Tenants might see rates jump by $45 a month in extreme cases
CITY HALL — Landlords this fall will be able raise the rent on every tenant in Santa Monica as part of an annual adjustment to rent control, a 25-year-old law.
Officials have proposed a maximum hike of $20 a month, though school taxes and other fees can push that figure up by as much as $25. There are 36,000 rental units in Santa Monica.
For years, the amount of money by which landlords have been allowed to raise rents has been based on what’s considered a fair return, meaning if property taxes or maintenance costs rose, rents could follow. Calculating that amount involved tracking a variety of complex indicators.
This might be the last summer officials follow that antiquated formula. A proposal currently being discussed would allow City Hall to base the increase solely on the consumer price index, which tracks inflation. A similar approach is used in West Hollywood and Berkeley.
“It’d be more predictability for everybody,” said Tracy Condon, a spokeswoman for the Santa Monica Rent Control Board. “They could just see what the CPI is and take the percentage of it. Some of this data is much more difficult to get as we get further away from 1979.”
This year’s proposal, which goes before the Rent Control Board June 10, suggests landlords be allowed to raise the rent by $20 a month for units that are currently $1,500 or more a month, and by 1.3 percent for units that are below $1,500 a month. Whatever new amount is chosen can be charged beginning in September.
Historically, rent increases have varied. In 2003, landlords were allowed to raise the rent by 3 percent, with a maximum of $30. In 2002, every unit went up by $11. In 2001, the Rent Control Board approved a 4.2 percent increase in rents, or $40 — whatever was less.
But one thing has been constant. The formula has depended on everything from property tax rates, water and sewer bills, trash collection costs and maintenance costs to management costs, and gas and electric- Tenants must pay fees for registration, schools school bond, stormwater management fees and a streetlight surcharge, along with two school parcel taxes and an annual registration fee.
The registration fee, due from landlords by Aug. 1, is $132 a year, and works out to $11 a month for each tenant. The other charges — including $329 in annual school parcel taxes — can be split among all the units in an apartment building on a monthly basis.
At $3.5 million, revenue from the registration fee is the main source of income for the 30-worker rent control division at City Hall. Most of the division’s $4 million budget is spent on its staffers. It has four attorneys, three administrators, 15 public information workers and a handful of administrative hearing officers, according to budget documents.
Though only 60 percent of the rental units in Santa Monica are still rented at their original rent-controlled rates, all are protected by rent control, which sets a maximum allowable rent when a new tenant moves in. That rent can only be increased once a year, during the adjustment. ity bills, according to City Hall documents. This year, the board estimated landlords are paying an average of $692.81 annually in operating costs for each apartment.
Simplifying the formula so rent increases are based solely on the CPI would save City Hall time and money, and make the process easier for everyone involved. The proposal currently being discussed is to base the increases on three quarters of the CPI. Condon said that amount was chosen because over the years, the rent adjustments generally have followed that trend.
“We look at actual changes in operating costs — a variety of different operating costs,” Condon said. “But a significant portion of the factors, almost 66 percent, are adjusted by a change in the CPI. So in years of high inflation the general adjustment will be higher as well.”
Though the maximum hike is $20, Condon said additional charges can push that figure up between $11 to $25. Landlords can pass along the cost of a
Originally published in the Santa Monica Daily Press print edition on May 31, 2004. Read the original PDF.