February 25, 2008
The Rent Control Battles of 2008 -- They're On!
Rafael Mandelman, Tommi Avicolli Mecca, Supervisor Chris Daly, Debra Walker, Senator Carole Migden, Ted Gullickson, Robert Haaland and a host of others rallied on Friday to preserve rent control.
This entry is solely about rent control in San Francisco and the state of California -- you've been warned. See you after the jump.
Well, we just had a busy weekend on the rent control front. First up is the recent news conference on the steps of City Hall for Senate Bill 1299, a proposed law that would maintain the stock of rent controlled apartments by requiring the replacement of demolished units. With the way things are now, an earthquake "could destroy rent control in San Francisco". Read the news and turn the pages.
But that proposed law won't matter much if Proposition 98 passes come June. It would eliminate rent control statewide. There's also a competing measure, Prop 99, that would save rent control statewide. It's all a little complicated. But even at this early date, forces are marshalling already. The coming fight will make the Battle of Helm's Deep seem like a garden party. What you need to remember is that this all goes down on June 3.
We've been feuding over rent control in San Francisco since the days of Harvey Milk and Dan White. (Of these two former San Francisco Supervisors, can you guess who was for rent control and who was against? Sure you can.) But regardless if you love it or hate it, you've got to admit residential rent control has a big impact on our lives.
So, whether you're a landlord or you're Andy Wright, who needs RC to continue living in a unit built out of crackers and peanut butter, see you on election day.
Choose wisely.
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Screw rent control, we need vacancy control laws. There have been various vacancy control propositions that have been put up for public vote, but each time they lost horribly. Why do SF voters support uncontrollable rent growth? How much profit is a landlord making out of a 1 bed room apartment that rents at $2000/mo in a 1904 Victorian with a roach problem? Seriously.
Why do housing activists always gather on steps?
Is there a plastic surgeon in the house?
I find myself in an amusing position. I am generally very progressive, but I think rent-control is absurd. While shopping to purchase houses, I was amused at 3 unit buildings in disrepair and all units empty - the story was always that the landlord stopped maintaining the property and did not re-rent units when they came empty, once the last tenant left the property went on the market. Of course, nobody wanted to buy it because despite the fact it was now a piece of crap, it was still highly priced due to the land/location. Thus units are empty.
However, given the realities in SF, it made more sense to rent rather than own, I own 2 properties outside SF and rent the place I live in. Well, now the landlord is selling and we'll have to move. And while I think the rent policies in SF are absurd, that will not result in me giving the owner a free pass and moving out before the house goes on the market. We'll make nice and be sure that the house shows well, but then force an OMI or negotiate a buyout with the seller (unless our landlord offers a similar buyout).
Caveat Emptor - if they did not want a problem with selling the house with a tenant, they should not have rented the house out. If you don't want that problem, don't buy property. The game may have stupid rules, but they are the rules and those that play them best, win. I took a gamble that we might be forced to move - in large part because of the nominal protections that do exist. If those protections did not exist, I would have bought in SF instead of Healdsburg.
Deadweight loss is the term for all the negative effects of RC. Nobody is saying rent control is not ineffecient. The question is how much.
http://en.wikipedia.org/wiki/Deadweight_loss
RC buyouts can be tricky. I understand that they happen all the time in a quasi-legal under the table fashion.
http://www.sanfranciscorealestatebrain.com/landlord-tenants-rights/buyouts
RC as it stands in SF isn't a price control. It's a requirement that each rental unit include an option to remain indefinitely with below-inflation rent increases. Options cost money, and the burden is born by short-term tenants.
Without rent control, tenants have no rights. And housing security is a luxury only limited to those who can afford to buy San Francisco real estate.
Those who attack rent control on the basis of Econ 101 are only attacking the symptoms. What's really going on is runaway gentrification spurred on by the real estate speculative market where people just want to make a big buck.
Want to help tenants become homeowners? Support rent control. That way, they might remotely hope to eventually buy property in this town. But I am SICK and tired of anti-progressive reactionaries blaming rent control when the real culprit is speculative real estate economics.
Nobody here is "attacking" RC. Pretty much everybody agrees that is has negative aspects.
Prop 13 and the mortgage interest deduction also have their negative aspects.
RC is a price control for individual renters. Agree that new tenants bear a large burden because of RC.
New tenants only carry the "large burden" because there is no vacancy control. If we had vacancy control, it wouldn't matter if you started renting 10 years ago vs. 10 months ago.
Vacancy de-control (which was mandated by state law under Costa-Hawkins) was intentionally designed so that new renters grow to resent rent control because long-term tenants pay lower rent. It was a classic, right-wing divide-and-conquer tactic to pit tenants against each other ... while landlords laugh all the way to the bank.
RC and the tenant mindset are dragging down the city to the lowest common denominator. I for one will be dancing in the streets when RC is wiped from the books.
It really pisses me off when people think that living in San Francisco is an entitlement. Tenants absolutely have the right to move out of the 7x7 whenever they damn well wish.
So what we technically have here [I think] is rent stabilization vs control.
