The Santa Monica Rent Control Board continues to promote its inclusionary housing program as a way to stop landlords from evicting tenants and going out of business, but many landlords say the program provides too little and comes too late.
Although the program was hailed at its unveiling in June as a way to give landlords a better financial return while ensuring an adequate supply of affordable housing, a growing number of landlords say they would rather quit the business altogether.
At latest count, the owners of 113 buildings with nearly 600 units had filed notices of intent to evict their tenants and shut down their buildings.
Landlords say the inclusionary housing program doesn't give them enough incentive to participate. Meanwhile, tenant groups, the dominant political force in a city where 80% of the residents are renters, say the concessions to landlords are too generous. Despite the program's hostile reception, the Santa Monica Rent Control Board is expected to give it final approval later this month and put it into effect in October.
The voluntary program would allow landlords to raise the rent substantially--as much as $900 in some cases--on apartments when they are vacated. In return, they would be required to set aside an equal number of apartments for low-income renters at rates as low as $266 a month. The amount of rent the landlord forgoes by renting to the low-income tenant would be more than offset by the increase on the "incentive" apartment.
But many landlords argue that the program will not work because vacancies occur so infrequently. A recent telephone survey of tenants by the rent board found that 62% have been in their apartments five years or longer.
"The mom-and-pops don't get vacancies," said landlord Wesley T. Walker, owner of a six-unit complex, noting that two of his five tenants have been in their apartments for 25 years. "I'll probably go before they do."
The poor financial returns particularly worry elderly landlords who counted on rental income or land appreciation to augment Social Security benefits and pensions.
"I bought this place in 1963 with the idea of having a little something to supplement my income after I retired," said Walker. "Now I'm 80 and . . . I can't even afford to paint this place."
Since rent control was instituted in 1979, the rent board has generally limited the allowable annual increase to about two-thirds of the increase of the Consumer Price Index. The result has been rent increases of about 3%.
For an apartment renting at $220 a month in 1978, for example, that has meant an average increase in the monthly rent of about $7--and a monthly rent in 1989 that is still below $300. The average rent for regulated apartments in Santa Monica is less than $500 a month, and is about half the prevailing rate for apartments in neighboring areas of Los Angeles.
Though the decision to go out of business may be primarily one of dollars and cents for landlords, supporters of rent control say the landlords' financial needs are more than outweighed by the need for affordable housing.
"That's the underpinning of rent control," said Susan Packer Davis, chairwoman of the rent board. "You are dealing not with a stock commodity that you buy and sell, but with people's housing. That's why we have to protect it. Just because you are not making enough money is not reason enough to evict people out of affordable housing."
For landlords, the toughest provision of Santa Monica's rent law--and what sets it apart from rent control laws in most other cities--is that the controls remain in place when a unit is voluntarily vacated. Davis and other city officials say that vacancy decontrol would mean the eventual loss of all affordable housing.
"Rent control is not designed just to protect existing tenants, but to preserve the stock of affordable housing," she said. "I see the inclusionary housing program as a compromise that allows landlords to raise rents on some units while still preserving our stock of affordable housing."
Some landlords say they would like to get out of the rental business immediately, but that is costly too. Under city law, they would have to pay relocation costs of up to $4,000 per unit.
Luisa Kot, 71, and her husband Paul, 69, for example, have owned a five-unit apartment complex in the 2900 block of Broadway in Santa Monica since 1971. They live in one of the units and were renting the other four.
In 1978, the year before rent control was implemented in Santa Monica, the Kots collected $699 for the four units. After 10 years of rent control, the maximum they can collect is $993.
But the Kots do not take in that much. When tenants voluntarily move, Luisa Kot said, "It's cheaper for us to leave them empty." At present they rent out just one apartment, a two-bedroom unit, for $296.64 a month.
'We Just Wait'