Blogging Bayport Alameda

October 19, 2015

Making love out of nothing at all

Filed under: Alameda, City Council — Lauren Do @ 6:09 am

Look, you have to give Tony Daysog points for trying.  In the world of policy making, Tony Daysog would get points for simply writing his name on the test. As to substance: he fails.  Hard.

Tony Daysog decided to be the first City Councilmember to put together his “plan” to help kinda sorta solve the rental housing crisis in Alameda.  At the least he recognized (1) there is a problem and (2) that it needs to be addressed.  The problem is, his plan does very little to help people in crisis now.  Also, it tips Tony Daysog’s hand as to how far he’s willing to go which is — spoiler alert — not that far.

Let’s break this down.

Here’s his first “action”:

Action 1. 45-day urgency moratorium on all rent increases of more than 10%

Sounds good on its face eh?  Says the magic words “45-day moratorium” that the Alameda Renters Coalition has been pushing, but then caps the moratorium for only units that receive 10% or more rent increases.  Given the the larger Apartment Owners advocacy group has already said that 10% or more rent increases are not reasonable the 10% threshold is not meaningful for people receiving 9.99% increases or have received annual 9.99% increases.

It feels like Tony Daysog is missing the whole point of the idea of a moratorium which is to halt excessive rent increases while putting into place reasonable efforts to address the rental housing crisis.  It’s not a solution in itself.  And it goes against one of Tony Daysog’s guiding principles which is to “eliminate complexity” and create “clean” legislation.  The cleanest — as he points out himself — is to have a one sized fits all 45-day moratorium.  But this 10% threshold simply shows that Tony Daysog believes that the 45-day moratorium is some bone to throw to Alameda renters as opposed to being a pause to put into place definitive solutions.

Tony Daysog’s next action:

Relocation Assistance Ordinance (I) To Combat Mass Eviction (“Harbor Isle Relocation Ordinance”)

Again with the two parter the first part “relocation assistance” is designed to delight Alameda renters, the second part is to prevent the proposed legislation from actually being useful “combat mass eviction.”  Meaning that the relocation assistance isn’t triggered unless the renter is part of a large complex where everyone is booted at once.  He uses the example of Harbor Island which (400 units) and it’s unclear what the number of units trigger the “mass eviction” relocation assistance because Tony Daysog’s normally wordy explanations are silent on the details of this.

And, of course, this goes against Tony Daysog’s guiding principle to “eliminate complexity” and be “clean.”  He uses the City of Glendale as inspiration for this ordinance, but Glendale’s is not triggered by a mass eviction.  So again, Tony Daysog seeking to put something in place that will be useless for the vast majority of renters.

Tony Daysog’s next action:

Relocation Assistance Ordinance (II) to Combat High Rent Increases That Serve As De Facto Eviction Notices

This one has similar problems that exist in his first point, that somehow 10% rent increases annually are considered reasonable.    Essentially he’s saying that annual increases of 9.99% are acceptable.  The policy that remains to be determined is why does Tony Daysog believe that 10% rent increases every year is an acceptable policy position for the Alameda City Council to take?  The only organizations he has quoted that wave the 10% is a-okay amount are from housing providers and not from tenant advocate groups:

Other thoughts: some might ask why is 10% or more the standard by which rent increases are or are not excessive? This is so for several reasons. By state law, 10% is the threshold at or above which landlords are required to provide 60-day notice. Below that amount, landlord can increase rents with 30-day advance notice. So, 10% is a recognized trigger for heightened attention. In addition, the California Apartment Association has identified 10% as a key threshold: rent increases above 10% are unreasonable ( http://bit.ly/1MKH5D1). Anecdotally, I have heard some locally-based landlords view rental increases of anywhere between 5% to 8% as reasonable. To be sure, as this is a draft, the 10% is a starting-point for discussion but, to the extent that it is used at all by key stakeholders, it comes with some semblance of legitimacy.

For someone who claims to be the “data guy” one would expect him to get more data than just from the California Apartment Association and from local landlords.  If “legitimacy” equals “not pissing off moneyed landlords to help fund my run for City Council or other political office” then yes, I suppose using data from just the CAA and local landlords can be considered a “semblance of legitimacy.”

