WRITTEN PUBLIC COMMENTS
NOT READ INTO THE RECORD
APARTMENT ASSOCIATION OF GREATER LOS ANGELES
AAGLA
“Great Apartments Start Here!”
Janet M. Gagnon
Director, Government Affairs &
External Relations
[email protected]
213.384.4131; Ext. 309
June 27, 2023
Via Electronic Mail
Hon. Mayor Julian Gold, and the
Members of the Beverly Hills City Council
455 North Rexford Drive
Beverly Hills, California 90210
Re: Report on Consumer Price Index (CPI) Data and the Rent Stabilization Ordinance (RSO) Annual Rent Increase (Agenda Item G2)
Dear Hon. Mayor Gold and Members of the Beverly Hills City Council:
At the City Council meeting on Tuesday, June 27th, the Council will consider a report from staff on the Consumer Price Index (CPI) data and the rent stabilization ordinance (RSO) annual rent increase. The Apartment Association of Greater Los Angeles (AAGLA) strongly urges the City Council to include the ability for rental housing owners to recoup some of the increases they have been forced to forgo over the past 3 years due to the City’s ordinance that prohibited annual rent increases between July 1, 2020 and June 30, 2023.
Independent, “mom-and-pop” rental housing providers have been forced to endure multiple years of lost income due to the rent increase freeze and unpaid rent that remains due because of years of COVID-19 moratoriums. But for the City’s rent increase freeze, rental housing providers with properties under Chapter 6 of the RSO would have been able to obtain increases of up to 8.0% based on May-to-May CPI for 2021-2022 and up to 3.9% for 2020-2021. That is a combined loss of almost 12%.
Further, as stated in the staff report, 74% of rental units under the RSO have been unable to charge a rent increase since July 1, 2020. This is on top of the tens or hundreds of thousands of dollars in lost back rent due to the eviction moratorium. Unlike multinational corporations, mom-and-pop owners in Beverly Hills have no ability to absorb such dramatic losses as they typically own a single property with 4 or fewer units.
To keep these moms and pops in business and their renters housed, the City needs to step up and provide financial support in the form of a special increase to offset the years of freeze.
Some mom-and-pops are struggling to hold onto their rental properties and need the City Council’s help to put them back on a financially firm footing by allowing a special increase to compensate for some of their losses caused by local government mandates. Because of supply chain and labor shortage issues
APARTMENT ASSOCIATION OF GREATER LOS ANGELES
AAGLA
“Great Apartments Start Here!”
experienced throughout the pandemic, these costs of all goods and services required to maintain and operate rental housing have skyrocketed. Costs for property insurance, utilities, trash hauling, landscaping and repair services have all outpaced the rate of inflation and the limited 3.2% increase suggested by City staff. As a result, many Beverly Hills mom-and-pop owners are struggling financially and, if they have not yet done so, they are making plans to leave the rental housing business. As these independent owners leave Beverly Hills, the City will lose its supply of naturally occurring affordable housing as new owners seek to redevelop older properties for much higher returns on investment.
As the City Council considers the CPI numbers, we urge you to include a special, additional increase to help independent rental housing provides to begin their recovery and keep their properties out of the hands of developers that will likely demolish older properties and rebuild them as luxury rentals or condominiums not subject to either the local RSO or statewide tenant protection laws.
Thank you for your time and consideration of these matters. If you have any questions, please call me at (213) 384-4131; Ext. 309 or contact me via electronic mail at [email protected].
Very truly yours,
Janet M. Gagnon
Janet M. Gagnon, Esq.
June 27, 2023
To The Honorable Members of the Beverly Hills City Council:
My brother and I own the 6-unit apartment building at 136-138 South Peck Drive in Beverly Hills. Unfortunately, due to a medical issue, I cannot appear at tonight’s City Council meeting regarding “allowable rent increases” under the Rent Stabilization Ordinance and, therefore, I am writing this E-Mail to you to set forth the following points for your consideration in making your decision on “allowable rent increases” for this year:
(1) While we recognize that the City Council wants to maintain “affordable housing” for tenants who reside in the City of Beverly Hills, it is my understanding that the last allowed 3.1% rent increase applied to the 2019 calendar/fiscal year. Since May of 2019 – according to the attached CPI index – prices have risen 18.76% without a corresponding “allowable rent increase”.
