Panel urges rent control expansion

In an action intended to close a loophole and protect middle-income tenants, a Los Angeles City Council committee moved Tuesday to expand rent control to apartments that are built to replace torn-down units.

If approved by the full council and the mayor, the measure would add another aspect to the city’s rent control law, which now applies only to buildings constructed prior to 1979.

The council is scheduled to take up the matter today.

The proposal is widely opposed by building owners and the real estate community, which say that it would discourage housing construction.

The law would allow building owners to set the initial rents at market rate for the new units, probably making rents far higher than in the buildings they replace. Future increases would be subject to the city’s rent control law, which limits how much rents can be raised each year.

State law gives landlords the right to go out of business by taking their units off the rental housing market. But city officials say some owners are demolishing their older buildings and then constructing rent control-free apartments.

“This is about closing a legal loophole,” said Council President Eric Garcetti, who sits on the housing committee, which recommended the measure Tuesday.

“This is about people signing an affidavit that they are leaving the apartment market and then coming back into it,” he said.

The proposed ordinance is the latest effort to protect affordable housing in a city where average rents are about $1,500 a month. In a related move last month, the council doubled and tripled the relocation fees paid to tenants evicted from apartments being converted to condominiums.

Mercedes Marquez, general manager of the city Housing Department, said the latest proposal wouldn’t help the lowest-income tenants because they would be unable to afford the new units. But the law would help keep rents in check in future years to help middle-class tenants, she said.

The ordinance also would offer owners the option of setting aside up to 20% of their apartments for low-income tenants. If they did that, the rest of the building’s units would be exempted from rent controls.

Building owners, business interests and the real estate industry are fighting the proposal, which they say would violate another state law and would discourage home construction in housing-starved Los Angeles.

“The issue isn’t about closing a loophole,” said Veronica Perez Becker, a vice president of the Central City Assn. “The city made the policy decision in 1978 not to extend rent control to new construction. This would give those already hesitant to invest in the city another reason to stay away.”

Becker also argued that the measure would discourage people from buying rent-controlled buildings and investing in them and would harm current owners who wanted to sell. Others said that state law allows the construction of apartments where old ones have been demolished.

It was unclear how many building owners would be affected because the city had not tracked until recently how many units were taken off the market and then replaced.

Housing Department statistics show that the city has about 620,000 rent-controlled units. In 2006, building owners removed 4,685 such units from the market. Of those, 2,068 were demolished, and at least some were replaced with market-rate units.

The housing committee rejected, 2 to 1, a proposed amendment by Councilman Bernard C. Parks that called for an exemption from rent control for new, small apartment buildings.

Parks says the prospect of rent control will dissuade people from constructing smaller buildings.

Nearly half the apartments demolished in the city last year were in small buildings, the committee found.

The full council can consider Parks’ amendment.

steve.hymon@latimes.com