Rent Stabilization Commissioner Appointments Hit a Snag

City Council created the Rent Stabilization Commission in March to resolve certain tenant-landlord disputes and make recommendations regarding amendments to the rent stabilization ordinance. A total of 29 residents stepped up to apply, including 8 ‘at-large’ applicants (neither a tenant nor landlord). These disinterested at-large members are supposed to balance against the vested interests of tenants and landlords. But what if they’re not disinterested and unbiased after all?

Update: City Council agreed to reopen the selection process for the at-large commission seats. Over the next approximately two months the positions will be advertised and applications will be accepted until the application window closes on a date to be determined.

The Rent Stabilization Commission was always an exceptional commission: six voting members (most commissions are five) with appointed alternates and each commissioner holds a designated seat to represent tenants, landlords, and at-large city residents. The selection process was unusual too: each candidate was interviewed by back-to-back city council panels. (Read more: City Council Creates a Rent Stabilization Commission.)

The challenge for Rent Stabilization commissioners is also unusual: deliberate issues that will materially affect both tenants and landlords. That suggests a zero-sum situation. While most aspects of the tenant-landlord relationship hinges on shared concerns, the city’s rent control ordinance places a redistributive responsibility with the commission: a surplus to the landlord in the form of a higher maximum allowed annual rent increase, for example, is money right out of the household budget.

So it was conceivable to councilmembers that two tenant commissioners might see an issue differently than the two landlord commissioners and, to break a tie perhaps, or even to merely facilitate the discussion, perhaps ‘at large’ commissioners would help. Of course the presumption was that these commissioners would be neutral — that they would not have a horse in the race.

However the staff report for the upcoming city council meeting on August 20th suggests some complications making appointments for the at-large seats:

During the commission interviews it was found that all (with the exception of one) of the applicants for the At Large category had financial and/or personal interests in multi- residential buildings outside of Beverly Hills. There were seven (7) applicants for the At Large category. From the At Large applicants, six (6) had interests in multi-family residential properties outside of Beverly Hills. — Staff report August 20, 2019

The Municipal Code defines the at-large category this way:

The commission shall be comprised of two (2) landlords who own one or more residential rental properties within the City, two (2) tenants, and two (2) members who are not Landlords, Tenants or Managers of an apartment building (At Large member). One of the three (3) alternates shall be a Landlord, who owns one or more residential rental properties in the City; one alternate shall be a Tenant, and one alternate shall not be a Landlord, Tenant or Manager of an apartment building…”

As the staff report concludes, “Therefore, under the current code, an At-Large Commissioner cannot be a Landlord, Tenant, or Manager of an apartment building, whether or not the apartment building is in the City.”

The ‘neutral’ standard is best-served by choosing at-large commissioners who have no beneficial interest in a multifamily rental property or derive any income from that kind of property. So what do do when six of the seven at-large applicants hold some interest in multifamily property? The staff report offers four possible options to city council:

  1. Allow at-large applicants to be a landlord or manager of an apartment building outside the City; OR,
  2. Allow at-large applicants with a financial interest outside of Beverly Hills who do not have an “active role” as an owner or manager; OR,
  3. Re-open the application process for at-large candidates as currently defined (i.e., find at least three other candidates for the two voting members plus one alternate; OR,
  4. Appoint the one current applicant with no financial investment in rental property and reopen the process to attract one more candidate as an alternate (to make one voting member plus one alternative INSTEAD of two voting members plus one alternate.

City council will discuss this measure in the study session at 2:30PM on Tuesday August 20th. Direction to staff to implement the decision would follow.

Evaluating the Options

Option #4

To understand option #4 we need some background on how the current commission composition was decided.

Councilmembers in the March discussion about the Rent Stabilization Commission were concerned about two aspects of commission composition: 1) the ratio of at-large members to tenant and landlord members; and 2) the “neutrality” of the at-large appointees.

On membership, city council agreed to two voting members for each of the three categories (tenant, landlord, at-large). That would satisfy a key concern: that tenants and landlords not be outnumbered on their own committee. Earlier proposals had one tenant and one landlord balanced by three at-large members (a ratio of 2:3). Tenants didn’t like the concept and Councilmember Lili Bosse objected.

