The old adage that nothing good happens after midnight was on full display last Tuesday evening into Wednesday morning in the chambers of the Santa Monica City Council.

When item 11.D came up on the council agenda, an item to decide whether to place on the November ballot a measure that would amend the city charter to cap the rent control Annual General Adjustment not at the current six percent, but at three, Councilmember Lana Negrete laid out an alternative motion that would replace the three percent being proposed by the City’s Rent Control Board (RCB). Calling it the Tenant Income Inequality Relief Plan (TIIRP), Negrete suggested the following:

The annual general adjustment will be ZERO for units with rents at or below the citywide medium Maximum Allowable Rent (MAR) FOR 2021. This methodology would eliminate all increases for units with rents below the following:

• Zero-bedroom units with MARs at or below $1,528
• One-bedroom units with MARs at or below $1,995
• Two-bedroom units with MARs at or below $2,500
• Three-bedroom units with MARs at or below $2,791

For controlled rental units above the MAR, the current Annual General Adjustment methodology would remain in effect. Meaning, a six percent increase for 2022-2023. The charter amendment she proposed would sunset after four years and return to the current methodology that’s been in place since 2013.

This sent the council into a cantankerous debate. The proposal would sure give a lot of renters relief for four years, but at the same time, it upends 43 years of rent control integrity. In addition, it was brought up last minute, without vetting or discussion, after 1:00 a.m. in the morning and was a complete blindside to the agenda item that was at hand. Councilmember Gleam Davis was correct in suggesting that the idea should have first come up as a “16 item,” referring to the end of agenda items where a councilmember or team of councilmembers first proposes an idea for the council to consider at a later meeting following some staff analysis.

But there are several other obvious flaws in her and de la Torre’s proposal:

• It assumes – falsely – that rent tracks with income. It completely ignores the idea that someone paying $1,995 in rent could be making $120,000 a year, or that four single women each making $65,000 a year share a three-bedroom unit going for $4,500 a month
• It assumes that those paying the lowest MARs are the most rent burdened, and that those paying the most rent must have moved into Santa Monica more recently and can therefore afford their high rents. But what about those who moved into Santa Monica four years ago at a high rent that are now severely rent burdened because of a divorce, the death of a partner, or a layoff since moving in?
• It scuttles what Co-Chair of Santa Monicans for Renter’s Rights (SMRR) Denny Zane calls the “long-term fairness” of an annual increase that all residents share. Simply going back to normal after a four-year general adjustment hiatus doesn’t exactly provide these folks much to look forward to
• It doesn’t take into consideration that many of the landlords that Negrete claims to care the most about – the “Mom & Pop” landlords (vs. the bigger corporate landlords and REITs) – are likely to own buildings with longer-term tenants and lower MARs. They are counting on an at least a three percent increase to be able to make a fair return. Will this proposal now seal the deal and cause them to sell to the big boys?
• It very well could lead to a massive wave of tenant harassment as landlords who never asked for this proposal begin to chase out their tenants with these lower MARs in order to collect maximum market value rent

Of course, her proposal, which is co-sponsored by Councilmember Oscar de la Torre, was really the work of a group of landlords calling themselves “Progressive Landlords of Santa Monica.”

When called on for her comments, RCB General Counsel Allison Regan informed Negrete and council that her landlord-sponsored proposal was untenable, likely illegal, and would not hold up to court challenge. But instead of being grateful for the warning, Negrete was quickly offended that somehow Regan’s comments were putting her integrity into question. We don’t fault Negrete for putting something forward. In fact, we fully believe she thought she was just trying to think outside the box and propose something new that she believed might help a lot of people.

The landlords that concocted this measure may, in fact, be counting on its shaky legal standing. Why? Because if Santa Monicans are only presented with this alternative instead of a new three percent cap on Annual General Adjustments, they know all too well that if struck down, all residents including those protected by “TIIRP” would face the full six percent increase.

In addition, Santa Monica landlords are currently allowed to “bank” several years of Annual Adjustments that they can later apply to a tenant if they so choose. Meaning, that if the Annual Adjustment is two percent a year for three straight years, and the landlord decides not to apply it to a tenant for three years, in the fourth year, they could boost that tenant’s rent by a combined six percent from the previous three years. Would this plan protect those under TIIRP from four years of banked increases?

And even if, as it was argued, landlords are nowadays asking prospective renters to prove they have the revenue to consistently meet their market-rate rent, shouldn’t someone with a strong income be given a fighting chance to stay there without a massive six percent increase putting their tenancy at risk?

RCB Commissioner and current City Council candidate Caroline Torosis, during an emergency meeting of the RCB called to discuss the surprise proposal Thursday evening, pointed out another obvious flaw in the plan. One tenant could be paying $2,450 a month for a two-bedroom unit, while their neighbor next door might be paying $2,550 for an almost identical unit. The tenants paying $2,450 would face no increase, while the tenant paying $100 more per month would receive a full six percent increase (capped at $140). Such a disparity between too nearly equal neighbors would justifiably have “Friends” character Chandler Bing asking, “could there BE a bigger wedge to divide the renting public?”

Further, as RCB Commissioner Anastasia Foster also articulately put it during Thursday’s meeting, even with this year’s cap of $140 per month against the six percent increase, tenants would likely endure a similarly high cap next year due to the inflationary times we live in. That would mean a $280 dollar PER MONTH increase in rent over just two years. But Foster in her comments Thursday evening was actually sympathetic to Negrete, de la Torre, and their ally Councilmember Phil Brock, saying, “Landlords wrote this measure for unsuspecting councilmembers that meant well.”

It couldn’t be more clear what the city council should do when they reconvene on Wednesday, August 3 to consider which proposal to place on the ballot: follow the expertise and advice of RCB General Counsel Allison Regan, RCB Executive Director Tracy Condon, every RCB Commissioner, and anyone with any sense and adopt the proposed three percent maximum cap to the rent control Annual General Adjustment. There are more than 27,000 households in this town that are relying on fairness, some semblance of predictability, and who aren’t game for being pawns in a hair-brained, last-minute scheme that would monumentally upend a proud tradition of rent control enjoyed in this city since 1979.

*Disclosure 1: Westside Voice Publisher Todd Flora, who authored this piece, was a Co-Author and Co-Sponsor of 2012’s Measure GA that implemented the current system of measuring the Annual General Adjustment by 75 percent of the CPI and never allowing a general adjustment of greater than six percent. He sat on the RCB at the time. And at that time – and probably complacent from 30 years of low inflation – he never imagined a time we would hit nine percent inflation and actually trigger the six percent cap.

Disclosure 2: Anastasia Foster was an early supporter of Westside Voice.