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Mr. McDonough. I think it is significant for the committee to know that the public reaction to decontrol of rents in Los Angeles was confirmed pretty much in the public interest by a recent election in the city of Los Angeles, where nine of the members of the council that voted for decontrol were reelected.
Mr. O'DONOVAN. That is right.
Mr. McDonough. One of them was unopposed for reelection, and two other councilmen that voted for decontrol were defeated in the final election, just a week ago Tuesday.
Mr. O'DONOVAN. That is correct.
Mr. McDonough. So that the action the city council took, which Tighe Woods resisted through all the courts of the land that he could resort to, was in the public interest and the public responded to it and reelected the Los Angeles city councilmen who voted for decontrol.
Mr. O'DONOVAN. They showed it by their vote. Mr. McDonough. That is rather pertinent, because, if the people of Los Angeles didn't agree with the city council, they would have defeated those who voted for decontrol.
Mr. O'DONOVAN. As a matter of fact, a great hue and cry went up by the representatives of the tenants' council that they were going to recall certain of the councilmen and that feel flat on its face. The public just could not be aroused; they weren't aroused; there was no reason to be aroused.
Mr. McDonough. Yes. That is all, Mr. Chairman.
The CHAIRMAN. You may stand aside, Mr. O'Donovan. We are glad to have your views and they will be considered by the committee.
Mr. O'DONOVAN. Thank you very much, sir.
Mr. HALLAHAN. Mr. G. G. Bauman, representing the Small Property Owners League of Los Angeles.
The CHAIRMAN. Identify yourself and proceed.
STATEMENT OF G. G. BAUMAN, THE SMALL PROPERTY OWNERS
Mr. BAUMAN. My name is G. G. Bauman. I am the chairman of the Coordinating Committee of the Small Property Owners League in Los Angeles.
At the outset I want to express the appreciation of our group for being permitted to appear before this committee.
On July 28, 1950, the city council of Los Angeles, Calif., after a public hearing, adopted a resolution finding that there no longer existed such a shortage in rental housing accommodations as to require rent control in this city. In so doing it became the first and only one of the very large metropolitan areas in the United States to take this step. Why?
When the city council voted for decontrol the Housing Expediter resorted to every trick, device, and subterfuge which he and his cohorts could concoct, including collusive law suits 3,000 miles away, to block this step. However, the indignation of an aroused and shocked citizenry wouldn't take the Expediter's “no” and pressed the matter until on December 20, 1950, decontrol of Los Angeles was attained. Why did the citizenry of this particular community rise up to fight the rent czar?
The answer to this and the preceding question, we believe, will be found in the fact that there are thousands of small property owners, small landlords, in this community-perhaps more than in any other area in the country. Their experience under rent control brought forth a rebirth of the spirit of the "Boston Tea Party." They had had enough. But let us look at the small property owner under rent control in Los Angeles.
For the most part the small landlord could not afford to employ representatives to intercede for him at the rent office. Consequently, he went himself to the area rent office whenever he sought adjustment or general information in regard to his property. Instead of being serviced by an unbiased neutral agency endeavoring to equitably administer the laws, the property owner found that he was subjected to insults, discourtesy and for the most part treated as though he were on probation under the surveillance of a vindictive conqueror.
Illustrative of such conduct is the case of Mr. and Mrs. Jensen who purchased a home on Logan Street in Los Angeles. Mrs. Jensen went to the local rent office to request a form with which to apply for a certificate to get possession of the house from tenants then in possession. She was curtly told by the man at the counter, “Who the devil do you think you are that you have a right to buy a house and put someone out to live in it yourself? You cannot have a form." She got a form all right, but through an attorney and not at the rent office.
There was one set of rules for tenants, another for property owners. Where a landlord failed to file a registration statement at the time of rental, regardless of the circumstances, the rent office reduced the rent retroactively to the date of such first rental. No such retroactivity, however, could be obtained on behalf of the landlord in cases where he had improved his property or converted it from unfurnished to furnished but had inadvertently delayed in requesting an adjustment. In such case if a complaint for overcharge was made covering the time prior to his application for adjustment no consideration could be given to the fact that improvements had been made or that the place was now finished. He simply paid without recourse.
