BPOA Article Library
Editorials • July 13, 2010
Rents decreased, but affordability concerns remain
Santa Monica Daily Press
April 10, 2010
CITYWIDE — The cost for a new tenant to lease a rent-controlled apartment decreased last year for the first time in 11 years, City Hall said in a report released this week, but the number of affordable units for those earning less than the median income continued to dwindle.
The report detailed changes to Santa Monica's rent-controlled apartment stock during 2009 under the California law known as the Costa-Hawkins Rental Housing Act, which was passed in 1995 and allows owners of rent-controlled units to offer them at market rate once a tenant moves out.
Under the law, which took full effect in 1999, owners are typically able to get big increases in revenue from their properties after a long-time rent-controlled tenant leaves.
According to the report from City Hall's Rent Control Agency, a typical rent-controlled, one-bedroom apartment that was leased for $799 per month would cost $1,514 per month after a vacancy.
Rent control rules that set maximum annual rent increases and put in place certain eviction protections still apply after the new rent for a controlled unit is established.
In what City Hall referred to as the "one bright spot in this year's report" the median market rate rent for controlled apartments went down for the first time since 1999.
"While there will be times like the present when a troubled economy drives rents down, the historical trend is upward, and away from affordability," the report stated.
According to the report, the median "maximum allowable rent" for one-bedroom, rent-controlled apartments that were leased to new tenants in 2009 decreased 5 percent from the year before, to $1,542 per month from $1,631 per month.
Tracy Conden, City Hall's Rent Control administrator, downplayed the impact that decrease will have on overall housing affordability in Santa Monica.
"It's not like rents have come down significantly, they're just a little bit down from this upward movement that they've been having for the last 11 years," she said.
For new tenants with low or moderate incomes who are seeking rent-controlled housing in Santa Monica, she said affordable units are scarce.
"Certainly people making minimum wage could not afford any of these apartments in Santa Monica now," she said.
A new tenant had to earn $75,700 per year in order for a one-bedroom, controlled apartment in Santa Monica to be considered affordable in 2009, the City Hall report said.
"Basically, these market rate apartments are non-affordable, certainly for low-income or median-income people. It is a problem and continues to be a problem," said Marilyn Korade-Wilson, who chairs the Rent Control Board.
Realtor and Rent Control Board Commissioner Robert Kronovet, though, said the down tick in the market rate rental prices of controlled units shows affordability has improved for those entering the market.
"The housing prices in Santa Monica at market rate represent, at this point, a real value to the consumer," he said.
And Wes Wellman, president of the Action Apartment Association, a rental housing owners' group, said a trend toward more people sharing apartment units has also helped affordability.
"As owners rent to a greater number of occupants per unit, consumers have in kind made more efficient use of the housing stock by sharing," he said.
Of Santa Monica's 27,500 rent controlled units, 58 percent have been offered at market rate at least once in the past 11 years, the report stated. The other 42 percent of the city's controlled rental stock, or 11,500 units, are occupied by tenants who have remained in their apartments since before 1999.
In 2009, 431 rent controlled apartment units were offered for rent at market rates for the first time, fewer than in any other year since Costa-Hawkins took effect.