Households earning more than $85,000 a year are still priced out of Santa Monica
CITYWIDE Even families who earn more than $85,000 a year are having trouble living in this town without becoming financially burdened by rapidly escalating rents, according to a report released this week by the Santa Monica Rent Control Board.
Since a state law was passed in 1999 allowing landlords to raise rents to market rate when a tenant vacates a rent-controlled apartment, the price of affordable units has jumped by at least 55 percent for a bachelor’s pad, and 92 percent for a unit with three bedrooms or more; the average rent today being $1,031 and $2,354, respectively, according to the report.
Based on the increases, a family of four would have to earn at least $86,783 a year to be able to afford a three-bedroom apartment before becoming “rent burdened” — defined as spending more than 30 percent of a family’s income on housing.
The report also found that more than half (51 percent) of the controlled rental housing stock has been rented at market rate, while 49 percent remains rented to long-term tenants.
As a result, “a dramatic shift,” has occurred in the afford-ability of the 14,013 units that received vacancy increases. Before the increases, 81 percent of the units had rent levels affordable to low-income households, or $55,450 a year for a family of four. After the increases, just 16 percent remain affordable at the low-income level, according to the report.
The good news, rent control officials said, is that there are still 13,400 units that have not received vacancy increases and continue to provide housing at affordable rents. Also, the rate at which units are being rented at market rate has dropped considerably since 1999. In 2006, 552 new units were rented at market rate for the first time compared to almost 3,900 during the first year of vacancy decontrol.
“I am not concerned that this (signals) the end of rent control because after eight years just over half (of rent controlled units) have been rented at market rate and the trend seems to be slowing,” said Tracy Condon, a spokesperson for the rent control board and one of the authors of the report. “There are about 13,400 units that have not been rented at market rate, so those units continue to provide affordable rents for those living there.”
Condon said the rent control board is as important today as it ever was, and while the Legislature has eroded some of its power, the board is still vital, particularly when it comes to protecting tenants from unlawful evictions.
“We provide protections that those who are not living under rent control don’t have,” Condon said. “Even though rents are controlled, owners are responsible for maintaining the units and common areas. If they don’t, all of the tenants have the right to request those repairs. If they are not taken care of in a reasonable period of time, tenants can petition for a rent reduction. Those in a non-controlled environment would not have that benefit.”
The loss of affordable units could have political consequences. There are those who believe that as more affluent tenants who do not depend on rent control move into the city, the more conservative it will become. There is also speculation that as rent control diminishes so will the power of Santa Monicans for Renters Rights (SMRR), the city’s leading political party, which has held a majority on the City Council for nearly 30 years.
While that may be a possibility, it hasn’t surfaced yet, according to results from the municipal election in Nov. 2006. Despite an aggressive and expensive campaign to oust SMRR members from office, SMRR candidates swept the election except for one seat on the council.
“The loss of affordable housing is a big issue for us, but not politically speaking,” said Denny Zane, a former mayor and cofounder of SMRR who has run several campaigns for local candidates and ballot measures. “It’s a big issue because of the loss of economic diversity. We think that this is a real blow to the historic character of the city. Politically speaking, the evidence has been strong for the last decade that the newer, higher income residents are still quite liberal and that progressive philosophy like SMRR is very appealing. For many, the progressive character of the city is an attraction.
“People like to live in a community where the political philosophy is aggressive,” Zane added.
For Zane and other advocates of rent control, the report of vacancy decontrol further supports efforts to reconsider state law that has eroded rent control. As the state faces a housing crisis, Zane said lawmakers need to give weight to reports such as the one provided by the rent control board.
“This is a serious crisis that will dramatically affect life decisions for people,” Zane said. “It affects where people decide to go to college and whether or not graduates will be forced to stay at home with their parents longer because they can’t afford to do anything else. More and more kids who grew up in Santa Monica may never be able to live here as adults because they will be priced out. The only way they will be able to stay is if through inheritance.”
Others viewed the report as further evidence that rent control is broken and needs to be fixed so that those who are truly needy benefit. Landlords have complained for years that many of their rent-controlled tenants are making six figures and can afford to pay market rent.
“They make a big deal about losing rental units that are affordable to low income people, but they are making a big assumption, and you know what that makes out of you and me,” said Carl Lambert, president of the Action Apartment Association and a landlord in Santa Monica for the last 20 years. “The assumption is that needy and low income people occupy those units. They have never been able to or willing to establish that the needy are actually getting these rent controlled units.”
Lambert said that one of his tenants has a masters in business administration.
“The only thing that this report shows is the amount of subsidy that wealthy tenants are getting,” Lambert said.
Condon said a survey of 750 tenants was conducted last spring and it revealed that 43 percent of tenants living in rent controlled apartments before vacancy decontrol had incomes below $40,000. For those making above $100,000, only 7.6 percent were living in their units before vacancy decontrol, Condon said, whereas almost 22 percent of those living in market rate housing have income above $100,000.
“Long term tenants clearly do have lower income levels than those paying market rate, which is to be expected because that is the only way these people can afford the rent,” Condon said.
To make rent control work, Lambert said it should be based on a person’s income, not the length of time they’ve lived in an apartment. That way, those who are low income may see their rents reduced, while those who are better off would most likely see their rents increased.
Under that scenario, rent control officials have said it would be a logistical nightmare because landlords and tenants would flood City Hall with complaints about rents every time a renter lost his or her job or received a raise.
Originally published in the Santa Monica Daily Press print edition on March 12, 2007. Read the original PDF.