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A $1,800 apartment became a $3,300 corporate rental. Is that bad for housing?

Andrew Khouri, Los Angeles Times on

Published in Home and Consumer News

"This is just another (way) to get around rent control and maximize their profits," Gross said. "It puts a bull's-eye on the back of every rent-controlled tenant."

Monempour said he turned to corporate stays as a way to make more money, but he isn't forcing or buying tenants out to renovate units. He said he's converting units as people decide to move on their own. Monempour said he actually worried about increased vacancies from shorter stays, but Diamond assured him occupancy would remain very high.

Blueground's Southern California units are located in newer non-rent-controlled complexes as well as older, controlled buildings. The company leases the units directly from landlords for at least one year, furnishes them, and rents them for periods of at least a month. Average stays are for six months.

Last week, a furnished Blueground one-bedroom in a Palms rent-controlled complex was advertised at $3,740 a month for a one- to two-month stay, or $3,129 a month should a tenant sign a lease for more than a year. In comparison, the landlord was advertising unfurnished one-bedrooms of the same size in the complex for $2,240 to $2,285 if tenants sign a year lease.

Blueground said it waits for tenants to move out on their own before converting units and won't work with landlords who buy out tenants. Tin, the local general manager, said as the rental market softened landlords have increasingly turned toward the start-up to fill vacancies. It isn't harming affordability, he contends, in part because it isn't immune to market conditions. In some neighborhoods where supply has swelled, Tin said Blueground has been forced to rent units below the price it paid the landlord.

The controversy surrounding such companies reflects concerns over the region's brutal affordability crisis. Last week, officials reported the number of homeless people in L.A. County jumped 12% over the last year, with the largest increase seen on the Westside.

Santa Monica City Councilmember Kevin McKeown cited those figures as a reason to crack down on corporate rentals, which he described as "prevalent and growing quickly." Besides the 12-month minimum lease, the city will discuss this month mandating that apartment leases be made only to "natural persons," excluding corporations.

"We can't afford to lose any housing options at all," McKeown told The Times. He said he would support some form of corporate housing near the city's hospitals, because people often come to town to be with relatives seeking medical treatment.

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In West Hollywood, a judge recently denied the city's request for a preliminary injunction to stop Korman Communities from renting units as extended-stay apartments at its complex on Sunset Boulevard. But the city is still weighing an ordinance that would impose some form of annual-lease requirement.

"The city's position is that everyone who needs a place to stay for less than a year should go to a hotel," said Sean Walsh, a spokesman for Korman. "Telling someone who needs a home for six weeks to pay hotel rates or take out an annual lease -- that's what hurts affordability."

In Los Angeles, the issue so far has drawn less attention from officials.

Meanwhile, StayTony is expanding. Diamond said he plans to eventually take all 30 units at the property near Hollywood and Highland, and he is talking with Monempour about working on one of his buildings in Venice.

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