Santa Monica Rent Control Board Raises Allowable Rent Increases by 2.9 Percent

By Niki Cervantes
Staff Writer

May 15, 2018 -- The Santa Monica Rent Control Board last week raised the amount landlords under rent control can charge tenants by 2.9 percent.

At its Thursday meeting, the board voted for the adjustment, which is based in the City Charter on 75 percent of the rate of inflation for the Los Angeles, Riverside and Orange counties region which was 3.8 percent.

Landlords can add the rent increase starting September 1.

The board will hold a public hearing on June 14 before deciding whether to also impose a dollar amount ceiling on the rent adjustment, as per the City Charter.

It is proposing a maximum increase of $60 to all units with rents of $2,087 and above.

Such a ceiling would be based on the 85th percentage of the maximum allowable rent of all controlled units, which is $2,8221.

The formula for the cap then looks at the 85th percentile of the maximum allowable rent of all controlled units with a base rent established before January 1, 1999 -- or $1,311 – and averages the two rents and multiplies that amount by the annual general adjustment.

In this case, the ceiling $59.93, is rounded to a $60 increase a month.

Last year, the Board voted unanimously to cap rent increase at $40, due to skyrocketing rents.

Santa Monica is one of a handful of California cities, including West Hollywood and Berkeley, to enact full rent control in 1979 as the result of a voter rebellion against soaring hikes in rent.

In 1994, the state legislature approved the Costa-Hawkins Rental Housing Act, which allowed all newly built or re-rented units to charge market rates when the law took full effect in 1999.

Newly rented units are then subject to rent control’s annual adjustment limits.

But as of 2017, the City Rent Control Board found even studio apartments in Santa Monica were not affordable to a household making the area’s median income.

A family would need an income of at least $85,600 to “afford” a studio apartment -- or 32 percent higher than the AMI, the report found.

For a two- or three-bedroom unit rented in 2017 to be considered “affordable,” a household would need a six-figure income, the report said.