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Four-month freeze on apartment rents proposed by L.A. City Council committee

After roughly 90 minutes of angry testimony from tenants and landlords, a Los Angeles City Council committee called Wednesday for a four-month prohibition on rent increases at an estimated 630,000 apartments.

On a 3-1 vote, the Council’s Housing, Community and Economic Development Committee supported a plan to bar owners of rent-controlled buildings – properties with two or more units that were constructed before 1978 – from raising rents on July 1.

The proposed moratorium heads to the City Council for a vote on Friday, setting the stage for a showdown between landlords and renters, both of whom said they have been struggling in the economic downturn. Under the plan, the moratorium could be extended an extra two months, to Dec. 31.

Councilman Herb Wesson, who heads the committee, said the moratorium would give council members time to assess a proposal to tie rent increases to the inflation rate. Wesson said his plan would serve as a compromise with Councilman Richard Alarcon, who wanted to ban landlords from raising rents on rent-controlled buildings for a full year.

Alarcon said landlords should not impose new costs on their tenants in the middle of a recession.
“Do I want to allow a group to increase its income when the people that they are providing apartments to are losing income? I have to say, I can’t be a party to that,” Alarcon told the audience. “I cannot align myself with allowing people to benefit when tens of thousands are struggling in Los Angeles.”

Landlords spoke out against the plan, with some saying it would prompt them to have their property values reassessed downward to reflect their reduced value. Others said they would have a difficult time finding the money to repair and maintain their properties.

“This is financial suicide for the city,” said Yolanda Gonzalez, who owns four apartments in Venice and another 14 in Boyle Heights.

Renters rights groups contend that unless a moratorium is enacted, the city’s rent stabilization law would allow rent to go up by 3% on July 1 -- even though inflation was less than zero last year. Tenants now paying $1,000 a month, for example, would see their costs rise to $1,030. In certain large buildings where landlords pay for the utilities, rents could go up by as much as 5%.

Landlords and tenants packed the committee’s hearing room and a spillover room at on the 10th Floor of City Hall at Wednesday’s meeting.

Two building owners said rent control already made it to impossible to get loans to make long-term repairs. A third complained that the moratorium would go into effect on the same day that the Department of Water and Power imposes a 4.8% electricity rate hike.

Renters, in turn, talked about reductions in Social Security payments and their ongoing struggle to find work.

Venice resident Cindy Chambers told the committee that she lost her job in November 2008 and recently received a written notice that her rent would go up.

“My landlord knows my situation,” Chambers said. “In fact, a few months ago he told me that living on unemployment must be a good life.”

Backers of the moratorium include the Coalition for Economic Survival and the Los Angeles Community Action Network, two tenant groups. Foes of the plan include the Los Angeles Area Chamber of Commerce and the Central City Assn., two business groups.

Councilwoman Jan Perry cast the lone vote against the proposal, saying it “polarizes the situation” between renters and landlords. Councilman Ed Reyes favored it, saying that as many as 75% of his constituents are renters.

“There are thousands and thousands of people out there in the working class who just don’t have a voice.”

-- David Zahniser at Los Angeles City Hall
 
Comments () | Archives (43)

I love how the city council can change rent control laws when they feel they are not 'fair'. Why don't they also force grocery stores, gas stations, utilities etc. etc. to lower their prices during this ongoing downturn?

What a bunch of a-holes! I just purchased an occupied duplex last year and due to the RSO, I am basically stuck with the tenants. They have been there so long that they are paying WAY below market rate. Now the city council wants to tell me I can't raise the rent a piddling 3 percent (which would not even begin to allow me to break even)?

As a result, I am going to be looking for any legal method to get these tenants out (ethical or not)...

No wonder this city is so messed up!!!

Alarcon told the audience. “I cannot align myself with allowing people to benefit when tens of thousands are struggling in Los Angeles.”

Just like when he voted to increase DWP rates on ALL L.A residents? Hypocrite, Mr. AlarCON.

Fantastic! Now we know of more costs that can be saved!

Stop City idiots managing rent costs. Fire them and let rents and people go where they may.

Anyone who thinks rent control is a good idea should read Thomas Sowell's "Basic Economics."

Vote out every progressive in November. Government does not belong in controlling what we do with our own property. It belongs to the owner, not the government

I own a 5 unit rent-controlled apartment building. Assemblyman Richard Alarcon (7th district) estimates that the one-year freeze could save rent-control families $300 - $500 per year.

I guess Alarcon does not own rental income property. I guess Alarcon has not heard about the Villaragosa's plan that households that get their power from the Los Angeles Department of Water and Power could see their electric bills go up between 8.8% and 28.4%, depending on where they live and how much energy they use.

I guess Alarcon is living in a static world where the costs of doing business have not increased each year, such as taxes, insurance, utilities, maintenance, court costs, etc. I guess Alarcon doesn't realize that the rental property income business is just that - a business and that many rent-controlled apartment owners struggle just as many people in this economy, and vacancies have skyrocketed! The truth is that you can go to Craig's List and see that the market is glutted, and this has caused fair market value in non-rental controlled areas in the City.

Many renters in rent-controlled buildings pay far less that the fair market rent will fetch, and many renters have paid far less than market rent for many many years. The City is actually shooting themselves in their feet because apartment buildings are bought and sold by GRM (gross market rents), the less the rents, the less the building sells, the less TAXES the City collects each and every year.

The proposed moratorium is wrong.

I have a two unit property. I collect $3100 in rent and my monthly payment is $3600 so I already pay $500 out of pocket and that's before the water that I pay for the whole property which averages $60 a month. I also pay for all repairs and since it's an old property this is not an infrequent thing. I also pay LAHD over $100 a year to register the property as rent controlled. My property taxes will also go up this year by more than a 3% rent increase will cover. I have a state job and got a two day a month furlough which came with a 10.7% pay cut. My point...all landlords aren't on easy street so why are you punishing me, City Council?

