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Wed, Feb

LA Council Approves Controversial 4% Rent Hike, Sparks Intense Housing Debate

Rent stabilized residential building fronting Sunset Blvd. with retail on Glendale Ave., 90026

LA POLITICS

LA CITY GOVERNMENT - On Tuesday November 14, LA City Council approved the Rent Stabilization increase of 4% -- and up to 6% for landlords who pay renters’ utilities -- to start on February 1, of 2024.

Before the Rent Stabilization (RSO) rental increase vote, Council deliberated pitching- in various successful efforts on housing the unhoused in their districts  while other members presented possible strategies with the aim to lessen what seems to be forthcoming an overwhelming number of homelessness.

Councilmember District 3, Bob Blumenfield deliberated on the two reasons why the city does not have the power to impose a zero rate of return on housing providers: Firstly, the powers granted during the COVID 19 Emergency have terminated; secondly, the CA Supreme Court mandates that RSO housing providers are entitled to a reasonable rate of return. Also, “the rents being too high does not qualify as an appropriate finding to change the two-year Consumer Price Index (CPI) Formula,” Blumenfield explained.

“A two-year look, back and not changing the Formula, and using more recent data, since we are not in July but in February, then the percentage ends up being 4%.”

After, Councilmember District 15, Tim McOsker proposed a two-tier rent increase, one for “mom-and-pop” units, and the other for the multi-unit residential buildings.  However, LAHD General Manager, Ann Sewill could neither define what constitutes (by the number of units) a mom-and-pop property, nor provide an existing numerical figure of such housing stock in the City of Los Angeles, let alone a numerical figure for the grand sum of multi-unit residential buildings. Sewill did say, there are 640,000 RSO units in the city of Los Angeles and bills are mailed out to 125, 000 owners.

“It’s not feasible for us [LAHD] to know they are telling the truth when they say, they are small owners. We need to offer an opportunity for small landlords to come forward, prove they are small owners, and certify them as small owners,” Sewill said.

LA Housing through its mandated (LAMC 151.05 J) Annual Rent Registry Program, effective on October 4, 2016, mails out preprinted forms that supply plenty of tenancy information on the form, with the number of rented units, their addresses and the Assessor Parcel Number of the property.

 Rent Stabilized housing units in Echo Park.

 

LAHD General Manager Sewill answered the Council, she could not provide, with a tap of a finger, a quantitative figure for a certain category of housing type. Landlords self-confirm without a follow-up by the housing Department to verify accuracy. On the other hand, Assistant General Manager Anna Ortega said that for the ULA Program, a landlord who self-confirmed, then the follow up revealed inaccuracies.

Councilmember District 1 Eunisses Hernandez asked General Manager Sewill about a previously requested housing Report dated January 23. Sewill said, she was able to acquire funding but realized when starting, that ULA funding needed to be in place before creatin a “small owner” portal.  “It feels that we are putting the cart before the horse, we need to stop that,” Councilmember Hernandez clearly stated.

Apart from LAHD’s Rent Registry, the City Office of Finance collects annual city taxes from all multi-unit residential properties, RSO or not. Observe its posting:

“If you rent out 4 or more residential units from properties within the City limits, you are required to obtain a business tax certificate from the Office of Finance. However, if you receive rental income from 3 or less units throughout the city, you would not be liable for business taxes under this classification.

Moreover, a city business tax on residential properties triggers paying a business rate on utility bills.

Councilmember Council District 13, Hugo Soto-Martinez was in support of a zero- rent increase. He stated that his district has 83% renters, and “since February had 7,000 eviction filings because they [tenants] can’t pay the rent.” Soto-Martinez did not elaborate on what type of housing these tenants are being evicted from: covenant expiration, housing authority, RSO corporate, Ellis Act, Foreclosures. etc.

Soto-Martinez reported that corporations (Limited Liability Corporations, LLCs) own 70% of the RSO properties in the City of Los Angeles. Also, he added that 60% of the people who become unhoused cannot pay the rent, which is the number 1 reason for homelessness. 

Lastly, Councilmember District 6, Imelda Padilla expressed her concern to the Housing Department General Managers as well as critiqued their seemingly unaccountable attitudes with the crises at hand. In contrast, Padilla stressed her continuance to bring supportive housing development into her council district to reduce homelessness as well as protect small owners in her jurisdiction.

(Connie Acosta is a writer and an active member of the City of Los Angeles Neighborhood Council System.)