Council to Discuss Ballot Measures That Could Dictate Future of Santa Monica Rent Control

By Jorge Casuso

June 26, 2018 -- The request by two Santa Monica City Council members was a short 46 words and it provided no details.

But by the time the item -- which could impact the future of rent control in Santa Monica -- is taken up Tuesday niight the battle lines will have been clearly drawn and the arguments laid out in detail.

Councilmembers McKeown and Himmelrich's request would "authorize staff to explore appropriate local responses to the possible statewide repeal of the 1994 Costa-Hawkins Act," which allows landlords to raise rents to market rates on most vacated units.

Shortly after the item was first placed on the ballot earlier this month, memo began circulating from Santa Monicans for Renters' Rights (SMRR) that spelled out proposals for two SMRR-sponsored measures for the November ballot.

Soon, landlords had responded to the SMRR proposals, which also addressed the Council members' call to explore "ways in which our community might capture a portion of rent windfalls to support hardship renters and fund affordable housing."

While the Council could come up with different measures that those proposed by SMRR, the majority on the Council -- including McKeown and Himmelrich -- are members of the City's powerful renters' group.

If approved by the Council, any proposed ballot measures would only go into effect if if the statewide Affordable Housing Act is approved by California voters in November.

The measure, which qualified for the ballot this month, allows counties and cities with rent control, including Santa Monica, to expand their laws ("Statewide Measure to Repeal Vacancy Decontrol and Expand Rent Control Makes Ballot," June 15, 2018).

SMRR's first proposed measure would set the base rent for all rent-controlled units to the lawful rent this past January 1.

It also would "permanently exempt from rent control" all single-family homes and all condominiums except those converted under the City's TORCA program.

In addition, the proposed measure would "place rental units in buildings built from 1979 through 1999 under rent control jurisdiction on January 1, 2019" with a January 1, 2018 base rent.

It also would "place rental units in buildings built after 1999 (other than single family homes and condominiums) under rent control on the 20th anniversary of their certificate of occupancy with base rent being the rent as of one year prior."

In a call to oppose the proposed measures, the Apartment Association of Greater Los Angeles (AAGLA) warned that "rent controlled units would no longer be able to be brought up to market rate even when a tenant vacates."

Instead, AAGLA noted in an email, SMRR's measure would "only allow a 5 percent increase IF the unit was voluntarily vacated (not evicted for non-payment of rent) and this increase could only happen on the unit once every 5 years.

"Further, the proposal would establish rent control on all multifamily buildings in Santa Monica," AAGLA said. "Those buildings not previously under rent control would have a base rent established."

SMRR's second proposed ballot measure calls for 4 to 5 percent "windfall profits tax on rental income collected by property owners."

The tax would apply to "all units that have been vacancy decontrolled since the adoption of the Costa-Hawkins Act" and "all rental units in apartment buildings that have been built in Santa Monica since 1979 and that have never been rent controlled."

The tax -- which cannot be passed through to tenants -- would not apply to single family homes, TORCA condominiums or rent controlled units that have never been vacancy decontrolled.

AAGLA strongly opposed the proposed tax, saying it would apply to 72 percent of all current rent controlled units in Santa Monica.

"The proposal does not specify how many prior years would have to be paid based on this new windfall tax, nor how the windfall amount would be calculated, nor what happens if the property has been sold between 1995 and present," AAGLA wrote in its email.