A Brief History of Rent Stabilization in Beverly Hills

Would you be surprised to know that Beverly Hills has had a rent stabilization ordinance on the books for the past four decades? Back in the 1970s, during an earlier housing crisis, our city adopted rent control. Rent increases were tied to consumer prices and could only be increased once every twelve months. No-just-cause evictions were prohibited and where an eviction was allowed under the law a relocation fee was due.

But was supposed to be a “temporary system” of rent control for certain qualifying households. But the city never ended it. Though the housing crisis may have abated the landlord malfeasance did not!

In 1985 the city extended rent stabilization to all renting households that were not covered under the first program. Again complaints about landlord malfeasance drove the city to act. The new program included fewer protections. It capped rent increases at 10% per year but no-just-cause evictions were allowed and there was no relocation fee.

Finally in 2017 came the most significant reforms. The city tied all rent stabilization to consumer prices, required a relocation fee for all no-fault evictions, and most notably created a rental unit registry and formed the city’s first rent stabilization office. The next year the city outlawed all no-just-cause evictions.

We won’t find that chronology on the city’s rent stabilization website. Nor will we find a narrative telling of the city’s forty-year journey to comprehensive tenant protections.

We provide our Renters Alliance history of rent stabilization in Beverly Hills because it is important to understand why it came about, why it took so long, and what made the difference in recent years to get us to a good ordinance.

For information about our current rent stabilization ordinance and program please visit About the Rent Stabilization Ordinance.

Rent Stabilization Comes to Beverly Hills in 1979

Beverly Hills may seem like the last city to embrace rent control. The city is fairly conservative. It skews older. Business interests have influence through the Chamber of Commerce and social networks. City council has been drawn from those ranks.

But Beverly Hills reluctantly embraced rent control because landlords would not voluntarily manage their own industry. Some landlords overreached with rent increases and evictions. Some treated seniors poorly. And the 1970s was a time of high-inflation and uncertainty. A crisis in rental housing affordability prompted the city to act.

In 1979 Beverly Hills adopted a ‘temporary system of rent controls’ Chapter 5 of the municipal code applied only to tenancies that commenced at a rent of $600 or less. Tenants who signed a lease at a higher rent, or rented after that ordinance went into effect, had no rent control at all. Chapter 5 limited the allowed annual rent increase the the annual change in consumer prices and, most significantly, prohibited no-just-cause evictions.

Chapter 5 also imposed some pass-through costs onto tenants for capital improvements and utility costs. There was a hardship clause to bail out underwater landlords. But overall Chapter 5 did a good job of balancing tenant rights and landlord rights. (Read Chapter 5 as it existed before the recent changes.)

City council never brought an end the program because it became less consequential. Tenancies turned over and new tenants signed market-rate leases. Fewer and fewer renting households enjoyed the protections as its reach diminished. Not least, it was also politically difficult to take away existing protections. Landlords accepted Chapter 5 over time because new tenants were padding the profit margin.

We called Chapter 5 a model rent stabilization ordinance and urged city council to extend Chapter 5 protections to all tenants.

Rent Stabilization Part II in 1985

Despite Chapter 5 landlords could still raise the rent by an egregious percentage each year on many tenants. They could (and did) evict households with only 60 days notice regardless of whether they were seniors, disabled or had kids in the school. Households without Chapter 5 protections were vulnerable and some landlords took advantage.

Amid an uproar about landlord abuses, City council extended tenant protections to the remainder of the households in rental housing with Rent Stabilization, Part II (otherwise known as Chapter 6 of Title 4, ‘Regulation of Certain Types of Businesses and Activities.’) Tenants under Chapter 5 would continue to enjoy stronger protections but now all tenants had at least some protection.

Chapter 6 limited the maximum allowed rent increase to 10% annually and it allowed only one increase in any 12-month period. Crucially landlords could continue to evict for no-just-cause. And where Chapter 5 imposed strict conditions on any termination for major remodeling or landlord use (which is legal under state law), Chapter 6 took a laissez-faire approach: a renting household could be sent packing with a quick-and-easy 60-day notice.

Chapter 6 eliminated some of the pass-through allowances under Chapter 5 for capital improvements and utility costs because city council recognized that a 10% annual rent increase would cover any of the landlord’s costs. There was so few substantive tenant protections in Chapter 6 that it ran to just one-third the length of Chapter 5. The missing two-thirds was the protections that most tenants didn’t enjoy in Beverly Hills.

