City Council - Regular Meeting

Thank you.

Oh, yeah.

I can't do it.

The July 9, 2026 regular meeting of the Santa Monica Rent Control Board is called to order. Would the secretary please take the roll? Yes.

Commissioner Dudek?

Present.

Commissioner Gonska?

Here.

Commissioner Leslie is absent. Vice Chair Ambriz is absent. Chair Ivanov? Here. We have a quorum.

Please join me in the salute to our flag.

To the flag of the United States of America and to the republic for which it stands, one nation under God, indivisible, with liberty and justice for all.

If anyone wishes to address the board either on a specific item on tonight's agenda or during public comment, please see our board secretary to fill in a speaker slip. Our next item is approval of the minutes. If commissioners have had an opportunity to review the minutes of the June 11th and June 25th, 2026 meetings, may I have a motion for their approval?

I move that we approve the minutes from the June 11th and June 25th.

and billing cycle. If the invoice is not paid by the deadline, the landlord may not pass through that fee to tenants this year. In addition, the general adjustment may not be applied until all past due registration fees and related penalties are paid in full. Second, landlords should receive reports of maximum allowable rents or MAR reports shortly. These reports provide property-specific information from the Board's records and help landlords determine the lawful application of the annual general adjustment for eligible units. A tenant should receive postcards regarding the 2026 general adjustment shortly. The postcard explains that effective September 1, 2026, the annual general adjustment is 2.6%, with a maximum increase of $70 from Mars of $2,674 or more. It also explains that eligibility depends on several conditions, including the tenancy start date, proper registration, required written notice, payment of registration fees and penalties, and the absence of uncorrected violations. Finally, rent control staff will be participating in two upcoming community outreach events. We'll be tabling at the State of the City event on July 23 from 4 to 7 p.m. at Ocean Park Library and at National Night Out on August 4 from 5 to 8 p.m. at City Hall. These are good opportunities for staff to answer questions, provide information, and connect directly with community members. That concludes my announcements. Thank you.

Thank you. public comment. This is the time set aside for members of the public to address the Board on matters that are not included on the agenda, but that are within the Board's subject matter jurisdiction. Please note that the Board cannot take official action at tonight's meeting on any matter not included on the agenda. And am I correct that we don't have any speaker slips? Okay. Is there anyone who would like to address the Board before we move on to the next item? Okay, seeing none jurisdictional items, our jurisdictional items tonight are new construction exemption cases P2026-00577 and 00578 and P2026-00579 concerning 2409 28th Street and 2234 5th Street, respectively. If there are no objections from Commissioners, I'll ask staff to deliver the reports on both items simultaneously. Are there any objections? Okay, seeing none, may we please have the staff reports together?

Certainly, Commissioners. Good evening. The first matter that you talked about, Case 577-578, concerns 2409 28th Street, which is owned by Eric Wasserman. who represents the LLC that owns the property. He constructed a two-story duplex on the property, 2411A and 2411B. and these were constructed as of 2016 because these units were constructed after the enactment of the rent control law and they're not otherwise subject to the rent control law as a result of an Ellis Act withdrawal or a removal permit. They are eligible for exemption as new construction and which is what staff recommends that you accept the grant the exemption application and adopt the proposed findings of fact and conclusions of law. Very similar case. The next one, Mr. Jeff Sung is the owner of the property at 2234 Fifth Street. He built a new two-story single-family dwelling on the property back in 2015, and he's petitioned to exempt it as a single-family home. Again, it's constructed after the enactment of the rent control law and is not otherwise subject to the rent control law because of the NLS Act withdrawal or removal permit approval. For those reasons, staff recommends that the Board grant the exemption application and adopt the proposed findings of fact and conclusions of law. Thank you.

Are there any questions for staff? In that case, would anybody like to make a motion?

Commissioner Dudek I would like to move that we agree with the findings and confirm the exemption for units 2 4 1 1 a At I'm sorry just moment trying to get the address at 2409 28th Street and And 2411B at 2909 28th Street in Santa Monica.

