Long Beach renters may soon find flyers in their inboxes and messaging on social media informing them of negative consequences of rent control.


Meanwhile, in front of local grocery stores, signature gatherers continue collecting residents’ John Hancocks to support a proposed municipal ballot initiative to approve a rent control ordinance for Long Beach. The initiative is meant to address a housing affordability crisis, gentrification, eviction without just cause, and other issues, according to the proposed ordinance’s language.


If put on the ballot and passed, the ordinance would, in addition to controlling rental rates, create a series of rules for just-cause eviction of tenants. Tenants could only be evicted: in the event they failed to pay rent and have received a written warning; they violated the lease in matters related to certain occupancy limits; they engaged in specific criminal activities; they have refused reasonable access to the unit after proper notice; or violated a number of other provisions.


The ordinance would also require landlords seeking to recover possession of the unit to provide relocation assistance amounting to “$8,441 to qualified tenants and $3,941 to all other tenants.”


Pabst Kinney and Associates, a Long Beach-based property management firm and real estate brokerage that oversees about 2,500 apartment units in Long Beach, plans to send out a flyer to its tenants within a few weeks about the negative ways rent control could impact the community, according to owner Kristie Kinney Pabst. She pointed out that property owners are less likely to invest in their apartment units if the rental rate they charge is controlled. “There is no incentive for the landlords to invest dollars into improving their building. And Long Beach has very old housing stock,” she pointed out.


“Any city that has had rent control, you have a lack of new affordable housing being built,” Pabst said. “The other thing is, that can’t be good for you as you increase your salary and everything, and you want to move up. Well, what if there’s no housing being built? And who is going to want to build affordable housing in Long Beach if this passes?”


Larry Ahlswede, a former employee of the Apartment Association, California Southern Cities, pointed out that, while many mom and pop owners of apartments in Long Beach don’t often raise their rents, the rental ordinance being proposed would automatically raise tenants’ rents annually, adjusted to the consumer price index. “Each and every year the tenants will get a rent increase regardless of the condition of the economy,” he said.


According to the draft rent control ordinance submitted to the city attorney’s office, rental rates would be adjusted annually according to the CPI, but “in no event shall the annual general adjustment be less than 0% or more than 5%.” In other words, there will virtually always be an annual, controlled increase in rent if the ordinance makes it to the November ballot and passes. The only exception would be in the event that the consumer price index does not increase.


Phil Hawkins, CEO of the Pacific West Association of Realtors, pointed out that tenants may also be subject to an additional surcharge. According to the ordinance, in order to fund the board that would oversee the city’s rent control regulations, landlords would be charged a rental housing fee on an annual basis. The board would determine if the landlords can pass through some of that cost onto tenants. If so, the cost to tenants could be up to 50% of the total fee.


Hawkins pointed out that, in other cities with rent control such as Santa Monica, apartment owners have chosen to convert their units into for-sale condominiums to avoid rent control, resulting in a loss of housing supply for renters. “You’re going to see apartment units [converting] into condos. You’re not going to see building development going on in the city because people can’t get a return on their money,” he said. “So, overall, it hurts the people they’re trying to help when property values go down.”


While many arguments that have been made publicly against rent control consider impacts to property owners, these are some of the ways tenants would be negatively impacted, observed Mike Murchison, a consultant hired by local property owners to help fight the proposal. “It’s very hard to argue with somebody who’s not really familiar with the issue of rent control by just saying we’re against it. . . . However, the ancillary impact, the unintended consequences, the quality of life impacts of rent control passing, that’s what people need to understand,” he said.


From the business side of things, the impacts mainly boil down to a loss of control and a loss of return on investment, as described by Keith Kennedy, a Long Beach property owner. “How it will affect me personally and my own business would be that it will cost me more money and I will have a harder time covering my expenses if my income is capped at a certain level,” he said.


Pabst said she has sold hundreds of apartment buildings in Long Beach over the years, and that her clients never consider investing in areas with rent control. “None of my clients will buy in rent-controlled areas. So it creates a huge problem of selling real estate under these conditions,” she said.


“This is a bellwether city. . . . If this passes, it has a huge impact on other cities.  If it’s defeated, same thing,” Murchison said. He said that efforts would soon be underway to urge Long Beach residents not to sign the initiative to put rent control on the ballot, including mailers, social media campaigns and other strategies.


City Memo Says Ordinance Would Trigger An ‘Immediate Legal Challenge’

After the Long Beach City Council requested that city staff answer a series of questions about the proposed rent control ordinance and its impacts, Assistant City Manager Tom Modica and Deputy City Attorney Richard Anthony responded with a 28-page memo on April 19. Among the findings presented were that the proposed ordinance poses several conflicts with the City Charter, the municipal government’s governing document, which “would likely trigger an immediate legal challenge.”


According to the memo, the most important challenge would relate to the rent control board that the ordinance requires. “Most importantly, the establishment of the Rental Housing Board, and the breadth of powers granted to it, are inconsistent with (and likely violate) provisions of the City Charter. Lengthy and potentially costly legal actions would be necessary to address such inconsistencies,” the memo states.


The memo remained neutral on the issue of rent control and pointed out arguments for and against it as informative background for its recipients, the mayor and members of the council.