Bound by a set formula in their charter, the Rent Control Board reluctantly passed a 6 percent annual rent adjustment, one of the highest hikes in the agency’s history.
During a June 9 meeting, Board Commissioners said they were aware of the pressure this will put on rent controlled tenants, many of whom have fixed incomes based on disability or social security payments. However, Commissioners do not have the ability to enact a lower annual adjustment as it is determined by a calculation based on inflation levels.
“My heart was broken when I heard what the figure was,” said Commissioner Anastasia Foster.
With regional inflation rates skyrocketing, this year the adjustment formula spat out a 6.4 percent increase. This number surpassed the 6 percent annual adjustment cap, which was added as a charter amendment in 2012. As a result this year’s annual adjustment is 6 percent, making it tied for the third highest adjustment in rent control history.
The highest ever adjustments were 7 percent in 1979 and 6.5 percent in 1980, which took place before the cap was enacted. By comparison, the 2021 adjustment was 1.7 percent and the 2020 adjustment was 1.4 percent.
“It’s really hard for me to even vote at all because I feel like this is not just and not what we were elected to do; 6 percent is not acceptable to me,” said Commissioner Caroline Torosis. “I don’t know anyone who’s gotten a de facto 6 percent raise in their salary this year just because of inflation. That’s a very, very high amount.”
Several members of the public wrote letters or spoke during public comment about the burden this annual adjustment would place on renters.
“Please reconsider this increase. Most of the seniors who live in rent controlled apartments cannot afford a 6 percent increase. We will have to cut back on basic things like groceries or gas in order to pay this kind of increase. We are on fixed incomes,” wrote rent controlled tenant Norma Maister.
Commissioners are striving to lighten this blow in two key ways. Firstly, they voted to place a $140 dollar ceiling on an annual rent adjustment, which was calculated from a second formula in the Board’s charter. The ceiling applies to households for whom a six percent rent increase would surpass $140, which is equivalent to rents of $2,325 or higher.
Secondly, Commissioners are seeking to place a measure on the November ballot that would amend the Rent Control Charter and give the Rent Control Board the authority to suspend rent increases during declared emergencies. If passed, this would not apply retroactively to the 2022 annual adjustment. Commissioners voted to recommend the measure to City Council where Councilmembers will vote on whether to place it on the ballot.
Separate from these steps, Commissioners also voted to increase annual registration fees from $198 to $228 per unit to bridge a $221,000 deficit in the Rent Control Board’s 2021-22 Fiscal Year budget
Several small landlords also wrote in and spoke in public comment about the financial hardship they have suffered during the pandemic and as a result of inflation.
“For well over 2 year, apartment owners, like myself, (“Mom & Pop”) have had extreme financial hardships. Trying to provide housing that is so under market value that it is difficult to make ends meet sometimes. Expenses of building materials, insurances, maintenance, water & refuse, gardeners, etc. compounded by enormous increases in these costs, which now include runaway inflationary pressures effecting our economy,” wrote Linda Tennant.
Tennant and other local landlords urged the Rent Control Board to vote against enacting the adjustment ceiling, increasing annual registration fees, and requesting the ballot measure.
Wendie Olshan, who has been a mom and pop landlord in Santa Monica for 40 years submitted a written public comment saying that her rental income has decreased for the past few years as a result of increasing maintenance costs and water/refuse fees as well as tenant relocation during the pandemic.
“If SM persists in increasing the burden on property owners -- esp. small mom n pop owners like ourselves --, you will find that only corporations will own the multi-family buildings and they will find a way to charge more and probably convert the rental units to condos, thus reducing the rental housing stock,” wrote Olshan.
Commissioners said they empathize with landlords and know that the unusually high inflation rates are hurting everyone. Commissioners still supported all three motions (adjustment ceiling, ballot measure, registration fee increase,) saying that their job is to try and ensure rent control tenants can remain housed and that their agency remains funded to perform its functions.
“We are lobbying hard for the rest of the city, city staff and city officials to come up with common sense solutions that make sense to protect our renters as much as we can in a very odd circumstance that is unprecedented since 1990,” said Foster. “And no we couldn’t have seen it coming in time to stop it… and that upsets me greatly and I know it upsets everyone else in the landlord and tenant community who want to see this community stay together.”
Clara@smdp.com
