The November ballot will be quite the busy one for Santa Monica voters. Not only is the presidential election on tap in less than four months, but local voters will also vote ‘yes’ or ‘no’ to a proposal by the Santa Monica Rent Control Board that would change the way rent ceilings for controlled units are adjusted.
Council members unanimously approved Tuesday a ballot measure that would limit general adjustments for rent-controlled units to 75 percent of the annual percentage change of the Consumer Price Index (CPI) with a zero to six percent adjustment range.
Also, the Rent Control Board would have discretion, after holding a public hearing, to impose a dollar limit, within that (zero to six percent) range.
According to City staff, the dollar limits “would be calculated using the same formula that is employed when imposing such a limit under the existing general adjustment formula.”
Since zero percent is the minimum rate, negative general adjustments, or rent decreases, are not permitted, even in deflationary economic conditions.
This sets a floor for rents charged.
The annual CPI period would run from March to March. Basically, Santa Monica landlords may recover from rent-controlled units 75 percent in value of the March-to-March CPI, adjustable by zero to six percent.
“This proposal puts us in line.. with every other strong rent control jurisdiction in California that go by a percentage of CPI,” said Todd Flora, of the Rent Control Board. “It is almost a mirror of nearby West Hollywood. There is plenty of precedent. It’s the right thing to do.”
A representative who spoke on behalf of Santa Monica for Renters’ Rights (SMRR) said the group was in favor of the proposed ballot measure.
“The proposed ballot measure would significantly change the way that the annual general adjustment is calculated,” City staff said. “The present complex formula would be replaced with an adjustment based on the Consumer Price Index and circumscribed by limits consisting of a statutory minimum adjustment of zero percent and a maximum of six percent.”
A letter addressed to Flora by attorney and apartment owner Michael Millman stated that the proposed ballot initiative is “illegal, unconstitutional, and unenforceable.”
“The use of an arcane formula where you discount the CPI by averaging does not accurately reflect a true recovery on investment,” Millman wrote.
Under current law, City staff said, rents are generally adjusted upward by allowing landlord to take into account “actual increases in utility costs and taxes and for increases in City ‘maintenance expenses’ and to generally adjust rents downward for actual decreases in taxes pursuant to a formula of general application.”
The City Charter also authorizes the Rent Control Board “to adopt any lawful fair return standard and “consider all factors relevant to the formula it employs.”
Such factors include “expenses, utility costs, capital improvements replacement and maintenance, increases or decreases in living space, and substantial deterioration of the unit other than from ordinary wear and tear and failure by the landlord to provide adequate housing services or substantially comply with applicable housing, health and safety codes.”
Section 1805 of the City Charter, which partly governs the Rent Control Board, would be amended to incorporate the approved proposal should a majority of voters in November give it a thumbs up.
The last time Section 1805 was amended was 1984. Council member Bobby Shriver was not present at the July 17 special meeting.
The next regularly scheduled meeting is July 24.