LA council approves ordinance limiting rent increases to 4% on stabilized units

City News Service
Wednesday, December 6, 2023
LA council approves law limiting increases on rent-controlled units
The City Council adopted an ordinance that would limit rent increases on rent-stabilized units to 4%, or up to 6% if landlords cover gas and electric costs.

LOS ANGELES (CNS) -- The City Council Tuesday adopted an ordinance that would limit rent increases on rent-stabilized units to 4%, or up to 6% if landlords cover gas and electric costs.

Council members voted 10-2 in a second consideration of the ordinance. Mayor Karen Bass will need to sign and approve the ordinance before it can be enacted.

Council members John Lee and Traci Park voted against it, while Council President Paul Krekorian and Councilman Curren Price recused themselves because they are landlords. Councilwoman Nithya Raman was absent during the vote.

Ordinances need to be voted on twice before they can be adopted by the council. Last week when the council voted on the ordinance for the first time, there was an urgency clause that required 12 votes for the ordinance to be passed with the clause.

Though the ordinance was approved, the urgency clause did not as council members voted 11-2 with Lee and Park voting against the item. Krekorian and Price recused themselves.

During Tuesday's Council meeting, there was a second attempt to pass the ordinance with the urgency clause, but it failed again, and council members adopted the ordinance without the clause.

The law will limit rent hikes for properties that are subject to the city's rent-control law, and limit the increases from Feb. 1 to June 30, 2024, with the council expecting a report from the Housing Department in mid-December that will help better determine appropriate rent hikes for rent-controlled units going forward.

Los Angeles County has launched a $46.3 million rent relief program to help qualified landlords mitigate the detrimental economic impacts caused by the COVID-19 pandemic and tenants who have fallen behind on their rent payments.

In an effort to assist mom-and-pop landlords and tenants who will be impacted by a rent increase, the council instructed the Housing Department, in consultation with the United to House LA Citizens Oversight Committee, to develop programs for the maintenance and preservation of rent-controlled units.

Council members also requested a report back on establishing a rule or policy that would help distinguish mom-and-pop landlords from corporate landlords, in an attempt to ensure small landlords can receive city resources to stay afloat.

The council's action was prompted by the pending Jan. 31, 2024, sunset of a pandemic-era rent freeze placed on rent-stabilized units.

The city's Rent Stabilization Ordinance was adopted in 1979 and applies to rental housing built before 1978. It limits the allowable increase for rent-controlled units, tying rent increases to the consumer price index, a measure of inflation.

Rent hikes would be calculated using a formula outlined in the city's rent control law, using the consumer price index from October 2022 to September 2023 instead of from October 2021 to September 2022.

According to Councilman Bob Blumenfield, who introduced the proposal, by using the most recent consumer price index, the formula would allow a rent increase of 4%, up to 6%, instead of what would have been a 7%, up to 9%, increase.

"So, that's why I put that forward in committee, because it didn't change the formula. It merely changed the window that we look at that formula to make it the most updated window," Blumenfield previously said.

Councilman Hugo Soto-Martinez originally proposed extending the pandemic-era rent freeze, but that idea did not garner enough support.

David Kaishcyan, government affairs coordinator for the Apartment Association of Greater Los Angeles, addressed council members during public comment at last week's council meeting, where he said that the ordinance would pose a "serious threat" to the livelihoods of mom-and-pop rental housing providers who have struggled for four years due to the coronavirus pandemic.

He said these owners have not been able to raise rent despite an increase in mortgage interest, property insurance, city property taxes and more.

"The 4% increase is only a third of what owners would have normally received over the past four years if not for the emergency freeze imposed during the COVID-19 pandemic," Kaishcyan said. "This reduction is unworkable for small owners with a single property. It is also a serious breach of trust that will fuel the exodus of small owners from rental housing."

Housing advocates had urged council members to extend the rent freeze or limit the rent increase as much as possible. Many said a rent increase would lead to an increase in evictions and homelessness.

The Los Angeles County Board of Supervisors earlier in November took similar action, extending but slightly increasing a cap on rent increases allowed for rent-controlled apartments in unincorporated areas.

The board last year imposed a 3% cap on rent increases, but that cap was set to expire at the end of the year. The board voted to extend the cap until June 30, 2024, but agreed to increase the allowable rent increase to 4%.