By George Balanis Santa Monica
A recent article by Alan Toy (SMDP, June 15, page 4), a member of the Santa Monica Rent Control Board, claims that property owners cause skyrocketing increase in voluntary-vacated apartment. Of course, the amount of rent charged in an open market is a direct result of supply and demand and, indirectly, the cost of housing production and maintenance. Many residents are aware that the rent control board and Santa Monicans For Renter’s Rights (SMRR) do everything in their power to raise market rents and the cost of housing restricting supply and raising fees. Let us review some relevant SMRR and rent control actions. 1. Restriction in supply of market housing by conversion to low-income housing or construction of low-income units on parcels of land that could be used for market-rate housing. This city law stipulates that 30 percent of all housing in Santa Monica shall become low income (one in three residents to become low income). This restriction is responsible for huge increases in the cost of new housing, as well as making a growth industry out of Santa Monica low-income housing. 2. Low-income housing fees averaging $24.21 per square foot (see http://pen.ci.santa-monica.ca.us/housing/AHPP.htm) for all new multi-family housing of two units or more. This raises the cost of a new housing by about $24,210 per 1,000-square-foot unit at the rate of about $200 per month. 3. Severe downzoning in parcels available for market rate housing but huge upzoning in parcels for low-income housing. Parcels in Ocean Park, as well as several other city areas, have been downzoned so that one can build less than 50 percent of the number of existing units. On the other hand, low-income units are allowed building more than 400 percent of the number of units allowable for market rate housing. This restriction is also responsible for huge increases in the cost of new housing. 4. Unwise rent control regulations increase tenant evictions causing tenants to unnecessarily suffer huge rent increases in order to secure market rate housing. The rent control board has enacted many tenant protections which make it almost impossible to evict a troublesome tenant. Often the property owner has only the Ellis option in getting rid of the troublesome tenant but at the cost of evicting all other tenants. Also, the rent control board has kept some rents dangerously low. In today’s environment it is difficult to pencil out a new apartment building based on market rents. So, rents that are substantially below market provide an awfully strong motivation for property owners to convert buildings for use by their families or for selling out to condominium developers.
In conclusion, Alan Toy is part of the group of people that are directly responsible for high market rents. Unwise rent control regulations increase friction between property owners and tenants and thus eliminate any fun from owning rental property. It is no accident that many property owners get fed up and do an Ellis to get out of the reach of the rent control board.
Originally published in the Santa Monica Daily Press print edition on June 30, 2006. Read the original PDF.