By Jason Islas
Staff Writer

July 19, 2012 -- The Santa Monica City Council voted unanimously Tuesday to put a measure on the November ballot that could alter Santa Monica’s rent control law for the sixth time since it was adopted in 1979.

The measure, which the Rent Control Board recommended in June, would scrap the formula board officials use to determine how much landlords can raise rents on controlled units and use the Consumer Price Index (CPI) instead.

“Our current system, which is what informally is called the ‘pie system’, really costs the rent control board staff a lot of time and money,” said Rent Control Board member Todd Flora, addressing the City Council Tuesday.

“It’s the right thing to do because, rather than spending thousands of dollars on consultants and using our staff time internally, we could be better serving the public and working down the cost of staff,” Flora said.

The current system is a complicated one. Staff divides every rent dollar into landlord expenses -- including utilities and taxes -- with a portion reserved for profit. Then staff uses a formula to determine how much landlords may increase their rents to keep up with inflation.

Tracy Condon explained the ‘pie system’ -- or the component ratio to gross rent -- formula. “(Staff) identify all of the components of an owners expenses,” she said. “There are 14.”

Then, she said, staff looks at changes in cost from year to year.
The new formula would peg rent increases to 75 percent of the CPI.

The pie system usually comes close to 75 percent, Flora told the Council. This year’s general adjustment increase of 1.54 per cent was 77 percent of CPI.

“One of the things we hope to accomplish is not only to save money but to make it more clear,” said Rent Control Board member Marilyn Wilson.

Santa Monica’s Rent Control Law has been changed five times since 1979, with the first change made in 1984. Proposition XX was a housekeeping measure that clarified the status of single family homes, specified the Rent Control Board’s independence from the City, and specified the Board’s power.

The law was changed again six years later when voters approved Proposition X, exempting state-owned property from rent control laws.

The law was amended once again in 1999 to add tenant protections after a State law allowed landlords of rent-controlled units to charge market rates when a unit was voluntarily vacated or a tenant was evicted for not paying rent.

Voters further protected renters against eviction in 2002 when they passed Measure FF, which prohibits landlords from evicting spouses or family members of a tenant who may have died or been hospitalized.

The most recent amendment, passed in 2010 as Measure RR, protects the rights of tenants. Measure RR required landlords to serve tenants written notice of any misconduct that would lead to eviction.