By Jorge Casuso

June 7, 2022 -- The Rent Control Board on Thursday is expected to hike the registration fee landlords pay in order to dig out of a growing budget deficit.

It also is expected to raise the maximum allowable rent tenants pay by 6 percent, one of the biggest increases in the Board's 43 year history.

Under the registration fee increase proposed by staff, the amount paid by a landlord would rise from $198 to $228 per unit, half of which can be passed on to the tenant.

The hike is expected to bridge a $221,000 deficit in the 2021-22 Fiscal Year budget, which ends June 30, according to staff. That gap is expected to grow to more than $500,000 in the upcoming budget.

Unless the Board increases its revenues, its reserve "will become insufficient to meet the contingencies for which it exists," according to a memorandum to the Board from General Counsel Alison Regan.

"Raising revenue is therefore essential if the Board is to continue to carry out its Charter-mandated function," Regan wrote.

The proposed increase would "allow the Board to replenish its reserve
account" and "meet increased insurance and pension costs over the coming fiscal years."

Under the City Charter, the Board can impose a registration fee of up to $288 "but only to the extent that the Board deems necessary to meet its reasonable and necessary expenses," Regan wrote.

To meet its obligations, the Board also "may supplement its budget with funding sources other than annual registration fees" but "only when the need arises."

"It is to avoid a fiscal emergency that would necessitate resort to other funding sources, such as interest-bearing loans or lines of credit merely to meet the Board’s existing obligations, that staff recommends raising the annual registration fee," Regan wrote.

The last major increase took place in 2013, when the Board raised the registration fee from $156 per unit to $174.96 to bridge a similar $500,000 deficit.

Also on Thursday, the Rent Board is expected to authorize a 6 percent annual increase in rents. The increase -- which is based on the percentage increase in the Consumer Price Index for the LA region, which was 6.4 percent -- would be capped at 6 percent under a Charter amendment.

The Board is expected to set a ceiling of $140 that would apply to rents of $2,340 or more.

This year's dramatic hike is more than triple the 1.7 percent increase, with a 39 percent cap, approved by the Board last year.