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Council Puts Change to Santa Monica’s Rent Control Law on November Ballot
By Jason Islas
July 19, 2012 -- The Santa Monica City Council voted unanimously Tuesday to put a measure on the November ballot that could alter Santa Monica’s rent control law for the sixth time since it was adopted in 1979.
The measure, which the Rent Control Board recommended in June, would scrap the formula board officials use to determine how much landlords can raise rents on controlled units and use the Consumer Price Index (CPI) instead.
“Our current system, which is what informally is called the ‘pie system’, really costs the rent control board staff a lot of time and money,” said Rent Control Board member Todd Flora, addressing the City Council Tuesday.
“It’s the right thing to do because, rather than spending thousands of dollars on consultants and using our staff time internally, we could be better serving the public and working down the cost of staff,” Flora said.
The current system is a complicated one. Staff divides every rent dollar into landlord expenses -- including utilities and taxes -- with a portion reserved for profit. Then staff uses a formula to determine how much landlords may increase their rents to keep up with inflation.
Tracy Condon explained the ‘pie system’ -- or the component ratio to gross rent -- formula. “(Staff) identify all of the components of an owners expenses,” she said. “There are 14.”
Then, she said, staff looks at changes in cost from year to year.
The pie system usually comes close to 75 percent, Flora told the Council. This year’s general adjustment increase of 1.54 per cent was 77 percent of CPI.
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