What Rent-Controlled Tenants and Landlords Need to Know After the Passage of Measure RC

December 13, 2022 7:49 AM
by Daniel J. Costello

As part of Measure RC, which Santa Monica voters passed in the November 2022 election, the General Adjustment (GA) for controlled rental units will be reduced in February for units that qualified for this year's increase. The Measure was added to the ballot by City Council after many tenants in rent-controlled units received notice of a 6% rent increase in September 2022 (with a maximum increase of $140) and could not afford the steep increase in their rent. Some tenants have received assistance from the City’s Rent Control Adjustment Relief (RCAR) program, which is detailed below.

Measure RC reduces this year's 6% increase to Maximum Allowable Rents (MAR) in effect on August 31, 2022 to a 0.8% increase from February 1, 2023 through August 31, 2023. The result is an annual increase for the year (from September 1, 2022 through August 31, 2023) that averages 3%. Similarly, other units with higher rents that received the maximum increase of $140 will have the monthly increase reduced to $19 starting in February. Measure RC requires this Adjusted General Adjustment so that the average rent increase for the year (from September 2022 to August 2023) does not exceed 3% or $70 per month, whichever is less.

In future years, the maximum General Adjustment for all tenants in rent-control units will be 3%, and the Rent Control Board may set dollar amount caps per a formula in the Charter. The next General Adjustment in September 2023 will be applied to MARs that are 3% higher (maximum $70) than the MARs in effect on August 31, 2022.

To be eligible for the September 2022 GA and corresponding February reduction per Measure RC, the following conditions must be true: 

See below for specific information on what rents will look like for controlled rental units:

1. If the Maximum Allowable Rent (MAR) on August 31, 2022 was $2,312 or below and the landlord gave written notice of the 6% GA effective September 1, 2022, as of February 1, 2023, the increase will be reduced to 0.8% of the August 31, 2022 MAR. The landlord should give tenants a new notice effective February 1, 2023 reflecting this reduction.

September 2022 - January 2023: 6%

February 2023 - August 2023: 0.8%

AVERAGE: 3%

Five months at 6% (Sept-Jan) and seven months at 0.8% (Feb-Aug) average an annual 3% increase

2. If the MAR on August 31, 2022 was $2,313 or above and the landlord gave written notice of the maximum increase effective September 1, 2022, as of February 1, 2023, the increase will be reduced to $19 above the August 31, 2022 MAR. The landlord should give tenants a new notice effective February 1, 2023 reflecting this reduction. Over 12 months, this achieves the average $70 maximum Adjusted GA required by Measure RC.

September 2022 - January 2023: $140

February 2023 - August 2023: $19

AVERAGE: $70

Five months at $140 (Sept-Jan) and seven months at $19 (Feb-Aug) average an annual $70 monthly increase.

3. If the landlord gave an increase of less than 6% prior to February 1, 2023, the landlord may give a new notice for a rent that is above 0.8% of the August 31, 2022 MAR effective February 1, 2023, or after - provided that the average increase for the year (September 2022 through August 2023) does not exceed the lower of 3% or $70 per month.

September 2022 - January 2023: <6%

February 2023 - August 2023: >0.8%

AVERAGE: 3%/$70

The reduction to MARs per Measure RC will be implemented in Board records automatically on February 1, 2023, with or without notice from the landlord. Landlords are still required to give tenants a Notice of Change in Terms of Tenancy as required by California law.

In addition to the MAR, the property owner may require tenants to pay half of the Rent Control registration fee as a monthly surcharge. The annual Rent Control fee is $228 per unit. If the owner paid the fees in full by August 1, half of the monthly fee of $19.00 may be passed through to tenants as a $9.50 monthly surcharge on their rent. The pass-through of half the registration fee is existing law and was not changed by Measure RC.

If a registration fee waiver has been approved for a unit because the tenant is a very-low-income senior or very-low-income disabled tenant, or if the rent is subsidized by a state or federal program (such as Section 8), the owner does not pay the registration fee, and nothing is passed through to the tenant. Applications for fee waivers are available from the Rent Control office or online at santamonica.gov/rent-control-fee-waivers.

In some cases, owners may add limited property-tax-related surcharges to the rent. Property-tax-related surcharges may not exceed the actual prorated amounts from the tax bill, $35 or 4% of the February 2023 Maximum Allowable Rent, whichever is less.

This is a simplified explanation of the Rent Control Law relating to the changes resulting from passage of Measure RC and pass-through of tax-related surcharges and the registration fee. The entire law, with regulations, is available online or in our office. You may also call an Information Coordinator or Analyst at (310) 458-8751 if you have any questions.

Rent Control Adjustment Relief (RCAR): Limited Reopening

The City of Santa Monica is reopening the application process on a limited basis for the Rent Control Adjustment Relief program (RCAR). This program aims to help rent-burdened households in Santa Monica rent control units impacted by the 2022 General Adjustment increase. Applications will be open Monday, December 12, 2022 – Wednesday, January 11, 2023, only for households that did NOT apply by the original deadline and who are:

  1. Households in Rent Control units that received a rent increase notice dated AFTER the original Sept 19th RCAR deadline. Rent increase notices must be clearly signed and dated by property owner/manager after September 19, 2022. This does not include any notice of a rent reduction effective February 1, 2023 per Measure RC referenced on this page.
  2. Households in Rent Control units that did not submit an application in the first round due to extenuating circumstances (e.g., illness, being out of town).

The RCAR program provides relief equivalent to a 3% rent increase over a 12-month period to be paid directly to the property owner/manager in a single lump sum. To apply or for additional information, visit: santamonica.gov/programs/rent-control-adjustment-relief, email RCAR@santamonica.gov, or call (310) 458-2201 extension 5771.

Authored By

Daniel J. Costello
Public Information Manager

Categories

Housing, Programs