pass-through

At the January meeting the Rent Stabilization Commission will take a record NINTH swing at crafting a recommendation to City Council concerning pass-through surcharges. In prior meetings commissioners found agreement to limit the cumulatively cost of any pass-throughs plus the maximum allowable annual rent increase to 10% of the base rent. Beyond that outer bound the commissioners have split on nearly every pass-through under consideration. At this meeting commissioners will try to come to some agreement on whether landlords should be able to pass through the cost of seismic retrofit, capital improvements and other major costs; and if so whether both Chapter 5 and Chapter 6 rent-stabilized tenants should pay for it.

The Rent Stabilization Commission at the December meeting returned to its ongoing discussion about pass-throughs for Beverly Hills rent-stabilized tenants. There was no formal action but commissioners did find consensus on sharing with tenants the cost of the annual $63 per-unit RSO administration fee, and nearly found consensus on a 50–50 cost-share for seismic retrofit. Landlord commissioners scuttled that proposal so that pass-through plus several others will come back for more discussion in December.

The question of pass-through surcharges comes back to the Rent Stabilization Commission tonight and on the agenda is a review of current pass-throughs for refuse and water penalties which is applicable to all tenants; and a potential expansion of pass-throughs that could affect 95% of rent-stabilized tenants. Commissioners will discuss individual pass-throughs and may recommend to City Council that the city allow one or more monthly surcharges related to capital expenditures for property improvements; expenditures that are mandated by law (such as seismic retrofit); and a surcharge for additional tenant(s).

The Beverly Hills Rent Stabilization Commission at the upcoming December meeting will again focus on pass-through surcharges and commissioners are likely to recommend more of them. To curb the impact, the commission has provisionally agreed to limit the rent increase plus pass-through surcharges to ten percent of the base rent. But that would be a significant increase in housing costs for any renting household. Should more pass-throughs be allowed at a time when asking rents are at record highs? You will have a chance to voice your opinion at the meeting on Wednesday, December 7th at 6pm. Here’s what you need to know and what may happen next.

The Beverly Hills Rent Stabilization Commission at the September meeting indicated that it may recommend landlords be allowed to pass-through to tenants certain costs of doing business in addition to the rent. Commissioners seemed inclined to OK some or all of the bill for city-mandated seismic retrofit, for example, which could add $60-$120 per month to the rent. Pass-throughs could include other capital improvements like the cost of a new roof. And that’s on top of the cost of utilities that many tenants pay. To what extent should pass-throughs be allowed — and should the cumulative cost of pass-throughs be capped?