The Beverly Hills City Council on Tuesday imposed a 10%, once-a-year limit on rent increases on many apartments, significantly expanding the scope of the city's 7-year-old rent stabilization law.
Tenants' representatives complained that landlords would be tempted to treat the 10% cap as a minimum instead of a maximum increase, while landlords said it was overly restrictive.
"There are owners in this town that are well below market, and they're going to be impaired as a result," said Sam Schermer, a member of the apartment owners' delegation to an advisory committee set up by the council.
'What Can We Do?'
"But we're going to live with it--what can we do?" Schermer said.
He said that a few apartment owners might impose maximum rent increases, but that most would not because market forces, such as competition from neighboring cities, would keep the increases down.
But Sheldon Sacks, a renters' representative, disagreed.
"You're sticking your head in the sand if you think that people aren't going to take advantage," Sacks told the council. "You know it, I know it, everybody knows it. They (apartment owners) would be foolish if they didn't."
Vice Mayor Benjamin H. Stansbury Jr. responded that the 10% limit was intended to block steep rent increases such as those imposed by the city's biggest landlord earlier this year.
"We're dealing with an extraordinary limit that we expect nobody to take, and the free market will operate below that," Stansbury said, recalling that voters rejected a tougher, Santa Monica-style rent control referendum in 1982.
That measure would have provided for apartments to be registered and for rents to be controlled even after a change in tenants, which would not be the case under the latest changes.
4,000 Units Affected
The new ordinance will apply to about 4,000 of the 8,200 multiple-unit rental apartments in Beverly Hills, officials said. The rest are already protected by rules that link rent hikes on the city's cheapest apartments to increases in the consumer price index.
The new rules will apply to buildings with three units or more. They call for the base rent to be determined by the rent charged as of April 30, for only one increase of 10% or less in a 12-month period, and for written notice of any increase at least 60 days in advance.
Additionally, owners and renters would be allowed to negotiate arrangements under which the rent could be raised by more than 10%. If the tenant refused to go along, however, the 10% rule would apply.
Councilwoman Donna Ellman said it was important to allow for such arrangements because owners of higher-priced apartments might be reluctant otherwise to make expensive improvements on their property.
There was previously no limit on rent increases for the apartments affected by the new rules, which are scheduled to go into effect in mid-October.
They will take the place of a temporary rent freeze imposed after Donald T. Sterling, the city's biggest landlord, increased the rent on some apartments by more than 30% earlier this year.
A spokesman for Sterling, who owns about 550 Beverly Hills rental units in addition to the Los Angeles Clippers professional basketball franchise, said he was not available to comment on the council move.
But another Sterling associate said last week that "we always abide by whatever rent control rules and regulations there are."
One speaker won laughter and cheers at the packed council meeting Tuesday night with a semi-serious proposal that the city seize Sterling's buildings by eminent domain and convert them to senior citizen housing. The council did not act on the suggestion.
The vote of the five-member council was 4 to 0 to approve the ordinance, with Mayor Charlotte Spadaro abstaining because she owns an apartment house in the city.
The council settled on a 10% limit after the landlords' delegation to its advisory committee recommended a 17.5% cap and tenants held out for 8% or the rate of the consumer price index, whichever is less.
At the last minute the tenants proposed that the cap be either 10% or the rate of increase in the consumer price index, whichever is less, but the council stuck with the 10% figure proposed by Michael Fasman, the neutral chairman of the advisory committee.