General Adjustment Tutorial for Owners and Managers ACTION APARTMENT ASSOCIATION

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1 General Adjustment Tutorial for Owners and Managers ACTION APARTMENT ASSOCIATION

2 Disclaimer This presentation is intended to provide assistance in calculating the Maximum Lawful Rent after the annual General Adjustment goes into effect. It is not intended as legal advice or as a substitute for reading the laws addressed.

3 Overview 1. The Maximum Lawful Rent 2. How to Calculate Annual Increases 3. Agency Contact Information

4 The Maximum Lawful Rent There are three amounts that make up the maximum lawful rent: 1. MAR (short for Maximum Allowable Rent ) 2. Pass-through of the registration fee 3. Allowable surcharges from the property tax bill MAR +Registration Fee +Surcharges =Maximum Lawful Rent

5 Calculation of the MAR differs based on when the tenancy started Pre-1/1/99 Tenancies The MAR is usually going to be based on the rent in effect on April 10, 1978, plus allowable increased approved by the board since that time Since 1/1/99 The MAR is usually going to be based on the initial rent at the start of the current tenancy plus allowable increased approved by the Board since that time.

6 Learning the Current MAR for Any Unit Each year, the Agency sends property owners a MAR Report stating the MAR according to the Agency s records; or Call, or come to the Rent Control office during business hours to request a MAR printout from our property database Use the Look up a Rent link on the Rent Control website to find the MAR in the Rent Control Database

7 The Annual General Adjustment Each year the Board announces an increase to the MAR, known as the General Adjustment (or GA). The GA is primarily based on 75% of the percentage change in the Consumer Price Index for the Los Angeles area for the 12 months ending in March. The annual GA increases the MAR for most controlled units, therefore increasing the maximum lawful rent for the units. The rest of this presentation focuses on increasing a tenant s rent due to the annual GA.

8 Requirements for Passing through Rent Increases to Tenants A rent may be increased based in the new MAR as of September 1 st each year only if: The tenancy started before September 1 of the previous year. All Rent Control registration fees and penalties for a property have been paid The subject unit is properly registered There are no uncorrected citations or notices of violation of health, safety, or housing laws for the property The Owner is in compliance with the Rent Control Law The owner gives proper written notice to the tenant

9 Sample MAR Report Unit ID Current MAR as of 6/16/17 MAR Report Market Rate Established 9/1/17 GA New MAR as of 9/1/17 SITE ADDRESS: 1234 SAMPLE ST. RENT CONTROL ID#: $1, /1/ % $1, $1, /5/ % $1, $1, % $1, $1, /1/2015 N/E $1, $ % $1, # # 7 Sec 8* Sec 8* 8 $2, /1/2017 N/E $2, $ % $ $2, /1/2007 $40.00 $2,020.00

10 Using the Rent Notice Form Provided by the Rent Control Agency

11 Sample MAR Report

12 On line 3, add lines 1 and 2 and round the sum to the nearest whole dollar amount. 1, ,020

13 Registration Fee Pass-through The Rent Control Board charges a Registration Fee for each rentcontrolled unit to the owners of rentcontrolled properties. Owners may pass a portion of the registration fee through to each tenant. For the 12 months starting September 1, 2017, the amount that may be passed through is $8.25 per month, as long as all registration fees and penalties have been paid no later than August 1, MAR +Registration Fee +Surcharges =Maximum Lawful Rent

14 Registration Fee Waivers A waiver of the registration fee can be authorized by the Board for units occupied be very-low income tenants who are ALSO: senior citizens, disabled, or are participating in a state or federal rent subsidy program (e.g., Section 8) A waiver of the registration fee can also be authorized by the Board for units occupied by owners of the property (at least 25% ownership interest) who occupy the unit as their principle place of residence. No registration fee is charged for units for which a fee waver was authorized; therefore, no registration fee pass-through may be charged to a tenant of such a unit.

15 If there is no registration fee waiver in effect, enter the registration fee pass-through on line

16 Calculating Allowable Surcharges Surcharges are based on charges that are included in the property tax bill A copy of the tax bill much be attached to the increase notice to the tenant in order to pass through these charges: Community College Bond, Unified Schools Bond, Stormwater Management User fee and Clean Beaches & Ocean Parcel Tax. MAR +Registration Fee +Surcharges =Maximum Lawful Rent

17 Sample Property Tax Bill Community College Bond, Unified Schools Bond, Stormwater Management User Fee, Clean Beaches & Ocean Parcel Tax, and School District Parcel Tax are abbreviated on the tax bill. The sample above lists them as they appear on the bill

18 School District Special Taxes (Measure R) Senior Owner Exemption Exemptions from this tax may be granted to property owners who meet the following qualifications: Must be 65 years old or older by June 30 th of the year in which they apply; and Must own and occupy their property as their primary residence Applications are available by contacting SMMUSD and asking to be put on the exemption application mailing list. Call SMMUSD at , ext

19 Clean Beaches and Ocean Parcel Tax Exception available for low-income tenants who qualify and apply. To apply, call Rent Control Agency Exception available for low-income owners who qualify and apply. To apply call Neal Shapiro of Santa Monica s Office of Sustainability and the Environment at (310) For this tax only, if the tax bill has been adjusted because a tenant has an exemption, when calculating the surcharge, divide the amount on the tax bill by the number of units that have NOT received an exemption, and do not pas this through the tenant with the exemption.

20 Follow the Numbers

21 Enter Amounts from the tax bill,

22 enter the number of units on the property,

23 calculate the surcharges, and put the results on lines 5a through 5e.

24 Put the total amount of the surcharges on line 5

25 Finally, add lines 3, 4 and 5, and put the total on line 6. This is the new maximum lawful rent.

26 Rent Control Office Office Address Santa Monica City Hall 1685 Main Street, Room 202 Santa Monica, CA Phone (310) Website

27 Information Analysts Information Analysts are available to answer question by phone, walk-in or . No appointment is necessary Hours available Monday-Thursday Walk-in: 8:00 am 4:30 pm By phone: 7:30 am 5:30 pm Fridays (closed every other Friday) Walk-in: 8:00 am 4:30 pm By phone: 8:00 am 5:00 pm

28 Download Forms from Website

29 Additional Information & Referrals The following are referrals to sections of the Rent Control Law in order to provide you with suggestions for research to learn more about he law. The actual text of the resolution and regulations listed below can be ounf online at the Rent Control Agency s website. Just go to the homepage and look under Rent Control Law & Regulations in the directory on the left side of the homepage. General Adjustment: Board Resolution Surcharges: Regulations 3105 to 3109 Registration Fees and Fee Waivers: Regulation 11200

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