At the last City Council meeting there was a line of people who got up to speak during the public comment period about issues of rising rents and the effect that it has on the citizens of Alameda. Unsurprisingly because there has been so much activity around the issue of the housing shortage the City recently sent out a Press Release touting its accomplishments on “strengthening” mediation tools. Of course most would agree that the “strengthening” was pretty minimal and does nothing to help folks in need right now which directly lead to the petition circulating asking for a moratorium.
But naturally Mayor Trish Spencer wanted to chance to say that she did something in the face of a petition that says that the “something” hasn’t stopped the bleeding. These days you know you’re in for some Trish Spencer “good news” when you get a Press Release from the City these days. We’ve had some pretty inane ones lately like this “save the date”. But I digress.
At that meeting Trish Spencer again opted to delay as opposed to move forward decisively. She suggested a “workshop” to discuss the issue in detail after the suggestion by Marilyn Ezzy-Ashcraft to agenda something immediately.
Of course, Trish Spencer’s tactic of delaying and saying that everything is okay is not anything new, particularly on the issue of the protection of renters. When she was running for Mayor this was her answer to the question last year around this time: “What if anything should the city do to address rising rents? Should the city regulate rents and if so, how?” which could be summed up as: meetings have been cancelled at the RRAC so clearly there’s not a problem.
Alameda has a Rent Review Advisory Committee that “reviews complaints of significant rental increases, providing a neutral forum for renters and residential property owners to present their views. It evaluates increases, determines whether they are equitable, and, if not, attempts to mediate a resolution acceptable to all parties … Regular meetings are generally held the first Monday of each month.” (See http://alamedaca.gov/city-hall/rent-review-advisory-committee)
“The Committee was formed by motion of the City Council in November 1979 upon the recommendation of the Ad Hoc Rent Evaluation Committee. The Ad Hoc Committee was formed in response to citizens’ complaints to the City Council regarding substantial rental increases. It is comprised of five volunteer members: two owners, two renters, and one homeowner … The Committee has had success in establishing communication between owner and renter, and in effecting compromises with regard to rent and maintenance. Through the voluntary cooperation of owners, the Committee has served as an effective alternative to rent control in the City of Alameda.” (See http://www.alamedahsg.org/hd_hsg_rrac.html)
A quick review of that site shows that the committee last met in July and meetings in August and September were cancelled. Thus, it appears that the complaints were resolved, and hearings weren’t required, which suggests the site’s contention that the committee has served as an effective alternative to rent control is accurate.
Another interesting observation is that there are only minutes for March and April of 2014 posted and audio of April and June posted. It’s unfortunate all minutes aren’t posted for the public’s review. Also, Renewed Hope (Alameda housing advocates) has a rent survey on its website that I’d encourage renters to complete. (See http://www.renewedhopehousing.org) [emphasis added]
Later when the topic came up at one of the first few City Council meetings (in January of this year) she was the only person to vote against collecting data in January to evaluate the larger problem. Tony “elections have consequences and so I just vote with the Mayor or abstain so I don’t offend her” Daysog, who loves data, decided to abstain. From the minutes:
Mayor Spencer inquired whether the data issue should be revisited at this point, to which Vice Mayor Matarrese responded in the affirmative; stated the next motion would be to ask staff to prepare a report that answers the questions posed in the September staff report, gathering the necessary data to support the answers.
…
Mayor Spencer stated Councilmember Daysog’s presentation already provides some information; other sources provide information, including a survey; comments can be submitted to Council and staff to support the work.
The City Manager clarified that the data selected will determine the policy decision; stated that he does not want staff to step into a policy choice; what Council chooses to collect is a policy decision.
Vice Mayor Matarrese stated it may be helpful to get an analysis of what Council should discuss; Council could make an informed decision about what data is needed if a public education of what the landscape would look like is provided.
The City Manager concurred; stated that is exactly what staff would like to do.
Mayor Spencer stated she wants to look forward; data collected would be based on the system that Council is trying to change; there needs to improvement with more focus on how to resolve cases moving forward.
Vice Mayor Matarrese stated the same end can be accomplished; Council still needs to know the landscape moving forward.
Councilmember Ezzy Ashcraft stated the four questions from September staff report are important and helps Council know the current state of the residential rental market so appropriate solutions can be instituted to address concerns; the key question is the state of the residential rental market in Alameda
Mayor Spencer stated there are next to no rentals available.
