Bridging the Chasm : After Months of Talks, Santa Monica Landlords and Tenant Leaders Reach Accord on Rent Control Changes
When landlord James Baker and tenant advocate Wayne Bauer smiled and shook hands at a City Hall press conference, it was as if the walls of Jericho had tumbled and the Red Sea had parted, all at once.
The two men for a decade have been bitter rivals on opposite sides of Santa Monica’s most divisive issue: rent control. Yet last Friday, they appeared together to announce an agreement that introduces major changes in the rent control law.
It took marathon meetings, uncharacteristic secrecy, frantic phone calls and plenty of persuasion. But after more than two months of negotiations, the deal was struck.
The new program will allow a landlord to roughly double the rents on some vacated apartments if the landlord sets aside an equal number of vacant apartments for low-income tenants.
Two Goals
Advocates of the plan, called inclusionary housing, say it addresses two elusive goals of rent control: assuring that poor people have access to affordable housing while giving landlords a fair return on their property.
Until now, Santa Monica’s rent control law has been considered one of the toughest in the nation--partly because Santa Monica, unlike other cities, does not allow landlords to raise rents when their tenants move out.
Backers of the new program say it will encourage landlords to rent out units that they have preferred to leave vacant rather than rent at low rates. At the same time, it will ensure that low-income people are in low-rent apartments, reversing what many see as a trend of wealthy professionals moving into inexpensive apartments.
In one form or another, the concept of inclusionary housing has been kicked around for years. But no one could agree on how it should work. Rent control officials were especially reluctant to allow apartments to be removed from their authority, and a plan adopted in February was a bust.
So it came as a surprise to many observers when Bauer, long seen as the most unbending member of the Rent Control Board, emerged as a key negotiator committed to forging an agreement with the landlords.
“I think it’s the hardest thing Wayne Bauer ever had to do,” said Lisa Monk Borrino, a tenant attorney and longtime friend of Bauer.
Bauer said he saw the light earlier this year. He likes to tell the story of how he was watching the news and saw Israelis and Palestinians fighting on the West Bank, both sides adamant in their positions, unwilling to compromise, and both sides getting hurt. Not unlike the two sides in Santa Monica, he thought.
“It seemed so clear to me we would have nothing but polarization and war (unless) we try to find common ground, put our own animosities aside and do what is best for the people we represent,” Bauer said.
A greater motivation, however, may have been the less-than-encouraging reception Bauer and other rent control commissioners got from the Legislature when they traveled to Sacramento in early spring to lobby for changes in the so-called Ellis Act.
The Ellis Act, written by former state Sen. Jim Ellis (R-El Cajon), is a 3-year-old law that allows landlords to evict tenants and go out of the rental business. Many Santa Monica officials see it as the greatest threat to rent control in years. Several hundred Santa Monica tenants are facing the prospect of eviction by landlords using the Ellis Act.
Bauer may have decided that reaching some sort of accommodation with the landlords was the only way to stave off continued use of the Ellis Act.
So, arriving back in Santa Monica from Sacramento, Bauer called Baker. Jim Baker owns 75 apartments in the city and is a director of two vocal landlord organizations. He filed the first lawsuit against rent control the day after the law was passed on April 10, 1979, and has been fighting it ever since.
On the phone, Bauer told Baker he wanted to meet with him and two other prominent landlords, Carl Lambert, president of the landlord organization Action, and Pat Cramer, a part-owner of several buildings. Bauer considers them part of the “honorable opposition.” The enemy, yes, but landlords who at least treat their tenants fairly and who are willing to talk.
“He felt comfortable selecting us,” Baker said. “He knew we weren’t militants.”
Things nevertheless got off to a shaky start, according to both sides. At the first meeting in April at City Hall, with rent control administrator Mary Ann Yurkonis also present, the tension and anger were palpable, participants said.
Going into the meetings, Baker said he still had his doubts about whether Bauer was really willing to negotiate in good faith. Bauer said Baker seemed so hostile that he wouldn’t even look at him, addressing Yurkonis instead.
Ease in Tensions
But after considerable sparring, and as time went on, the tension began to ease. Each side seemed to realize the other was serious and committed, participants said.
“There’s a real history of mistrust, and with good reason,” Bauer said. “(But) we tried to keep personal feelings out of it and tried to focus.”
“Confidence grew as the meetings continued,” Baker said.
There were still hitches. At one point, the talks broke off when Bauer continued to insist that landlords be required to record the inclusionary program agreement with the title to their property, something the landlords had adamantly refused to do on the grounds that the resale value of their properties would suffer. Eventually, talks resumed and the two sides agreed to make the program part of a binding municipal contract, instead of part of the title.
Bauer began reporting his progress back to the other members of the Rent Control Board. Baker and Lambert began testing the waters with other landlords.
Finally, the agreement was reached, given tentative approval at a Rent Control Board meeting last Thursday and trumpeted at Friday’s press conference.
