1 SANTA MONICA RENT CONTROL BOARD MEMORANDUM
TO: Santa Monica Rent Control Board
FROM: Alison Regan, General Counsel
MEETING: June 9, 2022
RE: Public hearing on proposed Charter amendment to give the Board discretion to suspend rent increases during a declared emergency _____________________________________________________________________ Subject Matter
The Board will hold a public hearing and consider whether to recommend to the City Council that the City place on the November 2022 ballot an amendment to the Rent Control Charter Amendment (RCCA) giving the Board discretion to suspend the annual general adjustment during certain declared emergencies.
Executive Summary
In November 2022, Santa Monica will hold a general municipal election. For such elections, the Rent Control Board may make recommendations that the City Council place proposed amendments to the Santa Monica City Charter, including the RCCA, on the general election ballot.
The Board will hold a public hearing on the feasibility of an amendment to the RCCA to provide the Rent Control Board the authority to suspend the annual general adjustment in order to protect the public’s health and safety during a declared state of emergency.
Discussion
a. The Board does not currently have the authority to alter or suspend the General Adjustment in an emergency.
It is well-settled that the Rent Control Board derives its authority solely from the language of the Charter. Administrative bodies, such as the Board, do not have general police powers and cannot act in a way that contravenes the instrument from which they were created.1
1 Ocean Park Associates v. Santa Monica Rent Control Bd. (2004) 114 Cal.App.4th 1050, 1064, quoting from Kerr’s Catering Service v. Department of Industrial Relations (1962) 57 Cal.2d 319, 329-330. In Ocean Park, the Court struck down the Board’s practice, not provided for by Item 11D
2 The Board, unlike the Governor, a city, or a county, has not been granted emergency powers. The Board is not the governing body of the City of Santa Monica, and for that reason has no emergency powers under the Emergency Services Act. Nor does any other state law grant emergency powers to a municipal administrative agency; so the Board’s emergency powers, if any exist, must be found in the statute that created it, the City Charter. But nothing in the City Charter, from which the Board solely derives its authority, grants it such powers. To the contrary, the Board’s powers are circumscribed by the Charter, which lists only 15 things that the Board may or must do.2 One of those things is “to make adjustments in the rent ceiling in accordance with [Charter] section 1805”, under which the adjustment is made according to a mandatory formula.
Section 1805 sets out the formula by which the Board must “announce” the annual adjustment to rent ceilings to controlled units. Nothing in that section allows the Board to alter that formula or suspend otherwise-allowed rent increases.
b. Proposed Charter amendment would give the Board authority to suspend rent increases in an emergency.
The global pandemic due to COVID-19 has caused unprecedented hardships, disruptions and long-term impacts that continue to affect Santa Monica’s residents. While there has been some relief in the form of an eviction moratorium, rental assistance and other efforts to prevent displacement, those programs are winding down while the pandemic’s impacts continue to be felt.
Inflation rates continue to spike and rising costs are hampering residents’ ability to recover from the loss of income and unexpected expenses that many experienced during the pandemic’s first two years. Meanwhile, COVID-19 cases are increasing even as mitigation measures, such as masking and social distancing, are no longer required.
Other rent stabilization jurisdictions have been able to adjust to these conditions by implementing temporary freezes on rent increases for controlled units.3 Because these jurisdictions are not Charter cities, they have the flexibility to enact measures through ordinance changes passed by the governing body. the Charter, of allowing the Administrator to file rent decrease petitions on behalf of all tenants in a building when an individual petition revealed the presence of a common-area issue. 2 SMMC § 1803(f). See, also, Westsiders Opposed to Overdevelopment v. City of Los Angeles (2018) 27 Cal.App.5th 1079, 1086 (“A charter city may not act in conflict with its charter, and any act that is … not in compliance with the charter is void [citation]. A city charter operates as a limitation over all the municipal affairs which the City is assumed to possess; it is not a grant of power.”)
3 See, e.g. City of Los Angeles and City of West Hollywood 3 By contrast, changes to Santa Monica’s Charter can only be accomplished by a vote of the citizens of Santa Monica.
The proposed amendment would give the Board the discretion to respond to future public health emergencies by suspending otherwise-allowed annual general adjustments if such a suspension is necessary to protect the public’s health and safety. The proposed amendment is not a blank check; this authority could only be utilized during a declared state of emergency. The Board would also be required to make findings that the public’s health and safety is at risk and that implementing a rent increase freeze, or modifying the otherwise-allowed increase, would mitigate the risks of displacement and the attendant public health harms. Moreover, an owner would still be able to petition for a rent increase if the inability to impose the general adjustment would prevent the owner from obtaining a fair and reasonable return.
This amendment would provide the Board with the authority, which the Charter does not currently provide, to address a future public health crisis and its financial impacts.
Conclusion
Following the public hearing and after consideration of public input, the Board can determine whether to recommend this change to the City Council. To ensure the City Council has adequate time to consider any recommended changes, they should be forwarded to the City Council no later than mid-June. Proposed language for the amendment is attached to this staff report as Exhibit A.
Exhibit A
Proposed language for Board authority to deny rent increases during states of emergency:
Section 1804(a) Temporary Freeze
(i) Rents shall not be increased during the one hundred-twenty (120) day period following the date of adoption of this Article.
(ii) Notwithstanding Section 1805, the Board may, in its discretion and in order to protect the public’s health and safety, disallow or, alternatively, modify otherwise-allowed annual general adjustments to rent ceilings during a state of emergency declared by the President of the United States or the Governor, or upon the declaration of a local emergency by the City Council or Director of Emergency Services, unless such individual adjustment is necessary to obtain a fair and reasonable return per the petition process in Section 1805.
Exhibit A