AAGLA Board President Message: They Are Not Making Any More Land...

If only the same were true about regulations

I hope that all of you had a great summer vacation despite the challenges of being a rental housing provider. My topic for this month is rent control. Right now, we are continuing to see a number of cities either in discussions about imposing new rent control ordinances, or that already have rent stabilization ordinances (a/k/a, rent control) that limit rent increases based on the Consumer Price Index (CPI) and are now attempting to limit rent increases even further to just a portion of the CPI or some lower percentage.

It is often said that the “CPI” does not refl ect any of the costs associated with the operation of rental housing, and because of that, it is not an appropriate index for determining annual, allowable rent increases. So then, how can CPI be used as the standard for housing providers to receive a fair return on their investments? And most importantly, why should these jurisdictions be looking to impose more, even stricter control over rental rates when most tenants have had the good fortune of not having to pay any rent whatsoever because of the pandemic? On top of that, we already have state-wide rental control in the form of Assembly Bill 1482 that limits annual rent increase to just 5% plus the change in the CPI. How far will these local jurisdictions go in continually ratcheting down allowable rent increases?

You may be wondering “why.” Why all this new rent control and stricter existing rent control? The answer is fairly straight forward. Many of the cities now signing up for the “rent control establishment” and those cities with existing rent control are making things worse by reducing already established increase limits is simple…it’s because these cities can or think they can.

We also know that if the ultimate goal for our communities is to have more housing available for people that live there, particularly more aff ordable housing, then we must do what we can to provide incentives to the very people we need to accomplish that goal, the developers and real estate investors, who we need to invest in and build more rental housing. This is not “rocket science” here folks. It seems; however, that government always reaches for the proverbial “stick” consisting of more and more punishing regulations like rent control rather than feeding us the “carrot” to better provide the incentive and desire to create more badly needed housing.

We can and should still provide vouchers and other subsidies to those who truly qualify and are in need assistance to help pay for their housing and other necessary living expenses.

Typically, rent control does not lead to creating more aff ordable housing in the long run – in fact, passage of a rent control ordinance never leads to the development of even one unit of new housing. Instead, as is typical, rent control only leaves developers with no other choice but to develop market rate housing which many can ill-aff ord.

We all know that rent control makes rent aff ordable for the few lucky tenants who happen to live in below market, rentcontrolled units, and those lucky ones may not be the people who truly need help paying their rent, and some benefi ting by a rent control subsidy may actually be quite wealthy. How many times have we heard stories of the wealthy renter who has kept a rent controlled, Santa Monica beach pad for weekend fun, many years after they have purchased a home someplace elsewhere? Then there’s the stories of wealthy celebrities that have benefi ted from rent control over the years such as Actress Mia Farrow who paid less than $2,500 a month for an 11-room apartment overlooking Central Park, or singer Cyndi Lauper who went to court to get her $3,250 rent lowered to $508 for a suite she took over from her parents.

The Apartment Association of Greater Los Angeles is supporting eff orts to protect our members in multiple cities and counties who are facing new rent control ordinances or facing further restrictions under existing ordinances. Through our political action committee, the AAGLA Issues PAC, we have or are currently opposing harmful ballot initiatives in cities such as Culver City, Burbank, Los Angeles, Santa Monica and now most recently, a rent control ballot initiative in the city of Pasadena. Your fi nancial support through contributions to our AAGLA Issues PAC are being put to work and we want you to assure you that our Association is there to protect your investments and property rights. These ballot initiatives include substantial increases to transfer fees, increased gross receipts taxes, stricter rent control (e.g., Santa Monica’s proposed lowering of maximum increase from 6% to 3%), and of course, Pasadena’s rent control ballot initiative.

It is, therefore, imperative that you get out and vote this November, and to encourage other rental property owners to vote too. Also, be sure to support those candidates that have been or are going to be endorsed by your Apartment Association of Greater Los Angeles. And, to those of you in the 28th State Senate District, I hope I can count on you to vote for me! When I am elected, you know that you can count on me! That I promise.