Landlords Sweeten Offer in Bid to Decontrol Vacated Units

Santa Monica apartment owners are promoting a measure that would radically alter the city’s rent control law by allowing landlords unlimited rent increases on vacant units in return for sharing their profits with tenants.

The initiative’s sponsors say they hope to qualify the Tenant Incentive Program for the June ballot. The controversial measure has already been labeled “ludicrous” and “gimmicky” by several City Council members, but landlords contend that the initiative has broad appeal for residents.

Geoffrey S. Strand, a spokesman for the Santa Monica apartment organization known as ACTION (A Commitment to Insure Owners’ Needs), said the ballot measure would encourage the rental of units held off the market by landlords protesting the city’s rent control law. He said it would also protect tenants from a statewide eviction law that goes into effect next year.

“Our surveys show that the chances of this measure passing are extremely high,” Strand said. “Who would be opposed to it? The only opponent I can see is the Rent Control Board because they didn’t come up with the idea.”

Sponsors must collect 6,000 supporting signatures by February to force a special municipal election June 3. If the special election occurs, City Councilman Alan S. Katz, who was appointed last month, would be forced to run for the unexpired term of the late Ken Edwards in June instead of November.

Strand said the landlord initiative has been in the works for several months. Its aim is to nullify the section of Santa Monica’s law that prohibits landlords from raising rents when a tenant vacates an apartment.

Stable Rents

Santa Monica’s rent control law, considered one of the toughest in the nation, prohibits vacancy decontrol. City Atty. Robert M. Myers, who authored the law, said stable rents (the rent board allows one rent increase per year) are one of the major protections for low-income and elderly tenants.

But opponents have argued that the provision makes it impossible to earn a profit and discourages maintenance. The result, they say, is that landlords rent only to young professionals who will pay for their own improvements.

Under the landlord’s plan, an apartment owner would be allowed to establish a “new base rent” each time a unit is vacated. His monthly profit on the newly rented unit would be multiplied by 10, and the sum would be paid one time only to the building’s tenants. For example, if a landlord raised the rent on an apartment unit by $400 a month, he would be required to disperse $4,000 among his remaining tenants. He would not be allowed to raise the rent on an apartment unit if the vacancy had been created by an eviction.

Strand said the initiative is designed to allow tenants to share “significantly” in a landlord’s profits. He said the provision was added as an incentive to tenants who may oppose any straight increase.

There is no limit on the new base rent that a landlord can establish under the plan, but the rent board can reject the increase if the landlord fails to pay his tenants their share of the profits within 30 days of the unit’s rental.

Strand said the rent plan would protect tenants in different ways. He cited a state law, which goes into effect next year and which allows landlords to go out of business under some circumstances--superseding local ordinances prohibiting a landlord from removing his units from the market. He said landlords will be less likely to go out of business if they can realize a greater profit for their buildings. He also said the new plan would discourage evictions because landlords would not qualify for new base rates in apartments vacated by evictions. And he said it would encourage apartment owners who have been holding an estimated 1,500 rent units off the market to rent their apartments.

Strand conceded that rents on vacant units probably would double or triple. But he added that the initiative would affect relatively few people because the city’s annual apartment turnover is only 8%.

‘Total Frustration’

“Apartment owners have faced six years of total frustration with a system that is unreasonable,” Strand said. “We’re not opposed to rent control, but we are opposed to radical rent control. This ensures a commitment to owner’s needs . . . and tenants are going to recognize the benefits instantly.”

Several city leaders, however, said the initiative has no chance of passing. Members of the city’s two political factions--the liberal Santa Monicans for Renters’ Rights and the moderate All Santa Monica Coalition--predicted that the entire seven-member council will oppose the measure.

Council members said the plan would threaten the affordability of rental housing, the major plank of rent control. Others called it unrealistic in a city composed mainly of tenants who overwhelmingly endorse rent control.

Mayor Christine E. Reed said the measure comes at a time when the scars from the bitter 1979 rent control campaign are finally healing. “This is a problem for the whole community,” Reed said. “I don’t want our community to suffer another antagonistic, divisive and hurtful rent control campaign.”

“I have nothing to do with this initiative, and I’m not supporting it,” Councilman David Epstein said. “I am not persuaded that the timing is right for any changes in the rent control charter amendment.”

Councilman Alan Katz called the initiative ludicrous. “I’m not even sure they’re going to succeed in getting it on the ballot,” Katz said. “I don’t know if there’s any support in the community for an initiative that includes the equivalent of payoffs for non-vacating tenants.”

Councilman Dennis Zane, who helped organize the 1979 rent control campaign, said he will “vigorously” oppose the measure. And Councilman James Conn, another tenant activist, said the plan may be too complicated to be “of any use” to anyone.

Predicted Defeat

Rent Control Board Administrator Howell Tumlin also predicted easy defeat for the measure if it makes the June ballot.

“I’m not surprised by the initiative,” Tumlin said. “Apartment owners throughout the state have turned to vacancy decontrol as the only acceptable form of relief . . . but vacancy decontrol places a bounty on the heads of the very people who should be the beneficiaries of rent control--the tenant with low rent that becomes the target for eviction or displacement.”

Some opponents have also criticized the measure’s timing. They say the initiative will seriously jeopardize the reelection chances of Alan Katz by forcing him to run for his seat five months ahead of time.

Katz was appointed to the council last month by members of the All Santa Monica Coalition, which holds the council majority. Apartment owners, many of them coalition financial backers, opposed Katz’s appointment at the time and accused the coalition leadership of ignoring them. Sponsors of the bill had no public comment on Katz, but one privately admitted that he remains unpopular.

“The coalition blew it when they appointed Katz,” the apartment owner said. “Katz is no friend and . . . he’ll probably lose.”

Zane said tenant activists would probably oppose Katz in June because he would be the only coalition-backed candidate in the race. If Katz ran in November, he might be unchallenged, Zane said, because tenants have already pledged to field challengers against the three council members running for full terms.

Prefers November Race

Katz said he would rather run in November, but predicted that he could also win in June. “Obviously in November I’d have a longer track record,” Katz said. “But I think I’ll have the wherewithal to raise the necessary funds and run a very strong community-based campaign.”

City Hall sources said the measure could also cause problems for the three coalition-backed council members who face reelection next year--Reed, Epstein and William Jennings. Sources said that tenant activists could hurt Reed, Epstein and Jennings by linking them to the plan, whether they support it or not. Reed, however, said she would try to defuse the matter by persuading landlords to seek a compromise that everyone could support.

“If the landlords sincerely want a workable amendment and they’re not just looking for a confrontation . . . there ought to be some attempt made to bring the major players together,” Reed said.