By Jorge Casuso

June 17, 2024 -- Santa Monica rent control tenants will see their monthly rent increase in September by 3 percent with a ceiling of $76 after the Rent Control Board approved the latest annual general adjustment last week.

While the general adjustment is set by a formula dictated by the Rent Control Charter, the Board has the discretion to set a cap or allow the adjusted rate to apply to all units no matter the price.

On Thursday, the board elected to impose a dollar-amount ceiling that applies to all units with maximum allowable rents, or MARs, of $2,517.

Before the unanimous vote, Boardmember Anastasia Foster noted that this year marked her "ninth time voting" on an adjustment and that a rent ceiling had been applied "every single year."

"The rapidity of increasing rents" under a State law that allows rent control landlords to charge market rates for most vacated units has made Santa Monica rents "among the highest in the nation," Foster said.

Boardmember Kurt Gonska said it is a common misconception that those paying the highest rents can afford to pay the full maximum increase without a cap.

"Often, people who have very high rents are people who need the help the most," he said.

To arrive at the $76 amount, the Board followed the methodology prescribed by Measure GA, a charter amendment approved by Santa Monica voters in 2012.

Had the cap not been imposed, tenants in pricier units could have seen substantial rent increases. Instead, they will see proportionately smaller monthly increases than tenants in less expensive units.

As an example, "a tenant paying $1,500 per month will see an increase of 3.0 percent," while a tenant "paying $3,000 per month would, as the result of a $76 ceiling, see an increase of 2.5 percent."

Tenants in the 16-story Champagne Towers on Ocean Avenue will see a $76 increase, since all of the tenants in the 121-unit tower pay far more than the $2,517 threshold, with 78 paying more than $10,000 per month, according to the MARs listed on the Rent Board site.

The highest monthly rent was $41,812 and was paid by a tenant who has occupied a three-bedroom unit since 2016. That tenant will see an increase of 0.0018 under the $76 cap.

The annual adjustment mandated by the Charter is based on 75 percent of the percentage change in the Consumer Price Index (CPI) for the Greater Los Angeles area for the year ending in March, according to Rent Board staff.

The percentage increase in the CPI index is 4 percent, according to staff. Seventy five percent of that increase yields the 3 percent general adjustment.

In a letter to the Board, Santa Monica landlord Mathew Millen, who owns or co-owns three five-unit buildings, noted that expenses for building owners are not fixed and utilities have been rising at a higher rate than the CPI for inflation.