SMRPH TO THE RESCUE

As we all know by now, market rents for top-end units have decreased in the last year. I have been hearing over and over from owners that completely redone two-bedroom two-bath units north of Wilshire that used to rent for $2,200 to $2,400 a month are now between $1,800 to $1,900. Yes, there are still some units that command more money, but it’s taking longer to find quality tenants for those units when in the past they would have been snapped up immediately. I can understand that the dip in the top tier rental rates might not be too great a concern for some people since, let’s face it, these rents are tremendous compared to the rent control rents we received prior to our historic win with Costa-Hawkins.

However, we must look forward a few years and recognize that sale prices will undoubtedly dip as buyers realize that they can not achieve the rents that they were projecting a year ago. In the recent past, we have enjoyed a quick run-up in property values. This was fueled by the rise in rental rates fueled by the dot.com companies and the stock market boom. Now that the dot.com bombs have left craters in our economy, our top rental rates have felt the negative effects as well. Eventually it will all turn around. However, our rental rates move up much slower than a rebound in economy. Thus, it may take two to five years before our top rental rates reach the historic highs of a year ago. Market values will probably remain flat or may even decline in the next several years.

A revival of the old TORCA Condominium Conversion law will enhance the values of every building in Santa Monica. SMRPH as the new TORCA law is called, will be our savior. SMRPH will not have a sunset clause like TORCA, so even if you are not planning on selling your property for the next ten or twenty years, SMRPH should be around to help enhance values.

SMRPH is being attacked by Denny Zane and SMRR as being anti-rent control and sponsored by the big hotels. Nothing can be further from the truth on both counts. The hotel lobby has given us virtually no money. They’ve got their own battle against SMRR because of the living wage issue. SMRPH needs the support of each and every owner and tenant in Santa Monica.

SMRR’s assertion that home ownership is contrary to rent control is both hypocritical and just flat wrong. Actually, condo conversion and home ownership is the ultimate form of rent control. Yes, I said it– home owner-ship is the ultimate form of rent/price controls because a tenant can then fix their housing cost by obtaining a low interest mortgage that will not go up over the years. The tenants who purchased their units five or ten years ago now have mortgage payments which are less than there rent control rents, plus they have a hundred thousand dollars or more in equity which ultimately can be used for their retirement. It’s interesting that the SMRR leader-ship all own their own homes, but they don’t want their lowly constituents to ever achieve home ownership. They want to keep them as tenants and servants to their cause in perpetuity. What hypocrisy. But then SMRR and truth were never close allies.

Since we don’t have any huge sponsors for this initiative, we need everyone’s support. Yes, we need your money. But, we also need owners and tenants help in getting the word out. The best way to get the word to the tenants is to have small meetings with several of the tenants in your building. Every building has one or more tenants who are keenly aware to what’s happening at the property and know most of the other tenants. We need to meet with those tenants and to educate them as to the benefits of SMRPH and let them carry the information to the other tenants in the building. This is the best way to combat the negative campaign that is going to be well funded by SMRR. These meetings will be held in a low key, non-confrontational manner. Please give me a call and arrange for a meeting so that the word can get out as soon as possible so we can build grass roots support. Additionally, if you or any of your tenants would like to be part of the training team to go out and talk to tenant groups please give me a call or call the Action office.