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CES In The News
Los Angeles Daily News
Wednesday May 5, 2010

Committee urges rent freeze in LA

by Rick Orlov, Staff Writer

Cheered by tenants and jeered by landlords, a city committee Wednesday recommended a four-month freeze on rent increases for Los Angeles' 630,000 rent-controlled units.

If approved by the full City Council later this week, the freeze would prevent landlords who own buildings built prior to 1978 from raising rents in the period, which could be extended by two months.

Council members said the freeze will give them time to study the city's rent stabilization ordinance and recommend changes.

"It will be a while before we turn this economy around," said Councilman Richard Alarcon, who sits on the council's Housing, Community and Economic Development Committee.

"While everyone is struggling through this horrible economy, I don't want to allow a group that is struggling to face the prospect of losing their homes (because of rent hikes)."

The San Fernando Valley has about 200,000 rent-control units scattered across a wide area.

With an overflow crowd of landlords and tenants at the meeting, the committee heard about the problems all are facing in the sluggish economy, with unemployment hovering around 14 percent.

In a 3-1 vote, the committee rejected complaints from landlords who said a freeze will do little to help tenants in a market that already favors them.

Mark Wagner, who told the committee he manages 700 units, said the freeze would only hurt landlords.

"Responsible landlords take care of their property," Wagner said, responding to complaints from some tenants that landlords do not make proper repairs.

"None of us have ever seen economic times like this. But, there are expenses that go up. It takes real money to operate a property and to fix and repair it."

Several other landlords said the market conditions now favor tenants so much that landlords have been forced to offer free rent for up to several months in order to fill their units.

Councilwoman Jan Perry, the only council member on the panel to vote against the freeze, said the best way to keep rents affordable was to encourage more development.

"I'm concerned this will create false expectations by many renters," Perry said.

Councilman Herb Wesson called the rent control issue the most vexing the city was facing.

"I believe there are problems that adversely affect landlords and tenants," Wesson said. "I want us to try to strike a balance."

One area the City Council wants to study during the freeze involves rent increases for mobile home parks, which face a further limitation of raising rents by only 10 percent when spots become vacant as opposed to being increased to market rates.

The city's rent control ordinance took effect in 1978 following the passage of Proposition 13. Under the measure, landlords of rent-controlled units are allowed to raise rents to market rates only after a unit is vacant. Meanwhile, they can raise rents by a base rate of 3 percent a year. Rent increases can be higher, if approved by the city, to reflect increased costs.

Landlords and their representatives said the freeze would drive many of them out of business or result in higher unemployment, noting they would have to reduce the number of contractors, landscapers and others who maintain their properties.

The California Apartment Association opposed the freeze, saying the city has had a report from a special Economic Roundtable on the rent issue for several months that shows 32 percent of the units are held by small business owners and many would be forced into foreclosure.

At the same time, many said they have tenants who have lived in the same units for several years and now are paying several hundred dollars below market rates.

But Larry Gross of the Coalition of Economic Survival, a tenants-rights group, said the economy should determine the need for the freeze.

"It's clear any increase on July 1 is not justified," Gross said. "The CPI was a negative 6.5 percent last year. No other jurisdiction is allowing as much as Los Angeles is considering. A freeze is just and is needed."

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