Chapter 6 was on the books for thirty years before city council revisited it in early 2017. Not that there weren’t efforts to improve the rent stabilization program; there were. It’s just that they ran aground on politics or staff interference.

Systematic Housing Inspection: A Nonstarter in 2008

City of Beverly Hills allowed no-just-cause eviction and that put tenants at a structural disadvantage with respect to our landlords. We could not speak up or speak out about conditions for fear of eviction. Consequently problems festered, unreported, and because the city had no rental housing inspection program we saw properties allowed to deteriorate from lack of maintenance.

More than a decade ago the situation might have changed. City building officials familiar with the problem recommended a comprehensive, systematic inspection program in 2006. The Rental Housing Inspection Program was intended to “provide proactive approach to property maintenance and habitability standards targeted at the aging multi-family housing stock….” The November 7, 2006 staff report described the need:

Currently, Code Enforcement staff deal with rental housing issues on a complaint basis. The current process is purely reactive and adopted housing codes are minimum standards dealing with basic health and safety issues. The current process seeks and generally achieves voluntary compliance…. The Program being developed is comprehensive, systematic with a proactive approach largely eliminating the need for tenants to contact us in most cases.

The proposed $690,000 annual program would have implemented required biannual inspections of rental apartments to reveal the problems without the participation of the tenant. It would have removed from the process any need for a tenant to make a complaint and put herself at risk of eviction.

Giving the proposal some heft were authors David Yelton, then the building inspection manager, and George Chavez, who was then the city’s top building official. These guys knew the problem!

However well-conceived the proposed Rental Housing Inspection Program was effectively dead by the time it reached city council later in the year. Why it died is an instructive lesson in local democracy!

The September 4, 2007 staff report gets to the key issue:

The apartment owners association provided the most feedback based on experiences they have had with other inspection programs. This particular meeting was held in February and resulted in gaining important perspectives from the property owners. Unfortunately, only two members of the public showed up at the outreach meeting arranged for tenants….

Had tenants stepped up to argue for the Rental Housing Inspection Program it may have had some traction with councilmembers. As it happened, landlords were organized and united in opposition. The status quo carried the day in Beverly Hills: there would be no inspection program.

In an example of how everything old is new again, landlords organized to oppose the mandatory inspection program as it was again proposed in 2017 too. Talk about full circle: today Yelton is the city’s deputy building official and Chavez is the city manager. The problem has yet to be addressed!

City Council Fails to Address the Loss of Rental Housing in 2012

Of perennial concern to rent control cities is the loss of rental housing. Once it’s converted to condominiums or redeveloped as market-rate rental it is nearly impossible to make up for the loss of relatively affordable housing. In Beverly Hills these units house many of our city’s households.

In fact the city’s Housing Element (2008-2014) already identifies the conservation of relatively-affordable rental housing as a goal. City programs exist to:

  • Regulate the conversion of rental apartments to condominium ownership;
  • Continue tenant protections through the City’s Rent Stabilization Ordinance;
  • Maintain affordability for the lowest income households.

Of those programs the conservation of rental housing stock through regulating condominium conversion is key. Condominium conversion takes dwelling units off of our rental market. Tenants are evicted. And because the supply of rental housing is diminished, there is greater stress on the rental housing market and rents tend to rise.

Adding insult to injury, when a rental unit is lost to conversion or construction there was no relocation fee in place for any tenant except the small and diminishing minority that are Chapter 5.

As it happened, the city already has a limit on conversions — about one-half of one percent may be converted in any year. That could be up to 500 units lost to conversion.

The Housing Element suggested that the city would revisit the condo conversion policy:

The City will evaluate the effectiveness of the existing ordinance, and consider modifying it to require a number of units in any building converted to be set aside as affordable rental or ownership housing. The City will also evaluate the benefit of offering an in-lieu fee option that would go into the City’s Housing Trust Fund and be used to provide affordable housing elsewhere in the City. — Beverly Hills 2008—2014 Housing Element Update

Adding a complication was that investors were looking to convert rental properties into condominiums specifically to escape rent stabilization. Buying, renovating, then converting renovated apartments into condominiums meant those units would be recycled back onto the rental market but at much higher rents and without a cap on the annual rent increase.

