Los Angeles officials have struck down a criticized rent freeze measure as they debate strategies to help businesses and residents recover after the most destructive fires in California history torched more than 11,000 buildings, leaving thousands displaced.
The proposed city-wide rent freeze died in a city council committee this week, but other efforts to protect tenants from price gouging and eviction are moving forward as officials craft policy to ease recovery.
The Los Angeles city council passed ordinances this week restricting certain evictions and some rent hikes for fire victims. But more criticized measures like a citywide eviction moratorium are still up for discussion.
Dozens of multifamily landlords — holding yellow signs and referring to themselves as housing providers —gathered at City Hall Wednesday to testify on various proposed legislation, with many claiming they would prefer the city give funds directly to residents in need rather than issue new rent laws.
Tenant advocacy groups in attendance argued that city bureaucracy takes too long to distribute such funds, leaving residents vulnerable to eviction and homelessness.
Mercurial rent collection rules are driving multifamily investors away from Los Angeles, local apartment investor Moses Kagan testified at the meeting.
"Private investors need to feel like they can get a reasonable return on their money," Kagan said. "There's no way they will feel like that in a circumstance where every time there’s a natural disaster there’s a citywide eviction moratorium."
Price gouging
The Los Angeles County Board of Supervisors directed its lawyers to draft a resolution to increase the civil penalty for price gouging during the fire emergency from $10,000 to $50,000 per violation. The board is expected to approve the higher penalty at its Feb. 11 meeting.
"Price gouging is illegal, yet enforcement remains a challenge," said County Supervisor Kathryn Barger at the board's meeting this week. "That's why LA County is taking bold actions."
The county has received 915 complaints of price gouging, with about 90% related to rental prices, said Rafael Carbajal, director of the county’s Department of Consumer and Business Affairs, or DCBA.
The board directed the DCBA to threaten litigation against corporate landlords using algorithmic rental price fixing software to charge tenants more than the allowable 10% increase from pre-fire rents.
The board gave the DCBA 60 days to file an ordinance to restrict such algorithms. The group will base its regulation on one in use in San Francisco, a law passed in October that's the first in the nation to prohibit the use of algorithmic devices to set rents or manage occupancy levels for residential units in the city.
State and Los Angeles officials have so far filed three charges against price gouging in the city.
California Attorney General Rob Bonta filed charges against two real estate agents for hiking rental costs on single-family homes in Los Angeles following the fires. One defendant offered a displaced family a rental price on a home in Glendale that exceeded the listing price by more than 50%, in excess of the 10% limit laid out in state law.
In the third case, Los Angeles City Attorney Hydee Feldstein Soto charged Blueground, a Delaware-based platform that pairs fully furnished homes with potential renters, for allegedly hiking rental rates on its 100 properties across Los Angeles by more than 10% and up to more than 50% from prices advertised prior to the start of the fires.
Violators face a maximum penalty of one-year imprisonment in county jail and/or a fine of up to $10,000.
Meanwhile, a group of 15 commercial real estate companies and organizations led by the California Apartment Association has formed the LA Wildfires CRE Pledge for Action to combat price gouging by educating peers about the rules governing rent hikes and the penalties for violations, while also working with third-party listing services to flag offenders and promote available space to evacuees.
Some multifamily landlords say they are being unfairly lumped in with luxury homeowners seeking to cash in on residents forced to evacuate multi-million-dollar homes in Pacific Palisades and Malibu.
The eviction dilemma
While it iced plans for a citywide rent freeze, the city's housing and homelessness committee approved a motion that would bar landlords from evicting renters affected by the wildfires, even for reasons including nonpayment. The prohibition would last one year.
The motion heads to the full City Council in the next couple of weeks.
Councilmembers kicked a previous version of the proposal, with a citywide rent freeze included, back to the committee amid concerns the protections were too broad.
In a Tuesday meeting, the city council passed an ordinance to bar landlords from evicting tenants for sheltering fire refugees. Many residential leases ban unauthorized people and pets.
"During this emergency, acts of kindness and compassion should not be punished," councilmember Traci Park said at the meeting.