The unalterable rule of the area rent office was to reduce the rental rate for which units were first rented after the maximum rent date. This rule was applied arbitrarily and without regard to the rental value of the premises or of comparable accommodations in the area.
A typical application of this rule is found in the case of a widow who, after her husband passed away in 1949 rented her six-room home on Mayberry Street in Los Angeles for $60 per month and went to live with her relatives. Her rent was reduced by the rent office to $40 per month, although across the street from this house a converted one-car garage with a cement floor and containing a portable stall shower rented for $90 a month.
The compliance section of the Los Angeles rent office subjected the small property owner to threats, intimidation, and verbal abuse in their attempt to extract or extort penalties where no penalties were due. This section seemed to take particular delight in frightening and abusing women property owners.
The personnel in this section cared little about equities in the matters before them. Their theme was “pay triple” or pay double” (in cases of alleged overcharges) or we will put you in jail, take your property and assess attorney fees against you.
Typical of the conduct of this section is the case of Vera Griffin who when she appeared before a compliance negotiator was haughtily told that she must pay $3,000 immediately, that he didn't care what the facts were, that if she didn't her property would be taken from her, she would be dragged through court and assessed even more than that plus attorney fees.
She went to court. The court found—as she had admitted that there was technically an overcharge but that the equities were all in her favor and against the Government, that the overcharge was $300, not $3,000, that no penalties or attorney fees were allowable.
Applications for certificates to secure possession of property were denied at the whim of the rent officials and for the most part without reason or justification. A simple letter from a tenant objecting to an application for a certificate or an adjustment in rent often resulted in its denial without further consideration.
In 1947 (to April 1949) when Congress placed the determination of eviction matters in the hands of the local courts, the rent office still endeavored to maintain its iron grasp over the control of property. Its rent attorneys frequented the municipal courts and wherever the opportunity presented itself, sought to influence the courts against the property owners in eviction matters, speaking at their own rqeuest as a so-called “friend of the court."
But this was only part of the picture. Where the rent office felt that in some particular case a landlord might prevail (or the tenant asked their help) or that a decision in favor of the property owner might set a precedent unfavorable to their slanted administration of the law, they enjoined the landlord from proceeding with his case in the State court by a United States district court injunction.
This was done despite the fact that the tonant was represented by independent counsel, that the case was at issue before the municipal court and that every defense which could be raised was raised in such action.
When this happened the small property owner threw up his hands. He was not financially able to fight the Federal Government through a delayed district court case merely to decide whether he be allowed to proceed with an eviction suit already pending in the State court. Thus, the rent office succeeded in perpetuating the tenant in occupancy and denying to the property owner access to his own local courts.
The rent office consistently pursued a policy of setting renter against property owner where no cause or reason for friction previously existed. As a result hundreds of property owners locked up their units when a vacancy occurred rather than endure the abuses which they had experienced under the stimulation and sanction of the rent officials.
A typical illustration of the practice of the rent office of stimulating strife and friction may be found in affidavits of tenants James R. Moves, Ruby Keefer, and Louis E. Surrett on file in the case of Woods v. Wheeler (No. 7856 W, U. S. District Court at Los Angeles).
The affidavits of these tenants set forth that without invitation they were contacted by investigators of the rent office who by intimidation and coercion endeavored to secure statements from them that they were dissatisfied with their housing and that they had been overcharged. Some were insulted when they refused to sign previously prepared statements handed them by these investigators. These
affidavits set out that these gestapo men from the rent office held “cell” meetings among tenants on the landlord's premises to stir up trouble and complaints and one meeting was presided over by an armed representative of the rent office.
When the 1949 amendments to the Rent Control Act recontrolled properties, many small property owners who had gone to great expense to modernize and improve their properties which had been previously decontrolled, lost such property as a result of the confiscatory coiling reimposed by the rent office.
