Author: Joe Brizzolara / Feb 21, 2018
Rents are on the rise in Southern California.
Harvard’s Joint Center for Housing Studies found that in 2015, 57.1% of residents of the Los Angeles-Long Beach metropolitan area were paying over 30% of their income on housing. 31.8% were paying over 50% of their income on housing. A forecast released last year by USC’s Casden Real Estate Center predicts that rents will only be getting higher. By 2019, the average monthly rent in Los Angeles County will increase from 2,237 to 2,373, a 6% increase from 2017.
Housing advocates in Long Beach, Inglewood, Pasadena, and Glendale are working to place rent control on the November ballot in the hopes of curbing these increases.
“Rent control” commonly refers to regulations set in place to cap the amount a landlord can charge a tenant for rent. Along with price ceilings for how much rent increases, these laws often include acceptable reasons for a landlord to terminate a tenancy known as just-cause, and some form of independent body that enforces these laws and settles disputes between landlords and tenants.
In Southern California 4 cities already have rent control: Beverly Hills, Santa Monica, West Hollywood, and the City of Los Angeles.
Currently, the State of California has two laws that restrict cities’ abilities to enact rent control. The Costa-Hawkins Act, passed in 1995, limits rent control in 2 ways. First, it limits the types of units that can be rent controlled. Single-family homes, condos, and newly-constructed units are all exempt. Second, it bars “vacancy control” meaning that when a unit becomes vacant, a landlord can charge whatever rate a new tenant is willing to pay.
The Ellis Act, enacted in 1986, allows landlords to evict tenants from rent-controlled units if they decide to remove them from the rental market. Typically, these units are repurposed for condos, demolition, or hotels.
Along with local rent control initiatives, housing advocates are attempting to repeal Costa-Hawkins with a state-wide proposition this fall. This comes after AB 1506, a bill that would have repealed the Act, failed to pass in the California State Assembly Housing and Community Development Committee by one vote. One of the bill’s authors, Richard Bloom-D of Santa Monica, told the committee: “We have to be frank with one another, new units in sufficient quantities will take years to build. In the meantime, the current dramatic shortage of units contributes to rapidly escalating rents in much of the state, affecting a vast range of Californians on a daily basis, from young to old across all ethnic groups and even including those holding good, middle-income jobs”.
Alliance of Californians for Community Empowerment, one of the organizations behind the propositions, said on their website: “While the bill to repeal Costa Hawkins is dead in the capital, the movement to repeal Costa Hawkins is just getting started in the streets!”
Let’s take a look at the various local rent control initiatives underway in the Southland:
According to the site Zillow, the median rate for an apartment is 2,200, up 10% from last year. Organizers at Housing Long Beach are hoping to stop this increase with their initiative “The Long Beach Rent Control Ordinance”. They’ll need to collect signatures from 10% of the city’s registered voters, about 27,000 total, to make it on the November 2018 ballot.
Housing advocates see the situation of rising rents as dire for low-income residents. About 20% of Long Beach lives in poverty, according to the most recent figures by the U.S. Census Bureau. “We’ve had folks who have received 55% rent increases with a 60-day notice,” said Benyamin Chao, an organizer with Housing Long Beach. “To us, that’s basically an eviction notice because those people are not able to pay that rent.”
“There was one person who came in a few months ago who had an 85% rent increase,” says Jordan Wynne of Housing Long Beach. “Landlords are taking advantage of the open market we have here.”
Wynne says they based their initiative, in part, on rent control initiatives successfully passed in Northern California in 2016. Voters in Richmond and Mountain view approved rent control while voters in Burlingame, San Mateo, and Alameda rejected it. “We saw that as a great opportunity to start mobilizing and really get this rent control movement started in Long Beach,” said Wynne.
Like ordinances in Mountain View and Richmond, Housing Long Beach’s initiative includes just-cause. These reasons for a just-cause eviction include failure to pay rent, breach of lease, owner’s decision to move into the unit themselves, or removal of the entire property from the rental market. As it currently stands, a landlord in Long Beach can choose to evict their tenant for any reason whatsoever. Initiatives in Pasadena and Inglewood also feature just-cause.
According to Housing Long Beach, they initially tried to get just-cause passed through the City Council in 2016. Wynne says that after several discussion with members of the council, a floor vote was pulled at the last second. “The councilmembers have done little to alleviate either of these problems [rent increases, unfair evictions],” says Wynne, “our efforts to work with them have not been very fruitful.” This failure led them to take their case to voters directly.
This lack of cooperation from the council plays into a larger narrative viewed by many housing advocates of elected city officials being non-supportive of tenants rights.
“If they were truly standing with renters” Chao opines, “each individual council member (especially those in district 1 and district 2 who have very large renter majorities) would be taking much more leadership on this issue.”
