After roughly 90 minutes of angry testimony from tenants and landlords, a Los Angeles City Council committee called Wednesday for a four-month prohibition on rent increases at an estimated 630,000 apartments.
On a 3-1 vote, the Council’s Housing, Community and Economic Development Committee supported a plan to bar owners of rent-controlled buildings – properties with two or more units that were constructed before 1978 – from raising rents on July 1.
The proposed moratorium heads to the City Council for a vote on Friday, setting the stage for a showdown between landlords and renters, both of whom said they have been struggling in the economic downturn. Under the plan, the moratorium could be extended an extra two months, to Dec. 31.
Councilman Herb Wesson, who heads the committee, said the moratorium would give council members time to assess a proposal to tie rent increases to the inflation rate. Wesson said his plan would serve as a compromise with Councilman Richard Alarcon, who wanted to ban landlords from raising rents on rent-controlled buildings for a full year.
Alarcon said landlords should not impose new costs on their tenants in the middle of a recession.
“Do I want to allow a group to increase its income when the people that they are providing apartments to are losing income? I have to say, I can’t be a party to that,” Alarcon told the audience. “I cannot align myself with allowing people to benefit when tens of thousands are struggling in Los Angeles.”
Landlords spoke out against the plan, with some saying it would prompt them to have their property values reassessed downward to reflect their reduced value. Others said they would have a difficult time finding the money to repair and maintain their properties.
“This is financial suicide for the city,” said Yolanda Gonzalez, who owns four apartments in Venice and another 14 in Boyle Heights.
Renters rights groups contend that unless a moratorium is enacted, the city’s rent stabilization law would allow rent to go up by 3% on July 1 -- even though inflation was less than zero last year. Tenants now paying $1,000 a month, for example, would see their costs rise to $1,030. In certain large buildings where landlords pay for the utilities, rents could go up by as much as 5%.
Landlords and tenants packed the committee’s hearing room and a spillover room at on the 10th Floor of City Hall at Wednesday’s meeting.
Two building owners said rent control already made it to impossible to get loans to make long-term repairs. A third complained that the moratorium would go into effect on the same day that the Department of Water and Power imposes a 4.8% electricity rate hike.
Renters, in turn, talked about reductions in Social Security payments and their ongoing struggle to find work.
Venice resident Cindy Chambers told the committee that she lost her job in November 2008 and recently received a written notice that her rent would go up.
“My landlord knows my situation,” Chambers said. “In fact, a few months ago he told me that living on unemployment must be a good life.”
Backers of the moratorium include the Coalition for Economic Survival and the Los Angeles Community Action Network, two tenant groups. Foes of the plan include the Los Angeles Area Chamber of Commerce and the Central City Assn., two business groups.
Councilwoman Jan Perry cast the lone vote against the proposal, saying it “polarizes the situation” between renters and landlords. Councilman Ed Reyes favored it, saying that as many as 75% of his constituents are renters.
“There are thousands and thousands of people out there in the working class who just don’t have a voice.”