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CES In The News
 
Park La Brea News/Beverly Press
Thursday May 13, 2010

Three Month Rent Freeze Proposed

by Ian Lovett
 

Gayle Santochi has lived in Park La Brea for 12 years, and almost every year her rent has gone up. When she moved in, she was paying $1,140 a month for her two-bedroom apartment. Now, she pays $1,840 a month.

Park La Brea
Park La Brea is a rent controlled property, which is subject to the freeze being considered by the Los Angeles City Council. (photo by Ian Lovett)
“I think I was getting a four percent increase each year,” Santochi said. “I think every six years I get a break. I never questioned why, I was just glad for it.”

Park La Brea is the city’s largest apartment complex. Like 66 percent of the rental housing stock across the city — some 630,000 units — Park La Brea is also rent controlled, which means the City of Los Angeles controls how much rent can be raised each year.

Usually, Los Angeles allows landlords of rent-controlled units to raise tenants’ rents by a minimum of three percent, or more if the Consumer Price Index (CPI), an algorithm used to calculate rents, is higher. Last week, the Los Angeles City Council voted to direct the City Attorney to draft an ordinance that will freeze rent from July 1 through October 31, with an option to extend the freeze for two additional months. The freeze is designed to give the council time to look at a rent control study completed last year and possibly adopt a new permanent rent control ordinance.

The 4th and 5th City Council Districts are home to more rent-controlled units than any other districts in Los Angeles. Both City Councilmembers Tom LaBonge, 4th District, and Paul Koretz, 5th District, voted against the rent freeze. Koretz also introduced a motion, which was voted down, to do away with the two-month extension on the freeze.

“I’m sympathetic to both sides, though I’ve been active on rent control issues for 30 years,” Koretz said. “I don’t want to see people kicked out of their homes who aren’t able to pay rent, but I also don’t want to see landlords defaulting because they can’t pay their mortgages. The moratorium was designed to be temporary while we study the impacts of the near-recession on the rent control study. The extension seems to me like an effort to squeeze in a couple more months that aren’t needed.”

Santochi, however, re-signed her lease in April, which included the regular 4 percent rent increase. Rent at her office, which she uses for her work as a psychotherapist, also goes up each year.

“It doesn’t seem fair to me that they only froze it for people who leased after July,” Santochi said. “It wouldn’t be so bad if people’s salaries went up in the same way that they increase rent. I’m making more money now than I did 12 years ago, but a bigger percentage of it than ever goes to rent. At some point, I’m going to be paying so much I might as well buy a house.”

Still, Santochi said she’s decided to remain at Park La Brea, because of other amenities the complex provides.

“There are certain things I like about Park La Brea,” Santochi said. “I like the fact that when I look out on the patio, there’s an expansive lawn. And it’s built solidly. I never hear my neighbors. For people who live in apartments, one of the biggest complaints is noise, but I’ve never had those problems living here.”

Larry Gross, executive director of the Coalition for Economic Survival, said that even with rent control, many tenants’ rent burdens have significantly increased during the past decade. The rent control study — for which he was part of a seven-member oversight committee — showed that 58 percent of tenants in rent-controlled units now pay at least 30 percent of their incomes for rent, while 31 percent of tenants pay at least 50 percent of their incomes.

“The rent control study came out last year, but there is still debate about what the council is going to do,” Gross said. “Because of that delay, we’re looking at a three to five percent increase for renters in July, even though the CPI is at .62 percent. There’s no justification for that.”

Ryan Minniear, executive director of the Los Angeles Division of the California Apartment Association, said the rent freeze diminishes landlords’ confidence in real estate investment in Los Angeles.

“It’s an issue of having confidence in the city,” Minniear said. “Property owners are given an increase of three to eight percent a year. A moratorium destroys that confidence in the city, because we fear that it might not be a short-term moratorium.”

Many property owners will in fact be exempt from the rent freeze. Buildings that include five units or fewer — which account for 35 percent of the city’s rent-controlled units — will be allowed to raise rents.

Complexes like Park La Brea that include utility costs in the rent will also be allowed to raise prices one percent each for gas and electricity costs, as usual. The utility allowance is also why Santochi’s rent has gone up by more than three percent each year.

Representatives of Park La Brea declined to comment on the rent freeze.

It is unclear, at this point, how great an effect the temporary rent freeze will have on tenants and landlords. Darlene Horvat owns six buildings in the area, all of them with fewer than five units. Though she is exempt from the moratorium, she said she didn’t like how the freeze would affect property owners like her very much.

“I think it pertains more to people who own big buildings, or bought in the last three years,” Horvat said. “I don’t raise rent every year, maybe some that are very low, but generally not every year. I’ve even lowered rent for some tenants. Things are hard for everybody right now, and you have to take that into perspective and be fair. You don’t want to lose good tenants.”


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