City council discusses caveats in a move towards permanent rent control

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In a special meeting held on July 16, the Culver City city council voted 4-1 to extend the Interim Rent Control Ordinance (IRCO) put into effect last year until Oct. 31. Additionally, the council began what should turn into a series of dicussions outlining the many nuances and caveats that come with extending rent control indefinitely.

Speakers were first given an opportunity to voice their opinions, and many of them were landlords who considered themselves “mom and pop” and expressed their concerns of tenants taking advantage of the fact that they are essentially immune to eviction due to an inability to pay rent.

However, in a surprising turn, Protect Culver City Renters — the Political Action Committee founded mainly in response to the initial implementation of the IRCO — voiced their support for permanent rent control measure. The group had several speakers at the meeting, and expressed five particular facets that they would like to be incorporated. These facets are:

  1. Setting the annual rent increases cap equal to the Consumer Price Index
  2. Passthroughs for 50% of enhancement costs over 10 years
  3. Eliminating certain decontrolled and no-fault evictions
  4. Protecting mom and pop landlords from various fees
  5. Following AB 1482 on defining mom and pop landlords, which excludes certain real estate trusts and limits the designation to those with two or fewer units

Each of these suggestions was considered by the city council, but not before a vote was made on extending the IRCO. There was not much indication at any point that this would not pass, and the vote panned out as expected. Mayor Goran Eriksson, who has criticized the idea of rent control as a whole at previous meetings, was the lone no vote.

Following the vote, discussions began over the feasibility of making rent control permanent, and analyzed specific aspects of the ordinance to ensure it is serving its intended purpose.

This discussion was based around two checklists regarding rent control and tenant protection markers that the current ordinance does or does not have.

One of the first issues brought up was the idea of ‘mom and pop’ landlords, and how specifically they should be designated. 

Councilmembers quickly seemed to gravitate towards the AB 1482 designation as suggested by Protect Culver City.

Additionally, the criteria for low income designation was also discussed, and another general consensus was found that using the same requirements that affordable housing uses — 80% of the city’s median income — was sufficient.

Eriksson believes unauthorized subletting and adding additional occupant w/o permission should be added to causes for eviction, in addition to the recovery of manager unit because of termination of manager.

Councilmember Meghan Sahli-Wells spoke out against additional occupant evictions due to job loss circumstances with the pandemic, but Small counters by saying only informing the landlord should be necessary, staff tasked with looking for ordinances addressing that in other counties.

Another general consensus brought forward was the removal of a minimum rent increase from the ordinance.

Councilmember Daniel Lee brought this idea forward, and argued that such a measure was counterproductive given the number of landlords who have spoken at rent control meetings and claimed that they do not raise rent often.

There were some other aspects that did not seem to come back with a definitive stance, in particular the use of a Net Operating Income (NOI) analysis to determine certain fees and passthroughs.

Councilmember Alex Fisch mentioned that NOI was causing issues in West Hollywood, potentially resulting in what he called “capital improvement deferrals.”

As the name suggests, a Net Operating Income analysis looks at the profitability of income-generating real estate investments. NOI equals all revenue from the property, minus all reasonably necessary operating expenses.

Discussions of net earnings and expenditures also brings the idea of passthroughs back to the forefront, and Sahli-Wells expressed concern that landlords could try to take advantage to charge tenants for unneccesary improvments.

While there was general agreement on this idea, the specifics on what exactly these improvements are, though the general idea that was put forward  that capital improvements that are necessary to benefit the tenant or maintain the property are the only ones that are eligible for passthrough.

In terms of amount, the Protect Culver City suggestion was once again the primary focus, as council seemed to agree that 50% over 10 years was a fair yet sufficient number for both sides.

City staff was then tasked with creating a report to be presented at a meeting in Sept., where the topic will be represented as the IRCO comes close to expiring again.

For more information on the Culver City city council schedule, visit the Culver City Legistar page at https://culver-city.legistar.com.