Blogging Bayport Alameda

May 5, 2016

It’s under rent control

Filed under: Alameda — Lauren Do @ 6:05 am

Interesting.

It appears that the Santa Rosa City Council managed to pass a rent protection ordinance that actually protected real “mom and pop” landlords as opposed to attempting to blanket everyone in that exception.  From The Press Democrat:

Councilwoman Julie Combs, largely in negotiations with three other supportive council members, proposed a “limited rent control” that capped rents at 3 percent per year, which would be restricted by state law to apartments built before 1995.

She added that the law would exempt duplexes and triplexes if a property owner or family member lived in one of the units. She also proposed making the law retroactive to Jan 1.

Also endorsed by the majority was a just-cause eviction policy that would cover all rental properties in the city. That ordinance would allow landlords to evict renters for a number of reasons, including a “habitual” nonpayment of rent, breach of contract, creating a nuisance, to allow temporary removal of residents for capital improvements, or to withdraw the apartment from the market.

Even as simple as the ordinance is, it really does two things.  One places a cap rent increases on the oldest forms of housing which is, typically, the least expensive.  But also acknowledges that for some people, like mom n’ pop operations may use a rental unit as their sole source of income and so a duplex or triplex that has the property owner living on the property or has a family member would be exempt from the rent caps.

Add to that the just cause eviction and you have an ordinance that — I think — would have appeased a lot of renters in Alameda, but wouldn’t have brought out the opposition from the  landlords in town that people would feel the most sympathetic.

It’s quite a shame that the City Council missed an opportunity to make an incremental change that would have protected those that needing protecting as opposed to simply making everyone unhappy because a “cap” was untenable.

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13 Comments »

  1. It is all good in some aspects but you ask a lot of renters who live in a rent controlled city and they don’t have a rent controlled apartment, they hate rent control. They most likely will never get one of these apartments because they fill up and the people never move. It hurts new families, people just starting out on their own either moving out of their parents house, leaving a bad relationship, recent college graduates, or new people relocating to the area for multiple reasons. Probably 75% or more renters don’t stay in the same place for over 4 years but you add rent control and they will stay forever making it impossible for people who need a rent controlled apartment to get one. It is similar to prop 13 which put the burden on first time homeowners who are usually new families, recent college graduates and those who have been saving for years to finally get a down payment.

    Many controls have the opposite effect of the desired purpose they were initially intentioned to have. In my opinion, rent control and Prop 13 are very good examples of that.

    If you live in a rent controlled apartment for example and your rent is $1,000 per month but you can afford $3,000 per month for a mortgage, you decide to stay in your rent controlled place and save the extra $2,000 per month is the logically way of looking at it. The problem is you start spending the extra $2,000 per month and become accustom to doing so and never save it. 5 years later you are evicted because the landlord died and the heirs decide to sell the property. Rent has gone up in the mean time to $4,000 per month for a similar place and they expect the landlord now owes them money to move how is that even right is anyone way of thinking. In my example the numbers are exaggerated but the concept is there. A mortgage hurts in the beginning, but your payments (rent) will be stable for 15-30 years. They are hard in the beginning and you may have to eat beans and go without cable but if you can get a down payment they pay off in the end. You may not get your dream house at first, you may not live in the best neighborhood but it is a start. My parents went though the same thing when I was young, my mom who never worked started working part time and she started a huge garden to help out and we didn’t eat out, or go to movies all the time or get what ever we wanted, they didn’t drive new cars every year but over time they were able to do more as the payments became easier due to salary increases. When I was in college (which I paid for by working to pay for it) they paid off the house. My point is if you’re willing to work extra, make sacrifices in the beginning, you can own a house and don’t need rent control. Rent control makes you a victim, you are not owed anything if you truly want to be free. No matter how hard you have it, there is someone else who has it worse and is making it. If you really want help there is help whether you are living under a bridge with a blanket or I hate to say it Trump (he probably need more help then the guy under the bridge). I not an infomercial, but make a list who is keeping you down. You may be able to write pages, but after the list is done…it all comes down to ‘you’ not your landlord.

    Comment by joelsf — May 5, 2016 @ 7:31 am

  2. Thanks for acknowledging that fact Lauren. What I also learned during this process was that many of the small mom and pops in Alameda are seniors who depend on their rents for their retirement income. That’s huge – especially if they are saddled with rising health costs as many are.

    Comment by Karen Bey — May 5, 2016 @ 7:38 am

  3. Corporate owners depend on the income as much as mom & pops do, because their shareholders, partners etc do.

    For example consider Essex Property Trust, a large & well known REIT specializing in West Coast apartments (ticker ESS/NYSE). Look at their largest shareholders: Vanguard, Blackrock, Fidelity, TIAA, et al. The first three are mutual funds, typically held by individual investors for whom income is a primary need. TIAA is a retirement fund manager for teachers and educators. Retired teachers depend on that income just as much as a mom/pop landlord does. Whether ownership is direct or indirect, behind most real estate is an individual who needs the income.

