Council Acts to Close Rent Control Law ‘Loophole’

Alarmed by a sharp increase in evictions, the Los Angeles City Council on Tuesday tightened rent control laws, trying to close a “loophole” that has reportedly encouraged landlords to evict tenants in pursuit of higher profits.

The council, on a 13-0 vote, ordered a temporary moratorium on a provision of the rent control laws that enables landlords to evict tenants to allow for “major rehabilitation” of apartment units. The council also acted to increase both the financial burden for landlords who attempt to use the provision and the allowance payable to tenants forced to move.

The action by the council on Tuesday is subject to the approval of Mayor Tom Bradley.

The moratorium would be in effect until the city’s rent stabilization division develops, and the council approves, further legislation designed to both encourage property improvements and protect tenants.

The council’s action was prompted by city reports that showed “major rehabilitation” evictions have risen dramatically in recent months. In the first four months of 1987, more than 700 renters had been evicted under the provision. That compares to about 800 in all of 1986 and 400 in 1985. Many are senior citizens, said Councilman Joel Wachs, principal author of the city’s rent control laws.

‘Incentive for Landlords’

The trend, Wachs said, illustrates that the “major rehabilitation” provision, enacted in 1979, had devolved into an “incentive for landlords to get rid of long-term tenants” who typically pay the lowest rents.

Because rent controls apply only while an apartment is occupied, landlords are able to raise rents to market levels only after a unit is vacated--sometimes by as much as three times what the previous tenant paid. Wachs said that some landlords are taking advantage of the major rehabilitation provision to clear out tenants and raise rents.

“The so-called improvements are a sham, an insidious ruse to increase rents,” declared Nick Zonen, spokesman for the Lincoln Place Tenants Assn. The group was formed to fight the eviction-and-renovation process now under way at the 800-unit Lincoln Place apartment complex in Venice.

To evict a tenant under the major-renovation provision of the rent control law, landlords faced a minimum cost of $10,000 per unit. That cost included both the costs of upgrading the premises and from $1,000 to $2,500 in relocation allowances for evicted tenants. The size of the relocation allowance is based on such factors as the number of the renter’s dependents, and whether the tenants are disabled or elderly.

With the tougher ordinance, the relocation allowance would be doubled, ranging from $2,000 to $5,000. Moreover, the landlord would not be permitted to apply that amount toward his rehabilitation obligation, as he could previously. Thus, landlords would face costs of $12,000 to $15,000 per unit to use the major renovation provision of the law to evict a tenant.

Under the council’s directive, the increased relocation costs would be retroactive for tenants served with legal notices since June 8, while the higher rehabilitation threshold for landlords would be effective as of Tuesday.

Barbara Zeidman, head of the city’s rent control program, said that landlords “who acted in good faith” would received credit for the increased relocation costs incurred in the period of June 8 until Aug. 4. The relocation credit would be applicable to future renovation work.

The council’s action Tuesday was applauded by tenant groups, but deplored by representative of apartment owners.

George Mihlsten, a lawyer for the Los Angeles Housing Council, a coalition of major property owners, said the financial thresholds “are picked out of thin air” and could serve to encourage demolition of old buildings instead of rehabilitating them, resulting in a decrease of housing.

The moratorium on evictions, Mihlsten said, “is a moratorium on rehabilitation.”

About 75 members of the Lincoln Place Tenants Assn. attended the meeting. Thirteen eviction notices have been served at Lincoln Place, and “200 more are in the works,” Zonen told the City Council.

Marcia Misuis, 37, who has lived in her apartment for 13 years and pays $300.25 per month, was among those served with eviction notices. Lincoln Place managers told her the new rent would be $875, she said.

Efforts to contact Lincoln Place managers and its owners, Transaction Financial Corp., were unsuccessful. Transaction Financial Corp. has initiated a similar eviction-and-rehabilitation at the Diplomat apartment complex in North Hollywood.

In a letter distributed to Lincoln Place tenants last week, the apartment management stressed that efforts were under way to secure federal Housing and Urban Development rental assistance available for all senior citizens, and that no senior citizens would be evicted if their HUD application is approved.

“Our policies should stop the rumors that certain uninformed or uncaring people would like residents to believe,” the letter stated.

Some tenants remained skeptical.

“I did not get an eviction notice, but I will,” Sol Weingast told the council. Weingast said he is 88 years old and lives on a $444 monthly Social Security check, $390.33 of which goes to pay the rent on his two-bedroom cottage at Lincoln Place.

Weingast said he doubts that he would be able to find comparable housing if he is evicted. “Where would I go but on the streets of Los Angeles?” he said. “There are too many homeless now.”