Below is an open letter sent to Liam Dillon of the Los Angeles Times.
Thank you for your interesting article. Unfortunately, it is very incomplete. Rent Stabilization (Rent Control) is a very complex, difficult and complicated subject. Let’s start at the beginning. Berkeley, Oakland, San Francisco, Santa Monica and West Hollywood have, by tradition and history, very oppressive and restrictive rent control protocols.
In 1995, the Costa-Hawkins Fair Housing Act was enacted and installed to address abuses. Concurrently, the Civil Code was amended to make it illegal to install any form of rent control on commercial or industrial property. Later, the Ellis Act and the Petris Act were signed into law. You understand.
Three-bedroom apartments with spacious fireplaces, vaulted ceilings and huge balconies overlooking the Pacific Ocean in Santa Monica were being rented to motion picture directors, thoracic surgeons, prominent architects, actresses and highly paid individuals, all of whom did not require or financially need rent control. Many had other homes. One cosmetic surgeon had a half dozen rental units for his patients, who received surgery in Beverly Hills, to recuperate and recover. These tenants were driving BMW’s, Mercedes-Benzes and other luxury vehicles and making several hundred thousand dollars per year – and yet living in rent controlled apartments. They were paying $700 to live on the sand overlooking the Pacific Ocean. By the way, rent control was started by Jan Fonda and her husband, Senator Tom Hayden.
Santa Monica has 16 rent control staffers who all make close to $150,000 per year or more! Do the research at the L.A. Housing Department (LAHD) and you’ll discover abuses.
Rent control is outstanding if you do not have a real job and they can give you a position and pay you several hundred thousand dollars per year or more. Bureaucrats love rent stabilization.
Now, Oregon passed a statewide rent control law in March of 2019. It was embraced by landlords and popular to tenants. It was all so simple. For the first year, either the owner or tenant could opt out of the rental arrangement. The second year, the tenant had status. He could not be removed unless you could show that he engaged in misconduct or failed to pay the rent. His relocation assistance was limited to several months and his annual rental adjustment was 7% plus inflation as determined by a formula based upon the operating expenses of the apartment group. All was so simple.
Your friends in Los Angeles became terrorized and frightened. It’s possible that the rents each and every year might increase by a realistic, fair and appropriate factor – 10%, maybe higher. Do the research.
There are 640,000 rent stabilized units in Los Angeles. Do the research. All of those units have a single master-metered water arrangement whereby the tenants do not pay for water, sewage or trash. True conservation means the tenants pay for their water.
The trash hauling bills in Los Angeles have increased by almost 500% or more. Do the research. So, AB 1482 exempted Berkeley, West Hollywood, Oakland, San Francisco, Los Angeles, Hayward and of course, Santa Monica. In Santa Monica, the water rate will increase by 9%; sewage by 15% and trash retrieval by 200%. Yet, the annual rental adjustment will be, and remains to be, only 2%. West Hollywood will be 1.5% or less! West Hollywood and Santa Monica agreed to provide no assistance whatsoever to landlords with the earthquake retrofit. Do the research.
So … in Santa Monica during 2018, there were probably only four or five evictions for failure to pay rent. Santa Monica, West Hollywood and Los Angeles have just-cause evictions. Yes, there is not enough affordable or work force housing. Do the research!
In Santa Monica, the college, Miramar Hotel, UCLA, Saint John’s Hospital, Facebook, Microsoft, HBO and Amazon have all installed offices, yet no work force housing? Now, do the research.
Rent Control Destroys Housing!
Rent control, as a Stanford University study confirms, does indeed provide a benefit for a small number of persons who have lived in San Francisco for 25 years. There was no turnover. No access to new units. Like Cambridge, Massachusetts – rent control destroys housing. In Los Angeles, 40 years ago, there were 1,200,000 rental units. Today, we’re down to less than 600,000. Maybe even less than that.
San Francisco boarded up 10,000 rental units rather than deal with rent control. Santa Monica had 38,000 rental units at the outset and today, they’re down to perhaps 24,000 or less. West Hollywood had 19,000 and today, they’re down to maybe 10,000. Beverly Hills had 9,000 units. Do the research!
A rental cap in AB 1482 exempted all of these cities and more. As an example, El Segundo would get a rental cap of 10%. Agreed. Yet, their neighbor in Santa Monica would have a rental cap of 2%! Is that fair?
Yes, rents are high. Tenants want luxury features like laminate wood floors, LED special designer lighting, special security locks, modern, updated appliances, modern kitchen cabinets with granite counters and high-end appliances. The tenants also want security systems in the common area. They demand and insist upon luxury items. Do the research.
Ten years ago, a ½ horsepower Badger garbage disposal would be purchased for $35. Today, with installation, it’s $155. Ten years ago, a 40-gallon water heater was $199 and today, with installation, its $1,100. Do the research. These tenants want double-pane windows. They want built-in air conditioning.
Rents are high because insurance, property taxes, parcel taxes, school bonds, business licenses, special insurance for discrimination and unfair housing practices, roofing , plumbing, electrical, landscape and of course, pest control are very expensive. Do the research. Consumer Price Index addresses and tracks cashmere sweaters, wristwatches and flat-screen TVs. None of the operating expenses associated with apartments is addressed or captured with CPI! Do the research.
Why Was AB 1482 Inappropriate?
So, AB 1482 was inappropriate. It was wrong. It carved out jurisdictions for special treatment. West Hollywood, Santa Monica, Berkeley and San Francisco could continue to oppress and terrorize small owners. Yes, new construction should come under rent control after 35 years. Yes, single family homes, condominiums and ADU’s should be exempt. Do the research.
Your article was terrific. But it failed to include a full and complete understanding. Now, the Oregon state-wide rent control law is exceptional. No carve-out exceptions. Everyone has the same rules and formula. Why should an apartment owner in El Segundo be able to get a 10% adjustment and his neighbor in Santa Monica only 2%? Sooner, rather than later, the El Segundo apartments are going to be beautiful, modern and attractive. They will kill off competition with Inglewood, Hawthorne and Santa Monica. You need money to enhance, revise, [simply maintain] and remodel your units. Do the research.
In any event, have a great summer. Maybe, if you have time, we can meet for coffee. But if you want to protect and preserve small family-owned apartments so that they’re not subject to sale to developers … you need to do the research! You need to write a fair, objective article.
[Do you know that the Apartment Owners Association of California, Inc. (AOA) calls intrusion on our property rights “Tenant Welfare”? Why not research and see if this is justified.]
Michael Millman is an Attorney and a Mar Vista activist and can be reached at (310) 477-1201.