Santa Monica Rent Board to Discuss Eliminating Surcharges for Existing Tenants

By Niki Cervantes
Staff Writer

March 20, 2018 -- After removing surcharges passed on from landlords to new tenants, Santa Monica’s Rent Control Board on Thursday will discuss doing the same for the remaining renters in the city’s more than 25,000 controlled units.

In January, the board voted to eliminate surcharge pass-throughs as of March 1 when a property is sold or reassessed due to major property improvements or for any tenant who moves in on or after March 1 ("Santa Monica Rent Control Board Votes to Phase Out Soaring Surcharges Passed Through to Renters," January 31, 2018).

But this week’s hearing will tackle extending the same protections to renters who were already tenants before March 1.

Dan Costello, a spokesperson for the board, said the first vote affected about 200 tenants. Thursday’s encompasses the thousands not included. The City has 27,375 renters, he said..

The board could require the owner to pay a share of the surcharges or establish a "cap" or maximum amount that can be passed through, the City said.

It could also eliminate surcharges completely or keep the status quo.

Thursday’s hearing is at 7 p.m. in City Hall, 1685 Main Street, in Council Chambers.

As it now stands, landlords in most cases pass through five line-items on their tax bills related to special categories of spending approved by Santa Monica voters over the years.

Included are bonds for improvements in the Santa Monica-Malibu Unified School District, bonds for improvements at Santa Monica College, the Stormwater Management Fee, the Clean Beaches and Ocean Parcel Tax and the Santa Monica-Malibu Unified School District Parcel Tax.

The surcharges can tack significant amounts onto landlord bills, as well as significant rent hikes for tenants when the surcharges are passed on to them.

Who pays for the surcharges is of rising interest because of the sky-high cost of renting apartments in Santa Monica and the impact on the many tenants struggling to cope.

Take, for example, the long-time owner (since 1972) of a 21-unit property. That owner paid total assessments of $1,532.32 for the five items that could be passed through. He passed through $6.06 per unit per month in surcharges in 2016.

When he sold the building that year, its value was reassessed, increasing the five items on the 2017 tax bill to $20,104.70.

The new owner could potentially charge $79.76 per unit per month in surcharges.

Costello said the board has received 88 comments on the issue so far. Eighty-four percent of landlords oppose eliminating pass-throughs to tenants; 80 percent of tenants support the move.

Interested members of the public may also complete an online comment form.

More information on the surcharge issue is available at the Rent Control Agency’s webpage.