CITY HALL ¬ó The Rent Control Board voted unanimously Thursday to recommend a change to its charter that would dramatically alter how rent increases are calculated, if not their final amount.
The proposal would calculate the annual rent increases allowed for rent controlled apartments in Santa Monica by 75 percent of the Consumer Price Index (CPI), a measure of the change in costs for goods and services.
It would also give the board the flexibility to impose a cap on the increase of up to 6 percent of the total rent on the unit.
The City Council is expected to take up the change in July, at which point it could begin the process to put the matter on the Nov. 6 ballot.
If passed, it would represent only the third time that the rent control charter has been amended since 1979.
Proponents of the concept say that the new method would make rent increases far more transparent than the current formula, which breaks down the monthly rent on an apartment into “slices” that represent the costs landlords pay to keep up an apartment.
Some of those components, like property taxes and business license fees, are fixed, while others are determined to be percentages of the rent.
Confusing and arcane it may be, it’s the way rent increases have been managed in Santa Monica for the last 30 years.
Opponents of the plan say that landlords should get the full amount of the CPI increase, arguing that as the cost of goods and services throughout the economy increases, costs of maintaining apartments and providing services to tenants does as well.
“Seventy-five percent of CPI is not CPI,” said Wes Wellman, of the Action Apartment Association, which represents landlords in Santa Monica. “If your purchasing power is reduced less than the CPI, it’s been reduced.”
The CPI method appears to undercut landlords’ profits further.
For the most part, the “pie” method imposed rent increases in line with the proposed CPI adjustment, just at much higher cost to the Rent Control Agency.
According to a staff report, the old method of rent adjustment has resulted in an increase of approximately 77.85 percent of the CPI over the course of the last 25 years, but the analysis costs between $15,000 and $25,000 each time.
The proposal came out of six months of work on the part of the Rent Control Board and its subcommittee, which put the matter out to public comment on June 14.
It made it through its final meeting Thursday almost entirely intact.
The only change was a decision floated by Commissioner Marilyn Korade-Wilson to increase the ceiling on rent increases from 5 percent as written in the proposal to 6 percent.
That figure represented a compromise between caps put out by Commissioner Todd Flora and Chair William Winslow.
Flora pushed for the lower ceiling, which would guarantee landlords a lower rent increase each year.
“Let’s be gutsy, let’s be bold,” Flora implored his fellow commissioners.
Winslow was more content with a 7 percent cap, similar to that seen in other cities like Berkeley, Calif. and West Hollywood, Calif.
He feared that a lower cap would be an invitation to a lawsuit by landlords eager to make more money off of their properties.
The Rent Control Board recently lost one such lawsuit that was fought over the ability of landlords to pass certain taxes onto renters through their rent.
Korade-Wilson, who had been a proponent of the 5 percent cap, suggested the 6 percent figure, which was ultimately accepted by the board.
The board is not bound by the cap. It can choose a dollar amount anywhere up to 6 percent of the unit’s rent if it so chooses.
ashley@www.smdp.com
