Tenants Join Landlords in Rejecting Rent Compromise

The Santa Monica Rent Control Board’s second attempt at making inexpensive housing available to poor people while providing landlords with a fair return on their investment appears to be falling apart.

The opposition is coming not only from landlords, as was the case in February with the first version of the program, but also from tenants, who are coming out strongly against the so-called inclusionary housing program.

Perhaps the biggest blow to the program came over the weekend when Santa Monicans for Renters’ Rights, the big tenants group that is the city’s most powerful political organization, rejected the rent board’s plan and called for new negotiations between representatives of SMRR and the board to work out some revisions.

“SMRR members have not rejected the concept of an inclusionary program, if their concerns are able to be addressed,” said SMRR Chairwoman Dolores Press, who is also a Rent Control Board member. “Most believe the rent increases proposed . . . are excessive.”

Disagreement Clear

Further negotiations seem unlikely to accomplish much, however, because the disagreement over the new program is very clear: Tenants believe it gives landlords too much, and landlords don’t think it offers them enough.

Emotion is high in both camps, fueled by confusion over provisions of the program and a general mistrust that goes back 10 years, when Santa Monica first adopted one of the nation’s toughest rent control laws. Unlike most rent control laws, Santa Monica’s does not allow rents to increase to market rates on apartments vacated voluntarily.

The inclusionary housing program unveiled and hailed as a breakthrough in June is a voluntary one for landlords. It permits substantial rent increases on some units of an apartment building to landlords who set aside an equal number of units in the same complex for rental at reduced rates to poor tenants. The program is supposed to start next month.

Although some landlords have said they would participate in the inclusionary housing program if it is not significantly changed, most oppose it as a distraction from their ultimate goal of eliminating rent control altogether.

Tenants apparently base most of their opposition on a belief that the board sold them out by not inviting them to take part in the recent negotiations with landlords that produced the latest version of the program.

Support Essential

Although it is up to landlords to decide whether to participate, tenant support is essential for inclusionary housing to survive. Tenants make up 80% of the city’s population and can make their unhappiness known at the polls when members of the Rent Control Board are elected. SMRR now controls a majority on both the City Council and the rent panel.

Mayor Dennis Zane, a founding member of SMRR, called the program exciting and innovative, but said: “We believe there are significant problems yet to be worked out. We want to be included in the dialogue.”

One option advanced by tenants is to limit participation to a few landlords and reduce the inclusionary housing effort to what amounts to a pilot program.

At least three of the five rent board members, however, are hesitant to reopen negotiations.

“I am reluctant to go back to square one,” said Susan Packer Davis, the board chairwoman. “I don’t want to renegotiate the basic . . . program.”

“I am not friendly to the idea of making the program a pilot program,” said board member Julie Lopez Dad. “Because we are so close to a final program that would supplant the one adopted in February, it doesn’t make sense to draw out the process any longer.”

‘A Terrible Idea’

Wayne Bauer, who was the board’s principal representative in the negotiations with landlords that resulted in the June agreement, was blunt: “I think it is a terrible idea. It introduces the program to a political argument as opposed to what is really going to help the people. It will become a political football. It will be decided by what is conducive to being elected to office.

“This is a program that might work. I think that is what everybody is so upset about.”

In meetings last month, many landlords sharply criticized the program and few indicated any intention of participating in it. Action, the city’s largest landlords group, formally rejected the plan in early July. And Pat Cramer, one of the landlords involved in the negotiations with Bauer, said that if additional concessions are made to tenants, landlords will not participate at all.

“We thought we were (talking) with tenant activists in the board members who claim to represent tenants,” he said. If the program falls apart, “the alternative (for landlords) is to wait a few years for changes in the courts and in Sacramento. . . .

“If we can get a reasonable program, I would be glad to stay in the business,” said Cramer, who has an interest in 300 units. “But if it continues that I continue to subsidize those tenants every month, then maybe I’ll get out of the business.”

The attempt to implement an inclusionary housing program began in 1984 when voters decided to amend the City Charter to allow for such a program.

Poorly Attended

After years of study, the board started holding public hearings in late 1987, but most of them were poorly attended. In February, 1989, the rent board adopted a program allowing landlords to raise rents by as much as $500 on some units but also requiring them to record the agreement with the title to their property for 30 years.

Landlords ignored the program, dismissing the increases as minimal and claiming that the deed restriction would lower the value of their property.

Recognizing that the program would not work, Bauer began meeting in March with three landlords to determine what changes would be needed to get landlords to participate.

In a press conference in June, Bauer and the landlords proudly announced the changes and called the agreement historic.

Landlords would be allowed to raise rents on some units by $300 to $900 in exchange for setting aside units for poor people at rates as low as $266 a month. Landlords would also be allowed to count current poor tenants toward the one-for-one exchange.

The 30-year deed restriction was replaced with a 10-year contract signed with the rent board, with an escape clause after two years.

Response Tepid to Hostile

The landlords’ response, however, has ranged from tepid to outwardly hostile, and as members of the rent board began presenting the program to tenants groups, growing opposition was apparent there as well.

In a statement released Tuesday, SMRR said it was urging rejection of the program because the amount landlords would be allowed to increase rents was “greater than needed to encourage landlord participation, (and it) would create an incentive for landlords to evict or harass tenants, and would substantially reduce opportunities for added moderate-income tenants in Santa Monica.”

Another major concern of the group is the provision that allows landlords to receive credit for current poor tenants. Such a provision, the group said, provides “significant rent increases with no corresponding added public benefit for which the program had been developed.”

“It is a grave injustice that landlords who have kept units off the market get rewarded by being able to raise rents significantly,” said Press, the SMRR chairwoman. “I question the morality and the injustice of providing a windfall profit for those landlords.”

State law permits landlords to evict tenants and go out of the rental business. No one knows for sure how many units have been left vacant, but estimates range from a few hundred to several thousand.

Cramer, the landlord, argues that many landlords have rented to low-income people when they have not been required to, and that those landlords should be rewarded by being allowed to raise the rent on other units.

“That was one of the main elements that was agreed to in the discussions,” he said. “We would get to raise rents on some units, but the low-income tenants would get lower rents, some sense of security and their apartments would get fixed up with new carpets and paint.”

‘Deal-Killer’

Cramer said if landlords are not allowed to count existing low-income tenants toward the one-for-one ratio, the program will not work.

“If they want a real deal-killer, that’s it, at least for me,” he said. “As it is, with such a low turnover, I may have to wait several years before a vacancy occurs. I would have real doubts that I would participate if I couldn’t count my existing low-income tenants.”

“That’s a reasonable response,” said Bauer. “If we start making significant changes to the agreement, it would really hurt the trust that we tried to build with landlords.”

Davis said that the amount of rent increases allowed should not be stumbling block. “None us feel that comfortable with rents going up by as much as $900,” she said, but added that since those units would no longer be part of the city’s stock of affordable housing, it shouldn’t matter how high the rents rise.

“You kiss those incentive units goodby,” she said. “Once you get to that point, it doesn’t matter how much over $1,200 a month the rent goes.”

Davis also argued that giving landlords credit for current poor tenants will not skew the program because only 3,000 to 3,500 of the city’s 30,000 tenants would qualify for the low-income units.

“I see this as a complement to the existing rent control law,” she said. “It is worth trying. Nobody said it was a panacea.”