Landlords Say Tenants Were Happy With RSO!

Landlords claim that we tenants were a happy lot before City of Beverly Hills mucked around with the rent stabilization ordinance. They hardly ever hit us with excessive rent increases, they say, and properties were maintained just fine. No-just-cause eviction was not even a thing, so why fix what wasn’t broke? This latest argument that change wasn’t needed isn’t fooling anybody: this was a system that did need fixing.

Let’s be clear at the outset: the impetus behind the landlords’ ‘analysis’ of Code Enforcement complaints is not to inform an understanding of the problems affecting tenants in rental housing. Instead it is an effort to persuade City Council to back out of their business and refrain from regulating the apartment business in Beverly Hills.

‘Bureaucracy’ and ‘regulation’ are often decried by the Apartment Association of Greater Los Angeles to impugn the new rent stabilization program. Landlords also claim is that the city acted capriciously — indeed acted in bad faith — when it adopted the first urgency ordinance in January of 2017. (That ordinance lowered the cap on allowed rent increases and required relocation fees for involuntary terminations and, worst of all for them, required registration of units and tenancies.)

Rent stabilization worked exceptionally well for 39 years,” they say, and we have no doubt about that if you’re a landlord. That’s why no landlord has called for a change in the rent stabilization ordinance. Ten percent increases and tenants fearful of eviction worked pretty well for them.

In fact landlords have doubled down by urging the city to simply add a couple more code enforcement officers to shore up the existing gimcrack system that doesn’t hold some landlords accountable for shoddy maintenance and conditions that skirt state minimums.

Bad landlords are a small proportion of the thousand or so property owners in Beverly Hills, but they no doubt generated an outsized proportion of calls to the city about rent increases, evictions and habitability issues.

The Landlords’ Analysis

Landlords looking to invalidate rental unit registration want to show that anecdotes and allegations predominated in the rent stabilization discussion rather than facts. To make their case the landlords focus on “complaints investigated by Code Enforcement” between March of 2013 to March 2017. That is a period largely before after the city’s urgency ordinance took effect.)

In those four years, Code Enforcement investigated 54 non-habitability complaints, they say, but only 7 concerned rent increases and just 18 were categorized as “eviction related.” And three of those eviction-related complaints ultimately resulted in a rescission of the eviction notice.

The implication of those top-line findings: few tenant complaints stand up after investigation. Landlords Elia Weinbach, Harvey Miller, Dan Yukelson and Jimmy Killian summarize their analysis this way in a July 6th missive to City Council:

The number of complaints relating to excessive rents is virtually non- existent; the number of complaints relating to evictions is similarly virtually non-existent; and, the City simply did not rely upon any reliable data to conclude that there was any real, let alone substantial, danger to ‘public peace, safety, and health.

That latter point refers to the findings in the January urgency ordinance:

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. — Urgency ordinance 17-O–2725

The landlords say that few tenants experienced any problem. But here’s where the landlords’ analysis comes up short: it excludes so many tenant calls and emails about their problems. Here is the caveat behind their conclusion:

To be clear, by “data” we refer to complaints investigated by Code Enforcement. The “data” does not include anecdotal and unverified comments, remarks, observations, and complaints made to and/or by the [Human Relations Commission]. The data we examined does not include any analysis of any habitability issues or health and safety code violations.

Tenants in number complained directly to city officials at meetings last year. Perhaps 100-150 spoke. The landlords simply dismiss them as “unproven allegations.” Worse, landlords say, City Council simply bought it hook, line and sinker.

But the suggestion that the system worked fine for tenants, and that is somehow proved because relatively few complaints were formally investigated, only suggests two problems: 1) many tenant calls highlighted serious issues that our local rent stabilization ordinance did not even address; and 2) landlords knew full well that tenants are reluctant even to file a complaint because we could be evicted.

Tenant Inquires Tell the Story

Thankfully the city’s RSO office provided a tally of constituent inquiries to the rent stabilization program and it is broken out by category. In the aggregate, the calls suggests some collective dissatisfaction among many tenants. Here is the city data (reformatted by Renters Alliance).

Constituent inquiry table

Red figures indicate study period highs. Let’s compare the city’s tally of constituent inquiries to the landlords’ analysis of so-called investigated complaints.

  • Where the landlords cites an average of 13 complaints investigated by Code Enforcement per year, the city shows more than 2400 total inquiries to the Rent Stabilization Program in just the last fiscal year. (That is exclusive of calls about the then-new registration process.)
  • Where the landlords ‘analysis’ shows just 4 eviction-related investigated complaints per year on average, constituent calls about evictions numbered 431 in that same year.
  • Where fewer than 2 complaints about unlawful rent increases were investigated per year, says the landlords’ analysis, constituent calls to the city about rent increases totaled 542 in that year.

Why the big discrepancy between the constituent inquiries and complaints formally investigated? There are many reasons (we recount some below) but the short answer is that bad landlord practices may not actually violate the city’s rent stabilization ordinance.

Our Takeaways from the Landlords’ Analysis

Comparing the landlords’ data with the constituent inquiries prompts a few reflections about tenants’ concerns and the process the city has to address them.