Councilmember Ezzy Ashcraft stated staff did a nice job of putting the report together succinctly; that she would like to add age as another category of consideration.
Mayor Spencer stated staff is already overburdened.
Vice Mayor Matarrese moved approval of directing staff to provide an analysis of the questions raised in the September City Council report and identify the potential costs of data gathering.
Councilmember Oddie seconded the motion, which carried by the following voice vote: Ayes: Councilmembers Ezzy Ashcraft, Matarrese and Oddie – 3. Noes: Mayor Spencer – 1. Abstentions: Councilmember Daysog – 1.
Mayor Spencer stated the reason she voted no because answers to questions have already been provided and she would like staff to be more focused on more productive issues.
Following Councilmember Oddie’s comment, Mayor Spencer continued to explain her no vote; stated the focus should be on moving forward; issues need to go to RRAC; she supports the RRAC and community amicably resolving rent increase issues; the first motion addressed what changes need to be made to the RRAC; staff was directed to review the Municipal Code.
Even when the majority of the City Council (Marilyn Ezzy-Ashcraft, Frank Matarrese and Jim Oddie) were looking to get more data in order to make a policy decision on rent related issues, Trish Spencer was only fixated on having the RRAC be the only solution to the problem:
Mayor Spencer stated she wants to look forward; data collected would be based on the system that Council is trying to change; there needs to improvement with more focus on how to resolve cases moving forward.
Despite the platitudes from Trish Spencer that may appear as though she is sympathetic, her past votes and her current action to schedule a “workshop” as opposed to simply asking the City Manager to place a moratorium on the agenda is telling about her commitment to these issues. At this point the decision is pretty straightforward given that the new “strengthening tools” wasn’t really intended to provide any substantive protections. The RRAC is still toothless and the participation in the result still voluntary. Right now the City Council has everything it needs to make a policy decision on this issue, but again with the punting. The only thing a workshop will do is delay, again, and provide an opportunity for sympathetic murmurs, but no action to be taken.
And the rent crisis is not just isolated to housing either, there are been several high profile lost leases of popular Alameda businesses. I’m not sure how the City Council intends on addressing that issue either.
With regard to how individual City Council people act on this issue, it’s best to judge them based on how they turn and not how they signal.
Blogging Bayport Alameda 
when I showed up last week the gallery was packed and at least half were there for this item. I missed what City Attorney may have said about whether it would be legal for council to declare a moratorium, but many speakers were asking council for a moratorium on rent increases and there were a number of impassioned testimonials. It was pretty impressive to see that many people mobilized and dragging their butts to City Hall to speak. It’s odd to me Spencer takes the stance she seems to be taking since she is supposed to be in opposition to big bad developers unlike Ed Lee in SF who carries their water. But the mayor isn’t known for consistency.
Comment by MI — September 22, 2015 @ 8:12 am
Alameda Merry Go Round had a good post this past Sunday: https://alamedamgr.wordpress.com/2015/09/20/why-wait-for-the-city-attorney/
Take a vote, you cowards! This has been a known issue for more than nine months. Alameda politicians (and this is a larger CA problem in general) want all the benefits of holding an elected position of power, but don’t want to actually have to do the difficult part of the job. This is the hard part of the job. A decision need to be made and you are going to piss off one group or the other (in this case renters or property owners/landlords).
Not everyone is going to like you and pat you on the back as you walk around town. Some people might even write mean things about you on the Internet! (CYBERBULLYING!!). Grow some skin, and while you are at it, a spine.
Some people observe this behavior and mistake it as a virtue. Whether its characterized as “getting input from the whole community and listening”, or the ultimate abdication of political responsibility and deference to mob rule: putting it to a direct vote. You hear this frequently about things like the Shoreline cycle track. “Why didn’t the people get to vote on this?”. Why don’t we take a vote on what kind of toilet paper is in the city restrooms? Let’s have a community workshop about what kind of shoelaces the Parks and Rec Department uses in their boots.
These politicians plaster the entire town (and state) with their signs and ridiculous flyers and are peacocking all over the place, but then when it comes down to it they don’t even want to do the work. And their constituents let them get away with it with some nonsense about “community involvement”. Unbelievable.
