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How Santa Monica's Rent Control Agency Spends Its Money

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

May 8, 2013 -- As Santa Monica's Rent Control Board considers a 15 percent hike in registration fees to avoid a looming $500,000 deficit, some are concerned about where that money is going.

The new fee structure could require landlords to pay half of the registration fees that for more than 30 years they have been allowed to pass on entirely to their tenants. The annual fee currently amounts to $158 per unit.

Proponents of change argue that landlords benefit from the services of Santa Monica's Rent Control Board. But the Annual Report released by the board last month does not seem to bear out that contention.

In 2012, the agency mediated 44 petitions for rent decreases filed by tenants and 24 complaints of landlords charging excessive rents, according to the report. By comparison, it mediated only four petitions filed by landlords seeking a rent increase.

“Landlords would not agree that the Rent Control ordinance has benefited them at all,” said Joseph Fitzsimons, vice president of Sullivan-Dituri Real Estate Company. “The tenants should be paying for (the fee).”

Fitzsimons argues that while the Rent Board is considering hiking registration fees, it only allowed landlords to raise rents on controlled units by one percent -- 75 percent of the Consumer Price Index.

“They are implementing a small General Adjustment, which will be wiped out” by the fee increase, he said, adding that a recent restructuring of the annual General Adjustment formula as well as reduction in staff keeps the agency’s costs down.

Since 1995, the Rent Control Agency has “reduced their staff by half from 50 by 25,” Fitzsimons said. “They're not handling as many petitions as they used to.”

Despite the reduction in staff to handle the dwindling caseload, personnel costs still accounted for $3,852,429 of the Agency's $4.5 million budget in 2012 and 2013, according to the report.

The decrease in caseload, said Rent Control Administrator Tracy Condon, is an indication that the Public Information Department is hard at work.

“That's the first point of contact and where a lot of the public work is done,” she said of the six-person department.

Since the department's job is to respond to questions from landlords and tenants alike about the Rent Control Law, it prevents the sort of misunderstandings that could eventually lead to mediation or an eventual hearing, which are handled by the Hearings and Legal Departments, Condon said.

Of all the questions fielded from the public last year, 53 percent were from tenants while 42 percent were from owners, according to the report. Of the nearly 5,000 documents filed and processed by the Agency, 4,336 were tenancy registrations filed by owners.

The Public Information Department is also responsible for organizing four information sessions a year to inform renters of their rights under the City's rent control law, Condon said, adding that they are usually well attended

Any further reductions in staff, Condon said, “may affect the responsiveness” of the Agency to questions from landlords and tenants and could lead to a rise in petitions and mediations.

“If we had to reduce our staff, that could be one of the impacts,” she said.

The Agency's regulatory responsibilities also take up a large portion of staff time, according to the report. In 2012, staff conducted some 126 on-site investigations in response to petitions filed.

They also make sure that landlords are abiding by health and safety standards, Condon said.

With 63 percent of Santa Monica's rental units having seen at last one market-rate rent increase since vacancy decontrol went into full effect in 1999, rent board officials argue that sharing the fee should not pose a financial burden on landlords.

Fitzsimons finds the arrangement unfair. “Landlords have been subsidizing and continue to subsidize tenants who pay below market rate without any means test whatsoever,” he said.

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