To this city's 500,000 tenants, rent control is an economic necessity that guarantees reasonably priced housing to those frozen out of California's high-priced real estate market. But to many of the city's 65,000 landlords, most of whom are small operators, the regulations represent something else: a prescription for economic disaster.
No matter which side one agrees with, there can be only one certainty in southern California's escalating and increasingly volatile rent control debate. The issue will not disappear, despite the Los Angeles City Council's recent decision to extend temporary rent control regulations that were adopted as an experiment in 1977. The new ordinance becomes effective May 9.
The debate went on for two months before the council then surfaced as an issue in the gubernatorial campaign of Mayor Tom Bradley and ended in the same way it had begun--with shouts, demonstrations and name-calling. It took police 13 minutes to clear the council chamber of angry, flag-waving landlords who accused the representatives of a political sell-out and chanted "Heil Hitler" and "We want freedom." The controversy over rent control has mushroomed amid reports that the rental industry is growing in size and importance to the California economy.
The dispute promises to continue. Earlier this month council members placed on the ballot a city charter amendment that would exempt rental units built after Oct. 1, 1976, from the controls. Although the new regulations already exempt those units, supporters contend that the amendment is needed to spur construction of new housing in the city.
Apartment vacancy rates long have heen miniscule and at times have dropped as low as one percent. Nervous builders, the argument goes, will not enter the Los Angeles market because of the volatile political climate. Only 8,100 apartment units were built in the city last year, the lowest number in six years. And city officials say many of those were individually owned condominiums, not rental apartments.
Some tenants, meanwhile, have threatened to escalate the controversy on their end by seeking to place on the ballot an even more stringent city rent control law. They need to gather 116,000 signatures in two months.
Tenant organizers look to the Los Angeles suburb of Santa Monica, where an activist slate of city council candidates campaigning on a strong rent control platform swept the local elections and cemented political control of the municipality until at least 1985.
But to achieve their goal, the Los Angeles tenant organizers would have to mold into a potent political force a large number of elderly tenants on fixed incomes and young families shut out of the housing market on the city's affluent west side and in the San Fernando Valley. Rent control also is a growing issue in Beverly Hills, where residents--about 50 percent of whom are tenants--have been pushing for the institution of their own rent control regulations.
Under the regulations adopted by the Los Angeles City Council, rent increases are limited to 7 percent annually. Controls have been temporarily lifted from units when tenants move but reinstituted when new ones move in, and landlords can pass on to tenants the cost of capital improvements, increased utilities and other operating expenses. Luxury units and single-family homes are exempt from the rule, as are buildings completed after October 1978.
The new measure differs from the experimental one approved four years ago in two ways: landlords' capital improvement costs can be passed on as permanent rent increases and protection if extended to mobile-home parks. The ordinance also contains some new protection for tenants. Landlords cited for safety violations cannot raise rents and tenants can't be evicted and replaced by the grandparents or grandchildren of a landlord.
The new regulation emerged as a compromise between two opposite measures passed by the city council. The first, approved on March 9, would have kept rent controls intact. The other, approved on March 16, would have permanently phased out rent control as tenants moved from their apartments. As emotions grew and political pressure from various special interest groups increased, the city council kept flip-flopping on the rent control issue.
Landlord representatives argued without success that lifting the controls would spur apartment construction and lead to a boom that would eventually stabilize rent prices and alleviate the housing shortage that led to the original controls. James Baker, president of the Apartment Association of Greater Los Angeles, has been one of the most vocal opponents of rent control, arguing that the regulations have polarized apartment owners. Baker said the new city regulations are "something we can live with, although our preference is to see the council restore our freedom."
Baker, an apartment owner in Santa Monica promises to keep the issue alive by launching a statewide effort to place an initiative on the November ballot that would "end rent control once and for all."
The Libertarian Party in the state is attempting to organize a similar campaign. Baker said his action is designed to foil the increasingly effective efforts of the Campaign for Economic Democracy, a statewide political coalition affiliated with activist Tom Hayden and actress Jane Fonda.
The CED has used the rent control issue to build political movements in Santa Monica and other locales. "It is time to go on the initiative against Fonda and Hayden and end rent control once and for all," Baker said.
Tenant activists have been just as vehement, claiming the controls halt greedy speculators and prevent large-scale evictions--such as those that occurred in Santa Monica neighborhoods in the early 1970s--by landlords seeking to convert their units into high-priced condominiums.
The rent control debate has increasing economic importance to the state economy because a recent study by the California Apartment Association concluded that the rental industry is the state's third largest, with 9 million renters spending $14.1 billion annually. In terms of gross income, the rental industry trails only tourism and construction in California.
The report also took a slap at rent control ordinances in effect in Los Angeles and nine other California cities. It said the regulations "confer its benefits early and extracts its costs later." The study said the "cumulative net effect of rent control has been one of stifling, in many areas of the state, the development of adequate housing."
The study found that 38 percent of the state's residents are renters, that the total market value of rental property is more than $130 billion and that the state's rental industry primarily is composed of small, independent owners with an average of 12 rental units.