Blogging Bayport Alameda

May 15, 2019

Cause I said so

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

It’s not until next week but this should be a pretty big deal for tenants and landlords and anyone who cares about this issue peripherally.    The City Council is actively looking into  making adjustments to the rent stabilization ordinance and it looks like the first on the list for a recommendation is to eliminate “no cause” evictions.

This will not be the first time the City Council is looking into eliminating “no cause” evictions.  From the staff report:

In the spring of 2017, the City Council adopted Ordinance 3180, which made a number of changes to Ordinance 3148, including eliminating the “no cause” provision as grounds to terminate a tenancy. The City Council had heard testimony regarding the use of the “no cause” ground for eviction and its impact on tenants, in addition to available statistics and facts surrounding its use. This information affirmed the underlying principle that a legal process exists through the court system for a landlord to make his/her case that there are grounds “for cause” to evict a tenant (e.g., non-payment of rent, violation of lease terms, etc.) and that a “no cause” basis to terminate a tenancy is not necessary and can be subject to abuse.

Subsequently, a referendum petition was successfully circulated to set aside Ordinance 3180. In addition, an initiative petition was successfully circulated to place most of the provisions of Ordinance 3148 into the City Charter, including the “no cause” ground for eviction (Measure K). In light of those matters, the City Council elected to repeal Ordinance 3180. The Council also placed Measure K on the November 2018 ballot. The voters rejected Measure K by a 60.3% to 39.7% margin.

Also from the staff report:

As noted above, most rent-controlled jurisdictions prohibit “no cause” evictions.  This is because most rent-controlled jurisdictions provide for a maximum annual rent increase (a rent increase “cap”) and without a prohibition on “no cause” evictions, tenancies could be terminated solely to increase rents (in California, rent increases are not limited when a tenant vacates a unit).  In addition, some jurisdictions without rent control are adopting stand-alone “just cause” eviction protection ordinances.  Those ordinances require that terminations of tenancies be solely “for cause” or for no fault of the tenant (owner move-in or withdrawal from the rental market).

Landlords are not required to submit “for cause” eviction notices to the Rent Stabilization Program.  This practice would remain unchanged by the proposed ordinance. “For cause” terminations include failure to pay rent, breach of the lease, nuisance, and failure to give access. Therefore, there is no data available concerning the number of “for cause” notices served in the City of Alameda (City).

Staff is now tracking no-cause evictions:

Since Fiscal Year (FY) 2016-17, the number of “no cause” terminations filed with the Rent Stabilization Program has increased (26 in FY 2016-17 and 31 in FY 2017-18). With two months remaining in this fiscal year (FY 2018-19), the Rent Stabilization Program has logged 35 “no cause” terminations (although the latter number has yet to be confirmed and finalized via monitoring and quality control reviews). Any “no cause” termination notice that is later withdrawn is not included in these statistics. Moreover, in FY 2016-17 and FY 2017-18, “no cause” terminations accounted for about 39% of all no-fault notices of termination filed with the Rent Stabilization Program. Although two months remain in FY 2018-19, “no cause” terminations account for about 66% of all no-fault eviction notices filed with the Rent Stabilization Program.

It, of course, “feels” high, but honestly without a frame of reference it’s really hard to know if that is more or less than before.

 

10 Comments »

  1. Wow! I cannot believe that there are no comments regarding your post on just cause and the council’s pending action. As I have time, I will post some information that I have regarding this topic. For now, let me try to provide the beginning of a frame of reference for your readers. There are over 13,000 rental units in the City contained in a wide variety of housing types ranging from single family homes all the way up to 200 plus unit multifamily buildings. Past consultant reports have estimated that 25% of the total units were single family homes. This statistic will be useful in subsequent comments. As the staff report states, there were 26 no cause terminations in FY 2016-2017 and 31 in FY 2017-2018. Currently, the City has about 35 so far in FY 2019-2020. Aside from the fact that these numbers are incredibly small in relation to the total units (35 of 13,389), this simple raw data does not even remotely begin to provide context to the underlying information about these terminations. More to follow . . .

    Comment by Jeff Cambra — May 16, 2019 @ 7:03 am

    • Jeff,

      Full props for everything you’ve done for the city as well as your work with commercial realtors.

      I just want to point out in regards to the number of Rental Units in Alameda, the proverbial horse has already left the barn, so all you are left with is the point in concept, that punishing housing providers does not lead to an increase in rentals.