Comment by Brock — September 22, 2015 @ 10:25 am
For a candidate who opposed “the status quo” and said she would champion the cause of people not in the (pre-2014) power elite,
Mayor Spencer is doing an awfully good job of defending and supporting greedy (mostly out-of-town and/or corporate) ;and;peds who keep raising rents by 20-35 per cent per year–in successive years.
If I were a renter facing rent increases, had considered myself under-represented by the previous City Council and Mayor, and if I had voted for Spencer (I did not),I would want my money back…..
Comment by Jon Spangler — September 22, 2015 @ 4:31 pm
Nobody can tell who is actually supporting who UNTIL the Votes are in. It is easy to point fingers now. It was the previous CC who set this all up. Our City Attorney is unaware of the Law.
Lafayette and Santa Rosa both put Moratoriums before their CC and they failed. Richmond failed the first time around but passed the second time. Then the Apartment Owners (in Richmond) got Votes to put it on a Ballot by deception. I don’t usually agree with Brock but he his on target with this.
Comment by frank m — September 22, 2015 @ 5:30 pm
Jon Spangler your power Elitist Gilmore Gang raised the City Building Permit and Fees 200% percent which is about 10,000 percent raise times the CPI which most peoples wages and income are tied too.
We need to maintain your Elitist at the Fire Department who receive about 4000% times what normal people receive in pension contributions from employer and soon to go to 5000% .
Average in Private Sector is 1.24% and we pay 46%- 48% and going to 56%.
I don’t think they will be asking for their heavy donations back from Odie and his clonies.
This all impacts rental rates and homeowner costs and where the money is spent in the City…Pools, Parks, Streets, Kids Programs all take second fiddle and now almost No Fiddle..
Comment by Cobalt Black Keys Johnson — September 22, 2015 @ 8:12 pm
5. You talk about permit costs ad nauseam. Do you have an estimate of their share of landlords’ costs?
I’m not an expert on the rental sector (then again, you’re certainly not either) but when one thinks about the costs landlords face–mortgage, property taxes (held low by every old person’s favorite subsidy, Prop 13), general maintenance, construction costs–it’s hard to imagine they are a major component. Furthermore, rents at the moment seem to be driven much more by housing scarcity and demand than costs of existing landlords.
In simple terms, I think permit costs have little if any effect on rents right now. Can you _coherently_ argue to the contrary? And if not, why not give your control-C, control-V muscles a rest?
Comment by BC — September 23, 2015 @ 5:41 am
Prop 13 was designed to keep older people from getting Taxed out of their home. It was life saver for most Seniors who live here and would have been forced to leave and sell.
You can see how our building fees and permits have increased to the tune of 10,000% + in a 25 year. Our Transfer Tax is 2200% higher than 97% of California Cities.
If Labor Costs to build rose at same rate as building fees and permits a construction worker would make about 4 Mil a year.
If housing costs rose at same rate of building fees and permits , average house in Alameda would be about 30 Million.
Comment by Cobalt Black Keys Johnson — September 23, 2015 @ 9:53 am
#7. Are you going to answer BC’s question or not? Here let me make it easy for you. Please fill this out with your percentage estimates:
Over a ten year period what are a typical landlords costs of doing business:
Mortgage Payments: _______________%
Property Taxes: _______________%
Insurance: _______________%
Direct Maintenance and Construction Costs: ____________%
Fees and Permits: _______________% (Don’t get too excited here – deep breaths)
Utilities: ______________%
Other, please specify (______________): _______________%
Total should add up to 100%
You’ve made at least 50 comments about the costs of Permits and Fees. Now we are paying attention to you. Please answer this inquiry about your favorite subject.
Comment by Brock — September 23, 2015 @ 10:27 am
If you are Building House which is happening now..
How much are the fees and Permits ?
If you are doing Total Remodel to bring your house up to speed what are Fees and Permits?
How much are your Property Taxes and Transfer Taxes?
Tell me these costs don’t have huge effect on Rental and housing costs,
Comment by Cobalt Black Keys Johnson — September 23, 2015 @ 11:04 am
Cobalt – you have now posted at least 51 comments about the costs of Permits and Fees and how they have an effect on almost every issue in Alameda.
