THE RENT BOARD AND THE CITY’S
“ELLIS ACT TAG TEAM”

Last issue, this column reported on Commissar Jeffrey Sklar’s public rambling statement that “Rent Control Law is not a law to help low income people. . .” That was not the only dumb he said at the Rent Board meeting of January 10, 2008. In this column, I will comment on some of the other things he said at the same meeting. To refresh your memory, Commissar Sklar said:

“. . .rent control law is not a law to help low income people, it was never designed for that, and it is a straw man argument and it is ridiculous to assume that rent control is only value is for the needy, it creates a solid community, it creates a safe community, it creates a community we all like to live in, that has prospered quite substantially and I believe that anyone that tries to divorce the rent control nature from its success, does so at their own intellectual integrity. I think that it is a wonderful law we have here and I am proud to sit on this Board and enforce it. And so I would say to those landlords who have enjoyed this community as have the tenants, I believe that it has endured to your benefit.

At the end of Rent Board Story Part 134, I asked a number of questions including the following:

IF landlords benefit from Rent Control, why does the City Council keep increasing the tenant relocation fees and penalties for going out of business under the Ellis Act?

WHY are landlords willing to pay tenant relocation fees and penalties in order to go out of business for many years to avoid being regulated by the Rent Board Commissars?

I never received an answer to those questions, so I figured that I could get answers to them at the Rent Board meeting of April 2, 2008, because on that date, the Rent Board issued its annual report titled, “Impact of the Ellis Act January-December 2007.” That Report documents the failure of the Rent Control Board to impose its “wonderful law” in a manner that makes Santa Monica rental property owners stay in the rental housing business.

For those of you who don’t know about that law, the “Ellis Act” was passed by the State Legislature in 1986, and it requires that local rent control agencies permit property owners to go out of the rental housing business. It is truly absurd and downright disgraceful that the State had to pass a law to establish such a right in a country where State and local Constitutions prevent government from taking life, liberty and property and because we went through a Civil War where it was established that involuntary servitude (i.e., slavery) was prohibited except as punishment for crimes. But as many who read this column know, “liberalism” now has the opposite meaning of individual liberty. I wanted to ask Commissar Sklar about that too, but he did not attend the meeting.

The Ellis Act Report documents the effects of Santa Monica landlords who have exercised their individual liberty since the State Legislature gave it to them in 1986 and it states many interesting facts. Page 2 of the report establishes that since July 1986, 497 properties with 2,370 units went out of business under the Ellis Act. It also says that 105 properties with 514 units went back into the “rental housing market” but does not actually say how many of those units are actually rented to tenants or how many of the original tenants moved back into the units they vacated. Such statistics would prove embarrassing to the Commissars who claim what a good job the Rent Board is doing to save the housing of Santa Monica tenants.

The Ellis Report also states on page 3 that last year (2007) that 135 units were “withdrawn” while 35 units were “re-rented.” But the term “re-rented” is misleading because is assumes that all units that were “withdrawn” were “re-rented.” The Rent Board does not actually know the number of units that were actually “re-rented” to tenants. That is because the Ellis Act requires that the property owners withdraw ALL rental units from the housing market, BUT it does NOT require that all units actually be rented to tenants when the building “re-enters” the housing market. I know of many buildings that have officially “re-entered the housing market” but are actually are occupied by property owners, their friends and family. This deception is caused because the Rent Board and the City set up a type of wrestling “tag team” in which they take turns beating up the property owners with City Ordinances and Rent Control Board Regulations as explained below.

When the State Legislature enacted the Ellis Act, it authorized the Rent Control agencies to administer and monitor certain provisions of that law. In Santa Monica, that agency is the Rent Control Board. But in June 1986, the City Council decided that it too would join in to make life more difficult for rental property owners, so it adopted Ordinances which required that only one owner (and immediate family members) could live on any “Ellised” property IF that one owner paid an “occupancy fee” to the City.

