Officials Weigh Abolishment of L.A. Rent Control : Housing: A manager in the city’s program says it is unnecessary in a depressed economy and prevents landlords from maintaining buildings. Advocates for the poor disagree.
Los Angeles housing officials are debating the merits of the city’s 16-year-old rent stabilization program and may soon recommend to the City Council that rent controls be phased out.
Barbara Zeidman, a Housing Department assistant general manager, said the controls may be unnecessary in today’s depressed real estate market, which has seen rents in uncontrolled apartments decline.
Zeidman said the controls are not appreciably helping many renters. High vacancy rates in most parts of the city have given tenants greater choice of where to move and, thus, more bargaining power in obtaining reduced rents.
But she said the controls “may be creating damage” to the city’s aging housing stock by making it harder for some struggling landlords to maintain their buildings.
Zeidman said that no firm decision has been made to recommend an end to the controls. But in remarks during a recent interview, she left little doubt that she is leaning toward such a controversial recommendation as a result of a City Council-ordered study of their effectiveness.
“The question is, if you’re not getting economic benefits, should you be doing economic regulation?” Zeidman said.
Zeidman said she will give her department’s recommendation to the council in late July or early August when the study is complete. She is scheduled to brief the city’s Rent Adjustment Commission today.
The Los Angeles rent control law limits rent increases to from 3% to 8% a year--depending on the rate of inflation. This year the allowable rate is 3%. It applies only to tenants in buildings built before 1978, when the ordinance was passed. These buildings contain at least 60% of the city’s apartments.
When a tenant moves, a landlord can hike the rent to whatever the market will bear. More restrictive rent laws in Santa Monica and West Hollywood do not have this vacancy decontrol provision.
Even in today’s market of declining rents, some long-term tenants are paying below-market rates.
To protect them from being kicked out just because landlords want to set higher rents, the law requires landlords to demonstrate that they have just cause to evict. But landlords complain that this is an onerous burden because it is sometimes difficult and expensive to gather evidence that, for example, a tenant is selling drugs and is driving away law-abiding residents.
Landlords say they are also being hurt economically because the law limits their ability to pass along the costs of large capital improvements--such as new roofs or earthquake damage repairs--to tenants.
Ralph Esparza, director of the city’s rent stabilization program, said data indicates that the city’s housing stock is deteriorating because landlords are not making needed repairs.
To reassure senior citizens and other long-term renters who pay below-market rents, Zeidman said any changes she would recommend would be gradual and not affect tenants unless they moved. She also said she would favor strengthening eviction protections and expanding penalties for landlords who do not provide basic services such as hot water.
The rent control movement became a powerful political force in the late 1970s in the wake of unkept promises by landlords to pass property tax savings from Proposition 13 on to tenants in the form of lower rents.
The City Council adopted its first set of controls in 1978, at a time when real estate speculators were trading apartment buildings as if they were baseball cards and raising rents sky-high to pay for ever-higher mortgages during a period of double-digit inflation.
At the time, said William Shaw, president of the Apartment Assn. of Greater Los Angeles, vacancy rates hovered at 1% or 2% and tenants who wanted to move had few options. By contrast, he said, vacancy rates now are greater than 9%. The Housing Department pegs the vacancy rate at somewhat less.
But there is no disagreement that the rental market in Los Angeles is fundamentally different now than when the controls were passed.
“Rents since 1989 in the Greater Los Angeles area have fallen; vacancy rates have risen,” Shaw said. “I’ve been in the rental housing business since 1974. This is the most difficult period I’ve ever been through.”
Housing Department officials declined to release data from their unfinished study on rent rates in the city, referring a reporter to Shaw’s association.
Shaw said he had no formal data, but, by his own experience, a low-end, two-bedroom apartment in Pacoima that rented for $575 four years ago might rent for $475 now. He said a luxury two-bedroom apartment in Encino that rented for $1,500 four years ago might rent for $1,200 now. Another association official, landlord Andre Vaughn, said rents for a typical two-bedroom apartment in the Crenshaw District have dropped from about $725 to $625 in the same period.
Any attempt to roll back rent control would probably be subject to intense political debate.
“We don’t believe this is the time to roll back rent control,” said Rod Field, housing coordinator for the Legal Aid Foundation. “If there is a large vacancy rate, it’s because of the economy. Basically, people can’t afford housing. Period.”
In some poor areas of the city, high vacancy rates coexist with unprecedented overcrowding. Many families, particularly those of recent immigrants, have been forced to double or triple up to pay rent.
Officials point to overcrowding as evidence that rent control is not solving the affordability problem for the poor. But advocates for the poor worry that removing controls will only make things worse.
“If you take off rent control, rents are going to go up dramatically,” Field said.
