Board Stories #101, January 2003
As the New Year 2003 arrives, Santa Monica "landlords" are faced with an amended Rent Control Law which was approved by the voters this past November. Apparently, the Rent Control Law needs to be stronger because "bad landlords" keep on "harassing" the tenants and making the housing shortage worse. Although laws are usually applied in a manner that rewards good conduct and punishes bad conduct, anyone who has watched our Rent Board and City Council in action knows that they treat landlords as the "enemy of the people" while those who invest nothing in rental housing are always the "good guys."
In order to help you make it through the coming year, I have reviewed provisions of Santa Monica laws and regulations to determine which actions are rewarded and which are punished so that you can adopt a few resolutions for the New Year and become "good" landlords. The Regulations and Ordinances adopted by our illustrious Rent Board and City Council seem to establish the following rewards and punishments.
to seniors, disabled and families with children:
The City Council also made the situation worse by adopting a "Tenant Relocation Assistance Ordinance" in June 1999 which requires that if you need to rehabilitate a rental unit in which tenants will be required to temporarily vacate, you will also be required to pay "any additional costs attributable to a tenant's special needs, including needs resulting from disability or age." See Ordinance 4.36.100. Thus, tenants with "special needs" mean more expenses for you.
Finally, the Rent Control Law as amended in November 2002 permits children, domestic partners and spouses to inherit rental units if the tenant who rented the unit from you dies or becomes incapacitated. Therefore, every time you rent to people who may have children, you potentially rent the unit to them and all their descendants forever. And, of course, the more children on the premises, the greater the chance you will end up with an expensive complaint based upon the existence of lead paint.
to low-income tenants under government-sponsored housing programs:
If you insist upon having earthquake insurance and there is another earthquake, sell the building as soon as you get the money from the insurance company. The Board will not be able to impute the proceeds as "income" against the new owner because he or she never received the "income." The Rent Board tried to impute earthquake proceeds as "income" to a new owner in at least one case, but the court quickly reversed it. The Board's policy rewards those who "take the money and run." Go figure the quality of thought that went into making this policy.
garage or parking spaces to residential tenants:
Then on September 23, 1999, the Rent Board made the situation worse by adopting Regulation 4400 to compensate tenants for inconvenience caused by "construction impacts." Therefore, if your building ever needs substantial rehabilitation and/or suffers a catastrophic event such as earthquake, food or fire, you will not only have to pay the cost of reconstruction and relocation, but also the cost of inconveniencing your tenants during construction.
In summary, more than twenty-two years have passed since the Rent Control Law was adopted by Santa Monica voters. At that time, Jimmy Carter was President, the inflation rate was 14% and mortgage rates were 22%. Although inflation and high interest rates disappeared long ago, the radical rent controllers keep blaming "bad landlords" for a shortage of affordable housing that keeps getting worse while never seeing themselves as a major part of the problem.
And if you don't believe it then go to the Rent Board and review the Rent Control Law and the Regulations. Or tell them that you want to make your building safe by retrofitting it before the next earthquake arrives and ask them if there are any additional costs imposed by local laws and/or a short-form rent increase process which would permit you to recover those costs.
Then you will discover why more government regulation always means less housing and why, in Santa Monica, the only "good" landlord is a "bad" landlord.