City Council in January created a registry of rental units to identify every rental property owner in the city and to inventory the apartments that are occupied, available for rent, or otherwise off the rental market. The registry is KEY to the rent stabilization program, which is why rental housing business owners are trying by hook and by crook to torpedo the registry in order to sink the program it. Let’s take a closer look at the landlords’ objections.
City Council created a registry of rental units “to preserve the City’s rental housing stock, and to protect the health, safety and welfare of tenants and the public” (January 24, 2017 staff report). It may be difficult to believe, but our city has never precisely accounted for all of the rental units, or all of the landlords doing business in the city. The approach taken by Beverly Hills has long been complaint-driven where other rent-regulated cities take a proactive approach. They put tenant health, safety and welfare first.
A Bit of History
Even a decade ago Beverly Hills admitted that there was more the city could do for tenants. Council considered (then rejected) a registry and a mandatory housing inspection program. Why was it rejected? According to the staff report, the landlords’ industry association provided useful ‘feedback’ on the idea. Then City Council simply killed it. (Just two tenants spoke up for it, the report noted dryly.)
City Council this past January revisited the registry as part of an urgency ordinance finding in Beverly Hills a crisis of housing instability and affordability. “Currently, there is a shortage of affordable housing that is available to all segments of the community both within the County of Los Angeles and specifically within the City of Beverly Hills,” Council said. That January Urgency Ordinance continued:
Studies, which were presented to the City Council and are part of the record regarding the adoption of this ordinance, have shown that there is a shortage of the number of apartment units that are available for rent and that the rents that are being charged for apartment units are increasing dramatically, especially within Southern California and within the City of Beverly Hills. – January Urgency Ordinance
City Council then took several steps to stabilize our rental housing market:
- The city capped the allowed annual rent increase to keep tenants who faced 10% rent increases housed;
- Imposed relocation fees to effectively put the brake on no-just-cause terminations; and,
- Created a registry of housing providers and their units.
With data on owners, properties, unit and tenancies, the city would finally be able to understand our rental housing market dynamics and address a problem that that the city long knew existed: some of our property owners and many of the professional managers were never licensed to do business in the city.
The registry requires that property owners, on record and under oath, simply describe their rental housing businesses. Each one is required to be licensed for business tax purposes.
I suspect that is one reason why rental property owners might balk at the registry: it requires all of them to be licensed as businesses. (Some are not.) That would require them to pay tax on gross receipts. (Clearly some are not paying their business tax. Even if licensed, they may vastly under-report the rents they get.)
Once City Council created the registry, City Council evidently harbored no second thought. The registry was reaffirmed again in February and April (unanimously each time) and finally given a concrete form in June when Council approved the registry form.
What Does the Registry Require of Property Owners?
There are three key aspects to the information requested by the registry:
- Property owners are asked to describe the property and their ownership interest in it, as well as identify the property manager (if in-house) or the management company (if different from the owner);
- They must document each unit and the essential housing services (like utilities and parking) that are provided to tenants in that unit; and,
- They must describe the current tenancy in general terms and note the cause behind each vacancy in that unit: was it voluntary, a for-cause eviction, or an involuntary termination?
These data points are common to every rent-stabilization program because any locality that regulates the rental market wants to know if a unit is rented or is vacant; if it has been removed from the rental market in that it is occupied by an owner, relative, or a resident manager; or if a unit has been unlawfully removed from the market. (That can push up rents for remaining units or be used for AirBnB or some other non-permitted use.)
Have a look at the registry form. It is foremost about the operation of a licensed business (renting real property) in Beverly Hills.
In fact, most of the information requested by the registry form is already public knowledge or is accessible elsewhere else (including business tax or property tax records). Here is the form showing only fields that ask for information not previously reported by rental business owners.
Landlords have balked loudly at the prospect of providing such information to the city. They claim that the city is demanding confidential or proprietary business information; and that it infringes on their tenants’ privacy. The latter is simply not true.
From tenants the registry asks nothing: no tenant fills out a registry form and no tenant provides any information to the registry. There is no request for the tenant’s name, occupation, income, age or any other personal detail. The registry does, however, require the rental housing business owner to indicate when a unit is occupied by a minor, a senior (62 or older), a disabled resident, or a household that receives federal or state housing benefits. (For good reason, below.)
Nor do the claims of ‘proprietary’ or ‘confidential’ information ring true. In our facilitated table dialogue with the property owners, none could offer any specific reason for withholding from the registry the information that they say is currently available from other sources like business licenses, county assessor records or public websites.
Instead they simply balk; they say they just don’t want the city collecting ANY of the information. They don’t want it centralized and they don’t want the city in their business. But again these are businesses providing rental housing. The presumed motive for not wanting to make this business information public: opacity. As one rental housing business owner said, “It should be on the tenant to find out” if the landlord evicts frequently or has been found to harass tenants.