Control = vacancy de-control so the rates can't go up when someone moves
Stabilization = you get a known quantity as a tenant when it comes to raises and eviction reasons. Market rate when someone vacates.
The rads want complete control [or elimination] depending on which side they are on.
The things you don't like about rent control are what allow it to be found constitutional in CA courts.
I get the point about stabilization, but i think different municipalities use these terms in different ways. Back in the days of high inflation, an RC tenant could get a 10% or so annual increase. Last time I checked, the increase was limited to less than one percent a year. Think the increase is calculated at 60% of inflation using some bay area-only inflation index.
Prop 13 certainly plays a role somewhere here in limiting the supply of homes for sale and/or units for rent ...
I really dislike the "us versus them" crap that keeps coming up in discussions about various flavors of public support for individuals ... Can anyone blame folks for wanting the government to spend money in a manner that benefits the most number of people rather than a handful?
Prop 13 has lots of ill effects.
End it, don't mend it.
I would absolutely support some version of Rent Control where "the government spends money" in a manner that benefits the most.
The problem here is that the money isn't coming from the government! The individual property owner is being forced to subsidize the difference between the RC rent and the market rent. This clearly is an unfair taking from the individual. The owner can't even keep up with inflation because rent increases are limited to 60% of inflation. This is a pure-and-pure recipe for either slum development or gentrification.
It's not something that keeps me up at night, but the effects of RC should be understood clearly. The game for tenants is to remain in the same rental unit for a long time. For that one needs a steady income, and a career or lifestyle that doesn't require moving much. Poor people seldom seem to meet these conditions.
For landlords, the economic game is to select tenants who will likely move in a few years, and who won't be disabled, elderly, or otherwise unevictable.
That said, there are positive effects, such as incentives for tenants to improve their neighborhoods without fear of immediate rent increases. Even if RC were abolished it might suit some landlords to grant, say, 5 or 10-year rent-stabilized leases to their non-mattress-fire-and-tomato-smearing tenants.
RC is certainly akin to a taking. The thing is that you have the right to sell or at least leave the rental racket. S.F. can be a tough place to do business - some people are cut out for it, some not.
Landlords always have the option of doing biz in the numerous counties with weak or nonexistent RC laws, such as Marin, San Mateo, Santa Clara, Contra Costa, and a good chunk of Alameda.
Or you can invest in a newer rental building with a young-ish occupancy permit. So many options...
I think paulhogarth is wrong, but we'd only see what would happen in a changed environ if it actually happened.
For example this statement...
"Want to help tenants become homeowners? Support rent control. That way, they might remotely hope to eventually buy property in this town."
By making this argument, I assume Paul thinks it is "good" for people to eventually own property. So let's work from that premise.
Perhaps Paul's argument here is that tenants save money because they are paying less rent due to rent control. My counter is that by the time they save enough money to make a down payment in SF, they are paying rent that is so below market that it makes absolutely no sense for them to buy. That certainly applied to my decision to buy an investment property in Sonoma instead of a place to live in in SF - I couldn't afford to move and give up my awesome rental deal.
The positive effect of this savings cannot possibly overcome the negative effect of reduced supply. And when you are talking about people trying to buy something on the low end of the market - that end of the market has its supply even more constrained by the difficulty in converting to condo from TIC. If the argument that eventually owning is "good", and the ability to convert creates more "lower" priced housing stock, then those conversions help renters become owners. Yet the argument goes that conversions screw the oppressed minions who have to rent - neglecting the fact that these sales are empowering current renters to become owners.
OT Rant: In practice most people in this town have already decided they "Will never be able to afford to buy something here" so they blow the savings from rent control on a new car anyway.
Renters get treated as second-class citizens because, presumably, they move around too much and aren't "invested in their communities" like homeowners. Then renters who have rent control and stay in one place for many years get trashed for not moving enough. Will the Goldilocks critics please tell us the magic number of years we have to live in our homes to be treated with respect?
There are somethings I don't miss about not living in California. Rent being one of them. Not only does DC have kick ass rent control: you can't charge more than 1st month, plus 1 month for deposit/move-in, it's pretty much impossible to evict someone (hearings and reviews take many, many months), rent increases are capped (even if the place is vacant, the landlord has to keep to the schedule). It's exactly like rent control used to be in the heyday in the 1960s and 1970s in other cities. It's pro-renter, not pro-landowner. And my rent? $723 a month for a one bedroom. (Which I will admit is about $500 lower than the average.)
There's no limit on the amount of rent you may pay in advance in CA. That was a decided advantage during the dotcom times, when people would offer to pay rent a year in advance.
It would be easier to live in DC than SF of course.
I guess they have a lot of murders in DC- landlords at work clearing the properties out for better profit?
I would just like to end rent control long enough for my upstairs neighbor with the super-cool 2 BR view and roof deck to be forced out, allowing me to move in. she's been there 30 years, and she seems perfectly healthy, so this appears to be my only option.