Not to come across as mean, but I do not understand if the lady in the article who lost her job back in 11/2008 is on unemployment and is complaining about a rent increase, perhaps if she has not already she needs to think about reaching out to family and/or friends for financial help and potentially consider either moving in with family and/or friends to lower her expenses or be a roommate. I am sure she is looking for employment, but from my understanding what you get on unemployment is really not a lot of money and I would think eventually one would come to the end of the line to where they could no longer receive unemployment, so if I had been unemployed that long as much as I may not like it, I would consider downsizing, lowering my expenses, saving up as much of my unemployment money as I could.

In the long run if this continues you will see fewer landlords and fewer properties available for rent. Then where are you going to live? The market best decides these sort of things, not the government. Price controls NEVER work. If they can't afford where they are living now, they need to adjust and move to somewhere where they can afford to live. Its not the property owners fault that you can no longer afford the rent and by saying that the property owners will "increase its income at the expense of people losing their income" is about as idiotic as any statement coming from a politicians mouth. This is supposed to be a free-market capitalist society and if we continue 'bashing' those that are trying to make money, what does that say about us as a country?

How much is Yolanda making on those four apts - quite a lot and has been doing so for decades I imagine. Landlords do very little for a lot of money, they should be glad to have such a gig right now (they are welcome to sell their property and earn money in a cd at 1% instead)

Th city keeps raising taxes, parking and traffic citations, and DWP rates yet they have the nerve to tell property owners to freeze rents? What hypocrisy. The City of LA is a joke. I cant wait to move.

This is complete BS. Rent control is stupid and unfair and so is this new moratorium. Let the market decide. Why punish landlords? Also, who is increasing rents right now? no one.

Alarcon is probably the worst politician ever and he needs to resign. he has bigger personal fish to fry.

why doesn't the city council pay their rent increase, OUT OF THEIR OWN POCKET.these commies want the productive taxpayers to support the riff raff?

This proposed rent increase moratorium is madness! I own a small 3 unit property in Los Angeles and I am absolutely being killed by the low rents. I don't know where they expect property owners to get the money to repair and maintain their buildings especially since there is virtually no recourse against destructive tenants under the rent control laws. This moratorium is only going to lead to reductions in property tax revenue since no one in their right mind is going to purchase a building in Los Angeles. The old neighborhoods will become more and more run down as property owners are unable to collect enough rent to keep up with repairs.

Increasing the rent isn't going to help a landlord if the tenants end up moving out becasue the can't pay the higher rent. You'll end up with a vacant unit and no rent at all. Keeping rents the same may help keep all the units occupied (no vacancies).

Here's an idea: If you can't afford your rent... move. It is in your best interest, anyway, to live within your means. Move to a cheaper land. Move to a town with less unemployment to increase your chances of finding a job.

Either, someone that can afford the rent will backfill you, providing stability to the neighborhood... or if no-one can afford it, rents will decrease. When we start trying to man-handle the market, bad things happen. Let nature take it's course.

I find it unbelievable how this City Council econ0mically ignorant .

They will vote for tax and rate increases on everyone and then impose this freeze . As a Latino with some understanding of economics , I am ashamed that leaders like Alarcon represent our community. What a sad "leader".

This is great news!

Raise the rent on illegal aliens, since they get more FREE stuff than the rest of us hard working US citizens.

Of course, the issue of rent control and rent increase is based on the presumption that city government has any business at all in injecting itself into private enterprise.

So the landed gentry is upset that they can't gouge the people anymore? I sure hope their monocles don't fall into their brandy glasses and shatter.

It's not up to the city to decide whether a building goes fully occupied or not. For years, landlords have been subject to the allowed rent increases whatever the rate of inflation or the market value of rental units.

Most landlords are savy and know a market rent from a below market rent. taking away their ability to raise the rent on a below market unit is a slap in the face.

I landlord who is getting market rents will not raise the rent on tenants; its in his best interest to keep the rents the same or even lower rents to current market. I know many instances where this is true.

I find the city council's action to be a dangerous and ill-advised move but what else can we expect from our council?

In regards to tenants moving out if the rents are too high: landlords know how high to make the rents in order to get tenants. When the economy goes bad, landlords routinely lower rents. What we don't need is a unilateral rent moratorium by an entity unfamiliar with the property, neighborhood conditions and potential tenants. Landlords need the flexibility to raise rents when necessary based upon their own property. Owning a property and renting it out is a business. The owners of hair styling salons and car repair shops aren't told how much to charge for their services, yet there seems to be salons and shops for every budget. In the case of property, let the market do its work. Eventually, there will be variety enough in property to fit every budget. The only regulations that should be in place are ones requiring landlords to make their properties habitable. By the way there is no way to get rid of bad tenants in Los Angeles. If this new law passes no one will buy property in this city (particularly older buildings).

I have absolutely no sympathy for these slumlords. Rents in LA are already so ridiculously high that they have no excuse to raise them for years to come much less this year. I'm seeing $2500 for a two bedroom in North Hollywood!! Unreal!! The greed in this city has gotten disgusting.

I own a 5 unit rent-controlled apartment building. I guess those that voted for the moratorium do not own rental income property. I guess 3 members of the committee are living in a static world where the costs of doing business have not increased each year, such as taxes, insurance, utilities, maintenance, court costs, etc. I guess they don't realize that the rental property income business is just that - a business and that many rent-controlled apartment owners struggle just as many people in this economy, and vacancies have skyrocketed! The truth is that you can go to Craig's List and see that the market is glutted, and this has caused fair market value in non-rental controlled areas in the City.

 
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