I'll second that. Motion by Commissioner Dudek, seconded by myself. May we have a roll call vote, please? Yes.

Commissioner Dudek? Yes. Commissioner Gonska?

Yes.

Chair Ivanov? Yes. Motion carries.

Okay, administrative items.

Item 12A is a presentation. Sorry, Commissioners. The Commissioner's motion only concerned the property The first property, we could also have a second motion with regards to the property at 2234 Fifth Street as well. Oh, apologies.

Do we need to re-vote on that?

No, that's fine that you granted it on that one. We just need a separate motion now.

Oh, okay. I'll move then that we, for the property at 2234 Fifth Street, that we permanently exempt it as new construction and adopt the proposed findings of fact and conclusions of law.

And I'll second that as well. So motion by Commissioner Gonska, seconded by myself. May we have a roll call vote, please?

Commissioner Dudek?

Yes, and thank you for pointing that out.

Commissioner Gonska?

Yes.

Chair Ivanov? Yes. Motion carries.

Administrative items. Item 12A is a presentation by the Housing Division on the Micro-Grant Habitability Pilot Program. Before we begin, are there any members of the public who wish to be heard on this item? Seeing none, whenever you're ready.

Thank you very much. And hello, my name is Richard Diaz. I'm the Housing Programs Administrator for the Housing Division. And tonight's presentation will be on a proposed habitability microgrant pilot program that will be targeted to some rent-controlled properties. And there will be time after this presentation for any questions or comments. So if you can, please hold those questions until then.

That would be very helpful.