The website LBReport released an email sent by neighborhood organizer and real estate broker Robert Fox who was preparing to run against Mayor Robert Garcia. Garcia is running for re-election in November. In the email, Fox told supporters that after having discussions with the mayor in which Garcia assured him he would oppose any attempt at Rent Control he had decided against waging a challenge. “Our unanimous opposition to Rent Control was one of our critical issues,” the email reads. “[Tonight he will] announce his opposition to Rent Control and some reasons for his position.”
Many activists saw this as proof of a backroom deal struck by the Mayor that is ultimately to the detriment of economically vulnerable residents. Garcia responded in an emailed statement: “We don’t believe that rent control works, or is the right solution. Just look at rent-controlled cities like San Francisco, the most expensive market in the country.” Fox later clarified in an email response: “I did not make him give us something for me not running. I was there to discuss our issues, and we did.”
The City of Champions is once again being championed by developers.
Inglewood has seen a rash of new development as of late and with it, rapidly increasing property values. $2 Billion has been invested in an extension of the Crenshaw/LAX Metro Line, connecting Inglewood with downtown and making the city more appealing to commuters. 2.66 billion has gone into the Los Angeles Stadium and Entertainment District, home to The Rams and The Chargers. The median home value has gone up 13.8% from last year according to Zillow.
The stadium is expected to generate 25 million annually in new tax revenue, according to UCLA Ziman Center for Real Estate Executive Director Tim Kawahara–a windfall for a city that nearly went bankrupt a couple of years back.
But while homeowners are enjoying their growing equity and city leadership enjoys fattening coffers, Inglewood’s renters are feeling the pinch. From September 2016 thru August 2017, the median rental price in Inglewood increased 20% according to the website Trulia. The Department of Housing and Urban Development found 38% of Inglewood renters were paying over 30% of their income on housing in 2013. 32% paid over 50% of their income on housing. A majority of the city rents; 65.3% of housing units are rentals according to the 2016 Census.
“The community was changing with the stadium coming,” said Derek Steele, an organizer with Uplift Inglewood. Uplift Inglewood was created to “make sure the culture is preserved and the people have a place to make choices about staying or leaving rather than just being uprooted.”
Uplift Inglewood is a coalition of community and faith-based organizations as well as businesses. They are sponsoring “The Inglewood Community Stabilization and Fair Rent Act.” They’ll need signatures from 15% of Inglewood’s registered voters, roughly 15,000, to make it the ballot.
“We want to make sure that progress happens but it all includes the people who have been the mainstays and who have held it down in the city when it was in the down times,” says Steele.
Steele says that Inglewood Mayor James Butts takes a “normalized” view of the gentrification currently happening in the city. According to Steele, displacement and gentrification is just “the cost of doing business” for Butts.
Mayor Butts has been in public service for over 40 years. He served in the Inglewood Police Department for over 19 years and was Chief of Santa Monica P.D. for 15 years. He was first elected mayor in 2011 when the city was on the brink of bankruptcy. That year, Inglewood had an estimated $17.6 million deficit. Butts and the Council laid off workers and issued pay cuts. Since then, Inglewood has restored competitive pay for city employees and has received an upgraded credit rating of A1 from Moody’s.
Butts has taken a significant leadership role in the development, often touting his accomplishments. He negotiated a deal with Madison Square Garden to renovate the Forum, turning it into the number 1 venue in the Los Angeles Area within a year of its opening. The Los Angeles Stadium will be the largest arena in professional football at 3 million square feet. Part of its agreement with the city requires that 30% of those employed for construction live within a 5-mile radius of the site. Century Boulevard and Market Street have both seen significant re-development with the latter being spear-headed by Thomas Saffron at a $100 million price tag.
Gentrification isn’t happening, according to Butts, because new wealthier residents are buying into middle and upper-middle class neighborhoods at premium rates, not low-income neighborhoods displacing long-time residents in the process. And it’s long-time Inglewood residents who are benefiting. He eagerly points out in an interview with The Los Angeles Sentinel that by the middle of 2017, property values had risen 102% since the end of 2012.
As far as increased rents are concerned, they are the result of an improving market. “There is nothing unique about having prosperity and inflated housing values and some people are priced out of neighborhoods,” Butts said in a panel at USC’s Sol Price School of Public Policy. “Sometimes you just have to embrace success and take it how it comes.”
Unlike Pasadena, Long Beach, and Glendale, Uplift Inglewood decided to make their rental board an elected body. “We want to make sure we’re putting the power in the hands of the people,” says Steele. There will be five members (one from each city council district and one elected at-large) who will serve 4-year terms with a max of 3 terms. The board will act independently of the city council.
