This is the second in a series of articles on Santa Monica's rental housing market.

By Jorge Casuso

April 1, 2019 -- Santa Monica has become a city separated by a rental divide, with some tenants paying triple what their next-door neighbors pay for a similar unit.

Market-rate tenants in the beach city paid more than twice as much as long-term tenants irregardless of the unit's size or location, according to the Rent Control Board's annual report.

The median rent paid by a market-rate tenant for a one-bedroom unit was $2,015, compared to $859 paid by a tenant who moved into their unit before vacancy decontrol took full effect in 1999, the report concluded.

The biggest discrepancy was in the Downtown, where market-rate tenants paid a median rent of $2,687 for a one-bedroom unit, more than triple the $811 paid by a long-term tenant.

Rent-controlled units have seen steep increases since the passage in 1995 of the Costa Hawkins Rental Housing Act, which allowed landlords to raise rents on most vacated units to market rates as of January 1, 1999.

In Santa Monica, that applied to units built before local voters approved rent control in 1979. All units built after 1979 are not subject to rent control.

Since vacancy decontrol went into full effect 20 years ago, 19,562 of Santa Monica's 27,445 rent-controlled units, or 71 percent, have seen rents rise to what the market will bear.

The units are then re-controlled under the new rate.

By comparison, the rents paid by tenants who stay in place have incrementally risen by amounts tied to inflation that the rent board approves each year.

The "vast majority" of properties -- almost all of which have between 4 and 15 units -- have units that have been rented at market rates, according to the report.

By the end of 2018, on average, owners of 89 percent of those properties had rented half or more of their units at market rates, the report found.

Only 2.9 percent of properties -- 67 of 2,340 -- had no registered market-rate rents.

Of properties with 16 or more units, at least half of the units have been rented at market rates.

The report divides the 8.3-square-mile city into seven neighborhoods that had the following median rents for one-bedroom units paid by market-rate and long-term tenants n 2018:

* In Ocean Park (Area A), market-rate tenants paid $2,210, compared to $898 for long-term tenants;

* In Sunset Park (Area B), the median rent for market rate tenants was $1,778, compared to $799;

* In Downtown (Area C), market-rate tenants paid $2,687, compared to $811 paid by long-term tenants;

* In the Pico Corridor (Area D), market rate tenants paid $1,830, compared to $744, the lowest median rent paid by long-term tenants;

* In Mid City (Area E), market rate tenants paid $1,847, compared to $811 for long-term tenants;

* In the area North of Downtown along the coast (Area F), market rate tenants paid $2,268 for a one-bedroom unit, compared to $981 paid by long-term tenants, the highest amount in the City, and

* In the area north of Wilshire away from the coast (which includes most of Wilmont), market rate tenants paid $2,068, compared to $854.

"To afford the median priced 1-bedroom or larger sized unit, a household would need more than double of what it would have needed had vacancy decontrol not been enacted," the report said.

"If rented at 2018 median prices, to afford any sized unit larger than a studio, a household would need a six-figure income.

"By contrast, had vacancy decontrol not been implemented, any household earning the median household income would have been able to afford any sized unit last year," the report said.

Ocean Park had 3,306 market rate units and 4,702 controlled units; Sunset Park had 2,311 market rate units and 3,288 controlled units, while Downtown had 814 market rate units -- the highest percentage in the city -- and 1,061 controlled units.

The Downtown has seen a building boom since 1999, with more than 2,500 units built using building bonuses approved in the mid-1990s fetching market rents.

The Pico Corridor had 1,782 market rate units -- the lowest percentage in the city -- and 2,849 controlled units, while Mid City had 3,661 market ate units and 5,018 controlled units.

The coastal area north of Downtown had 3,197 market rate units and 4,500 controlled units, while the Wilmont area had 4,491 and 6,027 controlled units, the highest percentage in the city.

"While there are significant differences in the number of controlled units in each area, the share of each area’s units tends to vary little from year to year," the report said.

PART I -- Santa Monica's Newest Rent Control Tenants Leaving More Quickly, Report Finds