Ballot Proposal Irks Rent Board in Santa Monica

The Santa Monica Rent Control Board is outraged by the City Council’s proposal for a ballot measure that would legalize permanent rent increases for capital improvements on apartments, board commissioner David Finkel told the council Tuesday.

In an impassioned speech, Finkel accused the council of usurping powers of the rent board, which is an independent city agency. He said the board is the appropriate agency to determine the merits of such an improvement program.

“The board thinks you are treading on rent control jurisdiction,” Finkel told the council. “And that’s not a matter to be taken lightly . . . . I urge you to reflect on what you have done . . . and call off the dogs.”

Similar Plan Rejected

The proposed ballot measure would allow tenants and landlords to negotiate permanent rent hikes for apartment improvements. Councilman David G. Epstein, who proposed the plan for council consideration two weeks ago, said the rent control board “chickened out” when it rejected a similar measure contained in a staff report from last year.

But Finkel argued that the board is still searching for a workable plan on capital improvements. Last year, the board approved a one-year experimental program that permits landlords and tenants to negotiate temporary rent increases of no more than $20 a month, or 5% of the maximum rent. Finkel said the temporary plan, which expires next month, has resulted in only seven applications for rent increases.

Too Complicated for Voters

Finkel said the capital improvement program, which is designed to give landlords an incentive to upgrade the city’s deteriorating apartment buildings, is too complicated to be expressed in a ballot measure and asked that the council refrain from putting any kind of plan before the voters.

“It’s not for the City Council to use its political muscle to place on the ballot changes in the law which have been rejected by the rent board,” Finkel said. (To do so) without coming to the rent board . . . is an outrage.”

The proposal was favored by five of the seven council members. Councilmen Dennis Zane and James P. Conn, who are affiliated with the city’s renter activist group, opposed the idea.

Councilman William H. Jennings, who was acting as mayor in place of the absent Mayor Christine E. Reed, said the council is legally empowered to pursue the ballot measure if it so chooses, despite the rent board’s objections.

Several other speakers asked to address the council, but Epstein said all further discussion would be held next week, when City Atty. Robert M. Myers completes a draft of the capital improvement proposal. “It’s not clear whether we will place it on the ballot or not,” Epstein said.

Meeting Ran Late

Myers said the draft should be completed by Sunday or Monday. Despite council pressure, Myers said his office could not complete the work any sooner. “We are busily working away,” Myers said as the discussion approached midnight at Tuesday’s council meeting. “In fact, there may be someone working on this in our office right now.”

Voter passage of the council’s capital improvement proposal or a separate initiative backed by a landlord organization known as ACTION (A Commitment to Insure Owners’ Needs) would substantially change the city’s rent control law.

Present law prohibits landlords from raising rents when a tenant moves out of an apartment. Landlords have said their plan, known as the Tenant Incentive Program, would allow unlimited rent increases on vacant apartment units in cases where an apartment owner shares his profits with tenants.

Landlords have explained their proposal this way: An apartment owner would be allowed to establish a new base rent each time a tenant moves out. He would share the profits from the rent increase with the remaining “qualified tenants” by multiplying the amount of one month’s rent increase by 10 and dispersing the sum among the building’s “qualified units.”

Profits Would Be Divided

For example, they said, a landlord who raised the rent on his apartment by $400 a month would divide $4,000 among his tenants one time. An apartment owner would not be allowed to raise his rent if the vacancy resulted from an unfair eviction as determined by the Rent Control Board.

The Tenant Incentive Program qualified for the ballot last month. It suffered a setback about two weeks ago, however, when Myers issued a report stating that the plan actually offered nothing to tenants. Myers said the landlords had made a “major drafting error” in the legal language used in the proposal, or intentionally deceived the public. He also said the plan could be fraught with implementation problems.

Landlords contend that Myers’ criticism was based on a personal bias. But this week there was some indication that apartment owners would support Epstein’s proposal as an alternative to their plan if it provides a reasonable financial return for owners who have complained about unreasonably low rents.