Rent Stabilization Commission Applications: Landlords Really Stepped up!

With Rent Stabilization Commission interviews commencing this week we have looked at those who applied. Now we turn our attention to the numbers: specifically the proportion of applicants who stepped up for the tenant, landlord and ‘at-large” categories relative to the number of potential applicants in each category. Which group was most motivated to apply for a commission seat? Landlords!

At first glance there appears some parity across the three membership categories. There were 12 applicants for the landlord seats; 9 applied for the tenant seats; and 8 applied for the ‘at-large’ seats. Because 3 of the landlord-applicants appear not to be city residents, that leaves the number of applicants for the landlord seats at 9, which is in line with the other categories. That suggests parity across categories when it comes to motivation.

However the population from which those applicants were drawn does vary considerably. So we should look at those applicant numbers proportionally. That is we could compare the number of applicants in any category relative to how many residents could apply in the category. When looked at proportionally it becomes clear that there really is no parity; instead we see some divergence in apparent levels of motivation to serve on the commission across the categories.

First Glance: Tenants are Clearly Less-Motivated

Even at first glance we can tell that tenants applied for the Rent Stabilization Commission at a much lower proportion than did applicants for either the ‘landlord’ or ‘at-large’ categories. Only 9 tenants stepped up to apply for a commission seat. But there are about 7,305 tenanted households in rental housing.*

Using tenanted rental units as a proxy for potential applicants, and considering that only 9 tenants applied, we get a proportion of applicants-to-tenants of only 0.12%. In other words, just over 1-in–1000 potential tenant applicants who could apply did apply for the commission.

Landlords applied to the commission at a much higher rate: the 9 applicants for that category in a universe of about 1,100 rental properties suggests a proportion of about 0.82%. In the universe of potential landlord applicants, about 8-in–1000 applied for the commission.

Comparing those proportions it would seem that landlords were seven times more likely to apply for the commission than were tenants (.82% for landlords divided by .12% for tenants = 6.8 times more likely).

Even residents who are neither tenants nor landlords and who have no vested interest in the outcome of the rent stabilization ordinance amendments  applied for commission membership at a proportion greater than did the tenants. There are 8 at-large applicants (one fewer than the tenant applications) but far fewer owner-occupied non-rental households than tenant households. So the proportion of at-large applicants relative to potential applicants is greater than the proportion of tenants who stepped up.

The 8 who did apply for at-large commission membership represent about 0.14% of the 5,620 owner-occupied non-rental households (that means they are neither tenants nor landlords). That equates to about 1.6-in–1000 potential applicants who did actually apply.**

That proportions for landlords and at-large applicants edge out the tenant proportion by a wide margin as this table shows:

Applicants Potential
Proportion Per 1,000
Tenants 9 7,305 0.12% 1.2
Landlords 9 1100 0.82% 8.2
At-large 8 5,620 0.14% 1.6

(Note: Universe of tenants is drawn from the approximately 7,800 RSO units minus 395 owner-occupied units and 100 resident-manager units.*** Universe of landlords is approximated using the number of rent-regulated properties in Beverly Hills. Universe of at-large is derived from the census count of owner-occupied dwelling units.)

Second Glance: Landlords Were More Motivated Than We Thought!

Actually the proportion of landlords who applied for the commission is understated by those figures. The number of resident landlord is actually much smaller than the 1,100 rent-stabilized properties!

  • The universe of potential landlord applicants is smaller than the proxy we used. Instead of the 1,100 rental properties in Beverly Hills the number of properties actually owned by residents of Beverly Hills is considerably smaller. While we don’t know exactly how many properties are owned by an out-of-town entity, the land titles for rental properties show that 43% use mailing addresses outside of Beverly Hills. Also,
  • When rental properties are under common ownership that would narrow the universe of potential landlord applicants even further. We know that some landlords own multiple rental properties. Some inherited them; some purchased adjacent parcels for development or speculation. It is not uncommon for one owner to control 3 or 4 properties. Indeed the notorious Donald Stirling reportedly owns 16 properties in Beverly Hills (inclusive of nearly 400 rental units).

On the other hand, maybe there are a few additional individuals who could fit into the ‘landlord’ applicant category.

  • There could be multiple owners for a particular property. Each could apply if he or she is resident in the city.
  • There are onsite managers – about 100 of them according to the rental unit registry — and if they are included in the potential landlord (or landlord’s agent) category it would enlarge the potential applicant pool incrementally.

We don’t really know what are the numbers, but for the sake of argument we might say that the pool of potential landlord applicants is fewer than 550. That’s half the number of rental properties in total (1,100) and this is admittedly a ballpark estimate.

Using that estimate of 550 potential landlord applicants, the 9 landlord applicants would imply a much larger proportion of potential applicants stepped up in this category.  In a universe of 550 the proportion grows to 1.64% (up from the 0.82% we calculated earlier). That would mean 16-in–1000 landlords stepped up to apply for the commission. The revised proportions:

Applicants Potential
Proportion Per 1,000
Tenants 9 7,305 0.12% 1.2
Landlords 9 550 1.64% 16.4
At-large 8 5,620 0.14% 1.6

(Note: Universe of potential landlord applicants is revised downward to project some unknowable number of non-resident landlords plus 100 resident-managers.

That proportion is nearly fourteen times the proportion of tenants who stepped up to apply.