City council briefly discussed lowering the cap on condominium conversions in 2012. That year (2012) there were 45 units converted to condominiums and another 38 units lost to demolition. Today the cap remains unchanged. Then Vice-Mayor John Mirsich proposed a reduced cap and new relocation fees for any tenant terminated in a condo conversion.

However there was not enough interest on city council. The policy change died an unceremoniously death. Indeed it died in relative silence in part because few tenants had tuned into the discussion to support council action.

Where city council did not act, Renters Alliance did some digging into the documents behind three significant condominium conversions. All had never sold units to the public as required. Instead those units were returned to the rental market, meaning they never should have been removed from rent stabilization. Two appeared to undertake conversion specifically to evict, renovate, and escape rent stabilization. We brought them to the attention of disbelieving city officials but, in the end, the law supported our claims and the properties were re-regulated. Today those tenants enjoy our new tenant protections.

Rent Stabilization Reform Gets Sidelined in 2016

By mid-decade city council again took notice of landlord abuses like excessive rent increases and tenant evictions. Then-Councilmember Nancy Krasne called-out a a couple of bad-actor landlords for failing to repair air conditioners for their senior tenants. City council too seemed ready to take a look at regulating rental housing.

Instead of taking up the issue directly, though, city council in mid-2015 agreed to hand off the hot-potato issue to the Human Relations Commission. Tasking this commission with tenant-landlord issues was problematic: it was not a particularly high-capacity commission; and the commission workload until then was relatively benign. It weighed in on no significant policy issues (much less one affecting the housing of more than half of city households).

Tasking the Human Relations Commission with rent stabilization policy stirred little interest among landlords. The stakes seemed low given this particular commission; and because city councils have historically not been particularly engaged in tenants rights there was little prospect of change.

Nevertheless, throughout 2016 the Human Relations Commission discussed rent stabilization and made a few recommendations. Among them was support for a rental unit registry. A registry would be a major step forward for rent stabilization in Beverly Hills. The commission also recommended relocation fees tenants evicted for no-just-cause. Commissioners declined to end the practice, though.

However a major break with current rent stabilization policy was on the table. City staff recommended that landlords not only be allowed to continue to evict for no-just-cause, but also to raise the rent to market rate after an eviction for no-cause. Both state law and city ordinance prohibited the landlord from raising the rent for the next tenant — an important disincentive to evict.

The key question was why: Why should staff look to change that aspect of the rent stabilization ordinance? It seemed to come from the discussion about substandard unit conditions. Here was proposed an incentive: allow landlords to boot-out tenants (albeit with a relocation fee) and then allow the landlords to raise the rent to market. The theory? They could then recoup their cost of bringing the units up to habitability standards.

Staff projects that this approach will: a) improve the quality of the rental housing stock, b) reduce tenant apprehension about asking for repairs or filing complaints with Code Enforcement, c) benefit tenants in transitioning from their unit after receiving a notice of No Cause Termination, d) allow market dynamics to reward/incentivize landlords who maintain their buildings without necessitating the launch of a city-based systematic housing inspection program. — Human Relations Commission staff report August 18, 2016

All of that is total hogwash. This was a landlord benefit at the expense of tenants, pure and simple. Recall that ten years earlier the rental housing inspection program would have imposed a regulatory approach to habitability deficiencies. Now on the table was a sweetener.

The first fallacy is that landlords must raise the rent in order to upkeep their premises. Nonsense: unit maintenance is why we pay rent. Second fallacy is that would “reduce tenant apprehension about asking for repairs.” Instead it would stoke tenant apprehension over losing their home. Indeed were it adopted this policy change would have upended the thinnest reed of tenant protection: a financial disincentive to evict.

In the end, Human Relations commissioners were unpersuaded. No such recommendation was made. But there is a lesson here for tenants. City staff can shape policy in ways the public can’t easily recognize. Here it involved slipping an unwise and unpalatable policy option into the process.

Rent Stabilization Reform is Nearly Derailed

City staff’s hand came back into view in November of 2016. Human Relations commissioners earlier in the year had unanimously supported a rental unit registry. And with good reason: every rent control city has a rental unit registry. Rent control can’t be effectively administered without tracking rents and tenancies. Beverly Hills never did create a registry so it had no way of tracking rents, evictions and landlord practices.

With a registry proposal now on the table, Human Services administrator James Latta maneuvered to take it back off the table. Latta suggested the commission consider another option: allow landlords to “self-certify” that their housing met minimum habitability standards.