(2) Tenants are not the only individuals that have been adversely affected by inflation. Landlords are also paying substantially higher prices and that fact should be taken into consideration in determining the “allowable rent increase” for this year. The costs of utilities, insurance, gardening and other costs of maintaining an apartment building have all risen substantially – as well as painting, landscaping and other capital improvements needed to properly maintain an apartment property for its residents. (3) It was my understanding that the Rent Stabilization Ordinance was enacted to prevent “price-gouging” by Landlords. However, it is not fair to paint all landlords with the same brush. To use the Rent Stabilization Ordinance to effectively prevent landlords from charging market rents is also unfair. An analysis conducted by one real estate broker estimates that, because of the Rent Stabilization Ordinance, the rents that we charge our tenants are substantially below market. [For confidentiality purposes, I do not want to put the numbers in this E-Mail but would be willing to share them with any members of the City Council and/or their staffs.] No other type of business is subject to price control. [For example, the stores on Rodeo Drive are not subject to rent control nor are the gas stations where we all used to pay $2.50 per gallon for gas (and now pay at least twice as much - - $ 5.00 to $ 6.00 per gallon -- for gas]. For the foregoing reason alone, it is important that the City Council be as “fair” to landlords as it is to tenants in determining the “allowable rent increase” for this year.
(4) Under the circumstances, an “allowable rent increase” of 10% for this year would be consistent with the permissible limitations of Section 1947.12 of the California Civil Code (part of the Tenant Protection Act of 2019) which provides, in part, as follows:
From: Dan Yukelson
To: Julian Gold; City Clerk; Bosse Lilli; John Mirisch; Lester F; 14-Sharona Nazarian Cc: Fisher Howard; Ryan Gohlich; Nestor Otazu
Subject: Tonight"s City Council Meeting / CPI Rent Increase Date: Tuesday, June 27, 2023 1:23:29 PM
CAUTION: External Sender
Use caution when clicking links or opening attachments
I own a 4-unit apartment building in Beverly Hills and write this letter as one of the City's rental housing providers.
Despite unprecedented inflationary pressures, rental housing providers in the City of Beverly Hills will have gone without rent increases for a period of 3-years (July 1, 2020 to June 30, 2023).
I know each of you to be intelligent and caring individuals, and surely you recognize that freezing rent while at the same time experiencing inflation that, at times, was 7% to 8%, has been unfair and is not sustainable.
Please vote in favor of the Chapter 5 and 6 rent increase amounts proposed by staff. Please also consider a make-up for the approximately 13% in forgone rent increases during the above 3-year period.
While I have had to replace expensive appliances, repair roofs and deal with difficult rent collections myself, to make matters worse, the costs of operating and maintaining rental housing have increased far more than inflation in many instances. For example:
- Interest rates have doubled since the beginning of the pandemic, and many owners have been forced to refinance during that time.
- Insurance rates have increased double digits each year, and now have gotten far worse due to Farmers and State Farm leaving California
- Trash hauling, water and other utility rates continually increase - renters do not pay for water and, therefore, do not conserve despite draught conditions - Supply chain issues, labor shortages, and fuel costs have led to significant increases in all types of goods and services necessary to operate rental housing. - Costs of food and necessities for the caring of our families and housing have also gone up - I am sure you as consumers are well aware.
For about 3-years under the City's imposed moratoriums, property owners have been left virtually powerless, and we have clearly been taken advantage of. On top of a freeze on rent increases, the City's rental housing providers faced difficulties collecting rent under an eviction moratorium that allowed renters to shirk their responsibility to pay rent. A case in point is the top lieutenant in the Beverly Hills Renter's Alliance who took full advantage of taxpayer money by getting thousands of dollars in state rent relief only to "miraculously" then pay their rent the minute the state program ended as of April 1, 2022. However, many of the City's housing providers were not so fortunate as to collect the rent owed - a recent Wall Street Journal article cited a study that estimates more than $1B in COVID rental debt is still owed to Los Angeles area landlords.
Your moratoriums have caused far too much suffering among the City's rental housing providers. Please now allow the City's housing provider to move on and begin the process of recovering from 3-years of financial turmoil caused by this City Council's response to COVID. Allow the City's housing providers to increase rent, and please grant all of us a "make-up" for lost rent increases so that we can survive under what has been immense inflationary pressures impacting all types of costs.
Thank you for your consideration.
Daniel Yukelson
Beverly Hills