Calling it a sham, a group of Santa Monica landlords has overwhelmingly rejected a Rent Control Board program that would allow them to sharply increase rents on some apartments if they set aside an equal number of units for low-income tenants at lower rates.
The rejection Monday night by 98% of about 500 members of Action, Santa Monica's principal landlord group, leaves in question a program that only last month was being hailed by landlords and tenants as historic and a breakthrough in the city's most divisive issue: rent control.
The program, agreed upon by three landlord representatives and two Rent Control Board officials, addresses two elusive goals of rent control: making inexpensive housing available to poor people while providing landlords with a fair return on their property. It takes effect in September.
Santa Monica's rent control ordinance, adopted 10 years ago, is considered one of the toughest in the nation partly because it has not allowed vacancy decontrol, the ability to raise rents when tenants move out. The new program, called inclusionary housing, would open the door a crack for vacancy decontrol. Participation by landlords is voluntary.
But the prospect of making even a dent in the city's tough rent control ordinance apparently was not enough for most members of Action.
In an emotional meeting, most of the audience in the nearly full auditorium at Lincoln Junior High School stood, applauded and cheered when Carl Lambert, president of Action, announced that 98% of the members who voted rejected the plan.
The outcome of the vote was no surprise. Members had greeted everyone at the door when the meeting started with handouts titled "Here's Why We Are Opposed to the Inclusionary Housing Program."
Heading the list of reasons was that the program would give the Rent Control Board "the opportunity to once again mislead . . . legislators and the public into believing they are doing something significant for the low and very low income tenants."
K. B. Huff, an Action board member, told the crowd that he opposed the program because it would benefit only a small number of landlords who own large apartment buildings. Some landlords say turnover is too slow in most smaller apartment buildings to make the program economically attractive.
"The majority of us are going to get shafted," Huff said. "I don't like it a damn bit. If you think rent control has been bad for the last 10 years, you can expect it to get worse in the next 10 years with this program."
Not Taken Seriously
Joel Goldfarb, another board member, said that although Action board members encouraged Lambert and James Baker to continue their discussions with Rent Control Board Commissioner Wayne Bauer, "I hope they understand that we never took the program seriously."
"Not only do we think this program is silly, but we are not going to be dissuaded from converting our units into condos under Ellis," Goldfarb said to thunderous applause.
Goldfarb was referring to state Ellis Act, written by former state Sen. Jim Ellis (R-El Cajon) and passed in 1985. It allows landlords to evict tenants and go out of the rental business if they can't turn a fair profit.
Landlords interpret the Ellis Act to mean that they have broad rights to convert their buildings to other uses, such as condominiums. The Rent Control Board takes a far more restrictive view, and the law is being challenged in several court cases.
"The plan will be used effectively (by the Rent Control Board) in court arguments to get court relief," contended Wes Wellman, former president of Action. "I think this is a propaganda device.
"The Rent Control Board believes you are whores, that you are for sale," Wellman said. "The question is not whether the program is good or not, but is our value for sale? Is your vote for a little more cash flow or for your sacred honor."
Primary Goal Unchanged
Baker said that he intends to participate in the program if it is implemented in September but that his primary goal of getting rid of rent control has not changed.
"We should seize every opportunity to allow owners to survive while seeking to achieve our primary goal of getting rid of rent control," Baker said.
After the meeting, Baker said he still expects about 50 landlords to participate in the program during the first year.
"I told Wayne that during the discussions, and I still believe there will be about 50 people participating," Baker said.
The program was tentatively approved by the Rent Control Board in June. Landlords who join agree to participate for 10 years, with a one-time opportunity to leave the program after two years.
Under the program, for each unit set aside for a qualified poor tenant at reduced rent, a landlord can raise the rent of a second unit by $400 to $900 per month. The amount of increase permitted on the second unit depends on the size of the unit and whether the first unit was set aside for a "low-income" or "very low-income" tenant.
Despite the overwhelming rejection of the program, Bauer said he is not discouraged.
"I anticipated it," Bauer said in a telephone interview. "Historically, there has been so much distrust that it makes perfect sense that people would oppose the program. It just indicates that trust has to be developed. Ten years of war is not going to disappear overnight."
Susan Packer Davis, chairwoman of the rent board, said she was shocked by the overwhelming rejection.
"That's too bad," she said. "I hope that is not indicative of landlords in general in Santa Monica. They may just be gun-shy. They don't trust the rent board. Anything we touch they don't have confidence in."
Still, Bauer and Davis agree that even if 50 landlords participate at first, they will consider the program successful.
"If we could get (50), that would be a real good start," Bauer said. "I want the landlords to feel as comfortable as possible."
"Anything is better than one," said Davis, referring to the number of landlords who participated in an earlier attempt at an inclusionary housing program. "If we could get 50 landlords, that's something."