And we'll begin tonight with some bit of background. Housing staff composed these recommendations at the direction of City Council. In September of last year, City Council requested staff to review the feasibility of a pilot micro-grant program to address the habitability of run-controlled and de-districted affordable apartments. Council asked staff to focus on small mom-and-pop landlords And they also ask that landlords demonstrate a financial need in order to qualify for any funds in this program. To prepare these recommendations, staff conducted a number of different research methods, including program model review of other jurisdictions that had similar programs. Really, there's not too many other similar programs like this out there. A couple of examples are the City of New York and Philadelphia. And housing staff data host interviews and discussions with the staff administering those programs in those cities as part of the research staff also did stakeholder interviews and gather community feedback. Some of the stakeholder interviews included doing outreach to small landlords and hosting a tenant listening session so that tenants could provide feedback as well. Housing staff also conducted a landlord survey. This was a digital survey so landlords could provide their feedback and staff could try to estimate the potential demand for such a program and what some of the financial need out there by small landlords is. Housing staff also did data analysis of rent control data to help inform these recommendations. And finally, housing staff held discussions with other city departments such as code enforcement, building and safety, and also rent control in preparing these recommendations. After conducting that research, staff found a number of findings. Here are three of the broad findings from that research. The first is that there's a significant portion of rent control properties that are collecting rents below market rates. For example, using data from the Santa Monica Rent Control Board's 2025 annual report, analysis shows that more than 16% of all rent control departments have maximum allowable rents per the rent restrictions on them. Where the rents are limited to less than 50% of comparable market rate rents. Staff identified those apartments as having a high risk of turning over and the no longer being affordable. If the existing tenants were to move out. A second key finding was that rising insurance and maintenance costs are impacting local landlords. And in turn, some local landlords, especially smaller landlords, are having some difficulty keeping up with those rising costs. And that's impacting their financial ability to also keep up with some habitability repairs and doing regular maintenance on some of their properties in some cases. And finally, staff also found that demand for other similar programs has varied widely. Some of the examples I gave were New York and Philadelphia. In those programs, Philadelphia has seen a very robust response from landlords and received many applications for the program. They've dispersed many loans and grants to qualified landlords. On the other hand, in New York's first attempt at this program, they got very few applications from landlords, and I believe they only dispersed funds for one or two projects. And then they had to revamp their project and relaunch it. So demands varied widely for the programs, and these recommendations are really trying to tailor this program for Santa Monica so that we do see robust demand. And with that bit of background, we can go into the recommendations for this pilot program. Small landlords for the purpose of this program for the purpose of this pilot are being defined as owners of no more than three properties and also owning no more than fifteen total apartments in the city. Additionally, owners must have owned their properties for at least fifteen years to meet that eligibility requirement. And again, looking at the rent control data in the annual report, that report shows that 89% of all rent-controlled properties are 15 units or less. So broadly speaking, the majority of properties that are rent-controlled right now would meet this eligibility criteria. That's not to say some of those properties have an owner that owns other properties, but that just gives you an idea of how many properties could potentially be eligible from that alone. Second eligibility criteria is that the property must be subject to rent control or have de-districted affordable apartments on site. Third, city inspection of needed repairs will be required. And fourth, again, small landlords must demonstrate a financial need. And to confirm financial need and eligibility, landlords will be required to open their books to city staff so that staff can do a thorough financial assessment. Only owners that do not have an adequate reserve balance to cover the cost of needed habitability repairs to reach code compliance and that also are incurring a net loss in monthly operating revenues will be eligible. And prior to the pilot launch, staff will use an outside consultant to develop a financial means test that makes the most sense for this program. And finally, as part of the eligibility, apartments receiving funds must serve households that are at 120% of area median income or below. And that last criteria there aligns with the language in the Measure GS, which, as we'll see further in this presentation, is where staff are recommending the pilot project be funded from. The structure of the recommended pilot program will consist of the following a six month application period from March to August of 2027 staff are recommending a total pilot budget of $300,000. And again, that those $300,000 in funding is recommended to come from measure. Yes, the appropriate funding category in measure. Yes, right now has approximately 6.75Million in available funds. So this is a relatively small amount of the available funds. There funds will be dispersed via grants of up to $5,000. and also via loans of up to $25,000. And for loans, 20% of the loan must be set aside for contingency costs. That's in case any of the estimated repair costs that properties get from contractors, if they go over that, staff are recommending a percentage be set aside for contingency. And finally, a property may qualify for both a grant and a loan. So some properties may qualify for up to $30,000 in funding from this program. Here are the funding terms that are being recommended. The first is that properties receive at least three bids for repairs from licensed contractors. And again, city building inspection will be required from a city agency upon repair completion. And loan repayment will be deferred so long as a landlord complies with the following terms. The first is a landlord will