Despite Drop in Many Rents, Study Urges Continued Controls : Housing: Suggestion upsets both landlords, who say the L.A. law makes it hard to evict criminals, and tenant activists, who say the ordinance is too weak.
City rent controls, which cover about 500,000 Los Angeles households, should be continued even though landlords’ profits are dropping and the law has “produced little or no dollar savings to tenants” in recent years, says a study prepared for the city’s Housing Department.
Although the recession and high vacancy rates forced many rents down somewhat, the average income of tenants fell faster, the report says. “Even if the real cost of their rents has been lowered, many more tenant households are now paying rents that are unaffordable by the most widely used federal standards,” declares the study.
Written by the Hamilton, Rabinovitz and Alschuler Inc. consulting firm, the report is expected to prompt months of debate on whether the city should change the rent stabilization ordinance. The 1978 law, which covers only buildings existing then, limits annual rent increases to between 3% and 8%, pegged to inflation. This year, 3% hikes were permitted and stabilized rents averaged $653 a month.
The study looked at rent stabilization amid what it showed to be a very gloomy overall rental housing market in Los Angeles, one that suffers from severe overcrowding, high vacancies and little new construction. In an accompanying letter to Mayor Richard Riordan, Housing Department General Manager Gary W. Squier warned that parts of Los Angeles are threatened with the decay that ravaged New York’s South Bronx.
“We are at a fork in the path of housing policy,” wrote Squier, who urged a more active city role in offering financing and technical aid to landlords and homeowners. “We can let the market take its course and stand back as real estate and neighborhoods go through a shakeout process, as has already occurred in most rust belt cities; or we can intervene to reverse the decline of housing and neighborhoods.”
Unfortunately, his call for activism came just as the Clinton Administration proposed to radically overhaul the federal housing programs that support most local initiatives. Squier and other experts fear a resulting steep drop in federal dollars.
In many U.S. cities, landlords have complained that strict rent controls have contributed to abandonment. The Los Angeles consultants conclude that the law here is not so disruptive because it lifts controls when housing is vacated, while also discouraging unfair evictions.
In all, the report gave a lukewarm endorsement of rent stabilization, mainly for what it could do in the future if Los Angeles recovers from the recession, riots and earthquakes. Still, the recommendation to maintain the status quo upset both landlords and tenant activists.
With many rents declining and post-earthquake apartment vacancies now estimated at nearly 7%, the only reason for controls is “to maintain jobs for bureaucrats, and that is not a very good use of taxpayers’ money,” contended Charles Isham, executive vice president of the Apartment Assn. of Greater Los Angeles. That group represents about 25,000 landlords in the county. Isham alleged that the ordinance makes it almost impossible to evict drug dealers and criminals, leading to buildings’ decay as good tenants leave in disgust.
In contrast, the pro-rent stabilization Coalition for Economic Survival advocates the end to vacancy decontrol, suggesting that landlords cause overcrowding in many apartments by keeping others vacant rather than lowering rents. “One of the reasons we are facing such a disaster in our housing situation is that the ordinance is not strong enough,” said Larry Gross, coalition executive director.
Among alarming statistics, the report and Squier’s so-called Housing Barometer noted that the percentage of owner-occupied housing in the city dropped from 46.2% in 1980 to 39.7% a decade later; the number of severely overcrowded apartments doubled to 20% of all rental units; the share of households paying more than 30% of their incomes to live in rent-controlled apartments rose from 42.4% to 61% between 1984 and 1993, and to make up for lost income, landlords on average cut maintenance by about 15% in that period.
One bright spot was that the median price of single-family homes in the city dropped to about $183,300 last year, although that is still more than many families can afford.
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Housing Trend The vacancy rate in Los Angeles apartments remains high, and even destruction by the Northridge earthquake hasn’t returned the city to the days when apartments were hard to find. Here are the multifamily housing vacancy rates in the city.Source: L.A. Housing Department and DWP.
