• The annual general adjustment will be ZERO for units with rents at or below the citywide median Maximum Allowable Rent (MAR) for 2021
o MAR reported by the Santa Monica Rent Control Board for each of the four unit-size classifications.
• This methodology would ELIMINATE ALL INCREASES for units with rents below the following:
o Zero-bedroom units with MAR’s at or below $1,528
o One-bedroom units with MAR’s at or below $1,995
o Two-bedroom units with MAR’s at or below $2,500
o Three-bedroom units with MAR’s at or below $2,791
• For controlled rental units above the MAR, the current Annual General Adjustment methodology would remain in effect.
• This charter amendment will sunset four (4) years after the date of enactment. Upon expiration, the annual general adjustment methodology will revert to the current methodology.
Tenant Income Inequality Relief Plan
KEY POINTS
1 The TIIRP is an equity-based methodology that prioritizes protection for those arguably most in need while continuing to protect others based on the existing city charter • This plan allows Santa Monica to take a national lead in addressing the serious issue of growing inequality
• The City’s Rent Control methodology has failed to help mitigate the impact of the growing inequality that has developed since rent control was introduced in 1979. • TIIRP relies on housing providers to supply financial resources in the form of reduced increases and to administer the program through their own rent increase submission to the Rent Control Board
• TIIRP DOES NOT ADD either additional cost or administrative overhead to the city Tenant Income Inequality Relief Plan (TIIRP)
KEY BENEFITS
2 • Under the TIIRP formula, housing providers sacrifice ALL annual increases for the bottom tier 50% of the city’s rental units
o 50% (13,741) of our controlled units will not be subject to an annual rent increase o These units have the lowest rent which is related to the longest term residents least able to afford changes in costs
o Housing providers would net roughly 2/3rds of what a 3% increase would generate under the current methodology and the same as what a 2% increase would generate • TIIRP protects roughly 4,156 (43%) more units/households than the even the 9,585-household number that has been claimed as rent burdened.
• Almost all of the top 50% of controlled units have been leased since 2016 at market rates o Units were leased under standard income qualification criteria of 3x monthly lease costs o Cap of $140 equates to $4.60 per day which is not a significant issue at these levels • The Sunset provision is intended to provide Council and Rent Board flexibility:
o Provide a financial bridge to cross the currently evolving economic uncertainty of the next several years.
o Provides a period of time to develop a thoughtful and robust and up to date rent control policy that permanently address the inequality trends in our community Tenant Income Inequality Relief Plan (TIIRP)
KEY ECONOMICS
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