      Prior to rent control, Alameda did not know how many rental units were on the Island. The city used business licenses to count rental properties prior to 2017. The SFH/Condo/Mom Pop rental units were off the grid. I suspect the city used an algorithm to include them in the total Island rental unit estimate. So the best number you will EVER have is 16,793 rental units as a starting point for what Rent Stabilization has done to Alameda Rental Stock.

      Today, in 2019, just about every single rental unit is registered to the city. The downside for renting a unit off the books in Alameda today, is just too great. It isn’t worth it. So the current 13,389 rental units that the city of Alameda is using as its current baseline is a solid number. The best number would come from the Alameda Finance Department, providing the 2018 Rent Program Fee numbers. That would be almost an exact number of rental units on the Island.

      So yes, approximately 3,404 or close to 20% of the rental units have left the market over the years. The vast majority, thanks to Rent Control. Don’t be shocked, you shouldn’t be. Rental Property owners have been voting with their feet (most of them in 2016), and they haven’t been quiet about it. I can’t say I’m surprised you didn’t know this, since cities don’t advertise their failures.

      In the Spring of 2016, when it became clear to Property Owners that Alameda was going to institute Rent Control, a substantial portion of SFH/Condo owners left the rental market. There is just anecdotal evidence of this, since the city lacks an accurate means of tracking rental properties before 2017. Those of us in the business that summer, saw a dramatic spike in the sale of rental homes to owners that moved in.

      Long story short, the Exodus has already occurred (as well as the resultant rent hikes). You will not see a dramatic decrease of units due to the current rent control provisions using 2017-2019 data. Alameda’s Rental Unit numbers that exist post 2017 are extremely accurate, but the horse has already left the barn.

      So flip it! Since our Rental Unit data is now spot on, start tracking the INCREASE in Rental Units in Alameda since 2017. With all the construction going on in Alameda surely the number of Rental Units will increase astronomically. Developers must be lining up to build rental units, because demand is so high in Alameda.

      Oh wait. We have rent control in Alameda. That discourages building rental properties. That punishes owning rental properties. I look forward to seeing those numbers, which will be bad, but exact.

      The next shoe to drop is the sale of Multi-Tenant buildings and their conversion to Condos. A lot of SFH/Condo owners left the rental market in 2016. Now the mom and pop and small apartment building owners are selling their rental properties. Talk to your Realtor friends, and listen to what they have to tell you about what’s happening in Alameda in that space. Then you’ll appreciate what Tony Daysog was trying to warn everyone about in 2016. You won’t hear Tony talk about it so much anymore. As I keep on saying, that horse has already left the barn, so why bother.

      Comment by Alameda Landlord — May 17, 2019 @ 4:27 pm

  2. Jeff:

    For a long time it was commonly stated that renters were a slight majority vs homeowners. The numbers quoted were usually something like 53-47%.

    The latest report from the RRAC has owners now in the majority, 52-48:
    https://static1.squarespace.com/static/56df370d22482e5c7f09022f/t/5b90188d0ebbe85ea24655fc/1544032544992/FY+17-18_Annual+Report_Final.pdf

    Two possible reasons that I can think of:

    1) City is now proactively collecting rent data, new numbers are just more accurate than old ones

    2) Relocation payments plus a very strong market for single family houses have combined to encourage SFH landlords to sell, which creates new owner occupied housing.

    Is either of those accurate? Is there another reason that I’m failing to see?

    Comment by dave — May 16, 2019 @ 10:23 am

    • Dave:

      Analyzing and predicting the reasons for changes in the demographic makeup of our local population is way above my pay grade. So, I am not willing to speculate on causes, assuming that there was a change at all. I am not sure of the “exact accuracy” of some of these city wide breakdowns because of the nature of the source data.

      Here is an example:
      The FY 2017-2018 AHA report indicates that 48% of the 31,408 total households or 15,075 units are rental. The source of the data is the American Community Survey (ACS) Five-Year Estimates, 2016.

      There was a rent study done way back in October of 2015. That study put the number of rental units at 16,793 units of 31,575 total units. The data source was again ACS but the timeframe was 2011-2013. Did Alameda lose 1,718 rental units between 2013 and 2016? Seems to me that someone would notice that kind of a loss.

