L.A. Limits Rent Hike to 4% for Year : Council Revises Law to Allow Annual Increases of 3% to 8%, Based on CPI

By a vote of 12 to 2, a surprisingly large margin, the Los Angeles City Council on Tuesday tentatively agreed on a new rent control ordinance, a compromise law that would tie the maximum rate of rent increases allowed each year to the consumer price index but prevent rents from being raised by more than 8% or less than 3%.

If it is ratified by the council next week and signed by the mayor, as expected, the ordinance would establish a 4% rate for 1985-86 and, for the coming year at least, offer significant relief to tenants who have been hit with 7% annual increases since 1979, when the City Council enacted the city’s first rent control law.

In its action Tuesday, the council settled for a middle course between a proposal favored by rent control stalwarts on the council, which would have tied the annual rate to 65% of the index, and other proposals favored by opponents, which would have retained the 7% rate or done away with rent control altogether.

95% . . . Will Be Happy’

With neither side assured of gaining the eight votes necessary to win, the door was open for a compromise that no one relished but that did seem to have the support of key representatives of landlord and tenant groups.

“It’s not as much as we would have wanted, but 95% of the city’s tenants will be happy,” said Dino Hirsch, a representative of the 7,000-member Los Angeles Renters Lobby.

“We would have preferred as is, leaving the 7% formula alone, but the council had to make a decision,” said Bob Smith, president of a large property management firm and a member of a steering committee appointed by the City Council to study rent control.

“Because we have people on both sides unhappy, there must be a bit of fairness there,” said Councilman John Ferraro, who voted in favor of the compromise.

The architect of the compromise was Barbara Zeidman, who heads the rent stabilization division of the city’s Community Development Department. Zeidman met nearly 50 times since last October with the rent control steering committee in an effort to find a formula that both landlords and tenants could accept.

Zeidman said she recommended using the consumer price index to determine the rate of rental increases because it is a figure “that everyone can understand.” By that, Zeidman said, she meant that the index is not the product of partisan arithmetic.

Something of a Gamble

Her recommendation was something of a gamble, however, because it meant setting aside one conclusion of a $600,000 city-sponsored rent control study, released last month, which said that landlords’ operating costs represent only about 58% of the index. That conclusion fortified a long-held renters’ contention that a formula based on the index would be too generous to landlords.

Nevertheless, Zeidman said, she believes that renters eventually will accept the formula because, in the short term, it will mean reducing the permissible rental rate by almost half, from 7% to 4%.

“The tenants didn’t like the formula, but they liked the 4%,” Zeidman said. “The landlords didn’t like the 4%, but they liked the formula.”

Zeidman took her fragile agreement to the City Council’s Government Operations Committee, which was responsible for shaping an ordinance.

Councilman Joel Wachs, chairman of the committee and leader of the council’s pro-rent control faction, had his own plan--one that would tie the rate of increase to 65% of the consumer price index. Even as Wachs was announcing his plan, other members of the council were speculating that Zeidman’s proposal was the one that would make it to the council floor, because it had the backing of tenant and landlord leaders.

In committee, Zeidman’s plan was altered only slightly. She had recommended that the maximum annual increase not exceed 7% or drop below 4%. The spread was widened by one point at either end.

Criticism Before Vote

On the council floor Tuesday, the compromise proposal drew criticism from many quarters before the vote. Councilmen Zev Yaroslavsky and Ernani Bernardi said it did not do enough to protect renters.

Bernardi argued that vacancy decontrol--a feature of the 1979 law that would be preserved under the new ordinance--would free virtually all apartments in the city from rent control over the next five years. Vacancy decontrol allows a landlord to raise rents by any amount after apartments have been vacated.

Bernardi said that because tenants move so frequently, vacancy decontrol would make rent control “a dead issue . . . in the next four or five years, or maybe a little longer.”

Councilwoman Joan Milke Flores, who supported the compromise in committee, and Councilmen Gilbert Lindsay and David Cunningham said the ordinance would not be fair to landlords.

“If it’s the object of the council to put thumbscrews on the landlords, we’re doing a pretty good job,” Cunningham said.

Councilman Howard Finn said the law would not help solve the city’s most critical housing problem: finding shelter for people who cannot afford existing rents.

In the end, only Flores and Cunningham voted against the ordinance--a surprising finale to a bitter debate that has fractured the council for the last six years. Councilman Arthur K. Snyder was absent.

“What I think happened,” Zeidman said, “is that the council wants a measure of peace on the issue. They want landlords and tenants to stop fighting.”