Santa Monica is Rapidly Losing Rental Units

A new study of apartments removed from Santa Monica’s housing stock under the state Ellis Act confirms what many already believed: The rate of withdrawals is increasing rapidly; most of the units being taken off the market have rents well below the average maximums allowed by the Santa Monica Rent Control Board, and many of the properties removed in the last two years were recent purchases.

The statistics are expected to get worse. The report compiled by the rent board studied only those apartments removed before Dec. 31. Between then and Feb. 20, owners of 17 properties with 261 units formally notified the city of their intent to go out of business.

Since the Ellis Act became law in 1986, owners of 161 properties with 995 units have pulled out of the market or have notified the city that they intend to do so.

The Ellis law, which limits the extent to which a city can block or penalize a landlord from going out of business, has become Santa Monica landlords’ primary weapon in efforts to force changes in the city’s tough rent control law.

The rent board, which is dominated by tenants’ rights activists and is attempting to persuade the Legislature to change the Ellis Act, called a special meeting to gather testimony from tenants who were evicted under provisions of the law.

But landlords outmaneuvered the rent board by dominating the hearing with their own speakers, who repeated their cry that the only way to stop the evictions under Ellis is to change the rent control law to allow rents to rise to market levels whenever a unit is voluntarily vacated.

The absence of such “vacancy decontrol” is the main reason that Santa Monica’s rent control law is considered among the toughest in the nation. Supporters of rent control oppose vacancy decontrol because they say it would eventually lead to the end of affordable housing in the city.

“I was very disappointed,” said Susan Packer Davis, rent board chairwoman. “There were 20 to 25 tenants who were supposed to testify but didn’t. It was rather intimidating, to say the least, and not very pleasant to sit through. We were trying to create a record of what happens to people who are ‘Ellised.’ ”

Rent control officials said they were seeking tenants’ testimony to present to the Legislature because they did not have statistics on what has happened to people evicted under the Ellis Act. The testimony, they said, would supplement the information in their study of properties taken off the market under the same law.

According to the study, the typical property has five units, most of which are one- or two-bedroom units. The average rent is about $355 a month.

Before June, according to the study, most of the properties taken off the market under the law had been purchased before 1986. But most taken off the market in the last half of 1989 had been purchased after Jan. 1, 1986, including 26 bought within the last two years.

“In other words,” the report concluded, “properties are not being Ellised by long-term landlords who are tired of being in the rental business. They are being Ellised by people who never intended to be landlords and who bought the property in order to remove it from the rental housing stock.”

Of the 144 buildings for which the rent board had received notices to withdraw as of the end of 1989, 18 had yet to follow through with eviction notices. The owners of four other buildings evicted tenants from the combined 18 units, but have since rented the apartments under rent control.

The study speculated that in those cases, the landlord may have filed the notice to withdraw “as a weapon in the targeting of an undesirable tenant, or as a way to develop a new group of tenants.”

Meanwhile, in a related matter, the City Council approved the second reading of an ordinance that would increase the minimum relocation fee for tenants evicted under Ellis from $2,000 to $3,000 and the maximum from $3,000 to $5,500.

Yvonne Craig, who owns and lives in a five-unit building, told the council that she was getting out of the rental business under the Ellis Act because the rent board would not allow her to recoup $40,000 in repairs to the 66-year-old building that she purchased in October, 1986.

Craig said the increase in relocation fees would compound her problems.

“Haven’t I been punished enough?” Craig asked the council. “I can understand a relocation fee increase if I was voluntarily going out of business, but what you council members need to understand is that I have been forced out of the rental business by the rent board and I am as much a victim as my tenants are.”