agree not to increase rents by more than 3%. for the duration of the loan term. And it's important to note that that 3% number, that doesn't supersede whatever the general adjustment is on a rent control property. If the general adjustment is less than that, then they can't go up to the 3%, whichever is lower. Second, the loan term being recommended is for up to seven years. The loan will be forgiven in year six and seven if a landlord complies with the terms. Landlords compliant for the full loan term will pay zero dollars. And if for any reason a landlord doesn't comply or chooses to end the loan early, the loan will be repayable at a 6% interest plus violation fees, again, if there's noncompliance there. This slide is an overview of the process for conducting the pilot program. The first part of the process will be outreach by staff to small landlord properties. Second, staff will host an information session for any interested owners, and this information session will take place prior to the application window opening. Third, any interested properties in order to be eligible for the program, they'll need a referral from code enforcement or rent control, or they may self refer if they agree to an assessment on site by enforcement or another city agency confirming the needed repairs there. After that, staff will review applications. A property lien will be placed if an application is approved for a loan and before funds are dispersed. The disbursement of funds will go out in phases with 30% upfront once an application is approved and once the three approved bids are received. And then Other funds, percentage of the fund of the loan will be dispersed in the line with different milestones for whatever the needed repairs are. So that might vary by the scope of repairs. There'll be ongoing compliance monitoring by staff and also staff will collect data to conduct a full pilot study of this pilot program. This slide provides an overview of some of the eligible repairs, to give an example, that the funds can be used for. And I'll note that qualifying habitability improvements would align with California Health and Safety Code 17920.3. And this also meets the code enforcement standards from the city. And again, the focus for this program is really on helping landlords that need that financial support to bring their rent controlled and deed restricted affordable apartments up to code compliance and improving the habitability for the tenants that occupy those units. The types of work that's not going to be covered by this program will be any work where the owner is looking to expand or add on to the properties or improvements that only offer cosmetic benefits. And again, here's an example of eligible and ineligible repairs. Some of the top ones you see for eligible repairs include unsafe heating, plumbing or wiring, roof repair, leaks and water intrusion. Those are some of the most common code enforcement complaints. I'm not going to read through the rest, but I think that gives you a good idea there. And during this pilot, staff will conduct a pilot study. And we'll collect a variety of different methods to really gauge the impact of the program, not only on the property owners, but also the tenants to influence any future recommendations for the program. And some of the metrics that will be collected include the number of applications received for the pilot project period, also the number and amount of loans dispersed, and also the type of funding requested by these properties, whether properties are looking for grants or those low-interest loans. Additionally, staff will collect data on the number of properties and households served, the income level of those households, the number of households that have seniors, minors, or people with disabilities, and also staff will be closely monitoring compliance for loan terms. This slide is to acknowledge some of the potential challenges that staff are likely to face as they launch this new and unique program. The first challenge is likely to be engaging targeted landlords. To overcome this challenge, staff do plan to work closely with code enforcement and rent control staff to identify and engage with the properties that most need this financial support and are best qualified to be served by this program. A second potential challenge that staff would like to acknowledge is that some landlords will need technical assistance to complete applications, obtain bids, and manage renovations. This is something that staff anticipate, and we do anticipate that staff that administer the program will provide that additional support for these landlords. But we don't really know the full extent of this need until we actually launch the pilot and we see what that response is like from the landlords or see what the expertise level is like for some of these different tasks to see how much support is actually necessary. And lastly, a potential challenge is around staff capacity for loan processing and also long-term compliance monitoring. Staff do have experience with other types of loans and other city programs, but we don't know what the process will be like for these new types of loans, again, until we test it in real life. I do want to emphasize that we want to use this pilot program to really learn, and if we do decide to continue the program after the pilot period ends, we'll use those learnings to make adjustments and really make this program successful, even more successful moving forward. And finally, here's an overview of the tenant benefits. You know, this program is aimed primarily at helping the property owners fund these repairs, but there also be some tenant benefits. The first major benefit will be additional protections on rent increases for up to seven years for apartments that receive loans. Another major benefit is improved accountability conditions for residences that these tenants are occupying. A third benefit is the preservation of affordable housing stock. This program, again, it's a micro grant program and small loan program. It's really aimed at addressing smaller issues before they become bigger issues. For example, if there's a small leak in the roof, This program can help a landlord that needs that financial assistance address that would leak before that leak turns into a major water intrusion, gets in the walls, gets into wiring, and really threatens the viability of continued residents in the affordable apartment. And finally, another tenant benefit is just insured code compliance for the properties. And the quote here is directly from the Measure GS language. Code enforcement is a cost-effective intervention to prevent homelessness or displacement of our low-income neighbors. And that completes the presentation. There's time for questions now.

