L.A. housing advocates say the city desperately needs a new law, proposed by Santa Monica–area Assemblyman Richard Bloom, that would strengthen rent control statewide by expanding the pool of housing eligible for it. The law would allow cities to restrict rent increases for single-family homes as well as for apartment units built after 1995 (Los Angeles' cutoff is 1978), neither of which is allowed today.
AB 1506 also would allow cities to limit rent increases even after a unit has turned over and a new tenant has started a new lease. Under current law, landlords can reset those units to market rates. The legislation would do all this by overturning the Costa-Hawkins Rental Housing Act, which put those limits on rent control in place in 1995.
“It gives the city options in addressing the severe housing crisis,” says Larry Gross, executive director of the tenants rights group Coalition for Economic Survival. “One of the reasons this has become the least affordable city in the nation — even though we have rent control — is because when those units become vacant, they go up to market-rate rents.”
L.A.'s rent-stabilization program applies to 631,000 apartments units, all built before October 1978; it limits annual rent increases to 3 percent. Costa-Hawkins, Gross says, “undermines rent control.”
His coalition also argues that current law gives landlords incentive to try to push long-term renters out of their homes by any means necessary, including using small-time lease violations as a trigger. “The Costa-Hawkins Act puts a bull's-eye on the back of every long-term, low-rent tenant in every rent-control jurisdiction in the state,” according to a statement from the nonprofit. “That's because landlords know if they can get those tenants to move, either by legal or illegal means, they can jack up rents without limits.”
The Apartment Association of Greater Los Angeles (AAGLA), a group of landlords that employs lobbyists in Sacramento, is dead set against AB 1506 and calls the bill “fatal to our members and our industry.” Frederick Sutton, the organization's director of government affairs, says there is no room for compromise. “We're opposed to this bill in any shape or form,” he says.
He argues that rent control in L.A. has helped to produce the city's housing crisis by discouraging new development; prospective landlords don't want to invest in housing unless they can see maximum returns. Overturning Costa-Hawkins, Sutton says, would discourage developers even more.
“This is probably the most devastating bill on multifamily housing to come out in 20 years,” Sutton says. “It will lead to a lower number of new rental units.”
By some estimates, Los Angeles needs more than 300,000 new units to keep up with today's demand. The city's low vacancy rate and high demand contribute to skyrocketing rents and even homelessness. The AAGLA argues that unfettered rent control would only make this worse.
In making this argument, the organization is claiming that the ability to construct new units that charge market-rate rents ($2,700 is today's median for a two-bedroom) and are eligible for up to 3 percent annual increases isn't enough of an incentive to build. Sutton also argues that less restrictive rent control encourages unit hoarding — folks who stay put because their rates are so affordable.
“Rent control sounds good, but it's counterproductive,” he says.
Gross begs to differ: “The landlords are going crazy over this. All it does is free the hands of local government to decide if they want to expand rent control and how.”