EARTHQUAKE / THE LONG ROAD BACK : Santa Monica’s Low Rent May Be a Quake Casualty

Mother Nature has done for Santa Monica landlords what 15 years of lawsuits could not: evict more than 1,000 low-rent tenants.

But it’s a classic Pyrrhic victory because their apartment buildings may have been lost as well.

Early estimates indicate that about 100 rent-controlled apartment buildings are uninhabitable in a city that probably has the toughest rent control law in the nation.

That means tenants in the estimated 1,000 units in those buildings, who paid as little as $300 a month, are now facing rents many times that. And many $500-a-month, ocean-view apartments may go the way of the 5-cent stamp.

In a city that guards each rent-controlled unit as if it were the Hope Diamond, rent control long has been close to the hottest local issue, rivaled only by what to do about the homeless. Opposing rent control dooms a candidate in local elections.

The destruction caused by the temblor thus is expected to set off a legal and political tremor that will reverberate long after the Santa Monica Freeway is in operation.

“The earthquake has created a lot of economic havoc in Santa Monica,” said Mary Ann Yurkonis, administrator of the Santa Monica Rent Board. “This is clearly going to have the long-term effect of decreasing the number of affordable units.”

Moreover, even if most of the units are rebuilt, Santa Monica renters who are used to paying wholesale for housing are in for sticker shock.

“There will be rent increases,” Rent Board member Lisa Monk Borrino said. “It’s naive to think there won’t be.”

Still to be determined is whether landlords who rebuild will be free to charge full market value for their units--a development that would send rents skyward.

Displaced tenants in line seeking financial assistance at a local FEMA disaster center Thursday were already talking about high prices, brokers fees and coming up with first and last months rent.

Jody Johnson had lived for nine years on the third floor of the historic Sea Castle, located at the beach near Pico Boulevard. Her rent, utilities included, was $450.

“I’ve been calling about apartments,” she said, “but they want a $3,000 finders’ fee. Who has that kind of money?”

Under current controls, the Rent Board each year sets a tight cap on rent increases for the city’s 30,000 apartment units. Recently, the allowable increase has been 3% to 4%. As a result, people hold on to their apartments for years or decades. Landlords, in turn, constantly clamor for relief, turning to the courts and state Legislature in a bid to charge market levels--at least after tenants move out.

In wake of the earthquake, many displaced tenants were suspicious that their landlords would use the catastrophe to get rid of them and perhaps get higher rents, or even convert to condos.

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The Santa Monica City Council has already passed one law this week to facilitate the repair process, waiving permit fees. Council members will discuss what to do about buildings needing major or total reconstruction at a special session Monday evening.

The trick for them is to balance their strict low-rent thinking with the need to give apartment owners incentive to repair or rebuild by allowing them to recoup the cost through increased rents.

“We want to preserve every single housing unit we can,” Mayor Judy Abdo said. “We want people living in them to get them back.”

To do that, the pro-rent control forces almost certainly will have to accommodate landlords to encourage them to rebuild, an unusual situation in light of a 15-year relationship of strife and distrust.

Abdo said this will not be a problem because of a shared goal with landlords: “Their desire to have tenants in their building paying rent is the same desire that we have,” she said.

The question left to decide is how high the rents can go.

Robert Sullivan, owner of one of the largest Santa Monica property management companies, said owners are of a mind to rebuild if possible. “If the Rent Board is reasonable . . . most landlords will repair their buildings. If they are not reasonable, they won’t because they won’t be able to afford it.”

Although tenants might suppose that landlords are gleeful at the prospect of higher rents--or getting out from rent control altogether, as is possible in some cases--that is not true, according to landlords and their representatives.

“This has not helped landlords at all,” attorney Chris Harding said. The property owners still have their mortgage payments to make, he noted, but they have no tenants paying rent.

Santa Monica officials are working to attract state preservation money to assist in rehabilitating those buildings of historic significance, Abdo said.

Among them are the Sovereign, the El Cortez and the Charmont, all apartment buildings in the hardest-hit section in the north end of Santa Monica. The historic 150-unit Sea Castle seems beyond repair, however, despite promises by city officials to fight to get it rebuilt.

But Borrino predicted that the city will be able to save many of the buildings that are currently tagged as unsafe. Rent Board officials worry that some panicked tenants will act rashly and give up hope--or their units--before inspectors and engineers take a more thorough look at the structures.

They even recommend, if at all possible, paying the rent.