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Santa Monica Landowners May Have to Pay for Increasing Rent Control Staff Costs

Santa Monica Real Estate Company, Roque and Mark
By Jason Islas
Staff Writer

February 18, 2013 -- With Santa Monica's Rent Control agency facing a nearly $400,000 deficit due to rising pension costs and staff salaries, the Rent Control Board may start requiring landlords to shoulder some of the financial burdern.

At Thursday's Rent Control Board meeting, agency officials recommended increasing the registration fee for landlords from the monthly $13 per unit to $16 per unit to help with as the costs for keeping the agency's 25 employees continues to rise.

“Eighty-five percent or more of our budget applies to wages,” said Tracy Condon, the Rent Control Agency's administrator.

Condon earns $193,416 a year, according to the Agency's pay schedule. An entry level public information manager with the Agency pulls in $127,968 a year while staff assistants earn anywhere from $42,336 to $59,712.

According to Condon, only about $20,000 of the projected $361,977 deficit come from salaries and wages. She added that, since 1995, the Agency has cut its personnel down from 50 to 25, but warned the Board that “any additional reduction in staff would likely require reductions in the board's current programs.”

Even so, personnel costs account for $3,852,429 (including $515,892 in pension payments) of the $4,501,231 the Agency expects to spend in the 2012/2013 fiscal year.

Condon reported that if the registration fee -- the Agency's primary source of income, since it does not draw from the City's general fund -- stays at its current level, the Agency would face a $500,000 in the 2013/2014 fiscal year, since the Agency is expecting to see expenses climb from $4.5 million this year to nearly $5.3 million by 2017/2018.

According to the Agency's projections, raising the fee to $16 a month per unit would generate $6,081,497.

Though landlords pay the fee, they are currently allowed to recuperate their expenses by passing on the cost to tenant. With an increase in the fee, however, the Board may reconsider letting landlords pass on all of the cost to their tenants.

“Not only is Santa Monica the only rent-controlled jurisdiction that has the tenants pay all of the fee, there is no jurisdiction that has the tenant pay more than 50 percent,” said Board Member Marilyn Korade-Wilson.

West Hollywood charges landlords $120 a year per unit but only allows them to pass $60 of that on to their tenants while Los Angeles allows landlords to pass on $9.35 of the $24.51 the City charges them per year per unit.

The Agency will also look into different ways to cut back expenses. The Board directed staff to look into moving the Agency out of City Hall, if it would save money. Condon was skeptical that such an action would save money, but said that Staff would look into it.

Wes Wellman, owner of the Wellman Realty Company, called for the Agency to work with landlords to see how best they could cut expenses and streamline operations. He recommended convening a group of apartment owners to give the Agency input about cutting costs.

“I don't think we've ever had any real outside input to the staff about ways you could economize,” Wellman said Thursday.

The Agency last increased the fee in 2005, when it went from bumped the fee from $11 to the current $13 a month.

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