Rising Rents

By Erica Williams
Staff Writer

June 10 -- The average Santa Monican’s annual income rose about 5 percent to $50,714 in 1999, but the higher wages lagged far behind the city’s skyrocketing housing costs, according to an analysis of the 2000 U.S. Census by the RAND Corporation and the City’s latest housing data.

In fact, residents had to make between $16,200 and $34,700 more than they did ten years ago to afford the “new” median rents in Santa Monica, according to a report released by the Rent Control Board earlier this year.

For example, the report pointed out, it now takes an income of $76,461 to afford a three-bedroom unit that was previously affordable with an income of $41,696 in 1998.

A one-bedroom unit that went for $695 a month five years ago, now fetches a median rent of $1,195 and requires a yearly income of $59,750, compared to $34,750 previously. The rent on a two-bedroom unit nearly doubled, from $889 to $1,606, making it affordable to those with an annual income of more than $67,000.

The report attributes the rise to the state’s “vacancy decontrol” law that kicked into full effect on January 1, 1999. The law allows landlords to raise rents to market rates if a rent-controlled unit is voluntarily vacated or the tenant is evicted for non-payment of rent.

Former Mayor Dennis Zane, a driving force behind the City’s Rent Control Law, placed the blame for the rising costs of housing squarely on “vacancy decontrol,” which he also blames for the loss of black and Hispanic residents during the past decade.

“Rent control works,” Zane said. “Vacancy decontrol assures that low and moderate income people are replaced by high income people who can afford the doubling of rents.

“If you want to create a higher income all white community,” he added, “just impose vacancy decontrol in a housing market and it will do it every time. It has the effect of segregating by income, and that has the effect over time of segregating by ethnicity.”

Not so, said representatives of the City’s apartment owners. Santa Monica, they note, was primarily white before rent control took effect in 1978 and it remained predominantly white before vacancy decontrol kicked in.

(In fact, whites accounted for 78 percent of Santa Monica’s population in 1980, 75 percent in 1990 and 72 percent in 2000, still more than double the percentage of whites in Los Angeles County.)

“It’s not a new trend,” said Bob Sullivan, owner of Sullivan-Dituri Realtors, one of the city’s largest apartment management companies. “Rent control has never done what it’s supposed to do. It doesn’t work.”

Sullivan contends that rent control has always favored the wealthier tenants who can afford to pump money into fixing their units and pose no credit risk.

“Rent control has hurt those it was meant to help,” Sullivan said, adding that there was no incentive for a landlord to rent to a low-income family when they paid the same low rent as a single well-to-do tenant.

Before vacancy decontrol, moderate and upper income tenants accounted for nearly 50 percent of the residents in rent-controlled units, according to a City survey of tenants conducted in 1995. According to the survey, low and very low-income tenants accounted for the other half.

It is these tenants – particularly the very low-income tenants who made up a third of all residents of rent-controlled units in 1995 – that City officials worry are being displaced by vacancy decontrol.

“Vacancy increases on 9,486 units have resulted in the loss of 6,506 units that had rent levels formerly affordable to low-income households, including 3,950 units with rent levels formerly affordable to very low-income households,” according to the rent board’s report.

Efforts by the City to step up the development of affordable housing have failed to stem the loss of Santa Monica's low-income residents, said City Housing Director Bob Moncrief, adding that the City has committed “$120 million in six years” to affordable housing.

“But you can’t possibly build enough to make up for what has been lost through vacancy decontrol,” Moncrief said.

Jorge Casuso contributed to this report