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Santa Monica Rent Control Board to Talk Fee Increase

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

May 6, 2013 -- Facing a $500,000 annual deficit, the Santa Monica Rent Control Board this week will continue to explore raising registration fees and having landlords for the first time pick up half of the cost.

The Board will discuss raising the annual fee from $156 per unit to either $168 or $180 in order to offset the rising costs of its 25-member staff, which accounts for roughly 85 percent of the agency's $4.5 million budget. (Santa Monica Landowners May Have to Pay for Increasing Rent Control Staff Costs, February 2013)

“We're running huge deficits right now and some of us are very concerned about that,” said Rent Control Board member Todd Flora. “I want to make sure that our budget is as tight as possible.”

The discussion on the 7 to 15 percent hike on registration fees will come two weeks after the Rent Board allowed landlords to increase rents on controlled units by 1 percent to offset the impact of inflation.

Though landlords currently pay the fees, they can pass 100 percent of their expenses on to their tenants. That, too, could change as the board considers requiring landlords to evenly split the costs with their tenants.

Flora thinks the time is right for landlords to take on some of the financial burden of running the agency. “Santa Monica is the only rent-controlled district in California that allows 100 percent pass-through to the tenants,” he said.

West Hollywood allows landlords to pass on $60 of the annual $120 per unit fee, while Los Angeles allows landlords to pass on only $9.35 of the annual $24.51 per unit fee.Beverly Hills allows no pass-through at all.

Some of the biggest California rent-controlled districts, including Berkeley, San Francisco, East Palo Alto and Oakland, require landlords to evenly split the fee with their tenants.

Landlords should share the burden, Flora said, because the fees allow them to “benefit from an existing Rent Control Board” that can arbitrate disputes with tenants. “Landlords should share some percentage because they have a vested interest,” he said. Not everyone agrees.

“They are funding a bloated bureaucracy,” said Robert Kronovet, a landlord and former Rent Control Board member. Kronovet was unseated in November by Santa Monicans for Renters' Rights (SMMR) candidate Christopher Walton.

Kronovet maintains that the Rent Control Agency is largely redundant and overstaffed.Rent Control Administrator Tracy Condon, however, says the agency is running on a skeleton crew.

In February, Condon told the board that since 1995, the agency has reduced its number of employees by half and explained that any further cuts would mean cutting back services. Increasing the registration fee to $180 per unit per year would only be a temporary fix to the agency's budget woes, according to staff.

Based on staff projections, the $180 fee would only keep the Agency in the black for another two years before expenses once again outstrip revenue. As a result, it is likely that a further increase -- to a yearly $192 per unit -- could be required in the future. Staff projections show that such an increase would keep the agency in the black until at least 2018.

Thursday's meeting is still a preliminary discussion, Flora noted, adding that a decision wouldn't be made until after the public hearing, which would probably be at the Board's May 23 meeting.

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