“The Costa-Hawkins Act has a very pernicious effect on our ability to control people’s financial ability to live in Santa Monica,” said Mayor Gleam Davis, who along with Councilmembers Caroline Torosis and Jesse Zwick, asked her colleagues to join them on Tuesday night in support of a statewide ballot measure – the Justice for Renters Act – that would repeal the 1995 law. It has qualified for the November 2024 ballot.

Costa-Hawkins created a system most refer to as “vacancy de-control,” whereby rent controlled units would jump to the current market rate rent if vacated by the current tenant. Once re-occupied, the rent is then re-controlled starting at that market rate. It would again jump to the latest market rate if vacated again. And so on. The law began to take effect for most renters on January 1, 1999.

“Costa-Hawkins is the single biggest threat to renters in this state, and it is a threat to the 70 percent of our residents who are renters,” said Torosis in support. She added, “It prevents our ability to regulate rents for buildings built after 1979.” She also pointed out that the Santa Monica Rent Control Board, where Torosis served for six years, has shown in its reporting a direct correlation between the beginning of Costa-Hawkins taking affect and negative changes in the cultural and economic diversity of Santa Monica residents.

Councilmember Christine Parra inquired about language in the Justice for Renters Act (JFRA) referring to controlling rents in single-family homes and condominiums. The Rent Control Law that Santa Monica Voters passed in 1979 exempted efforts to control rents in homes and condos, and therefore only apartments are subject to rent control in the Santa Monica City Charter. Davis assured Parra that even if the JFRA passed statewide, Santa Monica voters would need their own local ballot initiative to add single-family homes and condos.

Councilmember Oscar De La Torre was quick to say he supports rent control, but expressed concern for ‘mom and pop’ landlords that may only own a small number of units not having the money coming in from rent if vacancy de-control is eliminated.

“I’ve talked to many people throughout the years,” said De La Torre. “When they have a unit that becomes vacant, and they’re able to make more money, that money usually goes back into the building so you start seeing improvements. So the tenants that are living there, they benefit from those improvements.” He added, “On the opposite side, I’ve seen buildings deteriorate, especially in the Pico Neighborhood.”

Davis responded that there are tradeoffs, and that without Costa-Hawkins, there won’t be the jumps to market rate upon vacancy, and therefore more affordable housing stock. “Maybe my building doesn’t get painted but I can actually afford to live in Santa Monica,” she added.

“We would have to choose to enact vacancy control again,” Torosis assured Councilmember Lana Negrete, who shared some of De La Torre’s concerns. “The passage of this state law would not mean that automatically things revert. It just gives us that option. And we would not be able to do anything without an intensive fee study and economic analysis to figure out what CPI you’re using to increase rents when you re-set the rent when someone has vacated.”

Negrete, who submitted a controversial plan last year to fundamentally change the way rent control works in Santa Monica, ultimately suggested this discussion should give the council more reason to candidly address if the current system is really working.

Councilmember Phil Brock was skeptical. “Will it ultimately decrease our rental stock – where more people will Ellis* their buildings and decide it’s not worth staying in business?” he asked. “I support rent control. But I’m also concerned about the effects on both renters and landlords.” He also said he thinks the Rent Control Board has been “overly strict” in not granting rent increases among landlords that have appealed the board for them in certain circumstances.

He expressed openness about holding a session with outgoing Rent Control Board Executive Director Tracy Condon to learn more about how this would affect the equation, but said that for now he would abstain.

De La Torre returned, again sounding off on how much he thinks vacancy de-control has allowed for apartment building upkeep and nicer aesthetics. He even mistakenly said that Costa-Hawkins hasn’t raised rents, “Market forces have.” He then asked whether newer apartment buildings going up in Santa Monica would be subject to rent control.

To which, Mayor Davis explained, “You typically don’t impose rent control in the first 10-20 years after a building’s been built because in order to avoid discouraging the building of housing, you allow the developer of the housing to recoup their costs in developing the housing.”

De La Torre retook his time and said he thinks it’s a little early to support the proposed statewide ballot item, and aspires to a unanimous vote after a full study session, which he moved to the floor. It was seconded by Brock.

Torosis then moved a substitute motion to approve the item as written, saying councilmembers have known about the item for weeks and have received an analysis from the city manager. Davis seconded her.

Councilmember Jesse Zwick then finally took a turn. “Landlords tend to rent apartments at whatever rate they can find the market will bear.” Later he added, “I support giving Santa Monica the freedom to come up with a system of rent control that can better help tenants stay in Santa Monica – even when circumstances require perhaps they must move.” He then made a pitch for “more robust supply” of housing, saying without it, it will be harder for current Santa Monicans to move within the city without greater choice.

The substitute motion, representing the original request for the City of Santa Monica to support the Justice for Renters Act, passed 4-1-2, with Davis, Negrete, Torosis, and Zwick in favor. Parra opposed, and Brock and De La Torre abstained.

*Ellising a building refers to a law, The Ellis Act, that allows building owners to leave the rental business and effectively evict all tenants when doing so.

Photo by Ilya Burdun