An accompanying Inspection Checklist Program memo dated November 17, 2016 suggested that cost was the key factor:

It is anticipated that one dedicated part-time code enforcement officer and one clerk will be needed to respond to public inquires, conduct field investigations and to apply the necessary enforcement measures, including processing reports for appeal hearings. The fiscal impact including ongoing program and staff costs is expected to be around $200,000. — Inspection Checklist Program staff report, November 17, 2016

With a voluntary program the rental unit registry would not be necessary. This had the commissioners confused. They understood the need for a registry and had already agreed (unanimously) to recommend it. Now Latta was pushing a lower-cost option.

Why? One can presume it’s because for landlords the registry was the single most objectionable aspect of rent control. They sued to stop it here. Twice. But couldn’t. The registry took effect in late 2017.

But gutting it with a checklist was a masterstroke — the kind of switcheroo that tenants would never notice because tenants didn’t generally attend the Human Relations Commission meetings. And were it taken off the table, tenants would not miss a rental unit registry that never existed.

Under pressure, commissioners agreed to recommend the low-cost inspection checklist as an alternative to the rental unit registry.

As it happened was a case study in staff interference. The motion to support the checklist was offered by Chair Gerald Friedman upon the commission’s return to the dais after a 15-minute meeting break. The language mirrored exactly the language that staffer Jim Latta had suggested to the commission just before the break. Fifteen minutes later — voila! — there it is ready to be read into the record!

Anyone remotely familiar with how good policy meets an untimely end would recognize this bait-and-switch. So we picked up the phone even before that meeting ended and Councilmember Lili Bosse pledged action. By January city council had effectively taken control of the rent stabilization policy process.

Rent Stabilization Reform Kicks Into Gear in 2017

City council action commenced in early January of 2017 when the Human Relations Commission liaisons met to discuss next steps in the rent stabilization policy process. Attending were the chair and vice-chair of the commission and councilmembers Lili Bosse and Kathy Reims. Reims was appointed to city council by city council to fill the seat of departing councilmember Willie Brien (no fan of rent control). Having Reims in Brien’s seat may have made all the difference.

Bosse and Reims pressed the commission to consider four key recommendations at the upcoming mid-January meeting. Bosse attended that meeting and pressed the commissioners as they discussed the four possible recommendations, which included significant reforms to the rent stabilization ordinance like reducing the allowed annual rent increase from 10%.

This time landlords noticed. Several attended and attempted to horse-trade with councilmember Bosse. “Ten percent was always too high,” one landlord said. Another offered 8% as a concession. Bosse was having none of it. The landlords left empty handed as the Human Relations Commission approved all four pro-tenant recommendations and sent them on to city council.

What happened next was a stunner: at the January 2017 city council meeting the recommendations were adopted unanimously through an urgency ordinance. The urgency ordinance was based on this finding:

Currently, there is a shortage of affordable housing that is available to all segments of the community both within the County of Los Angeles and specifically within the City of Beverly Hills…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….Therefore, the City Council finds and determines that the immediate preservation of the public peace, health, and safety requires that this ordinance be enacted as an urgency ordinance. — Urgency Ordinance 17-O-2725 adopted January 24, 2017

The action reduced the cap on the Chapter 6 maximum allowed annual rent increase to 3% (from 10%) and imposed steep relocation fees for any tenancy involuntarily terminated — even for households terminated but not yet departed. Most important, city council in that action also created a a registry of rental units as recommended by the Human Relations Commission. Sidelined was the lower-cost checklist!

That year city council went on to create a new rent stabilization office, commissioned a study of rent control ordinances, and in various process steps created a real rent stabilization program. City council also backed a series of tenant-landlord roundtable forums where tenants and landlords endeavored to find common ground on divisive issues. (The concept evolved into a rent stabilization commission in early 2019.)

City Council Ends No-Just-Cause Termination in 2018

The most impactful reform to the rent stabilization ordinance came in the fall of 2018 when city council finally ended no-just-cause evictions. That action (via another urgency ordinance!) put an end to 60-day notices for Chapter 6 tenants. As important, council incorporated into Chapter 6 important safeguards long limited to Chapter 5 tenants.

For a detailed look at the current rent stabilization ordinance please read our in-depth analysis: About the Rent Stabilization Ordinance.