Blogging Bayport Alameda

April 3, 2017

Money only pays the rent

Filed under: Alameda — Lauren Do @ 6:03 am

On the City Council agenda on Tuesday, which will make the City Council meeting super long so the City Council should probably be prepared to bump those Referrals again, will be an update on the Rent Ordinance passed last year.   It’s hard to say that the ordinance passed has been a complete success from the perspective of a renter since there was the whole attempt to pass a Rent Control initiative in the November election, but it certain falls under the “something is better than nothing” category.

Per the staff report here are some of the highlights from the annual report:

  •  An average of 432 landlord/tenant calls, e-mails, appointments per month
  • 1,978 unique (unduplicated) interactions with individuals and 5,184 duplicated contacts and interactions
  • Three mailers to 14,000+ residents and landlords (42,000 pieces of mail)
  • 64 workshops, trainings and clinics attended by over 550 landlords and tenants
  • 456 rent increase submissions, 434 of which were initiated by landlords for rent increases above 5%, and 22 of which were for rent increases of 5% or less, initiated by tenants
  • 248 rent increases resolved prior to a RRAC hearing, 52% of which resulted in rent increases of 5% or less and 33% of which resulted in rent increases of 5.1%-10%
  • 23 cases heard by RRAC, of which seven cases resulted in rent increases of less than 5%, 12 resulted in rent increases between 5.1%-10%, and four resulted in rent increases above 10%
  • 0 cases heard by RRAC and appealed to the City Council or to a hearing officer
  • 62 valid termination notices, 32 of which were for no cause (52%) and 22 of which were for owner move-in (35%), and 8 were for going out of the rental business (13%), and verifying payment of relocation benefits

Some of the items that jump out are the large percentage of rent increases above 5%.  Nearly 70% of renter interactions with the RRAC resulted in rent increase recommendations of more than 5%.  That seems unfortunate, particularly since those renters are going to a purportedly balanced body asking for some measure of relief.

Based on feedback from both renters and landlords, as well as assessment of the program, staff is recommending the following issues that need addressing, there are recommended solutions, but I’ll just outline the problems since the City Council will be the ones to determine the policy solution:

  1. No relocation fees required at the conclusion of a fixed-term lease aka relocation fee loophole
  2. No cause eviction percentages are imprecise
  3. Relocation fees in situation that there is a government order to vacate unit
  4. How, when, where relocation fees must be paid

Staff is also recommending that City Council adopt a fee to be able to pay for Rent Program.  This is something that they should have done when the program first began, but for some inexplicable reason decided not to.  Additionally a fee program would also the City control over data collection about the true state of the rental housing market in Alameda.  If the concern is that the cost will be passed along to the tenant, then it could be exempt from one of the expenses that can be passed to the tenant and would simply be a cost of business operations.

 

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18 Comments »

  1. I would imagine since the current ordinance allows for rent increases up to 5% without a hearing, most the cases heard at the RRAC will be for rent increases greater than 5%.

    In reviewing and listening to the rent control meetings, I’m finding for the smaller landlords (2-6 units) that many of the rent increases greater than 5% are generally from landlords who have not given rent increases in the last 5 – 10 years. There was one landlord who had not given a rent increase in 18 years. In my opinion, the last thing we want to do is punish a landlord who hasn’t given a rent increase in 5 -10 years or more.
    .
    I like that the RRAC encourages the landlord and the tenant to try and come up with an agreement amongst themselves before they intervene – which is why these cases aren’t being appealed.

    Comment by Karen Bey — April 3, 2017 @ 7:26 am

  2. It might be too early, but I wonder with the demand for single family homes so high among buyers, how many previously available as rental properties have been or are being sold to people who intend to live in them.

    Comment by Denise Shelton — April 3, 2017 @ 8:12 am

    • I am personally aware of 2 such, but that’s too small a sample size to conclude anything.

      Comment by dave — April 3, 2017 @ 8:34 am

      • Make mine three. COE tomorrow.