The other cities will have rental boards appointed by the City Council, with stipulations as to who can serve. The boards would include five members: two would be landlords, two would be tenants, and one would be neither. Glendale’s ordinance goes further in stipulating that one of the renters must live in a unit priced at or below the median rate. Mike Van Gorder, a captain with the Glendale Tenants Union, says this will prevent renter representation on the board from being occupied by a renter of a luxury apartment whose perspective might not reflect lower income residents.
Nicole Hodgson, executive director of the Pasadena Tenants Union: “The reason we went with the appointed board is [so] we can make stipulations as to who gets the positions and who doesn’t.” City elections (especially those with low turnout) often come down to who has the money to run, Hodgson points out. “The fear was that [if elected] it would be a board that was not of the people.”
James Clark is an Army Veteran and retired school teacher for the LA Unified School District. He lives in a row house in Pasadena’s Historic Highland Neighborhood, close to Altadena. He joined the Pasadena Tenants Union in August of last year.
“I’d been sick of hearing these horror stories,” Clark says. He contacted Nicole Hodgson and has been a member ever since.
At last year’s State of the City address, Clark asked Pasadena Mayor Terry Tornek bluntly what was being done about rent control.
“There is no support on the city council, as near as I can tell, for rent control. I object to rent control for a series of reasons, not the least of which is that I think it will deter the production of new housing, drives rent up, and offers a good deal, sort of a lottery ticket for the few people that benefit from it,” Tornek responded matter-of-factly.
“In November it was 50$. In 2016 it was $100. In 2015 it was $75,” Clark says of his rent increases. Currently, he is paying $1350 a month in rent. New tenants in his building are paying $1500 for similar units. Even with his pension and Social Security, Clark is still paying over 1/3 of his income on rent. He’s able to handle the increases now, but he’s worried that if they keep rising at the same rate, he won’t be able to hold on to his apartment.
If the Pasadena Tenants Union is successful, rent increase percentages will be determined by the rental board. The increase will be dependent upon the Consumer Price Index with a max of 4.5%. The C.P.I. charts changes in the prices paid by the average consumer for everyday goods and services. It’s used by government and industry to determine inflation. Long Beach’s proposal places the max at 100% of the C.P.I. Glendale’s rent increases would be capped at 4%.
In June of 2014, the median price for a 1-bedroom in Pasadena was $1,898. That’s up from 2,248 in June of 2017, an 18.4% increase, according to Zillow.
Nicole Hodgson describes some of the extreme cases the P.T.U. has encountered: “Folks [were] coming in in dire situations. Receiving a rent increase of $300 and then three months later, getting another one for $500.” The individual stories were beginning to have a pattern.
“They were either given a 60-day notice to move and vacate or a rental increase,” Hodgson recounts. “Someone might have been renting an apartment for 40 years and is now in retirement on a fixed income, all of a sudden [they’re] getting levied even a $1000 rent increase. So it was that that really made us decide that this is a housing crisis of epic proportions and we really need to act now.”
Like their counterparts in Inglewood and Long Beach, they found little responsiveness from city hall. Alison Henry is also a member of the P.T.U. She met with her Councilmember, John J. Kennedy of Pasadena’s 3rd district, to inform him about dramatic rent increases she and a few of her neighbors experienced in March of 2017. She got a 20% increase, and according to Henry, her neighbors were dealing with 55-60% increases. In their building, out of 16 units, 13 turned over.
“One of them had a mom, a teenage daughter,” Alison recounts. “[In] Like a year… out.”
She showed Kennedy the rent increases to alert him to their situation. “The first thing he says is ‘Wow! My tenants aren’t paying enough’” Henry claims.
Councilmember Kennedy responded in an email to The Sprawl: “I assure [you] that my response was not the insensitive comment Ms. Henry has repeated.”
“We moved forward with the charter amendment to actually give this to the city to make the decision regarding our housing policy because at this point, it’s not being listened to [by City Hall]” says Hodgson.
The city of Glendale has wrestled with rent control for some time now.
A Los Angeles Times article dating back to 1986 voiced the concerns of seniors who were feeling the crunch of rising housing costs. Newly constructed high-rise offices and a scarcity of residential units were contributing to soaring rents. Real estate developers were buying up single-family homes as quickly as they so they could to turn them into multi-unit apartments. From 1980 to 1990, the population jumped 29.5%. A common So Cal trajectory was unfolding: a once quiet suburb was transforming into a bustling, small city. “Why is there no rent control in Glendale?” asked one of the seniors.
Some 30 years later and Mike Van Gorder is asking himself the same question.
“We’re in a crisis,” he says, sitting in a trendy coffee shop in Downtown Glendale.
According to Zillow, the median rent for a 1-bedroom apartment in Glendale in December of 2016 was 1,897. In December of 2017, the median for a 1-bedroom was 2,279. That’s a 20.1% increase in a year.