    While it’s laudable that Santa Rosa tries to protect some its local owners, it’s short sighted and misses the point. It’s also discriminatory, favoring one set of owners over another.

    Comment by dave — May 5, 2016 @ 7:55 am

    • Dave, it’s not short sited at all. There is a precedent for this policy — Oakland, San Jose, and other cities have a similar policy.

      Comment by Karen Bey — May 6, 2016 @ 7:29 am

      • There is precedent for rent control too but that doesn’t make it a good idea.

        Choosing one property owner’s rights over another is bad policy.

        Comment by dave — May 6, 2016 @ 8:30 am

  4. @4: Dave, your argument fails to account for the far more serious “discriminatory” effect of huge rent increases on renters of all incomes, but especially those living on fixed incomes such as SSI and railroad pensions. (That is why we need rent stability in the first place.) The absentee REITs are, by and large, the greediest of all landlords and the ones least likely to respond to tenant needs, so I do not cry any tears for them compared to the renters getting the shaft here in Alameda.

    After listening to hours of “mom and pop” landlords at several City Council hearings, I cannot say that I heard them express much genuine compassion for renters on fixed incomes facing big rent increases. Nor did I hear many offers of compromise or accommodation from their side. It was all about the (supposedly God-given and Almighty) “property rights” of landlords and very little effort to put forth workable solutions that would actually stabilize rents or stabilize our community.

    Installing a reasonable (cost-of-living-based) cap on rent increases is a logical and relatively simple way to reduce the fracturing of our community that results from ever-increasing “market rate” rent hikes.

    “Market rate” rents means charging what everyone else is charging because you can get away with it, regardless of your cost basis, your tax status, or your other your tax write-offs–all of which are on the landlord’s side. In other words, landlords can charge whatever they damned well please, regardless of the condition or cost of the units, the faithfulness of their current tenants, or the history of the rents charged for the units. Fair? Not much.

    Price-gouging has been made illegal in many sectors of our economy, but not in housing. We need to change that.

    Comment by Jon Spangler — May 5, 2016 @ 9:12 am

  5. Landlords certainly wish they could “charge whatever they damned well please” but they can only charge what the market will bear. Sometimes that is a lower number, as it was in fairly recent times. These days that’s a higher number. That which flows will also ebb.

    But as for the landlords’ advantages that you cite are neither known, nor uniform nor relevant. Many landlords operate on negative or neutral cash flow, I know of more than one who does (why they do so is another discussion) But more to the point, you also ignore the tremendous advantage that tenants have: they can move elsewhere. A building can’t. Tenants really do have more power than a landlord, who in Alameda is a price taker rather than a price maker.

    Comment by dave — May 5, 2016 @ 9:25 am

  6. “Councilwoman Julie Combs, largely in negotiations with three other supportive council members” is an interesting descriptive sentence. Hopefully all of those negotiations were done during a City Council meeting otherwise there discussions would a clear violation of the Brown Act.

    Comment by Mike McMahon — May 5, 2016 @ 8:15 pm

  7. Corporations are not people. There is a huge difference between corporate owners of thousands of units and owners of one unit. We own a small house we lived in for 27 years. We kept it when we moved here. It pays many of our expenses, since the banks are paying about zero interest now and the state sees fit to steal my earned Social Security since I was a second career teacher. If our costs go up, we have a flow problem. If the roof needs to be replaced, we have a flow problem. When an appliance dies, we have a flow problem. If our house was where there was rent control, we would probably raise the rent every year, which we do not want to do. On the other hand, the time may come when we need to raise the rent at a time other than tenant turnover time. It’s very complicated and difficult, but don’t pretend we are equal to a large corporation.

    Comment by dj — May 6, 2016 @ 2:28 pm

    • The principle of property ownership applies whether the owner is large or small, an individual or an entity. Your property rights should be as equal as anyone else’s, and both you and a large REIT should still have the power to use your property as you see fit. Neither you nor the large group should have their property controlled or encumbered by a non-owner.

      Comment by dave — May 6, 2016 @ 4:25 pm

  8. Welcome to the 21ST dave. Now get with the program. The only lawn signs in the new soviet are screaming for BS and that ain’t no BS. There are no ownership principals in the BS world so get ready for the replacement of all REITs with the Uncle…and it doesn’t really matter whether it’s HC instead of BS because It’s all just one more example of fruit droppings from the loaded trees that were planted in the sixties “Property Rights” will be equal across the fruited plain and everyone will live in unencumberedvilles happily ever after.

    Comment by jack — May 7, 2016 @ 10:12 am


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