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Santa Monica Rent Control Housing Stock Likely to Show Tiny Increase this Year
By Niki Cervantes
August 25, 2017 -- Santa Monica's struggling rent-controlled housing supply is likely to post a tiny gain this year as enough once-emptied units re-enter the market to offset the apartments dropping out, a rent board official said Thursday.
Dan Costello, a spokesperson for the City’s Rent Control Board, said the agency expects to finish the year with about 50 more units re-opened and added to the rent-controlled housing market, which now has 27,594 multifamily units.
It would mark the second consecutive year the rent-controlled market has expanded more than it contracted, Costello said. Last year, 52 units were added.
“We’re increasing,” Costello said.
It is a contrast to the last few decades, a time in which housing under the 1978 rent control law shrunk time and again. The board and others pin the depletion to statewide decontrol laws like the Ellis Act, adopted eight years later.
The law allows a property owner get out of the residential rental business and evict the existing tenants. The renters are paid a relocation fee, which varies in amount. After five years, landlords can start renting again at market rates.
If landlords re-open for business before then, they must offer previous tenants the chance to reclaim their old units.
Landlords who “Ellised out” their rent-controlled buildings are opening for business again, as market-rate rents skyrocket in Santa Monica.
Under the 1996 Costa-Hawkins Rental Housing Act, landlords of rent-controlled apartments can charge market rates for units that have been voluntarily vacated or the tenant has been evicted for non-payment of rent.
Landlords can only raise the rent by the annual adjustment approved by the Rent Board each year until the unit is once again vacated.
A 2016 year-end report by the City Rent Control Board also said the increase in rent-controlled units was due to better monitoring of re-rented apartment buildings which had been granted owner-occupied exemptions.
This year’s nudge up in the rent-control housing supply can be seen at 1024 Pico Boulevard, which was recently granted a City permit to go back into business as an eight-unit apartment building after being withdrawn under the Ellis Act in 1986.
A Rent Control Board “investigator visited the site following the removal from the rental market and found no one living at the premises,” an August 14 report to the City Council said.
“However, City business license records indicate that the property was used for commercial purposes by a previous owner for some years without approval of an Occupancy Permit," the report said.
Rent Control staff has certified that the new owner/applicant filed all the required paperwork and compiled with state and Board regulations, allowing its return to the rental market, although now at market rates.
Between the mostly shrinking number of rent controlled units and the stratospheric rents for new market-rate apartments, the stock of affordable housing is dramatically smaller now than it was in the late 1990s, when the Costa Hawkins Rental Housing Act went into full effect.
Among other restrictions, the act excluded new apartment buildings from rent control.
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