Santa Monica Lookout
B e s t   l o c a l   s o u r c e   f o r   n e w s   a n d   i n f o r m a t i o n


New Formula Allows One Percent Rent Hike for Santa Monica Landlords

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

May 6, 2013 -- Beginning July 1, Santa Monica landlords can raise rents on controlled units by one percent as part of the annual General Adjustment (GA) approved by the Rent Control Board last month.

The 2013 GA is the first to use the Rent Board's new formula approved by local voters in November that determines the size of the rent hike needed to offset the impacts of inflation on a landlord’s costs.

The new formula replaced a unique but complicated formula created by the Rent Control Board with a simpler one that calculates the GA as a percentage of regional inflation.

“My understanding is that we will always be using the U.S Bureau of Labor Statistics report that concerns L.A., Riverside and Orange Counties each year,” said Board member Todd Flora at the April 25 meeting.

He was responding to Bill Dawson, former president of the Apartment Association of Greater Los Angeles (AAGLA), a landlord advocacy group. Dawson wanted to make certain that the Rent Board remains consistent in their choice of which Consumer Price Index (CPI) report it used.

“I don't profess to be an expert on CPI, but I have looked on their website from time to time and there are many, many indexes on there,” Dawson said.

The Board placed the change to the formula on the ballot to bring Santa Monica's GA formula in line with other major rent-control districts, like West Hollywood, whose GA is also 75 percent of the CPI.

Landlords and rent control board members alike applauded the change in formula as a necessary streamlining of the Agency's complicated formula.

In June, when the formula change was suggested, Robert Kronovet, a landlord and former Rent Board member, said he was in favor of the change because it was more predictable and would cut back on bureaucracy.

But he still takes issue with the fact that the increase is only 75 percent of CPI.

“How generous!” he exclaimed at the news that the 2013 GA had been one percent. “One hundred percent of the CPI is reasonable.

“Let's say you have two athletes,” he said. “One athlete has to run 100 percent of the race and the other has to run 75 percent of the race. Who do you think is going to win?”

Kronovet has argued that not allowing landlords to compensate for 100 percent of inflation is ultimately unfair.

But proponents of Rent Control counter that they are only obligated to allow landlords a “fair return,” according to Santa Monica's Rent Control law.

The change in the GA formula has not drastically changed the outcome.

In 2012, the Agency was still using the original formula and the GA was 1.54 percent, or roughly 77 percent of CPI.

The vote came two weeks before the Board will discuss raising fees levied on tenants by as much as 15 percent to help offset an impending deficit due to increased personnel costs.

Lookout Logo footer image copyrightCopyright 1999-2013 All Rights Reserved. EMAIL