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Home Featured

$76 ceiling imposed in annual rent general adjustment

by Thomas Leffler
June 28, 2024
in Featured, News
Rent Control Board seeks new powers with potential City Charter Amendment
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In what has become an annual formality for the Santa Monica Rent Control Board, the board unanimously passed a resolution in its June 13 meeting imposing a $76 dollar amount limit to the 2024 general adjustment of 3%.

The board passed the 2024 general adjustment in May, which announced the 3% by which rent ceilings for eligible controlled units will be adjusted by, effective on September 1. The adjustment is equal to 75% of the percentage increase in the Consumer Price Index of the Los Angeles metropolitan region, which was 4% for the 12-month period ending in March 2023.

A dollar amount ceiling makes the maximum allowable rent for any controlled unit eligible for a general adjustment increased by 3% or $76, whichever is lower, meaning the $76 amount only applies to higher rents. An example provided by the board’s staff report notes that a tenant paying $1,500 per month would take in the 3% increase, as a $76 increase on such a tenancy would be equal to 5.06%.

The $76 maximum increase would apply to all units with maximum allowable rent of $2,517 and above. Another example would be a tenant paying $3,000 per month having a 2.5% increase on the rent rather than the 3% general adjustment.

Methodology for the increase was amended by Measure GA in the November 2012 general municipal election, making the calculation as follows: Determining the 85th percentile of the maximum allowable rent of all controlled units in the city, determining the 85th percentile of the maximum allowable rent of controlled units with a base rent established before January 1, 1999; and averaging those two numbers and multiplying that amount by the annual general adjustment.

The 85th percentile maximum allowable rent of all controlled units was $3,522 as of April 10, while the 85th percentile of base rents established before January of 1999 was $1,537. The average of these numbers came to $2,529.50, multiplied by 3% is $75.885, rounded to $76.

Rent Commissioner Anastasia Foster noted that this was her ninth time voting on a dollar amount ceiling and that she voted to impose the ceiling every single time.

"Though I know not everyone in the city completely understands why we do it, the rapidity of increasing rents is greatly affected by the fact that our decontrolled rents, initial rents, are among the highest in the nation," Foster said. "Whether it’s per square foot, per bedroom, anything. Many times, it is just simply our location or schools, our fabulous restaurants and businesses, our wonderful weather, that rates these prices … the problem becomes compounding increasing rapidity and [with] Measure GA baked into law, it allows us to impose this ceiling to keep residents in this city longer so that they can become productive members of our community."

Board Vice-Chair Kurt Gonska echoed this point while adding that the ceiling helps all renters across the board, taking on the "misperception" that those at a higher rent cost are "somehow wealthier" and can afford a higher rent increase.

"I label that a misperception because there is no correlation between somebody’s wealth or income and if they’re paying below market rate because they’ve been in a rent-controlled unit for many years, or they’re paying market, or somewhere in between … I think often, people who are at market rate or near market rate who have very high rents are people who need help the most," Gonska said. "Sometimes, people who have been in their units for a long time who are paying very low rent don’t need the help, and sometimes its flipped … it’s a misperception."

thomas@smdp.com

Tags: IncreaseMeasure GArentrent control board

Thomas Leffler

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