Rent Law Change Weighed by Board in Santa Monica

Santa Monica’s tough and controversial rent control law may soon undergo what officials say is one of the most significant changes in its history.

After more than four years since it was first proposed, a new program has been prepared that would allow landlords to raise the rent on some apartments if they set aside other apartments for low-income tenants.

Advocates of the proposal, called an inclusionary housing program, say it tackles two mounting problems: making affordable housing available to the needy while granting a financial break to property owners.

But critics--including landlord groups--say the program is doomed to fail because it offers little incentive to owners. Although some rents will be allowed to rise, those rents will not be allowed to float to market value, something that landlords say is essential. At the same time, other rents will be decreased.

Additional Details

A final version of the program went before the city’s Rent Control Board earlier this month, and additional details may be finished by Jan. 12. A public hearing will follow.

Under the program, for every apartment that a landlord sets aside for low-income tenants, a second apartment can be rented out for $300 more than the currently allowed rent, when that apartment is voluntarily vacated.

For every apartment set aside for “very low-income� tenants, another apartment that is voluntarily vacated can be rented out for $500 above the current rent.

“Low-income� is defined as no more than 60% of the area’s median income, and the rent could not exceed 30% of that income.

Based on 1988 figures, the rents for the units set aside for low-income tenants would range from $373 for studios to $578 for 3-bedroom apartments. (These figures are expected to be slightly higher next year.)

“Very low-income� is defined as no more than 40% of the area’s median income, and rents for those apartments would also have to be fixed at no more than 30% of that income. That puts rents from $248 for studios and $385 for 3-bedroom apartments.

Rents that are already lower than the new rates would not change.

The program includes other provisions. Among them: Owners must agree to set aside at least 15% of their units for low-income tenants and must bring their buildings up to HUD-quality standards, including applying fresh coats of paint and repairing appliances, and eligible tenants must be elderly, disabled or households of two or more members.

After an initial 3-year trial period, owners also would have to agree to participate in the program for 30 years, and that agreement would be recorded with the title to the property. Though there is an escape clause, some owners fear this provision would harm the value of their property.

‘Win-Win Situation’

Mary Ann Yurkonis, administrator of the rent control agency, praised the new program as a “win-win situation� that will ensure that rent control benefits those who really need it while giving relief to landlords.

“This is a substantial program,� she said.

It is the first time that the Rent Control Board--the nemesis of landlords throughout Santa Monica--has become involved in a program that will allow rents to be increased markedly, she said.

But landlords said the program is too little, too late. They predicted few apartment owners would be willing to participate because the rent increases offered are minimal.

“Landlords have been strangled by rent control, and you will have to revive them if you want (the inclusionary housing) program to work,� said Carl Lambert, president of the landlord organization Action. “And that means more than just taking a finger or two off the jugular.�

Landlord groups have long demanded vacancy decontrol--allowing apartments that are vacated to be rented out at market level. The absence of vacancy decontrol in Santa Monica’s rent control law makes it one of the strongest in the country.

Lambert said rent control officials are using the inclusionary housing program to “throw us a bone� at a time officials feel especially threatened. Santa Monica’s rent control agency has lost a number of crucial court battles recently, and additional cases could be used to further weaken the rent control law.

“When they felt fat and happy a year ago, they weren’t even willing to discuss inclusionary housing,� Lambert said.

Yurkonis denied that the agency had dragged its feet on the inclusionary housing program, saying officials had to find a place in the agency’s $4-million budget for it.

About $73,000 was budgeted for the program this year and $166,000 is projected for next year. That includes an additional $14,000-a-year staff member and a $40,000 fee to a consulting firm, Gary Squier and Associates, which helped draft the program.