenants throughout the city. SMRR operates a tenant hotline to advise renters about their rights.
Finally, the City provides funds to our local nonprofit housing provider, Community Corporation of Santa Monica (CCSM), for the acquisition and rehabilitation of existing housing, much of which is rent-controlled. CCSM now has well over 700 units of older rental housing, which will remain affordable and rent-controlled for at least 55 years. Existing tenants, at the time of CCSM's acquisition, are allowed to stay in their units.
Renters still comprise the large majority of Santa Monica residents. Their housing security is a major policy objective for the City and of concern to many of us. The likelihood that we will see repeal of the Ellis and the Costa-Hawkins Acts is slim. We may instead consider amending these laws in ways that protect the most vulnerable of our tenants and assure that we maintain some level of economic diversity in Santa Monica. At a local level, however, we should remember that we can help relieve the economic pressure put on long-time residents in rent-controlled units by creating new housing where none currently exists, minimizing the unnecessary conflict between new, incoming residents and those who have lived here for many years.
We believe that the collective consciousness of Santa Monica is still a progressive one. Notwithstanding strident, angry voices decrying the need to save Santa Monica that they once, if ever, knew, we are a community that believes in preserving our affordable housing through rent control, providing new housing opportunities for lower wage workers and those on fixed incomes, and retaining an economic diversity that has always distinguished us from other coastal communities. The City has repeatedly shown its commitment to these ideals. And, we are thankful for our City government and to be part of this dialogue.
Leslie Lambert, Cynthia Rose, Jason Islas for Santa Monica Forward. Read previous columns at www.santamonicaforward.org/news.
