HomeMy WebLinkAbout06-07-2023_Open Session_Item 16_Apartment Association of Greater Los Angeles (AAGLA)_RedactedAPARTMENT ASSOCIATION OF GREATER LOS ANGELES AAGLA
“Great Apartments Start Here!”
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up and go out of business by selling their property to developers. This not only harms these small local owners
but also all their existing renters. Renters will face mass relocation following the sale of these properties
and developers then demolish the existing buildings to be replaced with newer luxury rentals or
condominiums not covered by rent stabilization and various tenant protections.
Further, it is a complete fairytale to say that there would be a “process” created under rent stabilization
to ensure a “reasonable rate of return” to owners. The facts prove otherwise as few if any owners have ever
been able to successfully use this “process” in West Hollywood, Los Angeles, Santa Monica, or any other
jurisdictions to actually be granted an increase over and above the imposed increase limits. What we do see
occurring over the many years that rent stabilization has remained in place are housing shortages, poorly
maintained properties, and gentrification.
Rent stabilization is nothing more than a bureaucratic maze that encourages small mom-and-pop
owners to sell their properties as a much easier and faster alternative to layers of complicated regulations and
increased investment risk. The City should be fully aware that this is merely a false hope and not to be relied
upon to justify rent stabilization. It is in fact a primary reason for many of the existing legal challenges as
noted by staff in their report. Thus, the City should also include the cost of litigation when considering this
failed policy.
The staff presentations show grossly overestimated rental increases from data from RentCafe.com.
RentCafe is a public facing website of current rental listings, typically listing luxury rentals, and not a true
research organization for rental data. In stark contrast, data from CoStar (which is a well-established,
respected and robust rental data aggregator for properties throughout the U.S.) clearly shows that rent
increases have been in the low single digits in San Bernardino for the past 5 years including before, during
and after the COVID-19 pandemic. We would urge the Council to direct City staff to conduct more thorough
research to identify which specific properties they claim had such drastic increases to verify if in fact the data
from RentCafe is at all reliable even for specific properties.
Further, according to CoStar’s data, the only significant increase was conducted in a single year (2021)
by large complexes with 50 or more units that was above the current statewide maximum limitation. As such,
these were clearly newly built properties where state law does not apply. Rent stabilization by the City will
only encourage more such conversion where neither the City’s ordinance nor state law will apply to such new
buildings while the City loses many of the existing mom-and-pop owned properties providing naturally
occurring affordable rental housing.
Rent stabilization provides a small minority of higher income renters with a financial benefit at the
expense of all others, in particular low-income renters. Contrary to what is shown in the staff report, rent
stabilization has been proven to cause the most harm to low-income renters in a competitive rental market.
Such renters are unable to compete against renters with higher incomes and better credit scores. As a result,
the few available units will go to middle- and high-income renters fueling gentrification in San Bernardino.
It will also keep out new businesses and their staff who will not be able to locate units for rent. In addition,
it will keep out college students returning home as they too will be unable to find units for rent.
As staff has rightly shown, rent stabilization is also extremely costly to implement and administer with
initial upfront costs of $400,000 - $500,000 for consultants and $1 million to $3.1 million to administer as