The Glendale Tenants Union’s efforts come on the heels of a failed effort last year to get a rent control ordinance to the voters. It was undertaken by two retirees but was ultimately rejected by the State of California for not meeting election standards. They spliced together two existing rent control ordinances and wrote the proposal themselves. There were some serious errors: they didn’t have the full text of the ordinance, they didn’t have a summary above the signature line, signatures were submitted that had been pasted to other petitions. “The short-hand for all of this is that they didn’t get legal support,” concludes Van Gorder.
“[They formed] a coalition that would eventually put together 11,000 signatures.” Van Gorder points out that this is especially impressive because 11,000 signatures are more total voters (if in fact, the signatures represent actual registered voters in the city of Glendale) than the highest vote earners in the most recent City Council election. Councilmember Ara James Najarian got the highest amount with 9,962 votes. Mike Van Gorder ran unsuccessfully himself, securing 3,148 votes.
While collecting signatures for the original proposal, Van Gorder “ran into people who were in the process of moving out because they had gotten these huge rent increases. Like literally three families, families that I ran across putting stuff in moving boxes.”
“I wish we had had this last year because if we did then I would’ve been able to stay and my kid’s coulda stayed in the school with their friends” Van Gorder remembers them telling him.
Currently, Glendale has just-cause with an exemption for lease agreements that are at least one year long. If the ordinance passes, this exemption will be eliminated.
In a joint session with the Glendale Housing Authority, the City Council met in August of 2016 to discuss strategies for dealing with affordable housing. One of the ideas floated was requiring landlords to offer a yearly-lease to tenants. This would offer tenants the security of knowing what their rent would be for a full twelve months, avoiding a 60-day notice of a rent increase they can’t afford. No action has been taken on this idea thus far.
Then-councilmember and current mayor Vartan Gharpetian spoke bluntly about the situation, saying there is a problem with dramatic rent increases that requires an expedited solution.
“We need to come up with a solution to take the load off of the people who cannot adjust their lives within 60 days to pay 5, 6, $700 of $1000 more in rent,” Gharapetian said.
Gharpetian himself is a real estate broker. If he’s acknowledging a problem, he points out, there really is a problem. “This is about the predatory ways rents are going up.”
Similar to the way in which many office units are leased, Gharpetian believes that these 1-year leases should include an option for renewal that will establish what the rent increase will be in the next year so that “you can set your life up, 2, 3 years in advance.”
The Glendale Tenants Union’s proposal would create an ordinance that would have similar effects as the other initiatives: cap rents, establish a rental board, expand just-cause. As opposed to Inglewood and Pasadena though, which are passing charter amendments which then require another charter amendment to be reversed, Glendale’s ordinance can be repealed a year after its passing.
So what’s stopping the Glendale City Council, which is not supportive of rent control, to undo the ordinance after a year?
“If they do so, they’re doing so against the wishes of a majority of their city which will sink their re-election odds,” says Van Gorder. “It’d set up a platform for activists like me to take over the government.”
City officials aren’t the only ones who oppose rent control.
Apartment associations, organizations that represent the interests of apartment owners and real estate developers, pour tons of resources into fighting any new form of regulation within their industry.
Most recently, The California Apartment Association took an active role in defeating the repeal of Costa-Hawkins. Of the committee members that voted on the Costa-Hawkins repeal, four had received campaign contributions from apartment associations. One of the abstaining votes, Democrat Jim Woods out of Humboldt, received a contribution of 4,400 from the California Apartment Association for his 2018 re-election campaign.
Dan Yukelson, Executive Director of Apartment Association of Greater Los Angeles, acknowledges that there is an affordable housing crisis. Though it is perhaps not as invasive as many housing advocates claim.
“Some people are being priced out of their houses that they’ve been at for a long time. But the problem is rent control doesn’t help supply additional housing,” Yukelson argues. “In fact, it only discourages new development.”
Opponents of rent control often argue that by lowering the number of units priced at market values (or are available at all), the housing supply is lowered which increases demand which then results in an increase in market rates. “There is a shortage of housing. And what happens when you have a shortage in a capitalist society is prices go up. Demand is high and supply is low,” says Yukelson.
“Rent control also encourages housing providers to convert to condominiums.”
A study released late last year by two Stanford economists found that Rent Control may have actually accelerated gentrification in San Francisco. San Francisco has had rent control since 1994. Its ordinance closely mirrors those being proposed in Southern California. They found that landlords affected by rent control decreased their rentable units by 30% since 1994. This was largely a result of landlords converting their buildings into condos or single-family homes, unit types that are prevented from being rent controlled by state law.
The study also found that renters of rent-controlled units save, on average, between $2,300 and $6,600 a year from cheaper rent.
Yukelson believes that one of the solutions to affordable housing is government subsidies, not price ceilings. He supports programs where apartment owners get tax vouchers to offer affordable units for a finite amount of time. This incentivizes the creation of affordable units rather than legally constricting an existing unit to keep it affordable.