And finally:

Just Cause Eviction Ordinance

Draft Just Cause Ordinance modeled on City of Glendale’s ordinance, modifying where appropriate to fit the circumstances of the City of Alameda, and modifying where appropriate so as to align the Glendale ordinance with terms in Actions 2 and 3

Again sounds good on its face, “Just Cause Eviction Ordinance” but it’s Tony Daysog’s fine print that neuters the ordinance to strip it of its efficacy.  Without the relocation assistance the only penalties for no cause evictions are FINES per the Glendale ordinance and pretty small potato fines $250 and $500.

The TL;dr wrap up of Tony Daysog’s proposals: he does nothing to help renters and does nothing to hinder landlords if they’re willing to game around with the amount of rent increases per year levied on renters.  But, the proposals are dressed up in such a way that Tony Daysog can say that he passed a “Just Cause Eviction ordinance” or that there is a proviso for Tenant Relocation.  However if no one actually qualifies for the protection does it really protect any tenant?

Tony Daysog is attempting to earn the gratitude of both renters and landlords alike, but in this case where the scales are so out of balance there is no way to make both groups happy and it’s clear based on these proposals where Tony Daysog’s real loyalties lie.

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28 Comments

  1. What’s driving the housing crisis is the good economy and jobs. It would be nice to see some recognition from Tony that we need more housing – not less housing in Alameda in light of the housing crisis.

    To enact moratoriums and caps on rent increases without a commitment to build more housing, places all the burden of the housing crisis on current housing providers.

    Comment by Karen Bey — October 19, 2015 @ 7:08 am

  2. There is no mention or discussion in his plan that addresses the reason for the housing crisis, nor does he make a committment to make sure that Alameda does its part to build it’s share of housing in solving the regional housing crisis.

    Comment by Karen Bey — October 19, 2015 @ 7:24 am

  3. I got this email from him this weekend and after reading, I felt insulted by him and embarrassed for him. I presumed that he thinks “renters” have no critical thinking skills and would be impressed by the big words. This is a crisis now and he tried to pretend that he was doing something while protecting the moneyed interests.
    real man of the people – as long as the people are not renters. A lot of people here in Alameda may not be talking right now but they are renters and they do vote and they have long memories.
    As least, a whole lot of people know where he stands now.

    Comment by librarycat — October 19, 2015 @ 7:24 am

  4. In his proposal he has left a lot to be fleshed out by the City Attorney – nothing like passing on the heavy lifting. His relocation assistance clause would be great if the trigger was changed from mass eviction to anyone evicted, where the rent on the unit is then raised by more than 10% (i.e. the eviction being done so that rent can be increased),and/ or relocation assistance being required instead of the fine for a no cause eviction.

    Comment by notadave — October 19, 2015 @ 8:57 am

  5. These are **all** very good points. Please let me know any additional thoughts. Will modify accordingly: (#4: there are **two** types of relocation assistance: one, for instances [like Harbor Isle 2004] where the landlord isn’t seeking rent increases at all — just wants everyone out of the building. The second and separate relocation assistance is meant to apply to instances where individuals receive excessive rent increases, and for them, some relocation assistance would come due. Another person read the “relocation assistance” as you did – so I’ll have to modify the wording accordingly). thanks.

    Comment by tony daysog — October 19, 2015 @ 9:37 am

  6. so what did you expect??, he’s a “Politician”.

    Comment by John P. — October 19, 2015 @ 9:39 am

  7. I am extremely disappointed in Tony Daysog’s proposal, as it is laid out above. It is far too little, too late, inadequate, and reads like it was written by the same landlords who refused to negotiate or compromise *at all* with renters during the community conversation process led by Jeff Cambra last year. Suggestions: 5% instead of 10%, a 6-month (180-day) moratorium on rent increases above 5%, relocation assistance across the board, and fines equivalent to 6-12 months’ worth of the rent increases proposed instead of the paltry $250-$500 he suggests.

    In other words, Tony–get serious. Recognize just how serious the rental housing crisis in Alameda is for HALF of your constituents,
    our household of two regular voters included.

