There are many issues up for discussion at the Tuesday City Council meeting, but among the most important for Chapter 6 tenants is the proposed 3.5% floor on the maximum allowed annual rent increase. Chapter 5 and Chapter 6 tenants may be increased annually by the percentage change in consumer prices (CPI) but with a crucial difference: only Chapter 6 tenants could see their rent increased as much as 3.5% in any year even when the landlord’s costs don’t increase at all. This is nothing more than a City Council subsidy to landlords and it should be removed from our rent stabilization ordinance.
Rent day is an opportune moment to revisit City Council’s proposal to raise to 3.5% the floor on the range for the maximum allowed annual rent for Chapter 6 tenants. At the last meeting, councilmembers appeared ready to allow landlords a 3.5% increase even inflation is low and landlords’ costs hardly increase. As Councilmember Bob Wunderlich honestly described it, this is a straight-up subsidy. Indeed it is an unearned bonus that every tenant would have to pay should Council agree to keep a floor in place.
Here is a sight nobody wants to see early on a Friday morning before Christmas: a Sheriff’s deputy probably on his way to serve a tenant his notice to vacate. It is heartbreaking to see it in my neighborhood and even worse to see it on the next block. The only thing worse is the Sheriff showing up for a lock-out. The notice to vacate is the penultimate step. When the Sheriff shows up, that means time is up.
City Council recently discussed the maximum allowed annual rent increase. The good news is that councilmembers agreed to keep it indexed to the annual change in consumer prices (CPI). We can call that a win! The bad news is that Council will keep it at 100% of CPI. That generates the allowed increases of 4.1% and 3.8% (for Chapter 6 and for Chapter 5 tenants respectively). That more than is necessary to provide the landlord with a ‘fair return’ under the law.
Since Beverly Hills enacted rent stabilization in 1978 the RSO ordinance has applied to multifamily rental properties of two units or more. A few rental properties escaped its reach, namely condominiums and buildings built after 1995. Now City Council appears ready to categorically exempt many more, including owner-occupied duplexes. It is a major break from precedent with real implications for hundreds of families. Here’s what a duplex exemption means for tenants.
City Council held the first scheduled rent stabilization study session last Thursday. This latest step in the 18-month process to reform the ordinance is a sign that the endgame is near. In this first study session, our councilmembers suggested what a final rent stabilization ordinance might look like. However they continue to discuss both the key issues and the process itself. Here’s our recap as we look ahead to the second study session on October 18th.
A couple of months ago I got to thinking about how Beverly Hills calculates allowable annual rent increases. A formula tied to consumer prices long kept increases very low for Chapter 5 tenants. Indeed in a period of low inflation Chapter 5 increases long averaged about 1% annually. Then it jumped to an average of 1.7% this year in a reviving economy. But now the annual rent increase effective in August nearly doubles to 3.3%. What’s going on?
To a tenant accustomed to the 3% cap on annual allowed rent increases, the city’s announcement that the allowance has risen to 4.1% was a surprise both for the change and for the magnitude of the jump. As I explained in a recent post, the bump-up may have been predictable given the change in consumer prices lately even if the increment was larger-than-expected. The culprit? Rising rents!
Today City of Beverly Hills announced a bump-up in the allowed annual rent increase for Chapter 6 tenants. Effective June 12th the cap was raised from 3% to 4.1% – a one-third larger allowed increase. While that may come as a surprise to some, the Municipal Code allows the allowed annual rent increase to rise with the percentage change in the Consumer Price Index (CPI-U) for the Los Angeles-Long-Beach-Anaheim region. As calculated by the Bureau of Labor Statistics that was 4.1% hence the rise in the allowed rent increase from 3% to 4.1%.