Rent Stabilization Update: A Long Time Coming

It has been a while since residents received an update from City Hall about rent stabilization. The rental unit registry was completed in January and other aspects of program implementation have continued, yet we’ve heard nothing about either. The tenant workshops came and went nine months ago, and though City Council approved the hiring of a rent stabilization program director in September, no one has been hired for the position. This very important housing program seems not to be a priority for City Hall.

Even the Human Relations Commission, which has played a key role in tenant-landlord issues and made policy recommendations, has been left out for the program’s implementation. “We are in the dark,” one commissioner said. The Chair agreed. “Do they want us involved in any of the rent stabilization discussions?” “We’re in limbo” another commissioner said. This commission’s last rent stabilization came last October.

On March 15th Community Development Department director Susan Healy Keene finally delivered updated the commission on the state of the rental unit registry including several key findings from rent stabilization program implementation so far:

  • Nearly every non-exempt rental property is now included in the rental unit registry, with 1,096 total and just two duplex property owners still holding out despite the administrative penalties for non-registration;
  • Nearly all non-exempt rental units, a total 7,687, now have a ‘certified’ rent (the correct rent that sets the baseline for future rent increases under any rent stabilization program); and,
  • Just a handful of households disputed (or ‘appealed’) the rent stated by the landlord and only 3 of those cases proceeded to a hearing officer for resolution – a tiny percentage.

The focus of Keene’s PowerPoint presentation was the registry. New city figures include the number of properties currently registered, an elementary breakdown of tenancies (Chapter 6 versus Chapter 5), and the average cost of rental housing in the city (by apartment size). I’ll get to Chapter 5 in the following post, but here I want to focus on the rental unit registry.

Rental Registry Property Characteristics

Community Development Department director Susan Healy Keene presented property and unit totals by property type as currently registered. It comprises 1,096 residential rental properties inclusive of 7,701 units.

Registered properties by type Total units Total properties Properties according
to housing survey
Discrepancy
Duplex 420 210 210 0
Triplex 192 64 66 (2)
Fourplex 736 184 191 (7)
5-10 units 3,239 469 484 (15)
11-20 units 1,625 114 114 0
21-40 units 1,402 53 56 (3)
41 or more units 87 2 10 (8)
Totals 7701 1096 1131 (35)
Note: The city’s Rental Housing Initial Data Survey from April of 2017 established a preliminary baseline for properties not exempt from rent stabilization. “The rental property and unit information provided on [sic] this report is reflective of the information obtained within the existing information systems and may deviate from existing property conditions.”

These figures caught my attention because significantly fewer properties are included in the registry today than were identified in the city’s Rental Housing Initial Data Survey from last April. That preliminary rental housing survey identified 1,131 rental properties and 8,662 units.

Now, there are a few categorically-exempt properties under state and local law. For example, a building that was permitted for occupancy after 1995 would be exempt from rent controls (though it could well be subject to other local regulations to protect tenants). If we subtract the post-1995 properties and units from the figures in the housing survey, we are still left with 1,119 properties inclusive of 8,334 units.

Properties built or converted for sale as condominiums and that were actually sold to individual buyers would be exempt too. But that should be a relatively small number as relatively few properties have been built or converted. And perhaps the survey was not a definitive count. It was called ‘initial,’ after all, and it included this caveat: “The rental property and unit information provided on [sic] this report is reflective of the information obtained within the existing information systems and may deviate from existing property conditions.”

Still, there is a significant discrepancy: the housing survey found 1,119 properties inclusive of 8,334 units while the current registration tallies 1,096 properties inclusive of 7,701 units. Are those unaccounted-for 633 units really categorically exempt? How many units (and tenant households) may have been overlooked and simply not counted as rent-stabilized? We need to know because it matters: properties not regulated under local rent stabilization offer tenant households absolutely no local tenant protections. That includes the cap on rents and relocation fees.

So let’s drill down into the figures.