    Comment by Jon Spangler — October 19, 2015 @ 12:02 pm

  8. Jon Spangler is on the right track.

    Comment by Angela Pallatto Hockabout — October 19, 2015 @ 12:24 pm

  9. #7: I hear you, Jon. Just to be sure: the relocation assistance I have in mind thus far is $1,000 plus two months of market rate rent, so if market rate for illustrative purposes is $2,000, then the total relocation would be $5,000. Whatever relocation assistance is written in the Glendale Just Cause ordinance right now, if that is to be used as a model, would be changed to reflect these amounts. Please keep forwarding thoughts, comments for further consideration: as indicated, what I wrote initially is a draft. Thanks.

    Comment by tony daysog — October 19, 2015 @ 1:02 pm

  10. How would Jon/Angela feel about a law that limited their income to maximum 5% raises, in good years only? Their incomes could still fall and expenses could rise any amount  at any time. And if they got a new job for higher pay they’d be fined.

    Seem fair?

    Comment by dave — October 19, 2015 @ 3:04 pm

  11. The relocation assistance wouldn’t much be needed if one of two things happened, either the city and the landlords agree on how much rent can rise over a certain period of time like 3 or 5 years. Certainly a longer period than just one year. Or, failing an agreement, a rent rise moratorium with some teeth in it, until something fair to all can be worked out. Don’t you get it? Relocation assistance assumes that the city has failed in its goal of keeping people from being pushed out of their homes by exorbitant rent increases.

    Comment by Not A. Alamedan — October 19, 2015 @ 3:43 pm

  12. #10. Just note– I would love to receive a 5% annual increase in salary. I don’t remember the last time I had one of those, maybe before the previous dot com bust.

    Comment by Kevis Brownson — October 19, 2015 @ 4:07 pm

  13. 12

    Then your fortunes are similar to those of housing providers who only recently got back to pre-dot com levels. Pay particular attention to the period from 2001 to 2011, when rents were flat to falling for over a DECADE.

    http://infogr.am/rising-rents-in-alameda

    http://infogr.am/rents-over-time-8

    Comment by dave — October 19, 2015 @ 4:48 pm

  14. How would landlords like it if their mortgages went up $400-$1000 dollars in 60 days? That’s what’s happening to renters. Renters are fine with increases, but not one that force folks out of their homes.

    Comment by Angela Pallatto Hockabout — October 19, 2015 @ 7:51 pm

  15. If owners’ mortgage costs rose, would the city be expected to regulate their financing or legislate rent increases to cover it?

    Comment by dave — October 19, 2015 @ 8:24 pm

  16. Dave, I remember those days very well. I think I raised rents about 2% for three years in a row.

    I think this happened to a lot of the small mom and pop landlords and some didn’t raise rents at all; not understanding that it’s not a good practice to not raise rents and then try and play catch up with one big rent increase.

    I think Tony’s proposal focuses a lot on the larger corporate owners who one corporate owner I heard gave 50% rent increases across the board.

    Comment by Karen Bey — October 19, 2015 @ 9:53 pm

  17. If a limit of 10% a year is too high, what is a reasonable number? It is clear that the 1.1% increase this year is not enough to keep up with changing conditions. This punishes landlords who follow the law and rewards those who do no maintenance, perform self help evictions to force out rent controlled tenants. The last RHNA means Alameda needs to build 1700 homes over 10 years. Building more homes is the most important step to keeping rent costs sustainable. The population is growing whether the homes are built or not. The most vulnerable part of the population is greatly affected by these changes due to changing jobs more, and moving more. Even if you are a homeowner it is important to look out for everyone’s needs for the good of the community, or soon there will be no one left to look out for you.

    Comment by Tau — October 20, 2015 @ 1:28 am

  18. 15. in that period nobody was actually rolling back rents as units turned over and ultimately owning property is not merely about skimming income, it is about having tenants pay off property which in the end you get to see at the right time for a windfall.

    Comment by MI — October 20, 2015 @ 8:40 am

  19. There were years in which rents fell. I don’t know what you mean by “nobody was actually rolling back rents as units turned over.” Please clarify.

