Rent Control Board Limits Rent Surcharges

By Rent Control Board Commissioners Nicole Phillis and Steve Duron

The Santa Monica Rent Control Board recently passed key regulations that provide significant relief to tenants burdened by excessive pass-throughs based on bonds and other surcharges that appear on owners’ property tax bills.

The new regulations were adopted directly in response to concerns and requests raised by local tenants who had experienced pass-throughs that were double, triple and quadruple the amount of their general adjustments. Importantly, the new “cap” will not allow landlords to automatically raise rents. Rather, it will serve as the upper limit — the maximum — that a landlord can pass on to a tenant for bonds and surcharges.

On May 10, 2018, the Santa Monica Rent Control Board adopted Regulation 3120(e), “Limitation on Surcharges.” Under Regulation 3120(e), effective September 1, 2018, surcharges based on voter indebtedness (bonds, primarily) shall be capped at the lesser of either $35 or 4% of the unit’s maximum allowable rent. Regulation 3120(e) adds to the original Regulation 3120, which prohibits altogether any pass-throughs of surcharges for any unit rented on or after March 1, 2018 and for any unit reassessed as the result of a sale, change in ownership, or new construction improvements after March 1, 2018.

The new cap on pass-throughs goes into effect on September 1, 2018 — the same date as the general adjustment for 2018.

Tenants who have any questions about the effect of these changes on their rent rates should contact the Rent Control Board at (310) 458-8751.