Rather than force landlords to pay interest on security deposits, the Beverly Hills City Council agreed Tuesday to give landlords two months to voluntarily pay interest to tenants.
Councilwoman Charlotte Spadaro said she is convinced that landlords will pay voluntarily.
"Let's see if landlords voluntarily agree to pay interest to tenants. There's already enough government intrusion," she said during a council study session .
The council will wait two months before considering a law that would force landlords to pay interest to tenants.
Spadaro said she would personally contact the city's major apartment owner, Donald T. Sterling, who also owns the Clippers professional basketball team.
"I think Don will do it," she said. "Let's use our moral persuasion."
Stirling could not be reached for comment.
Councilman Robert Tanenbaum, who had asked that the council consider adopting an ordinance making interest payments mandatory, said in an interview that he does not expect the owners of the city's 8,200 apartment units to comply voluntarily.
"That would be wonderful if they did," Tanenbaum said. "It's a noble gesture. I hope it works, but if it doesn't, then we should do something."
Gerald Factor, a board member of the Apartment Assn. of Greater Los Angeles, an apartment owners group, said he does not believe owners will voluntarily comply.
"The process of keeping track on an interest-bearing account would be a complicated one, especially for small apartment owners," Factor said.
"I think there is also an awful lot of bad feelings among apartment owners that recent changes have made their lives more difficult and their apartments less profitable. This would be just another one," Factor said.
"There may be some way to simplify the process to give the renters some benefit from the security deposit, but there should also be some benefit to the owner to offset it," he said.
A security deposit is usually equivalent to one month's rent and is usually returned to tenants if the unit is left clean and in good condition.
Council members expressed concern over requiring landlords to segregate security deposits from other assets and when or how interest payments should be made.
Councilman Maxwell Salter at the study session questioned whether the small amount tenants would earn on their security deposits was worth the effort. He said, for example, a tenant paying $1,000 a month would earn only $250 over five years at current interest rates of 5% annually.
"Are we creating for ourselves another bag of worms?" Salter asked.
Tanenbaum said, "Whatever it is, whether it's a dollar or $50 or $100, it is the tenants' money. There's a principle involved."
West Hollywood last year passed an ordinance precluding landlords from increasing the amount of a security deposit during the term of the tenancy and requires the landlord to pay the tenant 5.5% interest on the security deposit at least once every five years through a rent rebate or payment.
The Santa Monica Rent Control board will consider a similar ordinance tonight.