City Releases Report on Rent Regulation Measure

Authors of a recently released report on a local rent regulation measure said supporters and opponents of the proposal both could identify portions of the findings that justify their positions.
That was certainly true for the Burbank City Council, whose members insisted Tuesday the report was further evidence that Measure RC, which will be on the ballot in the Nov. 3 election, would hurt Burbank.
The report is available on the city’s website, in the council’s agenda for the Tuesday meeting.

“Measure RC is complex, as are the impacts of rent regulation,” wrote Jerry Newfarmer, president and CEO of consulting firm Management Partners, in the report. “The reality of this topic, as many studies of this issue have concluded, is much more nuanced than the rhetoric surrounding the matter often is.”
More than half of Burbank’s housing units are rentals, according to the report, which also said more than 17,000 would be affected by the measure if it passes.
Management Partners said the measure’s impact on new housing would likely be minimal.
But the firm also noted repeatedly that Measure RC’s reach could be extended substantially if California voters pass Proposition 21, repealing limits on rent regulation. The proposition was co-sponsored by the AIDS Healthcare Foundation, and council members claimed Tuesday that the organization also authored Measure RC, though City Council candidate Konstantine Anthony, one of the authors of the proposal, denies this.

FINANCIAL IMPACTS
Among other things, Measure RC would limit rent increases to the rise in the consumer price index, with a cap of 7%. Under a state law that went into effect this year, annual rent increases are limited to 5% plus that index or 10%, whichever is lower.
Start-up costs for the measure, including a budget for staff, are conservatively estimated at $1.8 million, advanced by the city, with annual operating costs at roughly $3.9 million.
Costs would be offset by landlord fees, estimated at about $200 per unit per year, though that number could change depending on how many units are affected by the program — something that could be increased if Proposition 21 passes in November.
The report adds that “there is little consensus regarding the impact of rent stabilization programs on property values.”

HOUSING IMPACTS
The report claimed that rent stabilization ordinances that exempt new housing and allow vacancy decontrol, as Measure RC would, are not shown to impact the construction of new rental housing. Vacancy decontrol allows landlords to raise rent to the market rate after a tenant moves out, though that ability could be limited if Proposition 21 is passed.
“Because of the way this measure is written, and although we can’t predict what the [Burbank] Landlord-Tenant Commission would do, the passage of Prop. 21 would open the door to potentially more extensive rent regulation in Burbank than any other city,” Andrew Belknap, senior vice president for Management Partners, told the council.
The authors also explained that ordinances with such exemptions likely don’t lead to “a pattern of disinvestment in rental properties or significant deterioration in the housing stock.”
They added, however, that some rental housing could be lost due to owner move-in, condominium conversion and building demolition.
And while renters in units under rent stabilization tend to stay longer than those who aren’t, without the availability of comparatively affordable units, some tenants could be discouraged from moving to Burbank.
As for current properties, the report notes that Measure RC’s relocation fees — charged to landlords for reclaiming a unit for personal use or for doing work on a unit that requires a tenant to leave it temporarily — are “a potentially significant disincentive for landlords to invest in major work.” But the report added that a report on a similar fee required by Los Angeles’ rent control ordinance did not find evidence of rental housing deterioration in the city.
Studies are inconclusive on the effect of rent regulation on small “mom and pop” landlords, according to the report, though Councilwoman Emily Gabel Luddy said that information would “present a very different story.”

BATTLES WAGED AGAINST MEASURE
City representatives have battled Measure RC for months, starting when the city clerk rejected a petition to place it on the ballot, claiming its signatures were invalid because a particular statement was absent from it. Proponents of the measure sued and won, but the city had also filed a counterclaim arguing the provision in Measure RC conflicts with the city charter.
The judge did not give a strict ruling in that case, suggesting that the city return to the court if Measure RC is passed by voters in November.
The report does not address in depth the possibility of a charter conflict, though representatives did appear concerned that the proposed measure would empower the Landlord-Tenant Commission to “have a tremendous amount of authority” when interpreting the measure.
The City Council would be able to appoint and remove members of the commission, but consultants warned the panel wouldn’t have any other control of its decisions.
“You’ll be responsible, but you won’t have authority,” Belknap said.
In recent months, council members have made both their distaste for the measure and their frustration with Anthony clear. Councilman Timothy Murphy, an attorney, argued Tuesday that Anthony, one of his opponents in the upcoming council election, failed to understand the difference between a general law city and a charter city.
“Do you really want to vote for somebody who allegedly did the research on this issue for a year and a half and didn’t even bother to figure out what kind of city he was drafting it for?” he said.
Anthony said in a phone interview that, if the measure had an obvious conflict with the city charter, the judge would have determined so in court.
“At the end of the day, the voters are going to decide,” he added. “The voters have the report now and they can see that all five City Council members were incorrect on their [ballot] statements … and arguments against it.”
Real estate groups have also led a significant financial campaign against the measure. Burbank Citizens for Responsible Government, the sole listed opponent to Measure RC, is sponsored by the California Apartment Association.
By Sept. 19, the committee reported receiving $226,100, though only $2,800 had been spent. Its funds comprised donations from a handful of real estate groups, including $86,000 from Avalon Bay Communities, which owns apartments in Burbank.
The contribution statement does not include a $25,000 donation from the National Association of Realtors near the end of September.
The Burbank Tenant Rights Committee, which proposed the measure, reported raising more than $46,000 through Sept. 19, gained almost entirely through founders Anthony and Margo Rowder, who also serves as Anthony’s campaign manager.

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