Irvine Co. May Limit Rent Hikes

Moving to allay growing complaints from tenants, the Irvine Co. is poised to limit rent hikes for its long-term residents.

The step by Orange County’s largest landlord would be short of rent control but it comes as apartment dwellers in Irvine and elsewhere are starting to organize in response to skyrocketing rents.

In recent weeks, renters in Huntington Beach have picketed outside an apartment complex and others in Costa Mesa have met with church groups about their housing worries.

“I have a concern that we are pricing not only our working poor but our middle-class out of housing,” said Libby Cowan, mayor of Costa Mesa, who spoke at the church-sponsored forum. One renter told Cowan that her rent has been raised up to 40% over a nine-month period.

The city of Irvine is one of the most expensive apartment rental markets in the region. Average rent in the city has jumped 7% in the last year, to $1,456, in large apartment buildings. Earlier this year the city’s mayor, Larry Agran, and residents established a task force, which includes two Irvine Co. executives, to examine renters’ concerns.

Irvine Co. spokesman Rich Elbaum said the company is working out details of what he called a “longevity discount,” in which rent increases would be limited for tenants who have been in the property for an extended but as yet unspecified period of time.

Though the plan would likely benefit some renters, the average tenant only rents in Irvine 20 months, company and city records show. But cutting out college students, Agran said, raises the average to three or four years.

“A lot of fine people have been forced out of our community by rapidly escalating rents,” Agran said. “It’s a loss to our community when people who have invested in our community leave because rent is too high. We want to encourage longevity and stability.”

Elbaum said the plan would help retain longtime renters, resulting in more stability and other benefits for the company and renters. He said longer-term tenants tend to feel a stronger sense of attachment to the apartments and are generally quicker to report problems that need repair. Less turnover leads to less wear and tear.

Steve Donohue, president of Western National Property Management Co. in Irvine, said discounts are common in the rental industry to encourage longer leases.

He said his company, which operates about 20,000 units mostly in Orange County, typically discounts monthly rents by up to $30 a month at the start of a tenant’s second year. Other firms lower rents by as much as 5%, he said.

But easing rents for some tenants also might help the company retain higher occupancy levels during an economic downturn, said David Levy, a housing advocate at the Fair Housing Council of Orange County, who is a member of the Irvine task force.

“If the market softens up, people might feel loyal and won’t move to find a better deal,” he said. “It’s an experiment on a large scale.”

In Southern California, rents at larger complexes have climbed rapidly. The scarcity of new buildings, rising single-family home prices and sustained job growth have pushed rents up 9% in the five-county region from a year earlier, according to the latest report by RealFacts, a Novato, Calif., research firm.

In the first quarter, rents rose 13% in Los Angeles and 10% in Orange County, the report showed. Inflation rose less than 4%.

Those rents are far beyond the reach of lower-income workers, who find it toughest to get adequate housing. Despite robust economic growth, there has been little development of affordable housing in Orange County, said Rusty Kennedy, executive director of the Orange County Human Rights Commission.

“There’s no question that low-income people are finding it difficult to survive in a market where housing prices have gone absolutely in sane,” Kennedy said.

Irvine Co., based in Newport Beach, owns about 20% of the county’s land and controls almost 90% of Irvine’s rental housing market of 14,820 units, according to city records. The city, which the company developed, is the nation’s largest master-planned community.

The city’s task force is expected to release its report to council members early next month. Among the recommendations:

* Set up a formal system to resolve landlord-tenant disputes that in the final step could be mediated under the aegis of the Fair Housing Council of Orange County.

* Encourage developers to work more closely with employers to meet housing needs for less affluent workers.

* Encourage developers to collaborate with UC Irvine to provide more housing.

* Develop land at the former Tustin and El Toro Marine bases into hundreds of units of affordable housing.