        Comment by Denise Shelton — April 3, 2017 @ 1:00 pm

  3. There are quite a few landlords, myself included, who are substantially below market rate and would normally be inclined to let things drift up slowly within the 5% limitation. However, the highly restrictive rent control that was on the ballet last year took many landlords by surprise. It would have left many of us who are below market and don’t raise rent often, in a very compromised position to get a fair return. Hence, I can see why landlords are putting in for larger increases now. Who knows what the future will hold in terms of another initiative. I suspect this number will taper down.

    For me personally, the initiative last year has dictated a change in my approach. If I get a sense that things have settled down and that my future rent increases are not going to be limited to a fraction of the cost of living, I’ll dial things back. But for now, I need to maximize my opportunities until I can get in a better position. Albeit, I am keeping it below the 5% threshold. This past election may have put some agressive landlords on notice, but it was also a wake up call to those of us who have been lackadaisical in our approach on rent increases.

    Comment by Brian K — April 3, 2017 @ 1:13 pm

  4. 4. Exactly. Unintended circumstances. We could have kept renting out in hopes of returning one day but it became too complicated. To keep a great tenant long term would mean being on the hook for big bucks to relocate them when you sold. We have had so many unexpected twists and turns in our lives up until now, we just couldn’t take any more. Some people call it greed, I call it, making sure I don’t end up eating catfood in my retirement years.

    Comment by Denise Shelton — April 3, 2017 @ 5:39 pm

  5. Check out the business and finance section of the Wall Street Journal. It looks like we will soon be doing rentals by auction, ebay style on rentberry, zumper, and airbnb.

    Comment by Ed Hirshberg — April 3, 2017 @ 6:53 pm

  6. The sad result from Alameda renters trying to screw over landlords. Less residences to rent, and a huuuuge increase in rents by mom and pops and single family home owners. The rabble rousers all had their eyes on Gallagher and Lindsey and Matt Sridhar of 470 Central fame. All those mom and pops and single family home landlords with substantially below market rate rentals suddenly realized they were about to get screwed last March and woke up. Suddenly you were penalized for renting to long term tenants. Suddenly you were locked into way way low rents. Suddenly the bureaucracy and paperwork hassle and future payments for the new Alameda RRAC section came up. So homeowners threw out those long term tenants, raised the rents to market rate or if the hassle was too much, just booted the tenant and sold the house. I know many that did this.

    I talked to many many realtors last Spring and every house I visited, the realtor told me it was formerly a rental, but the owners lived out of town and didn’t want the hassle of rent control so it was on the market. The city and renters alike, had no idea how many houses got pulled from the market. Most home owners simply put out a shingle and rented their house when they relocated elsewhere. They didn’t fill out a city housing rental form. The city had NO idea who the single family home landlords were. Now they are gone, or all at market rate. What’s that phrase they teach all medical students? “First Do No Harm”.

    The sorry truth was that Costa Hawkins protects the majority of the rental units in Alameda. A single family home owner can charge WHATEVER they want for their home. RRAC or Rent Control is meaningless to them, because the city can not dictate the rent for Costa Hawkins protected residences. Alameda used to be a good deal for blue collar workers. Location and decent rents. Not anymore. A lot of the change was dictated by market forces. A lot of the change was dictated by idiotic Alameda renters trying to screw over Landlords. You mess with the bull, you get the horns.

    Denise and Brian are being polite about it. I’m just saying it like it is. Mike, as usual, is getting to the heart of the matter, the battle over Costa Hawkins this summer. As for Ed, he’s right, the future in the rental market is Rentberry. https://www.wsj.com/articles/want-that-apartment-you-may-have-to-bid-for-it-1491134407. As Crystal Gayle used to sing to those stupid tenants that just shoulda shut up “You never miss a real good thing until it goes away.” https://www.youtube.com/watch?v=W20TtJNQr_Y

    Comment by Alameda Landlord — April 3, 2017 @ 7:23 pm

  7. Is there any other business where the business-owners hate their customers more than land-lording?

    The angry paternalism of landlords never fails to cracks me up.

    Any house sold to somebody as a primary residence is opening up an apartment somewhere down the chain. Please spare us the crocodile tears.

    Comment by brock — April 3, 2017 @ 7:59 pm

    • Prop 13 has done more to screw newcomers to the California housing market – both those looking to rent and looking to buy – than any rent control measure has. And I’m sure all the “real estate tycoons” in Alameda would have an absolute fit if it were to be threatened.

