By Scott Baron Landlord and former Santa Monica resident
Though I no longer live in Santa Monica, I read your paper regularly and was disgusted when I read of the pending increase in rent for the Hot Dog On A Stick stand. Again we see the city’s attitude of “do as I say not as I do” in regards to rent control. As a landlord I have intentionally avoided owning rental property in Santa Monica for this exact reason. While the property owners are unable to raise rents on their units and must follow mind-numbing and often bizarre ordinances should they wish to remodel or rebuild, the city council seems to see itself as above its own laws and is continuing to use a double standard.
I would like to share an argument made to the Santa Monica City Council way back at the inception of the rent control ordinance by my father, who has re-told the story to me many times over the years. He pointed out to the council that what they were doing was restricting an individual’s return on his investment (the property) to the 3 percent annual increase.
“We must protect the renters and less fortunate,” they replied. “OK” my father said, “that’s a great idea. Then we should also restrict the return from all bank accounts and stock investments of all Santa Monica residents to 3 percent regardless of how well they are doing and then use the excess to help the less fortunate.” “Oh no” replied the council, “you can’t do that! You can’t take away the profit from our investments and portfolios.”
“But you’re doing exactly that to the landlords,” was his reply. What we have is a need for people to provide housing. What we also have is a group of people with capital to invest as they wish. By restricting their return on their investment to 3 percent, the council basically says “go invest in something else you can actually profit at.” Landlording is a time-consuming and expensive investment but someone has to own the apartments in the city. Individuals who could just as easily open a money market account with a higher annual return have decided to provide housing and charge a fee for it. What rent control does is essentially force the landlord to pay part of his tenant’s rent every month. What if every resident in the city had to chip in $400 a month to help out? It wouldn’t happen. But as it stands it is only a small group shouldering this burden.
Karmically, one should not triple a tenant’s rent, but this choice should belong to the person whose credit rating and financial well being depends on the stability and profitability of his investment. A final thought. If the landlords all went bankrupt and the city took over, do you think for a second that they would restrict themselves to the same rules they apply to private owners?
Originally published in the Santa Monica Daily Press print edition on July 30, 2002. Read the original PDF.