Establishing Expectations is a Two-Way Street!

City Council kicked-off our extended rent stabilization reform discussion in January of 2017 without much discussion about policy goals. Councilmembers heard plenty from tenants about rising rents, capricious landlords and predatory practices, but no specific objective for rent stabilization was identified. Well the Rent Stabilization Program has found one…but it needs revision!

The Community Development Department is home to the Rent Stabilization Program and it reaches out to the public with a newsletter titled CDD Connections. The Spring 2018 issue includes a section on rent stabilization! It explains:

The RSO has two fundamental purposes: 1) to protect occupants of rental apartments units from unreasonable rent increases; and 2) to provide a rental increase provision to offset building and property maintenance and improvement costs for landlords. (p. 5)

That purpose statement purports to walk a balance beam between the interests of tenants and their landlords. It implies a false equivalence: that the interests of those two parties should be equally balanced by the city through the Rent Stabilization Program.

The purpose statement is intended to establish landlord and tenant expectations. But because it does not sufficiently recognize the interests of tenants, it necessarily establishes the wrong expectations for the program.

‘Fair and Balanced’

We’ve heard the term before: it is the ingenious Fox News tagline that implies fairness in reportage while hiding behind a false equivalence (‘balance’) that substitutes for effective reporting today. Real reporting calls out injustice rather than calls on one side then the other and then tosses it to the audience: you decide.

That’s how the Rent Stabilization Program purpose statement reads: the city is an impartial arbiter between equivalent interests: tenants and landlords.

Now, any city must weigh the concerns of multiple stakeholders. But not all stakes are equivalent. In Beverly Hills about 7,700 households occupy rental housing. The city has a responsibility to provide rental housing, including an “adequate, affordable housing supply to meet the existing and future needs of the community.”

So says the city’s General Plan Housing Element. And the conservation and maintenance of rental housing are explicit policy goals because the most efficient way to provide affordable housing is to keep what we already have! Rental housing is a social responsibility and the Housing Element recognizes that.

On the other hand, our rental properties are is owned by perhaps a thousand or so owners, which include corporations, limited liability companies, trusts and individuals. These are investors. The city wants rental properties properly maintained and wants to support property values generally. Price controls can interfere with those goals, of course.

The state requires every city that limits rental prices to offer relief to a property owner who has been harmed by rent control. Section 4–6–11 of our rent stabilization ordinance outlines a ‘rent adjustments upon application’ process for that purpose:

A landlord may be granted a higher-than-allowed rent increase only if his net operating income has declined relative to the base year of 2016.

It’s all about ensuring the landlord makes a fair return on the investment. However that local provision has not been tested; apparently no landlord has yet been denied his fair return! ‘Fair return’ is a legal concept and the rent stabilization ordinance recognizes it.

But should city city draw some equivalence between the social obligation owed 7,700 households that rent housing and the ‘fair return’ obligated to landlords? Because that’s how the Community Development Department’s approaches rent stabilization in Beverly Hills according to the purpose statement.

The False Equivalence Harms Tenants

Just like the cynical tagline “fair and balanced” obscures the harm to the public interest posed by bad journalism, so the false equivalence of the purpose statement in CDD Connections harms tenants.

Consider how it has informed the department’s Community Education Workshop held this past April. The is intended to educate tenants and landlords. But we have different needs because our rights and responsibilities are different. Other cities conduct workshops separately for tenants and landlords for that reason. Not so in Beverly Hills.

At the workshop, staff had to studiously maintain some seeming balance between the interests of tenants and landlords. The goal was to offend nobody. Landlords were referred to as ‘housing providers,’ which is a bit of rhetorical pandering that erases the landlord’s true interest in rental property: investment. Even our own rent stabilization ordinance uses the term ‘landlord’! (Read our workshop recap.)

Where Did This Balancing Come From?

We had to do some digging to uncover where that false equivalence in the purpose statement originated. We went back through four decades of ordinances and resolution looking for it. In retrospect we should have started at the beginning with the original rent stabilization ordinance adopted by Beverly Hills City Council on March 27, 1979.

That ordinance created a “temporary system of stabilization and control of apartment rent levels” which we know today as Chapter 5. The findings on which the ordinance was based:

It is necessary in the public interest to protect the occupants of rental apartment units from unreasonable rent increases, while at the same time recognizing landlords’ needs generally and to have rental increases sufficient to cover maintenance thereof and increased costs of operation of the apartment buildings and to encourage capital improvements thereto. – Ordinance #79-O–1731 section 1(f) ‘Purpose’

It appears that city staff simply grafted that old purpose statement into the current program’s purpose statement as communicated by the CDD Connection newsletter. But using that old language as a guiding philosophy for today’s Rent Stabilization Program seems wrong.

Back then the Council was apparently divided on the issue of rent control. That much is reflected in the title of the ordinance: A Temporary System of Stabilization and Control of Apartment Rent Levels. Today’s City Council is of a different view, though, and has put a clear emphasis on tenant protections.

Take for example the urgency ordinance adopted by City Council in January of 2017 that made important changes to the rent stabilization ordinance. The Council recognized that a shortage of available housing and rising rents warranted urgent city action. The findings that support the urgency ordinance read as follows:

If this Ordinance does not become effective immediately, an increased number of tenants, including seniors and disabled tenants, will have their rents raised by 10%, or who are evicted without cause, will be unable to bear the cost of finding another unit and moving into the unit. At a minimum, the expense of moving to a new unit or having a rent increase of 10% will potentially cause the tenant to cut back on spending for health care, food, or medicine. — Urgency ordinance #17-O–2725, adopted January 25, 2017.

Council expressed profound concern about the state of rental housing in Beverly Hills. But not one of those concerns is reflected in the Community Development Department’s rent stabilization program purpose statement. Where is concern for tenant stability? For tenants’ rights? There’s not even a whiff of that!

The General Plan Housing Element is not reticent either. One of the stated goals: “To continue to provide tenant protections through the City’s Rent Stabilization Ordinance” (p. 469).

Why the RSO Purposes Statement Matters

City communications establish public expectations for local government. The RSO purpose does that work. But it falls short of what tenants should expect of City Hall.

The Rent Stabilization Program should strive not only to protect against “unreasonable” rent increases (as the purpose statement says) but also to protect tenants from all manner of predatory landlord behaviors too. That should include protection from no-just-cause termination and landlord retaliation. It should include a minimum standard for habitable premises. And it should suggest clear penalties when landlords flout the law.

Moreover, a central purpose of the program should be tenant empowerment. There is an historic inequity in power between tenants and landlords in Beverly Hills. That needs to be addressed. Other cities have crafted ordinances to do exactly that. Beverly Hills is on its way but not there yet.

More broadly, we expect the Rent Stabilization Program to honor the spirit of the City Council’s urgency ordinance: recognize the need to conserve the limited supply of affordable rental housing stock we have; and to enhance residential stability for those who inhabit it. That too should be in the purpose statement.

Tenants Need to Establish Expectations!

Setting expectations is a two-way street: the city has endeavored to set our expectations with a relatively limited and anodyne statement of fundamental purposes for the program; likewise we can establish our expectations for an expansive program that empowers tenants to be our own best advocates.

We have to look out for our own interests. That means holding the city to account for performance. Has the city responded promptly to a code violation? Does a call to the RSO office get promptly returned? Is the RSO program meeting our own expectations?