The fair net operating return formula provided in the rent law was emasculated and circumvented by the rent office. To illustrate this is the case of Mr. Robert Pabst who after refurnishing, redecorating, and reequipping some units on Coronado Terrace in Los Angeles for rent to nurses at the nearby hospital at the rate of $8 per week, had the rate cut to $5 and $5.30 per week by the rent office.
This was done despite the fact that his actual operating cost-as admitted by the rent office—was $6.25 without allowance for depreciation. This liquidated Mr. Pabst as a landlord
Owners of larger properties found that from time to time by paying substantial sums of money to individuals who claimed to have influence and knew where to spread the money at the local office, got desired adjustments. The small property owner was aware of this but aside from his moral abhorrence of the practice, he couldn't afford to buy relief.
Significant to the small property owner was the fact that on the executive council of the local advisory board in Los Angeles there was not one truly property owner representative.
It contained a rigged and biased group, apparently ever ready to do the Expediter's bidding.
The small property owner found that rent control meant confiscation, that it was in fact property control; that under it he was denied freedom of contract; that he was required to subsidize persons often in better financial condition than he; that it was arbitrarily and vindictively administered; and that his efforts to secure adjustments and equity were met with abuse, slander, and rejection. This was the plight of the small property owner under rent control in Los Angeles.
Five months after decontrol finds Los Angeles with thousands of repainted, refurnished, clean, moderately priced housing units for rent. Competition has brought rents down. Many rents are below that which existed under rent control. Hundreds of units are offered for rents below $50 per month. It is now necessary to fix up and to advertise to even rent at all.
Among the small landlords, these vacancies are not reflected in the surveys of professional property owner associations. The greater part of these small landlords cannot afford the cost of membership in such organizations and thus there is no accurate count of their vacancies.
One barometer to vacancies, however, can be found in classified ads of housing for rent. On May 6, 1951, there was in excess of 66 percent more ads of housing for rent in local newspapers than there was 1 year previously under rent control.
In the matter of evictions, the records of the municipal court disclose approximately the same number of eviction suits as were filed i year previously when rentals were not only under control but certificates were required in most cases.
Thousands of dollars have been spent for furnishings and improvements. Craftsmen, tenants, merchants, and the community at large has benefited from the elimination of this unnecessary "police state agency.”
The small property owner has his property back and shudders at the thought that he may again be subject to the tyranny and confiscation which he endured under rent control.
The CHAIRMAN. When was Los Angeles decontrolled?
The CHAIRMAN. These instances that you mentioned occurred sometime ago?
Mr. BAUMAN. They occurred prior to that; yes, sir.
Mr. McDonouGH. Mr. Chairman, the decontrol in Los Angeles occurred 6 months after the action taken by the city council, which in most cases throughout the United States was immediately effective, but in this instance, which occurred in July, the Expediter carried it through the courts which deferred the action until the courts finally ruled in favor of the city council in December.
Mr. GAMBLE. Are you suggesting that it was decontrolled because the Expediter could do nothing else to hold up decontrol?
Mr. McDoNOUGH. He was ordered to decontrol by the courts.
Mr. GAMBLE. Where do these people come from? Are they local people, in California? Or are they imported?
Mr. BAUMAN. Some of them are imported, sir. They come from Washington.
Mr. McDonough. Well the rent-control director came from Seattle.
Mr. TALLE. What is the situation in Manhattan Beach? Is it about the same as elsewhere throughout the city?
Mr. BAUMAN. It is generally the same throughout, sir. I don't have any independent knowledge of the conditions in that particular part of Los Angeles, but generally they are the same throughout the city.
Mr. Talle. Have you had any complaint about the Veterans' Administration, with reference to making loans, on the part of veterans who want to buy property in Los Angeles?
Mr. BAUMAN. No; I have never been connected with that phase of it.
We had 450,000 single family units constructed in Los Angeles VJ-day, in Los Angeles County.
And there is a $200 million housing project just outside of Los Angeles—private housing-Lakewood Village. There are plenty of homes there if people want to buy them and pay $45 a month, or $47 a month.
Veterans in most instances have been able to secure those homes without any down payment, and if they want a three-bedroom house,