The vast majority of inquiries are never referred to Code Enforcement. Of 2424 non-registration inquiries in the 2017–2018 fiscal year, only 8% (191) were actually referred to Code Enforcement. Why were fewer than 1-in–10 inquires referred? We can’t know from the data as provided. Some inquiries are undoubtedly addressed simply by informing the constituent about the law. Instances where the law may have been violated may be resolved by corrective action after an informal call from the city. Whatever the reason for the large volume of inquiries not referred, the landlords show us only the tip of the iceberg because their analysis only includes investigated complaints. [3]

An inquiry referred to Code Enforcement may not result in a substantiated violation. Although a landlord may run afoul of the law, the Code Enforcement process gives him ample opportunity – sometimes months – to correct an unlawful action. Take for example an excessive rent increase: once contacted by Code Enforcement the landlord can simply rescind the notice. Voila! No violation. Or consider the improperly-noticed tenancy termination: after a call from the city the landlord can simply re-post the notice lawfully. In both instances the tenant’s complaint has not proceeded to a violation (much less been referred for prosecution).

The complaints that are investigated by Code Enforcement are more likely to concern Chapter 5 tenants than Chapter 6. Chapter 5 tenants enjoy greater protections and for them Code Enforcement is quick to step in. That includes cases of unlawful no-cause evictions, instances where relocation provisions were not followed, and many other protections that elude Chapter 6 tenants. (Code Enforcement cases usually note right at the top: ‘Chapter 5.’) Even if Chapter 5 cases get the attention, those tenants are fewer than 5% of all renters. The 95% of tenants who are Chapter 6 will learn that seemingly unlawful practices like a 10% rent rise or eviction without cause are actually lawful. Chapter 6 tenant inquiries better reflect the impact on families of the rental housing crisis, but their inquiries are much less likely to require investigation and thus be represented in the landlords’ analysis.

Though constituent inquiries signal the state of tenant-landlord relations, many of them are not meaningfully categorized. Fully 41% (992) of non-registration inquiries last year were categorized as ‘general inquiries’ about which we know nothing. Also there were 107 ‘general complaint’ inquiries. What good is a ‘general complaint’ if there is specific issue identified? In total there were 1100 ‘general’ calls that resulted in no referral or investigation yet they suggest widespread concern about some or other aspect of the rent stabilization process.

The large number of inquiries about rent increases and evictions suggests real concern among tenants about residential stability. Rent raises and evictions alone accounted for nearly 1,000 inquiries last year, yet cases reviewed by the landlords over four years show only 54 such ‘investigated complaints.’ Even if every single one of those inquires were found to concern a lawful action which needed no investigation, those inquires suggest a magnitude of tenant concern wholly absent in the landlords’ analysis.

Habitability complaints are not included in the landlords’ analysis. This would seem to be a real head-scratcher! Among the concerns most often cited by tenants is deferred maintenance and even health and safety issues like poorly-functioning plumbing or lack of heat. Because habitability concerns were mentioned time-and-again by tenants, elevated habitability standards found some agreement among tenants, landlords and city officials too. Yet habitability complaints don’t show up in the landlords’ analysis because worn fixtures and degraded furnishings don’t even warrant an investigation under current habitability standards.

What About Habitability Issues?

In our apples-to-oranges comparison perhaps habitability is the one category of inquiry that most stands out. Many tenants have called it a problem but few have complained about it. Only 58 inquires last year concerned habitability, says the city — that’s just 2% of all non-registration calls. Why so few when we heard so many complaints at city meetings about worn carpets, old appliances, and weathered paint?

The answer: no code case need be opened because worn furnishings are perfectly allowable in Beverly Hills. A call about worn carpet or old paint or whatever is diverted before it even rises to the level of a tenant query: nothing obligates a landlord to address it unless it is a safety hazard. Neither the data from the landlords, nor the constituent inquiries in the city’s table, suggest the extent of tenant concern with regards to habitability.

What is the Landlords’ Angle?

The landlords are less interested in identifying tenant problems than indicting the city for bad faith. “The City simply did not rely upon any reliable data to conclude that there was any real, let alone substantial, danger to ‘public peace, safety, and health,'” they say, which echoes the allegations made in a state lawsuit.

To punctuate their analysis, the landlords cite “consequential and deleterious impacts” wrought by the urgency ordinance:

  • negative impact on the incentives for rental property owners to continue to maintain the rental housing stock;
  • negative impact on property tax revenue;
  • negative Impact on the City’s budget;
  • the cap on the allowed annual increase is not a ceiling but a floor; and,
  • annual rent increases on average have increased from 2.5% per year to 3%.

To these assertions we respond:

  • Some property owners never maintained their premises anyway, but because smart landlords know that their margin depends on tenant turnover (and higher asking rents) they are now investing in maintenance;
  • Property values for multifamily rental housing is setting new records despite rent stabilization as both cost per square foot and price-per-door reach new highs (the city gets a share of the swelling property tax assessments);
  • Asking rents are rising at an accelerating pace as some landlords exploit the housing crisis (as the January 2017 urgency ordinance said); and,
  • The city is receiving more business tax from landlords than ever before because the tax is based on gross receipts (rents) which rise (again) despite the changes to the rent stabilization law.

On that last point: the registry has required all landlords to obtain a required business license in order to rent an apartment. The scofflaws among them have escaped business taxes for decades but are now paying their due. The city’s coffers are likely much more full for it.[4]

Our Take

We are always happy to engage a debate, but the specious arguments put forth in the landlords’ missive are intended only to lay the groundwork for their next act: persuading City Council to accept a ‘proposal’ rehashed from last year’s facilitated dialogues, which include an allowed annual rent increase of 7%; exemption from RSO protections for all 4-unit-and-under owner-occupied properties; and allowing landlords to continue to evict for no cause whatsoever.

Having failed to stop the urgency ordinance in January of 2017; then failing to snuff rent stabilization reform at the ballot box in March 2017; then failing to invalidate the registry in Superior Court; then failing in Council chambers to brand tenants as mere grifters and gripers; the landlords now look for traction with an ‘analysis’ that portrays tenants as happy clams all along. But they are not fooling anyone!