      Comment by brock — April 3, 2017 @ 8:04 pm

      • Prop 13 has been a wonderful sales tool because there is some predictability of future real estate taxes, unlike the pre prop 13 era when assessments were rising 20% per year.

        Comment by Ed Hirshberg — April 3, 2017 @ 8:39 pm

        • Prop 13 is wonderful but it should be taken down a notch and not apply to everybody. I don’t know how those in other places cope with the uncertainly. Here’s an example from my home town of New Paltz, NY. This is a 2000 sq ft, four-bedroom, 2 bath ranch house on about a third of an acre. Current value is just under $300,000. This is the recent tax history:

          YEAR PROPERTY TAXES CHANGE TAX ASSESSMENT CHANGE
          2015 $8,244 — $253,400 —
          2014 $8,244 +2.7% $253,400 —
          2013 $8,029 +3.1% $253,400 —
          2012 $7,789 -5.0% $253,400 -2.0%
          2011 $8,198 +11.4% $258,500 -5.0%
          2010 $7,360 +22.9% $272,100 -2.8%
          2009 $5,988 -36.7% $280,000 —
          2008 $9,454 +38.4% $280,000 -5.0%
          2007 $6,830 — $294,700 +22.8%
          2006 $6,830 +8.2% $240,000 —
          2005 $6,312 +29.0% $240,000 +13.2%
          2004 $4,895 — $212,000 —

          Comment by Denise Shelton — April 4, 2017 @ 4:29 am

        • Re: how other places cope with property tax uncertainty

          A few primary methods –
          1. Vote for politicians and measures that will tend to keep property tax rates under control (for all property owners, not just newcomers)
          2. Existing property owners have an incentive to allow new development in tight housing markets, thus preventing the resultant out-of-control price appreciation and property tax reassessments.
          3. Older “empty-nesters” downsize to properties that more appropriately fit their current lifestyle, with lower property taxes, rather than hoarding big empty houses.

          Comment by brock — April 4, 2017 @ 11:37 am

  8. 8. Have you ever worked in retail? How about customer service? There are lots more businesses where the business owner can grow to hate the clients. I got PTSD from working the phones at a cable TV company for a year. People said some really horrible things to me and usually, they were just mad because their service was cut off for non-payment. The problem was their fault, not mine. Didn’t matter where I was, if I heard a phone ring, I immediately got uptight. It went on for a few years. Renters like customers are not all angels and it only takes a few really bad experiences to make you leery of everybody. You want world peace? Strive to be kind to everyone, whether you think they deserve it or not.

    Comment by Denise Shelton — April 4, 2017 @ 4:16 am

    • I’ve worked (in no particular order) retail, camp counseling, youth sports officiating, commercial and residential landscaping, house-painting, auto and high-tech manufacturing, commercial property maintenance and management…

      None of these businesses comes close to the level of disdain residential-landlords have from their customers, or exhibit such an overreaching sense of superiority over them. Yeah, in retail, maybe 10% of the owner-customer relationships our sour, but for residential landlords (especially small 1-2 unit landlords) that number is at minimum 60 to 70%.

      And in the Bay Area, with rents in the stratosphere and sale prices right there with them, it’s so easy to get out of the business! I’m convinced that most small time landlords just enjoy being miserable.

      I noticed you are getting out though. Congrats! Life is too short to put up with all that!

      Comment by brock — April 4, 2017 @ 11:50 am

      • I know 2 small time landlords. One fits that description, the other doesn’t. The sour one got into the business thinking it would be a good long term investment and didn’t anticipate how unpleasant tenant interaction can be. From the simple stuff, like a Sunday morning call about a leaky toilet, to the big ugly stuff like bounced checks and major property damage, it’s just worn him out.

        The happy one hired a property manager.

        Comment by dave — April 4, 2017 @ 12:23 pm

        • Full time property manager would definitely be the way I’d go if I found myself in the situation. I’ll gladly eat the 10% or whatever it is they charge.

          Comment by brock — April 4, 2017 @ 2:15 pm


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