Thank you so much. We really appreciate the presentation. I just had a few questions. You mentioned a couple jurisdictions that are doing similar programs on the East Coast. Are we the first jurisdiction that's doing this in California, or are there any other cities that are doing something like this?

There's a few examples in the Bay Area. I believe the City of Oakland is doing something similar. That's probably the most similar program. And we did reach out to Oakland. We didn't have a chance to have a discussion with them, but we'll continue to try to reach out to them. And there's also a similar program conducted by a nonprofit in South LA. I believe LDOC were the initials. That's something I can confirm. But there is a similar program already operating in LA County.

You mentioned Retaining an outside consultant to develop a financial means test. Can you describe a little more what you meant by that?

Yeah. So, broadly speaking, what we're looking for, it's defining how we're going to find a financial need. How we're going to be able to tell that property owner they can't afford the cost of repairs to come up with a code of compliance. And there might be some complications in the ownership structure, et cetera. We'd like to engage with an outside consultant to get their expertise to help develop the best formula possible that staff can use to make that determination. The examples I gave there is we're looking for, broadly speaking, properties that are incurring net losses in monthly revenues from the properties where their rents aren't able to keep up. the rents they're collecting aren't able to keep up with their operating expenses, or that they don't have any reserve balances for whatever reason. You know, small mom-and-pop landlords that are long-time owners, they may be in that situation. So that's why we engage with an outside consultant.

Is the $300,000 total budget, is all of that money allocated towards providing direct aid for this program, or is part of that budget allocated for this consultant?

It's all allocated in direct aid.

And you mentioned that one potential challenge of the program will be engagement with the target landlords, and you mentioned that one of the steps the city's going to take to get the word out is having an information session. How are we planning to get the word out about that? Because I do think this is a really great program, and we need to educate the community that this is happening and there's resources they could take advantage of.

Yeah. I think a key will be working with other city departments. One of the greatest source of referrals might be code enforcement. When code enforcement is aware of an issue, they go out and speak to the property owner. They may issue citations or warnings or anything like that. And they might the property might owner tell them I can't afford this. And the code enforcement could then refer them to this program. Working with rent control housing staff will work with rent control in the past via the newsletters that go out and identifying, you know, target properties for other programs, such as the pod program, or we've been able to send mailers to some of those addresses. And that's been a very effective means of communication and doing outreach. Those are some examples. Some of those details are yet to be worked out in the next 9 months before the program launch. But that just gives you an idea of what we're planning. And again, this still needs to go through council, so we're still waiting for the green light there before we finalize some of the really smaller details around outreach.

If this does get through council, can we make sure that we do include this in our September newsletter if it happens in time?

Absolutely.

And my last question, you mentioned a phased disbursement of the funds. Does that apply to the grants as well or only to the loans?

Right now loans, but it's still under consideration for the grants. And I should mention that we're planning to take this to Council in the fall. That date's not set yet. So we might not get it in time.

Okay. And what's What would be the logic of doing a phase in terms of the grants only? What's the logic of having the disbursement be phased?

Right. That, well, let me be clear. Right now, that's primarily the focus for that is on the loans. I don't remember in our staff report that we're drafting if we have that for grants or not. But, right, that primarily focused on the loans. The loans are the larger amount. And we also want to make sure that, you know, milestones are hit before we disperse all the funds and that the repairs that are done are up to standard, you know, the city standards. Thank you. Commissioner Dudek.

Thank you. Thank you for the report. I have a couple of questions. The program sounds as though certainly that is intended to benefit both the renter and the landlord, which, yes, sounds good to me. And I would like to, I've got about three questions here. One is regarding code enforcement and their active involvement in the program. Also, you mentioned something about forgiveness of the loan, and I wonder, I wanted to clarify under what conditions that would occur And also you mentioned additional protections on rent increases. And I was kind of confused about that because we set that every year. And I wondered what you meant by that. Thank you.

Okay, um, I'll go with the question. I, the last question you asked, and then if I forget any others, please, please remind me. Thank you. So that 3% rent increase limit in a reminder. Rent control properties are 1 1 type of property. That's the focus of this program. The other type of property are deed restricted, affordable apartments where they might not have that additional protection. And I think this will answer your second question you asked. If a landlord complies with the loan terms, including not raising rents for the entire loan duration, even if there's a new tenant moved in or whatever, then we'd forgive the loan after seven years. If they're in full compliance, they've done the repairs, and they're good actors. And I apologize, it was your first question about involvement of code enforcement?

Yes, active involvement.

