Local Advocacy Update: Lobbying Efforts Continue Across Multiple Local Jurisdictions

Local Advocacy Update: Lobbying Efforts Continue Across Multiple Local Jurisdictions

By Janet Gagnon, Senior Vice President, Government Affairs & External Relations

This past month, the Apartment Association of Greater Los Angeles’ (AAGLA) local government advocacy team was involved in numerous important issues impacting our members. At the time this article we written, some of the matters covered below had not yet been finalized – look to our emails for further updates. The following is a rundown of these important issues.

At the June 4^th Burbank City Council Meeting, the Council directed staff to bring back by July 16^th draft ordinances that will increase relocation fees approximately three-times the existing fees for any “No-Fault” evictions (and possibly even for “At-Fault” evictions – when the tenants are in violation of a lease), including for Owner Move-In, Anti-Tenant Harassment and Anti-Tenant Retaliation. In addition, Council  directed staff to hire the consulting firm Fairbank, Maslin, Maullin, Metz and Associates (FM3) to conduct a survey regarding rent control, and to hire another consulting firm, Pivotal Strategies, to conduct an in-person community listening session and online survey. The Council directed staff to complete all outreach efforts on rent control no later than the end of September at which time the Council will discuss the possibility of imposing a rent control ordinance.

As Mayor Schultz will no longer be on the City Council after November (as he is running for the 44^th state assembly seat), it is wrong that he votes on a material and far-reaching policy change like rent control. Similarly, City Council Kostantine Anthony is up for re-election in November and may no longer be on the City Council following the election. Any discussion and action by the Council on rent control should wait until new City Council members are seated following November as they will be the ones responsible for dealing with the harmful implications of rent control and increased relocation fees will surely have on rental housing providers that will ultimately lead to a drastic reduction in affordable rental housing. All AAGLA members with rental properties in Burbank must make their voices heard about all four of these bad policies by immediately emailing and calling the entire Burbank City Council.

The Claremont City Council recently voted to fund an additional $680,000 for the city’s Temporary Housing Stabilization and Relocation Program. With the additional funding, the city is providing up to $1,680,000 in total funding. The program will be open to accepting new applications starting on July 1st. These funds can be used by renters for a myriad of purposes, including moving costs related to No-Fault evictions.

The program was originally created on April 25, 2023, when the City Council voted to allocate $1 million in funding the program from American Rescue Plan Act (ARPA) funds. The first cycle of the program ended in April 2024 and so far approximately $350,000 has been distributed to applicants. The program will continue to use a prioritized review process, focusing on applications that serve vulnerable renters who are either income-qualified or that are in need of emergency rental assistance. Applicants are encouraged to apply now; however, submission of a completed application does not guarantee funding. Interested applicants should review eligibility requirements and access the application directly by clicking on this link.

On Tuesday, May 14^th, the Los Angeles City Council approved increasing sewer rates by a whopping 22% for multifamily properties (and 27% for single-family properties) with 6 additional increases planned over the next 3 years resulting in the DOUBLING of current rates by 2028. The increase was approved on a vote of 11 to 4. The issue received considerable attention and discussion thanks to Council Member Monica Rodriguez who has steadfastly been the champion for all ratepayers, including rental housing providers, requesting an amendment for a simple verification of the proposed rates by the Office of Public Accountancy (OPA) prior to their final approval.

At the meeting, AAGLA strongly advocated against the rate increases suggesting they be reconsidered due to the ongoing financial strain experienced by housing providers following four years of no rent increases and just one small rent increase granted for the current year that will not come close to helping owners recover from years of unpaid COVID-era rent. We urged the City Council to have the rates verified by OPA (in support of Rodriguez’s amendment) and for OPA to return with alternatives to the rate increases, including potential cost savings within LASAN. Unfortunately, AAGLA was the only public speaker on this item.

The modest request by Council Member Rodriguez seeking verification of the new rates and the specific amounts needed by LASAN to meet its bond obligations sparked a huge debate among those members on the City Council that wanted this item pushed through without any substantive consideration by the City Council, which included President Paul Krekorian and Council Members Katy Yaroslavsky and Bob Blumenfield (hereinafter, “the Jam Squad”) versus those City Council members representing primarily lower-income areas that included Council Members Monica Rodriguez, Kevin deLeon, Tim McOsker, and Imelda Padilla. Despite Council Member Rodriguez urged adoption of her simple amendment to instruct the OPA to validate the rates before they were adopted to ensure that the increase proposed are actually in alignment with the needs of LASAN, that they are reasonable and necessary and for greater transparency, the motion failed.