Half of the unaccounted-for properties are in the middle-sized 5-10 unit category (the most prevalent size in Beverly Hills). The discrepancy in that category alone represents a potential under-count ranging from 75 to 150 units. Few properties of that size have been built in Beverly Hills since the 1995 cutoff though there have been a few condominium properties. But if those units had not been sold to individual buyers, then they would be rent-regulated – and should be included in the registry.

There are also three unaccounted-for properties in the 21-40 category. They represent from 63 to 120 units. There are eight unaccounted-for properties in the 41+ category. That may be as many as 328 units in that category alone. We can assume that some may be later construction and/or condominiums actually sold to buyers, but the potential number of units not in the registry but potentially subject to rent stabilization is no small number.

The key questions:

  1. How many properties potentially subject to rent stabilization are not represented in the registry?
  2. How diligently has the program’s temporary staff looked for properties that should regulated but have not been identified as such?

These are not academic questions. The answers make a real difference to tenants who live in those properties. For example, last fall I began to work with a tenant who suffered harassment and discrimination. Then she was hit with a 13% increase. Shortly after she was given a 60-day notice. No relocation fees, the landlord said, because the tenant was leasing a condominium unit. And indeed the tax assessor’s office shows the building has a tract map (necessary for a condominium).

Turns out that the property was not a condominium at all. The developer never followed through on his condominium offering. Those units all should have been rent stabilized all along – indeed going back more than two decades – but the city never checked. In fact the city wasn’t even aware of the relevant provision in the law. So I’m sure it’s not the only such property that should be in the registry but is not. (Epilogue: the landlord rescinded the 60-day notice and the tenant now can only be raised 3%.)

Department director Keene in her presentation told the commission that 33 properties were exempt from rent stabilization, and identified them as hotels, condominiums and religious institutions (according to business records data). We know that there are at least two condominium buildings in which units were never offered for sale and there may be more. If only two properties with 41 or more units are registered but the housing survey initially indicated four times as many properties, that’s a red flag. Are those hotels or condominiums. On what basis is a multifamily building exempted as a religious institution?

Not addressed in the presentation is buildings removed from the market for use exclusively as AirBnB short-term rentals. This is not a legitimate hotel use as these are not permitted as hotels, and short-term stays of fewer than 30 days violate city law. Yet we know several such buildings exist and those units are effectively removed from the rental market. Are they in the registry?

Also not addressed is the loss of units to non-rental use (but not reported as such) or units that have been combined (I know of two cases without even having searched for them) which in each instance permanently takes one unit off the market. How are such properties represented in the registry? We can’t know.

As to question #2, my view is trust but verify. The only way we can verify these figure is to look parcel by parcel and compare the tax assessor’s records with the registry.. That is, we need an audit of the registry in order to ensure that the city has done the necessary due diligence.

City Hall reluctance to communicate the status of rent stabilization program implementation not only prevents the public from keeping an eye on the Community Development Department’s efforts, it also distances us, those most affected by rent stabilization, from the policy process. Many residents who rent are simply not paying attention anymore. With six months between updates, the public’s collective attention understandably starts to fade.

I will keep my attention focused on program implementation and communicate what I find if only because the city’s efforts are unsatisfactory. Recall that the last tenant-focused education workshop was nine months ago and the city’s posted FAQ documents haven’t been updated in nearly a year. Even the helpful FAQ for tenants from that workshop have been pulled from the city’s website. It’s no way to communicate to stakeholders about this most significant policy that affects nearly all of those who rent housing in Beverly Hills.

Human Relations Commissioner Gerald FriedmanIn the absence of city communication about the program, even the Human Relations Commission’s attention has faded. Indeed the commissioners in February commissioners decided not to stay involved but rather to return to prior worthy endeavors such as embracing civility, preventing bullying, and encouraging random acts of kindness (as illustrated by the new work plan priorities below). I had argued for an oversight role for the commission in my correspondence to commissioners but they thought otherwise. It’s up to tenants ourselves to trust-but-verify what comes out of City Hall.
HRC workplan FY2018-19

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