Why would “Building House which is happening now…” have any relevance to what we are talking about? Do you think we are dumb enough to believe that landlords rebuild their rentals every year?
BC has asked you a direct question in order to clarify this issue you are so passionate about, and you are blowing it off. Do you not understand the significance of the question or are you just an asshole?
Now you are asking questions back like “How much are the fees and Permits?” You are the one who is commenting incessantly about it! YOU TELL US!
What do my Property Taxes and Transfer Taxes (are landlords transferring their rentals every year) have to do with anything?
Since you don’t seem to be following, let me provide a numbered sequence of events for you:
1. You claim that cost of permits and fees are rising and that is contributing to rising rents.
2. BC has reasonably pointed out that if we assume that rents are proportional to landlord costs (not correct by the way, but let’s leave it), then they must be proportional to their total costs, not just the ‘Permits and Fees” subset.
3. BC and I have asked you to estimate the landlord total costs, over a 10 year period, of which Permits and Fees are only one component.
4. <—- (we are waiting for your reply here since by bringing this up over and over you have assumed the mantle of expert).
Comment by Brock — September 23, 2015 @ 11:33 am
This is simple. Lets says you won’t invest unless you can get a 6% return. Then you look for every cost of acquisition to produce 6%. For example if your permit fees were 1 million on a project then 60 thousand of the rents would amortize the building permit. If your water meters are 100 thousand, then 6 thousand would be necessary to amortize the water meters, and so on and so forth.
Comment by Ed Hirshberg — September 23, 2015 @ 11:52 am
You are Framing This in Your own Time Frame .
Lets Talk about the Present.
If you are Building House which is happening now..
How much are the fees and Permits Now ?
If you are doing Total Remodel to bring your house up to speed what are Fees and Permits Now?
How much are your Property Taxes and Transfer Taxes Now?
Tell me these costs don’t have huge effect on PRESENT Rental and housing costs,
Comment by Cobalt Black Keys Johnson — September 23, 2015 @ 11:52 am
Thanks Ed
Comment by Cobalt Black Keys Johnson — September 23, 2015 @ 11:54 am
Ed how much have City Fees and Permits increased in last 25 years?
Percentage would work.
How much has Labor Costs increased Last 25 Years?
Comment by Cobalt Black Keys Johnson — September 23, 2015 @ 11:58 am
I noted several weeks back that permits used to cost us about 1/2 of 1%. The last permit was 20% of construction cost. I am including all costs from the city, i.e. planning commission, horticultural expert, tree cutting permits, whatever is necessary to walk out with the building permit. But not architectural, engineering, or other design professionals.
Comment by Ed Hirshberg — September 23, 2015 @ 12:17 pm
A: USING COBALT’S TIME FRAME
OK lets use Your Own Time Frame.
Let’s say I’m building a house or multi unit to rent. I’m building it this year. Please give me rough estimates of the following for this year.
Mortgage Payments: _______________%
Property Taxes: _______________%
Insurance: _______________%
Direct Maintenance and Construction Costs: ____________%
Fees and Permits: _______________% (Don’t get too excited here – deep breaths)
Utilities: ______________%
Other, please specify (______________): _______________%
Now for shits and giggles, what are the rough estimates of these costs for Year 2? Assuming the construction is completed in Year 1.
What is the expected useful life of a residential building? I’m starting to think that you believe that this is one year. Do you?
Comment by Brock — September 23, 2015 @ 12:19 pm
#11. and #15.
Ok let’s try this tack.
LETS ASSUME:
Ed. Let’s say you evaluate a project right now in 2015. It looks like when you estimate all the costs of building a multi unit apartment building that you will be able to recover 6% of the costs. So you start building on 1/1/2016.
Let’s say 1 and 2 bedrooms apartments are renting for $2,500 to $3,500 per month around town right now, in 2015. Especially for nice new units like you are going to build.
Now around 1/1/2017 you are complete with construction and want to start getting that sweet, sweet rental income. But OH SHIT!! Look at the February 1st, 2017 Wall Street Journal!! There is a Major Recession going on!!
Now in early 2017, 1 and 2-bedrooms are only going for $1,250, to $1,750 per month around town. Even nice new ones!!
QUESTION:
What do you rent your units for? Or do you tear down your building and declare bankruptcy?
In this situation, do your costs as a new landlord have anything to do with what the rental price for the units in your building?