Baker praised what he said was Bauer’s deeply held desire to preserve housing for the poor, adding that he deserved the lion’s share of credit for having the courage to bring forth an acceptable agreement. Bauer said he was convinced Baker, Lambert and Cramer were sincere in wanting the program to work.
Although the Bauer-Baker agreement was a surprise, in many ways it took precisely these two men to pull it off. Each has the necessary credibility within his community--Bauer with the tenants and Baker, along with Lambert and Cramer, with the landlords--to be able to explain the program, show how it works and recruit participants.
Heat From Both Sides
Both men also fully expect to take a huge amount of heat from their constituents. Already, Bauer said he has been deluged with phone calls from tenants who mistakenly believe their rents will go up and accuse him of selling out. Baker awaits calls from those landlords who oppose “doing business with the devil.”
The inclusionary housing program is voluntary. Landlords who wish to join agree to participate for 10 years, with a one-time opportunity to get out of the program after two years.
Under the program, for each apartment the landlord sets aside for low-income tenants, he can raise the rent on a vacated apartment by $400 to $700, depending on the size of the unit. ($400 for singles, $500 for one-bedrooms, $600 for two-bedrooms, $700 for three or more bedrooms.)
For each apartment set aside for a very low-income tenant, the landlord can raise the rent by $600 to $900 on corresponding, vacant apartments.
Low-income tenants are those whose income is 20% or more below the median income for the area, as determined by federal formulas; very-low-income tenants are those whose income is less than half the median level. A family of four would qualify as low-income if it had a total annual income of $30,400; it would qualify as very low-income with a total annual income of $19,950.
$480 Average Rent
The average rent in Santa Monica is $480. On some of the units set aside for low-income tenants, the rent might actually be reduced.
All protections against evictions would be kept in place, board members said, to keep landlords from abusing the new program.
In buildings with fewer than 12 units, up to half the apartments could be set aside for the poor and the other half would be higher-rent. Larger buildings would be divided in thirds: one-third of the units for the poor, one-third for high rents and the other third would remain at the current rent-controlled level.
Many of the details of the program will be worked out over the summer months, and it is scheduled to go into effect in September.
As designed, the program could lead to people of very disparate incomes living together. Although that prospect is certain to bother some people, proponents of inclusionary housing point out that, under rent control, there is already a wide range of wage-earners residing in the same buildings.
Political Issue
Rent control in Santa Monica has always been as much a political issue as a social and economic one. The majority on the City Council represents a political faction, Santa Monicans for Renters’ Rights, that grew out of the campaigns to enact rent control.
With the changes in the law, some members of the faction may worry that their power base in the city will be diluted. Wealthy tenants who move in to the higher-rent apartments and the poor who move in to the cheaper apartments are less likely to have an allegiance to Santa Monicans for Renters’ Rights, according to this theory.
And because proponents of the new program admit it is a tacit recognition that rent control has not always been able to preserve affordable housing for the poor, it is not yet clear what the reaction will be among those mainstream rent control advocates who believe the system has been working just fine.
Meanwhile, can the newly found spirit of cooperation between rent control commissioners and landlords be expected to last? With reservations, Bauer and Baker both suggest that, on the heels of one breakthrough, perhaps other outstanding issues might be resolved.
Said Baker: “One can hope, but I can’t predict it.”
HOW THE INCENTIVES WORK The new rent control program is designed to give landlords a financial incentive to rent to poor tenants, particularly the elderly, families with children or people with handicaps. It will allow landlords to raise the rent substantially on apartments when they are vacated. In return, the landlords would be required to set aside an equal number of apartments for low-income renters. The amount of rent the landlord forgoes by renting to the low-income tenant would be more than offset by the increase on the “deregulated” apartment. Officials hope the incentives will encourage landlords to rent many of the vacant units that are now being kept off the market.
WHO QUALIFIES
The program establishes two categories of poor tenants, “low-income” and “very low-income,” as defined by federal formulas. Examples: In Santa Monica, a family of four is classified as “very low-income” if it makes less than $19,950 a year and “low-income” if it makes less than $30,400.
Monthly rents for poor tenants would be determined by the tenant’s income and the size of the apartment.
For low-income tenants, the rent could be as low as $399 for a one-room apartment and as much as $618 for one with three bedrooms.
For very low-income tenants, the range would be from $266 to $412.
THE INCENTIVES
For each vacated unit set aside for a low-income tenant, landlords would be allowed to raise the rent as follows on vacated units rented to regular tenants:
Single--$400
1 bedroom--$500
2 bedroom--$600
3 or more bedrooms--$700
For each vacated unit set aside for a very low-income tenant, the following increases would be allowed on vacated units rented to regular tenants:
Single--$600
1 bedroom--$700
2 bedroom--$800
3 or more bedrooms--$900
Example: A landlord has two vacancies at the same time of 1-bedroom apartments, each now earning the citywide average of $480 per month--giving him a monthly total of $960. Under the new law, he rents one to a very-low income tenant for $320. In return, he is able to raise the rent on the other apartment to $1,180--giving him a monthly total from the two apartments of $1,500.
