Santa Monica Forward urges a transparent, public process for rent control updates

RE: June 26, 2018 Agenda Item 5A

Dear Mayor Winterer and Councilmembers:

Santa Monica Forward supports the intent of Item 5A, which authorizes staff to explore appropriate local responses to the possible repeal of the Costa-Hawkins Act.   We request that such responses be developed with a public, transparent process that solicits input from stakeholders and experts in the field of housing development and finance.  We also suggest that this process be a deliberative one and therefore not subject to any deadlines required for placing a measure on the November local ballot. The City may be faced with a significant decline in new housing construction and negative environmental impacts if a local response is selected in haste.  Further we believe that the Rent Control Board is the most appropriate City agency to carry out this Council direction.

We also ask that you request the Rent Control Board (RCB) to clarify the effect of the possible repeal of Costa-Hawkins on the Maximum Allowable Rents for pre-1979 rental units.  The City Council should also request RCB input on what can be accomplished through revision of its regulations versus a Charter Amendment.

In drafting the local response to the possible repeal of Costa-Hawkins this November, we ask that the Council direct staff to consider the following potential impacts of any such response:

New Rental Housing Construction – Any local response should not disincentivize the construction of new rental housing in light of the housing crisis facing the LA Region and the state.  There are also important environmental reasons for encouraging new housing construction, especially that which is transit adjacent. If the response proposes rent control coverage of new housing in the future, the effects on project cash flow and the resulting decrease in inclusionary units and other community benefits must be analyzed.

Neighborhood Preservation – Any local response should be analyzed from the standpoint of whether it encourages local rental property owners to go out of the rental housing business because it would make more economic sense to remove their rental units for condominium construction through Ellis or removal actions.

Impacts on Property Tax Revenues – Although revenue impacts should certainly not be the sole basis for planning decisions, any local response should analyze any potential loss in property tax revenues due to the potential decline in property values of affected rental property and the resulting impacts on SMMUSD and public services.

Administrative Burden – Presumably the program created as a local response to Costa-Hawkins repeal will be implemented by the Rent Control Board.  The administrative burden of this implementation must be analyzed and quantified.

We look forward to participating in the public dialogue on a local response to the possible repeal of Costa-Hawkins.  Thank you for your consideration of this important matter.