    Comment by dave — October 20, 2015 @ 8:54 am

  20. dave, the argument is that protecting the stability of the cost of one’s primary residence is more important than a property owners’ right, in this particular circumstance, to extract the maximum economic value from the property and tenant in the short run. You can weigh those priorities differently, but that is the argument. Housing humans is serious business. If you want to sell cattle futures, go for it, if you want to profit off of market fluctuations in people’s housing stability, be prepared for some extra regulation on how you can do it.

    Comment by BMac — October 20, 2015 @ 3:32 pm

  21. I have two issues with this.

    The first is economic freedom and equal treatment. Rent control gives one side freedom and a senior standing, leaving the other side encumbered and subordinated. I dislike the idea of the law favoring one side over the other. Free markets are a two way street, and the property owner deserves the same right to earn an income as anyone else. (FYI I am not a rental property owner)

    But the much larger worry is that, like Prop 13, a temporary situation becomes an excuse for a long term mess. In the 70’s property taxes were rising, because home values were rising and inflation was significant. While this pinched some homeowners in the short term, they were actually better off. The nominal values of their homes were increasing while inflation depreciated the vale of their mortgages. Instead of letting a temporary blip run its course, or perhaps fine tuning assessment rules, the grand fix of Prop 13 was created and sold with a lot of hysteria.

    What it brought us is a deeply dysfunctional system, filled with inequities such as neighbors with tax rates 5-10X greater for houses of equal value, and other such bastardizations. In the same way, rent control in other cities has significant exceptions that spare some and fleece others, and really only benefits the longest term renters (at certain properties) at the expense of new residents who pay much more. It also hampers investment in new housing, compounding the problem it was intended to fix.

    Look again at the historical charts I posted above (which were cut/pasted from Michele Ellson’s sadly defunct site). Alameda rents have ebbed and flowed, which is to be expected in CA, which has traditionally has had a more volatile economy than other states. Ride this cycle out and over time, rents will be more competitive than in cities that have rent control.

    Comment by dave — October 20, 2015 @ 4:12 pm

  22. “Free markets are a two way street”

    How do you square your extreme enthusiasm for restrictive zoning with this purist interpretation of free markets?

    Comment by brock — October 20, 2015 @ 5:21 pm

  23. Prop 13 is a contributor to this problem. Rent control on the local level, while imperfect, is much more politically feasible than fixing prop 13.
    The economic freedom argument doesn’t hold water. By that standard, the status quo is hampering the economic freedom of renters by not allowing land owners to respond to market signals and build more housing on their properties. Zoning laws are a far greater bastardization of the market than any rent control regime could be. The difference is it protects incumbent homeowners instead of vulnerable renters. I’m not advocating to abolish all zoning codes. But, the notion that rent control is the death of economic freedom is dubious, at best. It was dead long before rent control came along. It’s just harder to see from that angle since the other is more indirect.

    Comment by BMac — October 20, 2015 @ 5:26 pm

  24. 23

    I agree with you that P13 is a contributor, but the fact that it’s easier to impose RC than repeal P13 is a non-sequitur, and in any case, just because it’s politically feasible doesn’t mean we should do it.

    And if you don’t think RC is a blow to economic freedom, I ask you to consider a legal cap on your income. How free would that feel?

    Zoning laws do restrict economic activity, yes, but consider these:

    1) Zoning has a much more equal and broadly distributed effect while P13 and RC — as it is done locally, with exemptions for certain properties — is much more capricious and discriminatory, strongly favoring some at the significant expense of others.

    2) Zoning laws protect quality of life, and again much more broadly than P13 and RC. That benefits owners and renters alike. Ambience and architecture are big issues in Alameda and Measure A, which is obviously the major zoning law here, has done a great deal to protect ours. Renters and homeowners alike appreciate tree-lined streets, nice architecture and unclogged commutes.

    Comment by dave — October 20, 2015 @ 5:50 pm

  25. 19. This lengthy response may be lame, but anecdote is all I’ve got.

