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Voters Could Decide on Proposed Hike to Landlord Registration Fee

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By Jonathan Friedman
Associate Editor

June 16, 2014 -- Santa Monica’s Rent Control Board wants voters’ permission to raise the registration fee for landlords by up to 64 percent and to place a lower limit on how much of that payment can be forced on tenants.

The board voted 4-1 Thursday night to request the City Council place a measure on the November ballot that would allow the annual registration fee to go up from $174.96 per unit to a maximum of $288.

Also included in the proposal is a restriction that tenants cannot be forced to cover more than 50 percent of the registration fee in the form of a charge on top of regular rent. The current rule caps tenants’ possible payment at $156 per year.

Registration fees cover a large majority of the board’s annual budget. Stephen Lewis, the board’s general counsel, said the fee must go up to cover rising costs that will lead to an estimated $36,000 shortfall next fiscal year and close to $500,000 within two years.

Lewis stressed that passage of the measure would not necessarily immediately raise the fee to $288, but rather it would allow for a gradual increase as the budget required. It would eventually reach the maximum amount after several years, he added.

Bill Dawson of the Apartment Association of Greater Los Angeles was skeptical about whether the increase would be gradual.

“It’s very difficult to be fiscally responsible and keep it at the limit that you are if you know you can charge this [larger amount],” Dawson said

Lewis later noted that the rent board’s budget cannot legally be higher than the amount of money needed to cover its expenses.

The reason for making the proposal, Lewis wrote in the staff report, is that legal challenges are usually made whenever the registration fee is increased, which forces resources to be used even if a lawsuit is frivolous.

If voters approve the measure, the maximum fee would be added to the rent control law that has been part of the City charter since it was approved by voters in 1979.

Board member Christopher Walton said the board had the authority to raise the fee to any amount without adding it to the charter, although he voted for the proposal because “I believe the renters of Santa Monica and their representatives want this measure on the ballot.”

Walton said, “We’re going to get sued over everything we do, and I don’t think that getting sued over these fees is as scary of a process as any other lawsuit that we’ve been served with.”

The board heard from a few public speakers in addition to Dawson. Former Rent Control Board member Jennifer Kennedy said she supported the proposal as a method to keep the board in good fiscal shape. Two landlords spoke in opposition.

One speaker called the proposal “outrageous, disappointing and disturbing,” and said “it will not allow housing providers a fair rate of return” while possibly being a violation of Proposition 13, the State’s voter-approved property tax limitation law.

The registration fee went up nearly $19 last year. It was the first increase in six years. When the board raised the fee last year, it also voted for a limit on how much of the fee could be passed on to tenants. Previously, landlords could stick them with the entire cost.

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