NEW Los Angeles Rent Stabilization (RSO) Ordinance 184529
You are probably wondering why the Los Angeles Rent Stabilization Ordinance (RS0) is asking you to provide additional information about your rental units along with your 2017 RSO Bill. The RSO is asking multifamily landlords to provide detailed information such as: current rents, date of last rent increase and unit mix for every apartment unit subject to rent control in Los Angeles. This is thanks to Ordinance No. 184529, which was authored by Councilmember Gil Cedillo and passed on Sept. 27, 2016.
This article will discuss the reduction in owner privacy resulting from the ordinance and the possibility of more laws and oversight in the near future.
Rent Stabilization Ordinance No. 184529:
A landlord shall provide rent amount and tenancy information about every rental unit subject to this chapter on a form prescribed by the Department [The Housing Community Investment Department]. This form shall be submitted annually by the last day of February of each year. Registration is complete only when all outstanding registration fees have been paid and all required rent amount and tenancy information, including emergency contact information, is provided.
With the majority of the housing stock in the City of Los Angeles -- 640,000 apartment units --subject to rent control, the idea behind the ordinance was to create a registry system to prevent multifamily landlords from giving illegal rent increases to their tenants, to promote and monitor the affordability of LA’s housing stock and to enforce the RSO. The number of instances where landlords give illegal rent increases is in the hundreds (per year) -- small in comparison to the total number of rent-controlled units. Therefore, the intention of the Rent Stabilization Ordinance seems to be focused on affordable housing.
In preparing this article, I spoke with 12 large property owners who own rent-controlled buildings in the City of Los Angeles and asked for their opinion of the new RSO ordinance. Each had their own slightly different take, but they fell into these three groups:
- Group 1 -- The opinion of this group was that the ordinance was benign. It was intended to reduce the number of illegal increases by the “bad apple” landlords, while giving the RSO a reason to collect additional fees. The City has no other intentions than what the ordinance calls for. Some questioned how the City would keep track of rent increases vs. other pass-throughs, like the Capital Improvement Program or the Earthquake Retrofit Ordinance.
- Group 2 -- The opinion of this group was that the ordinance is intended to collect more money from property owners. This can be done by imposing new taxes based on the gross receipts of the property. It will also help with the enforcement and collection of existing taxes, such as the City of Los Angeles Business Tax or the State of California LLC Gross Receipt Tax.
- Group 3 -- The opinion of this group was that the ordinance is intended to be much greater than simply catching a few hundred rent increase violators. With increased information comes more rules, stricter oversight and new laws. Some compared it to 1978, when the City asked owners for information before imposing rent control. “If the City wants the information that bad and is imposing a hard penalty, there is a reason for it.”
Ordinance No. 184529 is not the only recent rule change for multifamily owners. Measure JJJ (The Affordable Housing Mandate), which passed handily at the ballots in November, imposes affordable housing requirements onto projects that require zoning changes. Another measure stiffens tenant buy-out rules; owners now need to pay statutory relocation amounts with a 30-day recession period and must also register the buy-outs with the City. It appears that the goal of the City is to restrict future development and to protect low-paying tenants. Expect to see similar initiatives, like Santa Monica’s LV measure, on ballots in the future.
Whether in Group 1, 2 or 3, all the owners were in agreement that the ordinance gives them Zero Privacy.
Iconic spoke with Marcella De Shurley, assistant rent director at the Rent Stabilization Department and the official in charge of the rent registry program. According to De Shurley, the information provided by the property owners will be subject to the California Public Records Act, which will require some of the information provided by the property owner to be redacted. The City has not yet established what information will be available to the public. If owners don't include the rent registry information along with the 2017 registration, they will receive a "provisional" statement of rental certificate. Meanwhile, the City is understaffed and doesn't have the manpower to handle all of the information.
Another case of passing an ordinance and not thinking it through ahead of time!
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