    I was speaking anecdotally and admit that there may be data which indicates rents declined in bad economy, but I’ve never met a property owner who had to actually reduce rents to keep apartments occupied. That is hard to imgaine unless they had ratcheted rents to the hilt in fat times, but not to the point they would lose money. Karen is just one example of a landlord who did not increase rents during recession. It has always been recommended to me that property is one of the best long term investments. Over the years that I was not able to pull the trigger on various investment property opportunities because I was afraid of buying at the peak in a given period, I’ve always been proven wrong. We rented our house in Oakland at cost when we moved here and being a landlord for one lease cycle stressed me out so we dumped the place, but if we had kept it just ten years we would have profited by tens of thousands, if not $100K, but who knew, right?. Over the years I have met people who set out to invest in properties who have eventually been able to retire to manage them. Some budgeted to hire people to do maintenance and others who were handy did all the work. I worked with a plumber in 1978 who hired me to install cabinets at his house in near Mills. Years later when I moved here he was still doing plumbing, but owned a house in Alameda East End and had rented that property and continued to buy more rentals. Last I spoke to him he had retired from plumbing and was managing his rentals. A twenty five year process. Again and again I’ve met people who were better at investing than I am who have parlayed their investments and had stopped working before retirement age. Whether managing or actually doing maintenance, it is all “work”, but none of them suffered threat of bankruptcy because their rents would not pay the mortgage. The value of real wages have actually shrunk in the same period, so when you ask about how we would feel if our income were arbitrarily cut, it’s all relative. Landlords experience periodic stagnation in appreciation, while the renters of whom they profit fight against net wage loss against increasing rents and other costs of living.

    I got started in construction ( 1975) working for a realtor and her husband who managed their rentals. They were almost exclusively Berkeley but also Albany. They railed about Berkeley rent control, but continued to invest. (She disdained Alameda compared to buying in to Albany schools). They have done quite nicely. A savvy investor should be rewarded, but if the commodity one deals in involves basic human necessity like shelter there should be some regulations. “economic freedom”. What does that mean ? Do you abide by SCOTUS ruling on Citizens United?

    Comment by MI — October 22, 2015 @ 11:22 am

  26. I do know somebody who lost money on investment real estate. It happens. A lawyer who had more money than he knew what to do with was persuaded to invest in some condo property back in Vegas during the boom. When things got shaky he asked the guy who had talked him in to the investment about selling and was told, “Dude, I got out last year!” He was under water on that investment for a few years and finally unloaded it. But none of the hands on property investors I’ve met locally have been that unfortunate. Also know some folks who had a hard time getting equity out of South Florida after the 2007 bust so they could move to Puget Sound.

    Comment by MI — October 23, 2015 @ 9:51 am

  27. 10% increases are simply too high and Daysog knows this. Why he keeps pushing that amount is beyond me…it will never happen, at least not by legislation although 10% is the RRAC target for rent increases.

    With regard to relocation costs, he proposes two months of rent plus $1,000 for relocation costs to the vacating tenant. This is way too low, of course, because everyone knows one must pay three-months of rent upon move-in – Daysog knows this, too – or should. Further, he proposes that relocation costs are determined by the current HUD ‘Fair Market Rent’ (FMR) amount. Currently, for Alameda County, the FMR for a one-bedroom apartment is $1,260. In Daysog’s proposal, then, a tenant would receive $3,520 in relocation fees: $1,260 x 2 plus $1,000.

    Unfortunately, the median rent for a rental unit in Alameda is $2,251, according to the Bea report (although the Bea report aggregates all rents into a single median-rent figure). If a tenant must pay three months rent at move in, the tenant needs at least $6,753. Daysog’s amount pays barely one-half of that. Finally, at that proposed amount, a landlord can recapture the $3,520 in a single year with only a $300 rent increase, although it’s likely a landlord would raise the rent much more than that on a new tenat; with a $500 monthly increase, the landlord re-captures their relocation costs in just seven months. Relocation cost are intended as a disincentive to landlords, not simply a cost of doing business.

    Comment by John K — October 31, 2015 @ 8:27 pm

  28. This is way too low, of course, because everyone knows one must pay three-months of rent upon move-in

    ——————————————————————

    Everyone knows this?

    It was never the case for me when I rented. It wasn’t so for 2 friends who have recently moved to Alameda. A perusal of Craigslist ads doesn’t indicate that this practice is widespread. Perhaps you overstate?

    Comment by dave — November 1, 2015 @ 8:14 am


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