Then it can be reinstated. Thank you.
as a property owner, i think we should repeal prop 13 and rent control. they are equally dysfunctional handcuffs on an otherwise fair and equitable housing and taxation system. you want to live 1000% below the reasonable rent for a 1 bedroom, don't complain when you get diseases from the infestations. you paid for it. you want to never pay reasonable property taxes, don't complain when you get raped outside your door for lack of police protection. you paid for it.
Murphstahoe is a perfect example of the modern beneficiaries of rent control. Not "the poor" - an owner of multiple properties who is nonetheless taking advantage of SF's rules to extract a little bit of cash out of the buyer, probably a first time buyer at that.
This is who you are defending with your activism, SF tenants union.
Murphstahoe is a perfect example of the modern beneficiaries of rent control. Not "the poor" - an owner of multiple properties who is nonetheless taking advantage of SF's rules to extract a little bit of cash out of the buyer, probably a first time buyer at that.
This is who you are defending with your activism, SF tenants union.
Oh, one more thing. Sorry about the duplicates, SFist, please fix the internal server errors.
Rent control forces landlords to rent ABOVE market when they get a vacancy, to encourage turnover. If you want to rent a place for just a year or two, you have no choice but to rent it $500 above market, just so you don't get a "long term tenant."
Or just keep the unit vacant. This is why there are so many empty units in town.
New York, which has a tradition of strong rent control, reformed their system with means testing.
Tinkering with RC ususally results in making it harder to get rid of, as tales of millionaires living in pied-a-terres are countered with "oh, that doesn't happen anymore".
Back in the day:
http://query.nytimes.com/gst/fullpage.html?res=9D05E6DF1538F932A15754C0A963948260&sec=&spon=
I think it's something like a household income of over $200K will threaten your RC status in NYC these days.
"Murphstahoe is a perfect example of the modern beneficiaries of rent control. Not "the poor" - an owner of multiple properties who is nonetheless taking advantage of SF's rules to extract a little bit of cash out of the buyer, probably a first time buyer at that."
Heh! The owner of our house lives on Lake Geneva (the one in Switzerland, not Wisconsin) and is some sort of diplomat. They were going to retire to San Francisco so they bought our house 10 years ago and have been carrying it with renters since then. They changed their minds - they are going to retire to their little flat in the 7th Arrondisement of Paris instead so they can visit friends in Geneva when they want.
Saying I am "taking advantage" of SF rules is a bit of a stretch... it's not like I planned this and I don't want to move. I am renting because the rules as they stand favor renters. Just because you don't agree with the rules (I don't) doesn't mean the game is not played with those rules.
The seller has sent us a note asking us "How do you want to proceed". I have been advised that this is code for "How much do you want us to pay you to move out". It will be a 5 figure sum and honestly, I'd rather not move - life is too short.
http://www.sfweekly.com/2000-08-09/news/the-case-for-ending-rent-control/
But there is clear need for change. Thousands of existing apartments have been withdrawn from the market, construction of new rental housing is severely restricted, and rents continue to reach for the stars.
Not in spite of rent control, but -- as history has proven -- because of it.
It was 1979. Elvis was dead. Disco was king. A weird mixture of inflation and recession -- called stagflation -- was so wracking the U.S. economy that Ronald Reagan was able to base his presidential campaign on a promise to address the crisis through an untested set of policy initiatives known collectively as supply-side economics.
In the spring of that year, San Francisco landlord Angelo Sangiacomo abruptly raised the rent on 5,000 middle-class tenants. Renters across the city revolted, organizing themselves to put a strict rent control ordinance on the fall ballot. Then-Mayor Dianne Feinstein and the San Francisco Board of Supervisors pre-empted the tenants' initiative by quickly enacting rent controls that were more moderate than the ones headed for the ballot.
Feinstein's rent control law was intended to be temporary, lasting only as long as the hyperinflation that was then afflicting the economy. This initial version of rent control was intended to serve a definite group: "senior citizens, persons on fixed incomes and low and moderate income households." People, that is, who were having a hard time paying rent.
Nice work if you can get it, murphstahoe.
This is ample reason never to rent a place out, if you have to fork over a "five figure sum" just to get your own property back. No wonder there are so many vacant units in SF.
There are other ways to "get your property back" of course, without paying a five figure sum.
As suckafree mentions, both PROP 13 and rent control are the same thing - both homeowners and rent-control renters are being subsidized by others.
Without repealing PROP 13, it doesn't make sense to repeal rent control. Unfortunately, PROP 98 (to repeal rent control) is being pushed by the same people (howard jarvis group) who brought us PROP 13.
They are promoting PROP 98 in terms of limited imminent domain. The funny thing is, the only reason why California has so many imminent domain cases is because we are now dependent on Sales Tax rather than Property Taxes. PROP 13 has stolen $546 billion from the California budget.
Please do not advocate or vote for rent control repeal without also repealing PROP 13. They are both part of the same coin. PROP 13 is rent-control for homeowners.
You got it.
Vote for Prop 99 then. If it wins by a bigger percentage of the vote, then it will "save rent control" regardless of whether Prop 98 passes or not.