Voters Could Change Rent Control Law

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Santa Monica Rent Control Board asks City Council for a charter amendment on the Nov. 2 ballot that would simplify formula used to calculate yearly rent increases.

By Jenna Chandler | June 29, 2012

Santa Monica voters could be asked to simplify the method used to calculate yearly increases to rent paid by tenants of rent-controlled units in the city.http://blog.rsanyc.net/property-rights/wp-content/uploads/2012/07/santamonica1.jpg

In a 4-0 vote Thursday night, the Rent Control Board recommended to the City Council that it place a charter amendment on the Nov. 2 ballot.

Each year the board approves rent increases designed to cover the costs a landlord pays to maintain their properties, such as property taxes, utilities and business license fees.

If ultimately approved by voters, the formula used to determine how much rent should increase would be equal to 75 percent of the percentage increase in the Consumer Price Index, the federal government’s tool for measuring inflation rates.

“Going to a 75 percent of CPI is somewhat tried and true, it’s really just following the lead of several of our sister cities,” said Rent Control Board member William Winslow.

For the past 30 years, the board has calculated the increases using a formula that involves surveying landlords to find out how much and in what areas their expenses have increases and weighting those components based on local median rents.

“Santa Monica is the only city with rent control in the state using this methodology for determining what the general adjustment should be,” Winslow said.

The decision to recommend the charter amendment follows six months of research and public hearings. Most landlords and tenants are in favor of the change, rent control staffers said.

“It will make the general adjustment clear, concise and a lot less litigious,” said Santa Monica resident Christopher Walton. “I think it has merit.”

Other cities with rent control laws limit the upper and lower extent to which their CPI-based general adjustments may affect rents. West Hollywood does not permit decreases in the event of deflation, so the adjustment may never be less than 0 percent. It also caps the increase at 7 percent.

Santa Monica’s Rent Control Board is proposing a floor of 0 percent and a ceiling of 5 percent.

Rent control staffers wrote in a recent report that the existing formula’s “conceptual simplicity belies the complexity of its actual implementation.” Additionally, the costs of surveying landlords has cost about $20,000 annually in recent years, they said.

Last year, the city was sued over its calculation.

“Over the past two years, interest groups have complained that the formula isn’t being calculated fairly, or is being calculated in a way that, even if fair, is inconsistent with the charter,” they wrote in the memo. “Regardless of the range of credibility of the complaints, however, one thing is clear: they are partly a product of the complex methodology.”

Santa Monica-based attorney Rosario Perry told the board on Thursday that basing the adjustment on a percentage of the CPI won’t make the process simpler.

“Nobody knows how they calculate CPI. It’s just a mystical thing they come up with every year and no one knows if they’re doing it correctly or not,” he said.

The Santa Monica Rent Control charter has only been amended by ballot three times since it was first adopted in 1979, according to the Santa Monica LookOut.

In June, the Rent Control Board approved a general adjustment of 1.54 percent, equal to 77 percent of the CPI.

Source: Santa Monica Patch

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