Council Poised to Cap Post-Moratorium Rent Increase at 3.1%

Beverly Hills City Council at the April 12th evening will formally agree to sunset the city’s moratorium. That would allow the rent to rise in June — the first rent increase since the moratorium was enacted two years ago. But high inflation portends ‘sticker shock’ for rent-stabilized households as the allowed percentage could rise to seven percent or more in July. City Council however appears ready to cushion the impact by capping the first post-moratorium rent increase at 3.1% until July 2023. Good news for precarious households!

On March 15th City Council agreed it was time for Beverly Hills to sunset the residential tenant protections enacted pursuant to urgency ordinance 20-O–2818. It was time to collect rent again, they agreed, and it was time for the rent to rise. At the same time, some councilmembers expressed an interest to allow landlords to recover some or all of the missed rent increases.

Landlords want the rent to rise. They see costs rising and understandably they want the largest rent increase possible (and to recover missed rent increases). Tenants are concerned about the prospect of steep rent increases with concern (especially if wages don’t keep pace) and even more alarmed at the prospect of also making landlords whole for missed rent increases.

Council’s plan to wind down the moratorium rant headlong into a concern how the high-and-rising rate of inflation will affect tenants and landlords this year and beyond. The tentative plan agreed in March, as proposed by then-Mayor Bob Wunderlich, was to carry-forward missed rent increases to the present — starting with the 3.1% rent increases that some tenants escaped — and defer action on other rent increases missed due to the moratorium. So the high-percentage rent increase that landlords would have been due in July is postponed.

We looked at the complex proposal in a recent post titled, Beverly Hills Rents Will Now Rise — But by How Much?

What’s On offer: A Resolution to Sunset the Moratorium AND Cap Rent Increases

A draft resolution that will be presented for Council consideration at the Tuesday, April 12th evening meeting would add new language to Ordinance 20-O–2818 (which enacted the COVID local emergency) to the sunset the moratorium and to cap this year’s rent increase (respectively, with emphasis added):

During the period March 15, 2020 through May 31, 2022, no landlord shall endeavor to evict a tenant in either of the following situations: (1) for nonpayment of rent if the tenant demonstrates that the tenant is unable to pay rent due to substantial financial impacts related to COVID–19, or (2) for a no-fault eviction… — Ordinance 20-O–2818 Section 1

During the period March 15, 2020 through May 31, 2022, , a temporary moratorium is hereby imposed on the annual rent increases authorized by Sections 4–5- 303(C) and 4–6–3 of the Beverly Hills Municipal Code. Nothing in this Ordinance shall alter the date of annual rent increases in future years; provided, however, that notwithstanding the provisions of Sections 4–5–303 (C) and 4–6–3, the maximum allowable rent increase allowed pursuant to Sections 4–5–503(C) and 4–6–3 from June 1, 2022 through June 30, 2023 is 3.10%. — Ordinance 20-O–2818 Section 4

The resolution would amend the two year old ordinance rather than repeal it because there are other aspects of the moratorium that remain in effect and which affect commercial landlords and tenants.

Our Take

City Council proposes to protect Beverly Hills rent-stabilized households from the ‘sticker shock’ of a whopping rent increase by allowing landlords a maximum rent increase at the percentage that was in effect when the moratorium was enacted (3.1%). Whatever the rationale used to arrive at that percentage increase, a relatively modest rent increase will offer some breathing room — and potentially additional time — to precarious renting households that are struggling to recover from the economic impact of the pandemic.

Our view is that a bird in the hand is worth two in the bush. For the next 13 months we have some certainty in this era of record-high inflation. Going into this discussion our top concern was that an excessive rent increase could bring immediate instability to our local rental housing market that has already experienced relatively high turnover during two years of pandemic.

We would like to know how Council will resolve the difficult question of whether or how to allow landlords to recoup missed rent increases. Yet we are content to leave that complicated policy discussion for another time. By the time the rent can be raised again, in July 2023, we will know whether inflation has begun to moderate; we will know whether any of the three City Council incumbents running for reelection this June kept their seats; and we will know something about the city rent relief program that will soon be discussed by City Council.

Do you have an opinion? You can share it with City Council at the April 12th 7 p.m. meeting. Find the agenda online and look for item G1: AN ORDINANCE OF THE CITY OF BEVERLY HILLS AMENDING ORDINANCE NO. 20-O–2818. The agenda suggests that the item may come an hour or so into the meeting.

This meeting is a hybrid in-person and virtual meeting in Council chambers. Attend in person or reach City Council by email at cityclerk@beverlyhills.org prior to the meeting and note “Public comment for item G1” in the subject line. Or reach Council by phone at (310) 288–2288 as the item is introduced. Watching from home? Find the meeting live online or on BHTV cable channel 10.

FYI, City Council will discuss the proposed city rent relief program on April 26th so mark your calendar!