Yeah. So code enforcement would be required to check that the any one they would refer properties that are out of compliance with code. So if these funds were used to make repairs to come back into code compliance, code enforcement will go out and confirm those repairs. We've had discussions with code enforcement and they're aligned with that plan and that proposal there.

I just want to get back to this raising of rents. Are you talking about deed restricted? Because we do raise rents. every year according to a... Right.

And this would be an additional protection. So in case one year is a general adjustment, I'm not an expert on that. I'm not from the rent control. If it were, say, 5% one year in the next seven years, I don't know what the future holds.

We have a cap at 3%.

Okay. Well, if anything were to change for the duration of this loan, there would be this additional cap at 3%. Okay. Thank you.

Commissioner Gonsko?

Yeah, I think some of the questions I had here were already asked, but so the 3% restriction, is that modeled off of any of the other sort of case studies you looked at from other jurisdictions? And is there any concern about that making the program less desirable for people to take advantage of?

I'm working from memory here, but I believe Philadelphia has a similar restriction and some other programs did have some sort of rent restriction again. This is really incentive for compliance. If. If they don't do that again, there's different types of apartments that might qualify for this. Then the loan would be forgiven. So that's an incentive to really, well, forgiving the loan is the incentive to not raise rents more than that, no matter what the apartment type, deed restricted or rent controlled. And then complying with the other aspects of the loan, the loan would be forgiven. So that's one of the things we think it's a good balance between what the rent increase limit is, because we also... The you know, the whole purpose is these landlords can't afford these repairs if they're able to jack up the rents for whatever reason on whatever type of apartment is. Well, then they would have the additional funds to cover some of these costs of repairs. These are relatively small amounts that we're talking about, which could be made up quickly if the rents were to increase. So that's why we want that additional protection there to make sure that again funds are being dispersed for the landlords that actually need it. And in some scenario where they're able to, if that protection wasn't there, they were able to jack the rents, then they'd have the revenues to pay back the city or the funds repairs themselves. So that's again a loan term for why they're getting the funds in the first place.

Okay. Yeah, that makes sense. I think early on in one of the early slides, there was something about income limits, I think, for the tenants in these units? Is that, would that apply to, I think it was 120% of- Correct, of AMI. But that was obviously in relation to the rent-controlled units, right, because there's already Correct.

Well, we're requesting Measure GS funds to be in line with Measure GS language. It should serve tenants that are under those income thresholds. So that's in alignment with Measure GS, but you're correct. If they're deed-restricted affordable, they only go up to 120% of income anyways. So, yeah, that would also apply to the renter.

So the reason for that is because it's compliance with GS requirements? Correct. Okay, because my general question about that was why it's relevant, why the tenant's income is relevant, right? Because even, you know, because the whole idea, right, is the tenant's not responsible for these repairs in the first place in the unit that they're renting. So even if a tenant, in theory, could afford to do them themselves or not going to, they shouldn't be responsible for doing them themselves. So to me, it doesn't seem like I mean, it's a pilot program, so maybe there's, you know, elements. It's a small amount of money for the entire pilot. You want to give it to, you know, you need to have some sort of criteria and restrictions. But to me, it seems obviously the ability of the landlord to afford it is a core component here that needs to be a part of this. But to me, I don't quite understand the requirement just as a principle separate from, I mean, If it's a requirement of GS, then that answers the question. But to me, it doesn't seem like it's quite relevant that even if a tenant is higher income, they should, and if the landlord's not repairing things that are very important in a unit, it seems like this program should be available to them too. The core question being, can the landlord afford it? Yeah, I understand. Okay. I think that's all I had. Thank you for the report. You're welcome.

Okay, any other questions? Okay. Thank you so much. That was a really great and comprehensive report. We really appreciate it.

Thank you. Okay.

Is there any further business before the Board? Hearing none, the July 9, 2026 regular meeting of the Santa Monica Rent Control Board is adjourned. The next regular meeting is Thursday, August 13, 2026 at 7 p.m., excuse me, in Council Chambers.