March 7 -- For the first time since a State law allowed
landlords to raise the rents of vacated rent-controlled units, more
than half of Santa Monica's rental housing is at market rate, according
to a report released this week.
Since the Costa Hawkins Rental Housing Act took full effect in
1999, 51 percent of the city’s 27,445 rent-controlled units
have seen at least one rent increase, according to the report.
The median maximum allowable rent for a studio is now $1,031, up
from $667 in 1998; $1,384 for a one-bedroom, up from $672; $1,822
for a two-bedroom, up from $975, and $2,354 for three or more bedrooms,
up from $1,226.
While rent control opponents say "vacancy decontrol"
is a partial victory for property owners who deserve a return on
their investment, advocates claim the law passed in 1996 has led
to the loss of thousands of once-affordable rental units.
"The rent levels just keep going up and up," said Tracy
Condon, the spokesperson for the City's Rent Control Board, who
helped author the annual report. "People moving here either
have high incomes or they are paying significantly more for rent."
Before full increases totaling hundreds of dollars kicked in eight
years ago, 81 percent of Santa Monica's total rental housing stock
was affordable to low-income individuals and families as defined
by the Federal Housing and Urban Development Department (HUD), according
to the report.
"After the increases, just 16 percent remain affordable at
the low-income level," the report states. "As a result
of vacancy decontrol, a dramatic shift has occurred in the affordability
of the 14,013 units that received vacancy increases."
While rent-control opponents agree the overall numbers are accurate,
they note that the report fails to address the incomes of the tenants
in the remaining “affordable” units.
"Our argument has always been that it doesn't matter whether
a unit is affordable or not, it's who is living in a unit that really
matters," said attorney Rosario Perry, who has represented
local landlords for more than two decades.
"The report makes a big, big point about losing what they
call affordability," he said. "The issue is how many poor
people lived here in 1999, and how many poor people we have lost."
While that information is not part of the report, households that
earned the median income for the County – pegged by HUD at
$56,200 in 2006– would in many cases be "rent-burdened,"
or paying more than a third of their annual income towards yearly
rent, Condon said.
"A family earning the median seeking two bedrooms that now
costs an average of $1,822… would be paying forty percent
of their income to rent," she said.
The average rent before 1999 was $975 for two bedrooms, a difference
of $847 or an 87 percent rise, according to the report.
"Affordable units have been lost at every affordability level
and every bedroom size as a result of market rent increases since
January 1, 1999," states the report. " None of the post-increase
medians are affordable to a family making even 100 percent of median
Nearly three decades after voters approved rent control in 1979,
the ongoing battle between landlords and tenant advocates seems
to have reached a tipping point that has sobered the views of both
"Being that we thought that all the rent-controlled units
would be at market rate by now, only half are at market rate, and
I guess that's a good thing overall," said Condon.
"We were at 48 percent of the total units rented at market
value last year, and this year we are at 51 percent."
For landlords, though, vacancy decontrol has not been the overall
victory they expected.
"In all these years, 49 percent (of long-term) renters are
still here," said Perry.
In addition, both sides see the steadily shrinking number of units
coming on the market -- only 552 in 2006 compared to more than 9,000
in 1999 -- as a sign that the low turnover will leave a large number
of renters entrenched in their affordable, seaside units, until
they leave or die.
"Every year the vacancy turnover is less and less, and now
we're getting down to the hardcore renters," said Perry.
Many of the tenants paying lower-than-market rates are well off
financially, countering the myth that rent-controlled tenants are
poor, landlord advocates said.
“What the City fails to look at is just because the rents
are affordable in the remaining 49 percent doesn’t mean there
are poor people living in these units,” said Joseph Fitzsimons,
vice president of Sullivan Dituri Company, which manages more than
1,000 units citywide.
The fact that half the renters have not seen a market rate increase
"debunks" the City's long-held position that renters are
being harassed to leave by property owners, who can jack up the
rents only if tenants voluntarily vacate or are evicted for not
paying rent, Perry said.
Condon counters that tenants are staying in spite of perceived
pressures by property owners.
"We get calls weekly from people who feel harassed or are
offered large sums of money to move out," she said.
Not factored into the total rental units are 9,030 units "that
have either been removed from rent control or currently hold various
use exemptions," according to the report.
These include units on properties with owner-occupied exemptions
(approximately 1,720); units withdrawn under the Ellis Act (approximately
1,735), and units that have received removal permits (approximately
They also include units with various other use exemptions (approximately
2,740) and units that do not have registered base rents because
they have been occupied by owners since April 10, 1979 or have received
non-rental or commercial exemptions (approximately 1,250), according
to the report.
On Thursday, the Rent Control Board will discuss the report, which
will be posted on the board’s web site later this week.