Third Glance: Tenants Were Even Less-Motivated Than We Thought

Even worse, the pool of potential tenant applicants is much larger than we earlier estimated using rental units as a proxy for potential applications. Recall that there are about 7,305 tenanted rental units (not including vacancies). Some of those households include not just one potential applicant but two or even three. So we look to the census.

The census shows that about half of city households include at least two adults (defined as a ‘family’ with or without children). And those families tend to be somewhat more concentrated south of Wilshire in the multifamily zones, says our city’s Housing Element. By our rough estimate perhaps half of all rented units would include a second potential applicant for the tenant category.

Notice how the proportion drops from 0.12% to 0.08% after we include those additional adults in the pool of potential applicants for the tenant category:

Applicants Potential
Proportion Per 1,000
Tenants 9 10,958 0.08% 0.8
Landlords 9 550 1.64% 16.4
At-large 8 5,620 0.14% 1.6

Universe of potential tenant advocates is revised upwards to account for roughly 50% of renting households that might include a second over-18 adult.

By this back-of-the-envelope figuring, not even 1-in–1000 renting adults applied for Rent Stabilization Commission membership. Not even one-in-a-thousand stepped up!

Summing up, the universe of potential landlord applicants is likely much smaller than we first estimated. So the proportion of potential applicants motivated to apply for a landlord seat is larger than we first thought. At the same time, the universe of potential tenant applicants is much larger than we estimated. So the proportion of potential applicants motivated to apply for a tenant seat on the commission is smaller than we first thought.

What does it mean? When we divide the proportions we see that landlords were not seven times more likely to apply to be a commissioner as we first thought but instead were twenty times more likely to apply. (The math: we take the 1.64% of potential landlord applicants who stepped up and divide by the 0.8% of potential tenants who did and we get a proportion of motivated landlords that is 20.5 times larger than the proportion of motivated tenants.)

One more point: ‘Tenant’ for the purposes of the Rent Stabilization Commission is not necessarily limited only to occupants of rent-stabilized housing. Indeed there is no definition of ‘tenant’ in the relevant Municipal Code section for commission’s composition. That means that some unknown number of tenants in rented single-family homes and rented condominiums could have been eligible to apply. That makes the total pool of potential tenant applicants that much larger.

Why Were Tenants Disinclined to Apply for the Commission?

Why did tenants show such relatively little interest in serving on the Rent Stabilization Commission? We can’t know the answer but we can speculate on a few reasons:

  1. City outreach about the opportunity may not have reached all tenants. The city’s process for filling commission vacancies is standardized: newspaper advertisements and web postings are used to highlight commission vacancies. That process was followed in this instance too. A printed piece in mailboxes, though, would have done a better job of reaching all renting households.
  2. Landlords have an industry association that works full time to spread the word. The Apartment Association is 100 years old; it is generously supported by landlord dues. The organization has the capacity to reach all landlords to underscore the importance of the commission to the landlords’ bottom line. Renters Alliance is a shoestring outfit that can’t reach so many more tenants (certainly not as many as we’d like).
  3. ‘Process fatigue’ may have set in. We are midway through the third year discussing the rent stabilization ordinance and over time we have seen tenant interest wane. It’s simply impossible to keep people engaged over such a period. Moreover, the issues are complex and the many meetings tend to blur. Of course the current ordinance cements in place some good tenant protections and so the urgency may have passed.
  4. There were problems with the commission application as we earlier documented. And the application required tenant-applicants to declare under penalty of perjury, on a public document, whether or not they had been evicted from rental housing. We advised tenants not to answer that question. And finally,
  5. Many tenants may not recognize how significant is their stake in the outcome of this commission’s work. Tenant protections are all about stability, security, and sustainability; landlords are primarily concerned with net operating income (profit). Yet throughout the policy process we didn’t see tenants turn out in numbers proportionate to the landlords.

Perhaps we can chalk up these disparities to the way tenants and landlords perceive the importance of participation. Every landlord is a professional landlord who is in the business of apartment leasing. But contrary to what some landlords claim there are no professional tenants; we are all simply renting our housing. It is the landlord’s job to understand what rent stabilization means to their bottom line and to get involved. But tenants have families, jobs, and other responsibilities that don’t allow the time to participate.

A greater number of applicants for the tenant seats on the Rent Stabilization Commission would have been heartening but these numbers don’t matter if we have at least three good candidates in the running.

*There are approximately 7,800 rent-stabilized units but 395 are owner-occupied, according to the rental registry, so we subtract those. There are another 100 occupied by resident-managers, and managers are considered landlord agents. That leaves about 7,305 units that are tenanted if we don’t consider the vacancies.*

**The proportion of at-large applicants is derived by finding the number of eligible at-large households. Because the at-large category by definition cannot include tenants, landlords or property managers, we needed to tally the dwelling units that are owner-occupied but are not in our rent-stabilized housing stock. The American Community Survey in 2016 counted 6,015 owner-occupied dwellings. But we know from registry data that there are 395 owner-occupants in rental housing. Subtracting that from 6,015 leaves 5,620 eligible owner-occupied households which could be single-family homes or condominiums. From there we took the number of at-large commission applicants (8) and divided by the eligible households just as we did for tenanted households.

***State law views a resident manager as an ‘agent’ of the landlord. In recognition of the manager’s role, the city’s rent stabilization ordinance generally excludes managers from tenant protections.