Comment by Brock — September 23, 2015 @ 12:27 pm
Thanks for your input Ed and for clearing up what I have been trying to point out.
Trickle down costs and how it effects everyone from Renter, Homeowner, Landlord, and Real Estate investor.
Lets Use Building 2 units for 500,000 each as a Duplex for a Total of 1,000,000 as Example
Cost to build 2 Units
Cost of Land 400,000
Cost of Labor 200,000
Cost of Materials 200,000
*Cost of Fees and Permits 200,000
——————————————————-
Total Costs 1,000,000
Transfer Tax 11,000
_______________________________________
Total Costs 1,011,000
Property Tax 1.20% 12,000 Per Yr
Insurance 3,000 Per Yr
Maintenace and Up keep 5,000 Per Yr
Total Yearly 20,000 Per Yr
6% Return on 1,011,000 60,660
Total Yearly Costs + 6% Return 80,660
Needed for Rent
Divided By 12 Months is 6721.66
Divided By 2 Units 3360.00
Per Month For Rent
___________________________________________
Now with Fees and Permits raising as same rates as Labor, Land, Materials.
Cost to build 2 Units
Cost of Land 400,000
Cost of Labor 200,000
Cost of Materials 200,000
+Cost of Fees and Permits 10,000
——————————————————-
Total Costs 810,000
Transfer Tax 445
Like 95% of Cities in CA
_______________________________________
Total Costs 810,445
Property Tax 1.20% 9,725 Per Yr
Insurance 3,000 Per Yr
Maintenace and Up keep 5,000 Per Yr
Total Yearly 17,725 Per Yr
6% Return on 810,445 48,626 Per Yr
Total Yearly Costs + 6% Return 66,351 Per Year
Needed for Rent
Divided By 12 Months is 5,529 Per Mo
Divided By 2 Units 2764 per mo
Per Month For Rent
Costs per unit With Huge Fees 3360
Costs Per Unit 2764
So 600 a Month per Renter Difference
Or 17 -20%
I would say that is substantial.
Comment by Cobalt Black Keys Johnson — September 23, 2015 @ 3:59 pm
Thank you Cobalt! And here I thought you weren’t serious. Now we can have an intelligent conversation
A couple of things:
– Ed is saying that his last “permit” was 20% of construction costs. So your $200,000 figure is $40,000 too high. Should be $160,000.
– I would love to see the rundown of this 20% permit and fee figure. It really does sound like the City is hosing this particular project. The mention of horticultural experts and tree cutting permits make me wonder what kind of special circumstances exist here. I’m looking at the City Fee schedule on the website and I’m generously estimating $40,000 to $50,000.
If the City is finding ways to inflate these fees over $100,000 that is indeed a problem.
Comment by Brock — September 23, 2015 @ 5:43 pm
Ed said in ran 20% of Total Cost…….If Total Cost 1 Mil I would say 20% is 200K…….
The cost on remodel 25 years ago ran under 1/2 of a percent……Ed said his ran between .5 and 1% .
Whatever the number it has substantial impact on Renters, Landlords, Homeowners and Real estate investors and the Risk is very high if markets softens.
Renters are barring 500 month property tax and 600 a month in Fees and Permit costs in their rental in each duplex under this scenario.
Add in any new taxes and this will just be passed on to Renters.
Comment by Cobalt Black Keys Johnson — September 23, 2015 @ 7:34 pm
You can’t pay Employees 4000% times what normal people receive in pension contributions from employer and soon to go to 5000% , and Average in Private Sector is 1.24% and we pay 46%- 48% and going to 56%.
Without Impacting Everyone in the City and their Cost to Live Here.
Comment by Cobalt Black Keys Johnson — September 23, 2015 @ 7:50 pm
Brock, regarding what do you do if rents fall. In many cases the property will go back to the lender, and borrower will hope that he did not personally guarantee the loan. But non-recourse loans can be difficult to get. If the loan is recourse, then the investor might also lose his own house in addition to the investment. It is not uncommon for first investors in a property to fail. The first two owners of the empire state building in New York went bankrupt. Perhaps you remember in the last recession that whole subdivisions were mowed down and returned to vacant land.
Comment by Ed Hirshberg — September 24, 2015 @ 12:40 pm