City of Los Angeles is proposing to eliminate the 3% floor that has been the backbone of the City’s’ Rent Stabilization Ordinance since 1978. This proposal calls for the elimination of the 3% floor to be replaced with a new calculation – 60% of CPI. This is part of a broader package of proposals related to housing.
The current allowable increase calculation was the result of compromise at the inception of the rent control program. The 3% floor has long existed as a safety mechanism for housing providers. It ensures they do not fall victim to costs that rise independent of the Consumer Price Index (CPI).
The CPI is a consumer index. It does not take into account rising operational expenses such as real estate taxes, insurance, the city’s gross receipt tax, utilities, water, sewer, waste franchise increases, pest control, repairs and maintenance, earthquake retro-fitting, painting, cleaning, landscaping, vacancies, management administration, advertising, legal costs and a whole host of other expenses incurred through operating rental housing. These costs are increasing significantly in the City of Los Angeles.
All housing providers must reach out to the councilmembers. Tell them you oppose any changes to the allowable increase formula in RSO buildings. Let them know how it will negatively affect your ability to provide housing in the City.