In March council revisited the issue and proposed two voting members (one each for tenants and landlords) plus one at-large. That’s a ratio of 4:1 which would conveniently be like other commissions at five members. After some discussion council instead agreed on two voting members each plus one alternate for each of the three categories. (The alternate was seen as necessary because the quorum was determined to be six: two members in each of the three categories must be present for business. In case a voting member was unable to attend the alternate could step in.)

That’s all to say option #4 would upend the balance achieved by the current commission composition. However it would mean a commission at the usual number of five members with tenants and landlords again in the balance.

Yet the reason five members was rejected in the first place was that it could give too much voting power to the at-large if tenants and landlords split on an issue. Councilmember Les Friedman said then, “My fear is we have a 2–2 vote with one person making the decision: a “super-commissioner” potentially.” He favored three at large seats and one each tenant and landlord. Option 4 would signal the return of the “super-commissioner.”

Moreover option #4 would install as a potential super-commissioner the single applicant untainted by association with multifamily investment. If a “super-commissioner” is the concern, wouldn’t it be better to be able to vet a number of candidates in order to choose one that may meet the neutrality criterion?

Options #1 and #2

Option #1 (give a green light to landlords and managers outside of the city) should be a non-starter. Plainly it contravenes the intent of council in searching for neutral at-large members. (Actually ‘disinterested’ is probably the more appropriate term, and active owners and managers would hardly be disinterested.)

Option #2 seems to contravene council’s intent. One of the reasons the Rent Stabilization Commission application asked applicants about ANY beneficial interests in multifamily rental property was to guard against bias. While bias is acceptable in the tenant and landlord categories it should not be for an at-large member.

As Lili Bosse said in March, “I do know plenty of homeowners who have very strong opinions on this [tenant-landlord] issue…Just to assume that because you are not a landlord or tenant, that you don’t have strong opinions on it….”

Council’s responsibility is to search out that bias and arguably any beneficial interest in owning or operating rental property should be a disqualifying condition.

Option #3

That leaves option #3: re-open the application process for at-large candidates. This would seem to be the most prudent course given council’s discussion in March. The challenge here is time: we’re already five months out from the creation of the commission and nobody’s seated. Re-opening the process will set the appointment process back at least two months, and with it the whole ordinance amendment process.

Timing is already a concern: the rent stabilization ordinance amendment process is getting pushed into the next city council election cycle (in March) and possibly beyond. There could be zero, one or two new councilmembers seated then — and that uncertainty is the problem. Re-opening the process for the at-large category would surely push ordinance amendments to the next city council..

Our Take

Of the provided options only option #3 seems plausible: re-opening the at-large selection. But we would suggest re-opening not only the at-large category but all three categories. Simply a do-over. Re-opening the selection for at-large applicants only would have the disadvantage of pushing-back the timeline on ordinance amendments but not redressing the problems in the first round of selection.

One problem was the application itself. As we opined in a commentary, Rent Commission Application is Problematic for Tenants, the application form was incorrect on important points (yet was posted uncorrected for many weeks despite our protest).

A second problem was that the application included a question that required tenant-applicants to affirm on a public document, under penalty of perjury, that they had or had not been evicted for-cause. We said that question was not appropriate for a public document (there are tenant blacklists) and it was better to ask the question in a private interview. That question remained. Did that question put-off tenant applicants?

On those bases alone we would prefer to see the application process as a whole re-opened if city council decides to open it for just the at-large category. That’s because tenant-applicants numbered the fewest (relative to at-large and landlords) and, on proportional terms, represented a far smaller share of the applicant pool. (Read more: Who Applied for the Rent Stabilization Commission?)

And finally re-opening the at-large category only presents an opportunity to game the selection process. Now that we all have seen who the applicants are in each category, tactically speaking tenants and/or landlords could actively recruit like-minded at-large applicants to tilt the balance. Better would be to reopen all of the categories for new applicants rather than allow anyone to leverage the at-large selection in order to influence overall commission orientation.

There is no easy answer here. When city council pushed the rent stabilization ordinance amendments to the new commission for discussion we foresaw the possibility that the timeline could slip. However we didn’t expect it could slip so far — five months since the commission was created — and now find the selection process is not what we hoped it would be.

Councilmember Les Friedman 2019-3-5
Councilmember Les Friedman was a big proponent of including more than one designated at-large voting member in order to avoid what he called a ‘super-commissioner’ tie-breaker role for any single at-large member.