Breaking Promises: The Los Angeles Rent Freeze Debacle
AAGLA Executive Director Message
Almost a year ago, on January 31, 2023, the Los Angeles City Council finally declared that the COVID-19 emergency was finally over. With that, they promised the “emergency” rent freeze would expire 12 months later, effective on January 31, 2024, allowing housing providers to finally return to normal operations of collecting rent and responding to unprecedented inflationary pressures.
This promise, which many of the City’s rental housing providers had relied upon, was broken.
For over 40 years, the City followed a formula for rent increases prescribed by its ordinance. In the face of tremendous inflationary pressures, it has decided to severely reduce the allowable rent increase prescribed under the law after almost four years of zero increases and unprecedented inflation.
Rental housing providers in the City of Los Angeles will never have an opportunity even to recover and recoup their losses at the hands of short-sighted government officials.
It is perfectly clear, particularly when it comes to Councilmembers Soto-Martinez, Hernandez, and Raman, each of whom has proudly declared allegiance to the Democratic Socialist Party, that:
There is no respect in the LA City Council for private property owners who have sacrificed to make investments that place roofs over the heads of members of their community.
It should be no surprise that Councilmember Soto-Martinez, a staunch advocate for extending the freeze on rent increases, lives in a rent-stabilized apartment while making more than $220,000 per year as a member of the City Council. I am appalled by the pusillanimous action of Councilmembers Krekorian, Yaroslavsky and Park at the November 14, 2023, City Council meeting, who always hide behind state code that is highly ambiguous and recuse themselves on matters of importance to rental housing providers while the renters on the City Council vote to line their pockets with cheap rent.
I appreciate Councilmember McOsker’s attempt to recognize and carve out a more reasonable increase for struggling smaller independent owners, but unfortunately, at the end of the day, we got “window dressing” in a request for a “report back.” Also, thank you to Councilmembers Lee and Price, who both voted against the proposed lower rent increase as both pushed to get us 7% instead of just 4%.
For almost four years and approximately $3 Billion in lost rent increases, the Los Angeles City Council has again pulled the rug out from underneath housing providers by severely restricting allowable rent increases.
Housing providers have for nearly four years suffered financially under moratoriums that restricted both the ability to collect rent and eliminated all rent increases while inflation has roared out of control for all types of goods and services, and while the City itself passed through unprecedented cost increases onto owners for various fees, utilities, and taxes.
As a result, many smaller, independent owners have been forced to sell their properties at discounts or in foreclosure.
Today, we face a crisis in California’s insurance market, making policies difficult to renew even at 50% or more increases in premiums (if one is fortunate enough even to obtain insurance), and a more than doubling of interest rates. Housing providers who will be required to refinance their properties in the short-term horizon after losing tens of thousands of dollars in uncollected rent, experiencing ever-increasing operational and maintenance costs, and not being allowed to increase pricing will surely not survive in this rental housing business, and with that, the City will lose badly needed, naturally occurring affordable rental housing.
Our elected officials have proven once again that they are willing to sacrifice long-term housing goals for short-term political gains as they pander to the votes of renters and continue to sacrifice rental property owners at the altar.
We must bear the burden of providing housing services while the government steals from us the fruits of our labor.
#DanielYukelson, Executive Director, Apartment Association of Greater Los Angeles: Daniel Yukelson is currently the Executive Director of the Apartment Association of Greater Los Angeles (AAGLA). As a Certified Public Accountant, Yukelson began his career at Ernst & Young, the global accounting firm. Throughout his career, he has served in senior financial roles, principally as Chief Financial Officer for various public, private, and start-up companies, including more recently for 15 years as Chief Financial Officer of Premiere Radio Networks, the largest U.S. radio network and now subsidiary of iHeart Media, and for nearly 4-years as Chief Financial Officer of Oasis West Realty, the owner of the Beverly Hilton and Waldorf Astoria Beverly Hills where he was involved in the construction and opening of the Waldorf Astoria. He served as a planning commissioner, serving one year as Chairperson, and as a Public Works Commissioner in the City of Beverly Hil
Source: Originally published on LinkedIn.com