As for the city asking about the tenancies, specifically asking if there is a minor, senior, or disabled resident in the household, say, it is required because our rent stabilization policy protects certain classes of residents (like seniors) and requires for them longer periods of notice in some cases and additional relocation fees. In other words, the registry asks because the city cares. (That could be the registry’s motto!)
The Sacred Cow: Actual Rent Amounts
Aside from the practical and philosophical resistance to the city regulating their rental housing business, property owners will not yield on one piece of information in particular: the rents they charge. It appears to be a line in the sand. Why? Anybody can call on a vacant apartment and learn the asking rent. Sometimes it’s on the for-rent sign.
In any case it is a disingenuous red-herring argument: the city does not need to know the prevailing (i.e., ‘market’) rents; rather it must know the actual rent for each unit. The actual rent is the precise amounts the business charges NOW for any occupied unit. That’s required to administer a rent-stabilization program!
Rental housing business owners wheel out a variety of arguments to avoid disclosure. First: the information is already available. “We already provide that as part of business license,” one business owner said. But that too is disingenuous: not all landlords are actually licensed to do business, as it turns out, and the tax rolls are not necessarily an accurate reflection of rents charged. And if the licenses did accurately reflect those rents, wouldn’t the business owners fight to keep it secret? Of course!
Second: Tenants will be at each other’s throats if they know their neighbor’s rent. Nonsense. As it happens I do know my neighbors’ rents. We compared them when our landlord handed all of us near-10% increases for two years running. Of course we talked!
Third: It’s confidential. “I don’t want my new tenant to know what I charged my old tenant,” one landlord said. But another rebutted that claim himself. “If you want to know the rent just go on Zillow – it’s all there.” (The website posts estimated rents.)
Why is it so important for the city to know actual rents? Because the city has adopted rent stabilization as a policy and it must, under the law, certify a ‘maximum permissible rent’ for each unit. (That is the maximum allowable rent that can be charged, not what the landlord must charge.)
Establishing the permissible rent amount allows the city to identify unlawful rent increases and avoid disagreements down the line over the proper rent. It is an official number, not ‘confidential’ trade secret. Indeed the Civil Code mandates that permissible rents be made public (only upon request, however) when established. “The record of permissible rent levels is a public record for purposes of the California Public Records Act” – Section 1947.8(f). Stated plainly!
Also, identifying the permissible rent gives city analysts actual data on housing costs so that we can accurately calibrate relocation fees (among other things). All along, the property owners have decried the absence of data to impugn the rent stabilization policy process. Well we can certainly collect it!
And the third reason why we document permissible rents is that the permissible rent is the very crux of the registry database which is the keystone of an effective rent stabilization program. . That was my takeaway from Tuesday’s City Council meeting: strike the rents and you don’t even need a registry, according to our City Attorney.
In sum, the landlords’ arguments are both self-serving and obfuscating. Self-serving because each serves to kick a leg out from under the registry. (Since when does your landlord care about your privacy?) And obfuscating because all of the arguments work toward the ultimate goal of non-disclosure.
Today the registry is the law of the land. Rental housing businesses are required to register their properties, units and tenancies. Registration is online only, and must be completed by September 23rd. (City Council just moved that goalpost: the close of the registration window is now 30 days later than the original August 23rd deadline.)
We are at the beginning of this process. No units have ever been registered before.
Looking back Beverly Hills proposed a registry in 2006 to anchor an inspection program that held property owners to account for habitability standards. The idea was to ensure that property owners and managers adhered to the state’s habitability standards – and to head of tenant complaints by undertaking a proactive inspection program. But the landlords killed it.
Now that we have a registry on the books, will the city have the gumption to implement it properly? Tuesday’s Council meeting was not encouraging: we saw a parade of landlords push back strongly against a registry. And we heard councilmembers suggest the city may not even need record the maximum permissible rents (the basis for the registry).
Most important, we learned from the City Attorney that if the city eliminated the requirement to report actual rents, there would be no reason for a registry at all. And THAT would be an administrative stake-though-the-heart of rent stabilization.
That’s why our tenants committee put the registry among our top concerns. From the committee’s position statement presented at dialogue #5:
Registry. The Committee strongly endorses the Registry, which is required to properly determine the property owners adherence to laws and regulations. We believe it is imperative that the registry database also contain information about the landlord’s performance: information concerning complaints against the landlord for violation of habitability standards, code violations, lawsuits filed against him, all of which should be a matter of public record and that enable a prospective tenant to make an informed choice whether or not to do business with that landlord.
Beverly Hills is not inventing the wheel here: every rent-regulated city has a registry. You can even go online to view Santa Monica rents. (West Hollywood is more mum on disclosure.) Nobody is at each other’s throats there, as our landlords caution tenants would be. Nonsense!
So why the resistance? In a word, accountability. Tenants are thinking about that we ask the city to collect the information necessary to ensure that landlords are compliant with our laws. Landlords are thinking about accountability when they oppose collecting that information. As one property owner said to me at dialogue #3, “We’ve been getting away with murder in Beverly Hills for a long time.”
Let’s hope the registry changes that. It’s why every tenant should support it.