Testimony at Hearing : Option Offered for Bill Easing Rent Controls

At a sometimes boisterous hearing in West Hollywood, landlords and tenants voiced sharply contrasting views of state legislation that would weaken local rent controls.

While the two sides remained far apart at last week’s hearing conducted by the state Senate Judiciary Committee, the bill’s opponents for the first time put forth the outlines of their own counterproposal to break the two-year legislative logjam over the measure. The proposal agrees to some provisions of the bill but does not address a key demand of landlords.

State Senate President Pro Tem David A. Roberti (D-Los Angeles), who has helped bottle up the legislation for the past two years, described the proposal--put forth by the Western Center on Law and Poverty--as possibly being “an avenue to pursue.”

Welcomed Proposal

Assemblyman Jim Costa (D-Fresno), who is carrying the legislation for a coalition of real estate interests, developers and apartment owners, also welcomed the proposal as a basis for discussion.

Costa’s measure establishes the first statewide guidelines for local rent control ordinances. Cities could enact rent controls--such as those in Los Angeles--which allow rents to rise without limit when an apartment becomes vacant.

However, the bill would curb the authority of cities to either prohibit or limit rent increases when a vacancy occurs. Santa Monica and West Hollywood are among about a half-dozen cities in the state that have taken these strong actions, while other cities, such as Los Angeles, have considered adding these tougher controls to their ordinances.

In addition to curbing the ability of cities to impose the tough controls, Costa’s measure would exempt new construction and single-family homes from rent controls and would set up a housing trust fund to increase the supply of low- and moderate-income rental housing.

The counterproposal, worked out among opponents of the Costa bill, was issued by William Powers, lobbyist for the Western Center on Law and Poverty, which represents tenants. Like the Costa measure, the one-page proposal exempts new construction and single-family homes and calls for financing of affordable housing.

And it includes the first public proposal by a tenant group that rent control boards should be required to automatically provide “an annual increase which is at least equal to the increase in average operating costs, plus an increase in income adjusted for inflation.” In some cities, that could mean granting landlords larger rent increases than are currently granted, according to tenant activists who helped draft the proposal.

No Position

“It appears to respond to the publicly asserted justification for the Costa bill,” said Russell Selix, lobbyist for Santa Monica, who quickly added that the city has not taken a position on the ideas put forth by Powers.

However, the Western Center proposal still would not give landlords their key demand that the legislation limit cities’ ability to enact tough controls. Dugald Gillies, lobbyist for the California Assn. of Realtors, described that provision as “a minimum” but said he is willing to talk with the tenant groups about the proposal.

About 400 noisy supporters and opponents jammed the auditorium at Plummer Park for the daylong hearing Wednesday. Sen. William Lockyer (D-Hayward), chairman of the Judiciary Committee, intermittently warned the opposing sides to refrain from cheering and booing.

Another hearing has been tentatively scheduled for Jan. 17 in Oakland. Later next year the committee is expected to vote on the measure, which has passed the Assembly.

During Wednesday’s hearing, the opposing parties painted very different pictures of the impact of the bill and current rent controls on the supply of housing.

Costa argued that he has fought for the legislation as a way to expand the supply of rental housing in the state for low- and moderate-income renters.

He testified that “although radical rent control is often attractive to renters in the short term, it victimizes them over the long term” because the housing supply shrinks, sparking increased competition for rental units.

“The fixed-income senior citizen or moderate-income family is no match” in competition with a young professional, he said. “A landlord who is forced to take a low rent would rather rent to the yuppie who will repair and redecorate the unit.”

However, Assemblyman Tom Hayden (D-Santa Monica) said in an interview during a break in the hearing that by imposing rent controls, Santa Monica has ensured that the city will have a diverse population, not just upper-income residents.

Potential Losers

Hayden contended that the Costa bill “would accelerate the process of the city being for upper-middle-income (groups) only. The losers will be the elderly, Hispanic and other minorities and young middle-class couples who want to start a family” but who could not afford to rent in Santa Monica if the tough rent controls were lifted.

Indeed, rent control supporters predicted that if the Costa bill becomes law tenants in the handful of cities with tougher ordinances would face massive rent increases.

Kenneth Baar, a lawyer and urban planner, prepared a study for the Western Center on Law that estimated that tenants in Santa Monica, West Hollywood and Berkeley, which has one of the state’s toughest ordinances, would face rent increases of $31.8 million in the first year after the Costa measure became law.

Based on the assumption that 20% of the rental units became vacant, he said the average rent increase would be $200 a month in Santa Monica and $50 a month in West Hollywood.

Costa questioned whether the 20% vacancy rate was a valid assumption. He later said he would have to study the details of the proposal before commenting on it.

Construction Outlook

Real estate industry spokesman Gillies earlier had testified that passage of the bill would lead to construction of more rental housing by developers who are now reluctant to build in cities with tough rent controls.

“There has been no increase in construction in cities with radical rent control,” he said.

Supporters of the Costa bill also stressed that it would allow local ordinances such as Los Angeles’ to stand. But Barbara Zeidman, director of rent stabilization for the city of Los Angeles, said the city’s ordinance has evolved in response to local problems and “we don’t believe every city or county ought to enact it.”

Moreover, Los Angeles Councilman Michael Woo cautioned the committee that the city might want to enact tougher controls in the future. “It is not unreasonable to assume that housing conditions may change again, for better or for worse, and that the city will need the power to relax or enhance the provisions of its rent stabilization ordinance.”