The proposed new rates are go out for public notice to all ratepayers and in order to stop them from taking effect, a protest by more than 50% of the ratepayers must voice their opposition. However, there is a very low likelihood that 50% of ratepayers will take time to protest. It is also worth noting that earlier during the same meeting, prior to the passage of the rate increases, the Council approved the hiring of a new executive to head the Los Angeles Department of Water & Power (LADWP) for a salary of $750,000 per year.

On Tuesday, June 4^th, the Los Angeles County Board of Supervisors voted 3-to-2 (Supervisors Barger and Hahn in opposition) to reduce allowable rent increases for unincorporated areas of the County starting in 2025 and instructing staff to return with an amendment for final approval. This change, which modifies the current rent increase formula, will drastically reduce the allowable, annual rent increase formula to a mere 60% of the Consumer Price Index (CPI) with a 3% maximum limit and no minimum “floor.” 

What does this motion mean for owners? It means that once a draft amendment is finally adopted, then starting January 1, 2025, owners will only be able to increase rent by just 60% of CPI as an annual increase whatever the CPI turns out to be (and we cannot forecast it at this time because it is based on an average of the prior 12 months of CPI ending in September 2024). As an example: if the current CPI were used of 4.275%, then housing providers would only be permitted to increase rent by 2.57%. Additionally, because of the new maximum limit of 3%, if the CPI was 5% or greater, housing providers could only increase rent up to just 3% although 60% of CPI may be greater (e.g., if CPI were 6%, the 6% x 60% = 3.6%). In addition, under the proposal, it is possible that future allowable increases could be as low as ZERO when CPI is zero or negative because there is no longer a minimum “floor.” 

For some certain owners with fewer than 10 units, these smaller owners would be allowed to increase rent by an additional 1% per year up to a maximum of 4% and for certain luxury owners, they would  be allowed to increase rent by an additional 2% per year up to a maximum of 5%. Units are considered to be luxury units if they are 2 or fewer bedrooms charging at least $4,000 per month within a structure that contains 25 or more units.

The current maximum allowable increase of 4%, which was set to expire on June 30, 2024, remains place through December 31, 2024. Under the existing rent increase formula, owners in unincorporated areas of the County were permitted to increase rent in an amount equal to 100% of CPI up to a maximum increase of 8%.

The reduced 60% of CPI allowable annual rent increase was pushed by Supervisor Holly Mitchell. Out of multiple options offered by the County’s consultants, HR&A Advisors, Supervisor Mitchell chose the most draconian and harmful option, and was backed with supporting votes from Supervisors Lindsey Horvath and Hilda Solis. In striking contrast Supervisors Kathryn Barger and Janice Hahn had the courage and integrity to hold firm to previous promises made by the full Board of Supervisors to rental housing providers that the original formula would be allowed to take effect on July 1, 2024 when the temporary reduction to a flat 4% allowable increase was due to expire and voted as strong NO votes to this motion. Despite a good turnout of owners with 30 people calling in and 60 people in the room with 90% of speakers being small owners, owners were unable to deter the Supervisors from moving forward.

There is one remaining “sliver of hope” as final passage will require another vote when the draft amendment is brought back to the Board of Supervisors for final adoption. However, the likelihood of these three Supervisors suddenly waking up to the fact that they will DESTROY naturally occurring affordable rental housing by forcing existing, independent owners out of business based on severely flawed data is remote at best. 

The time is NOW as an owner for you to speak out against your destruction! Email and call Supervisors Mitchell, Solis and Horvath TODAY and demand that the amendment be held at least until an ACCURATE, ROBUST and TRUE ECONOMIC COST STUDY be conducted by REAL economists to show that this solution is completely UNWORKABLE in the face of the myriad of hugely increasing costs, including mortgage payments!

This article is for informational purposes only. If you have any questions regarding your property or specific tenancies and the requirements of any local law changes described herein, please consult with an attorney.