Consider that thought for a moment. If a number of owners buy a residential rental property, only one owner can live on the property IF that owner pays an occupancy fee to the City. The City managed to be more restrictive than the communist dictator, Joseph Stalin, who permitted more than one farm family to live on the farms he took from them during the “collectivization” of agriculture.
The Rent Board and the City then set up a network of spies (i.e., “inspectors”) who snoop around Ellised properties in order to determine of any unauthorized owners are living in the Ellised Units. (For more on this subject, see Rent Board Story Part 106 titled, “Peeping Pete and Other Strange Bedfellows,” for the story of the Rent Board’s most famous spy.) The Ellis Act Report at pages 2-3 describe the acts of the new “Ellis Task Force,” which now includes Rent Board inspectors, the City’s, Code Compliance officers, police officers and fire department employees. During the cold war, East Germany had spy network known as STASI. Today, Santa Monica has its SMASI (Santa Monica Association of Socialist Informers) who snitch on the capitalists who dare to live on the property they own. As stated previously, this is also referred to in the Ellis Report as the Ellis Task Force, or “ETF” for short.

In another attempt to keep Santa Monica property owners from going of the rental housing business, the City Council passed its first “Tenant Relocation Assistance” Ordinance in June 1986. The table below demonstrates the increased amounts of “relocation fees” that owners must pay to tenants from since the first Ordinance was adopted by the Council in July 1986.

The table above establishes that the “relocation assistance” has more than doubled since the first Ordinance was adopted and that while $3,000 would get you the right to occupy the largest unit in 1986 (two or more bedrooms”) it will not get you the right to occupy the smallest unit today. This increase in “assistance” is so outrageous that the City Council does not have these figures stated in the Municipal Code. In fact none of the figures stated above are in the Municipal Code. Municipal Code Section 4.36.040 titled “Amount of relocation fee” only states the “fees” in effect in March, 1990. Those figures are “adjusted at the inflation rate beginning in July 2007.

If this seems confusing, that is the way things are supposed to be. The first “fees” were established in July 1986 in response to the Ellis Act. They were increased to the amounts you see in the Municipal Code in March 1990. Then in June 2007, the City Council voted to increase the 1990 fees at the inflation rate. See Ordinance No. 2234CCS § 1, adopted 6/12/07. By not stating the amounts of fees first imposed or those in effect in June 2007, the City Council has attempted to create a statute of limitations defense to any judicial challenges of the increased “fees.” As an added bonus, City Council members who occasionally wander into apartment owners meetings around election time are less likely to be asked embarrassing questions about why they keep voting for increasing the tenant relocation assistance. The fact is that no City Council person ever voted against any of the “Tenant Relocation Assistance” ordinances. With friends like those on the City Council, Santa Monica property owners do not need any enemies.

Returning to the subject of Ellis Report presented at the Rent Board meeting of April 2, 2008, during that discussion some of the Commissars began talking about a 47-unit apartment building that recently went out of business under the Ellis Act and was not included in the Report. After listening to the discussion, it turned out that the property was located at 301 Ocean Avenue, the same building where former Mayor Clo Hoover lived, and where Chester A. Hoover filed so many lawsuits against the Rent Board and spoke against the Board at so many meetings for so many years.

The Hoover family did not go out of business under the Ellis Act. They sold the building about 10 years ago to a developer who decided not to put up with the petty harassment inflicted by the Rent Board Commissars like Jeffery Sklar who proclaim that “rent control was not intended to help low income people.” and that rent control makes everything wonderful for everyone in Santa Monica.

And if you don’t believe that Rent Control makes Santa Monica a better place for everyone, you can go to the Rent Board and get a copy of the report titled, “Impact of the Ellis Act January-December 2007,” and review the file for 301 Ocean Avenue Corporation. And year, you can watch the buildings being torn down. Then your suspicions will be confirmed.

But don’t look in the Municipal Code for the amount of “tenant relocation assistance.” The figures are from 1990. The Board will supply you with that information, although relocation assistance is not part of the Rent Control Law. History is being rewritten as we speak.

Not to worry how high the fees may go. Tenant “relocation fees” will probably always be less than the property value because if they exceeded property value, then tenants would become landlords and would have to pay the City “occupancy fees” to live there. Who needs that harassment?