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|Landlords and Tenants Bear Burden of Rising Prices|
May 17, 2011 – Even as its latest annual report showed housing in Santa Monica is still prohibitively expensive for many, the Rent Control Board agreed Thursday to consider an increase in the city's rent ceiling from 2 to 3.5 per cent at its next meeting.
The 2010 Annual Report analyzed rental figures going back to 1999, and indicated that the percentage of market rate rentals has continued to increase as families are less able to to pay for them.
At the same time, landlords have shouldered the burden of various property taxes and other increased expenses, city staff said, and it's only fair to bump the rent ceiling up next year in compensation.
“These figures continue to amaze and depress,” Commissioner Marilyn Korade-Wilson said at Thursday's meeting.
“After 12 years of vacancy decontrol, almost 60 percent of the controlled units have been rented at market rate,” Rent Control Administrator Tracy Condon told the Commission.
According to the report, despite a minor decrease in rents from 2008 to 2009, living in Santa Monica still costs more than many people can afford.
The report cites the U.S. Department of Housing and Urban Development assertion that no more than 30 percent of a household’s gross income should go toward rent. By that standard, a family of four would need an annual income of almost $85,000 to live in Santa Monica in a one bedroom apartment, according to the report.
For the surrounding Los Angeles County area, same family would need some $20,000 less, the report indicates.
The report also pointed out that since 1999, the median market-rate rent has gone up 39 percent in southern California, while the increase in Santa Monica has been 150 percent.
According to the report, “much of the difference results from sharp increases in rents in the decade between January 1999 and December 2008.”
All the same, city staff proposed raising the percentage by which landlords can increase their rents under the city's rent control laws next year to 3.5 per cent.
Condon presented the Board with a breakdown of how the adjustment was determined.
City staff uses a pie method, Condon said, in which the rent dollar is cut up like a pie into different slices, according to where the money goes.
“To reach the 3.5 percent recommendation, the agency looked at actual changes in expenses for refuse, water and sewer, gas, electricity, fire safety inspection and property taxes,” said Condon, adding that 65 percent of the pie was adjusted for inflation using a consumer price index (CPI).
Seven assessments on owners’ property tax bills are not currently passed through to tenants as direct surcharges on the maximum allowable rent, including City of Santa Monica Library Bond and Metropolitan Water District Bond, staff said. And five service-specific assessments appear under the Direct Assessments portion of tax bills: Trauma/Emergency Services, LA West Mosquito Abatement, Public Health License and Permit Fee, County Park, and Flood Control.
Property owner Michael Millman thought that the proposed increase was too low, arguing that the increase should be 5.8 percent because CPI “doesn't accurately track owners' cost.”
Bill Dawson, another property owner and vice-president of Sullivan-Dituri property management company, echoed Millman's sentiments.
The Board agreed to discuss the proposed increase at a public hearing on June 9.
“After 12 years of vacancy decontrol, almost 60 percent of the controlled units have been rented at market rate.” Tracy Condon
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