THE RENT BOARD'S SECOND ANNUAL
RENT ADJUSTMENT OF 2002

I decided to attend the Rent Board held on December 12, 2002 because it was the final meeting of the year and was also the final opportunity for the Board to give the tenants a gift to celebrate the holidays and the New Year. Of course, whatever the Rent Board gives to the tenants comes at the expense of the property owners they regulate. It is so much more blessed to give than to receive— especially when you can get someone else to pay for it.

The last time the Rent Board made a holiday gift was in 1999 when it decided that landlords should pay the tenants an interest rate for security deposits that was higher than the owners could receive. Unfortunately (for the Board), ACTION filed a lawsuit challenging that gift and it now looks like the Board might have to give it back. Therefore, for 2002 the Rent Board decided to give the tenants a more limited gift by revoking part of the general adjustment they gave some of the Santa Monica property owners in 2001.

As you probably know, the Rent Control Law requires that the Rent Board give an annual general rent adjustment to all property owners in September each year. In September 2001, the Rent Board gave a very generous adjustment of 4.2%, which was the highest general adjustment since 1990. In addition to the regular general adjustment, owners who paid all electricity for their rental units in "master meter" buildings were allowed an additional rent increase of $10.00 per unit/month. This generosity was not popular with some of the Commissars, so this year they decided to revoke that $10.00 general adjustment.

The Board then needed an expert opinion to justify revocation of the past rent adjustment so it hired its favorite expert, Dr. Kenneth Baar, to write a report about the changes in electrical expenses. As you may recall, Dr. Baar is the expert who hired a Santa Monica Rent Board attorney to get his own rental units out of Berkeley rent control jurisdiction, but be remains a darling of the local Sandinista Rent Board anyway. Dr. Baar's Report justifies the reduction because it does not measure the change in electric rates since 1978, which is the "base year" for Santa Monica Rent Control and was also a time of double-digit inflation. His analysis begins in 1985, which was six years after the Rent Control Law was adopted and after inflation had cooled down during the first Reagan administration.

By limiting the inquiry to a comparison of 1985 electric rates to those of 2001, Kenneth Baar wrote a report which found that the cost of electricity for the average rental unit had only increased from $20.04 to $25.69 during that time. Therefore, those of you who thought that electric rates have greatly increased over the past 15 to 20 years simply got it wrong because they only increased by approximately $5.50 per unit per month. At least that is what the Report written by Kenneth Baar says.

The Rent Board then had a public hearing on this issue that was almost as silly as the Baar Report. Four or five tenants spoke at the public meeting and informed the Board it was a good idea to reduce the rent by $10.00 per month because landlords are rich enough already. Some of them argued for an "excess rent' refund as well. Rosario Perry and I were the only ones who argued against this proposal. I also argued that the Rent Board should not pass this Regulation on December 12 and make it effective on January 1 because a thirty days notice to change terms of tenancy should be required. But the Board was not impressed by that argument and decided that it only applied when landlords gave notice to tenants, not the other way around.

I finally argued that the Rent Board should not be too impressed that a few tenants spoke in favor of a rent rollback because Santa Monica tenants proved in the last election that they did not want to pay one more cent for rent than they had to. That is why they refused to grant the Board Commissars a pay raise and free health insurance. But the Board did not seem to like that argument either. So they revoked the $10.00 adjustment as planned.

On the following Tuesday, December 17, in the same council chambers where the Rent Board reduced the rent to help Santa Monica's "poor" tenants, our illustrious City Council decided to double the parking meter fees so that it will cost $1.00 per hour to park downtown and on the coast and 75 cents an hour to park elsewhere. They also decided to add another 360 parking meters. The City Council staff estimated that the City will receive an additional three million dollars per year that way. Of course, the City desperately needs the money. They only have approximately $360 million per year to spend and a million dollars a day is not enough money where the City's finances are concerned. Here is an interesting fact.

According to the Santa Monica Mirror published the week of January 3-8, 2002, the population of Santa Monica declined from 86,905 to 84,084 between 1990 and 2000. And according to City budget report the City's budget is approximately $360 million per year. By dividing that $360 million by 84,084 people who reside in Santa Monica, the City spends $4,281.34 per person per year. Yet they don't have enough money.

Every time I visit the City Hall Council Chambers, I shake my head at the waste and hypocrisy that takes place within those walls. On Thursday evening, the Rent Board is cheating the landlords out of $10.00 per month and on the following Tuesday evening the City Council is cheating all of us out of a dollar per hour to park our cars. So the Rent Board saved the tenants $10.00 per month. Now they can afford to park in the City an additional 10 hours per month. Big deal!

I was thinking that if rent levels were indexed to the City budget or the Rent Board budget two good things would certainly happen. First, the City budget would be much smaller and we would all save money because tenants refuse to spend one cent more than they have to. Second, annual rent adjustments would be so high that property owners would not care about $10.00 per month or vacancy decontrol.