      The October, 2015 report notes the disparity in the two different data sources it relied on:
      “Most notably, the number of renter households in Alameda is reported to total 16,518 according to 2011-2013 ACS data and 15,275 according to 2008-2012 ACS data used for HUD tabulations. “ City of Alameda Rent Study, October 27, 2015, page 5.

      In regards to your second reason for the possible shift, we do have pretty accurate data on owner move ins and units that have been withdrawn from the market since the ordinance was passed. Thanks to the work of some folks that took the time to research the no cause terminations, I have a breakdown of the no cause terminations that were due to rental units being sold and the buyer occupied the home. Thus, removing it from the rental market. Note that my figures are based on the anniversary of the passage of Ordinance 3148 and not the fiscal year used by AHA un its annual report.

      From April 1, 2016 to March 31, 2017, the terminations filed with the AHA were 21 owner move in, 6 were removed from the rental market, 17 were sales to folks that occupied the home, 8 were for substantial renovation, and 8 property owners would not disclose the reason for the termination. Total units lost: 60.

      From April 1, 2017 to March 31, 2018, the terminations filed with the AHA were 38 owner move in, 13 were removed from the rental market, 13 were sales to folks that occupied the home, 6 were for substantial renovation, and 7 property owners would not disclose the reason for the termination. Total units lost: 77.

      I am providing raw data here. I will leave it up to each reader as to how they wish to interpret it.

      Comment by Jeff Cambra — May 16, 2019 @ 2:33 pm

      • OH! and just as an aside, the AHA Annual Report puts the number of rental units (covered under Rent Stabilization) at 13,389. Pick a number!

        Comment by Jeff Cambra — May 16, 2019 @ 2:40 pm

  3. Common sense. I think its pretty clear that SFH/Condo rental stock has decreased significantly. If you want more of something, stop punishing those that are providing it. Multi tenant building are next.

    La propriété, c’est le vol! crowd will never get it. They can pick their era, from the Fall of the Soviets, the Catastrophe of Cuba to the failure in Santiago de León de Caracas, but the reality is that the Free Ice Cream for Everybody Crowd, those Rent Control Do Gooders, were just slackers in school whose eyes glazed over whenever Econ came up.

    They simply fail to understand that a few individuals on the city council, however wise, pressing the buttons and pulling the levers to try to direct and shape rental rates on the Island, are no match for the way things work in a free market, in response to the building, buying, saving and renting decisions of tens of thousands of individuals.

    Comment by Alameda Landlord — May 16, 2019 @ 3:03 pm

    • Here we go with the red baiting again! As if every other business in this country isn’t under some kind of regulation, often for the express purpose of protecting the consumer. And when these consumers are literally paying for the roof over their heads, regulation is pretty important. You want to be in an unregulated business? Go be a pirate!

      Comment by Rod — May 17, 2019 @ 9:17 am

    • As with any large and diverse group, there will be some members of that group that will elect to withdraw their rental unit(s) and sell the property to an owner occupant. I acknowledge your point in concept and would need to see hard, reliable data to support any representation regarding the number of units lost due to the current rent control provisions. Granted, that as there are more restrictions placed on rental units, the number of owners of small properties that can sell their properties to owner occuping buyers will most likely go up, resulting in a loss of available rental property.

      As I stated above, the total number of rental units in the city is not an exact number, so variations in the estimastes could account for the difference in the numbers. Even if the numbers show a decline in rental units, correlation is not causation. There are many reasons that a property owner might decide to sell their rental property when a resident voluntarily moves out. For example, an owner that self manages a SFH or Townhouse that decides to move and doesn’t want to manage from a distance. Additionally, given the jump in housing prices and corresponding equity in the past few years, an owner could decide to do a 1031 tax deferred exchange into a larger property when the tenant voluntarily moves out. How about the owner of a rental property passes away and the heirs decide to sell the unit when the resident elects to out. My point that a decrease in rental housing stock, especially SFHs, townhouses, condos, duplexes, and even triplexes is not due to a single factor. With so many factors as play in determining the total number of rental units in the city, I find it problematic to associate a single cause as the explanation for the drop, especially when there is hard data that can track at least one of the factors.

      While the City may not be able to capture every property that is withdrawn from the market when a resident voluntarily moves out or measure the number of property owners that decide not to bring their property into the rental market, it can and does capture the number of property owners that have terminated the tenancy of a resident for the purpose of removing it from the market or when the owner or a relative wants to reoccupy the unit. I need to keep in mind that the purpose of the relocation assistance provision is to prevent property owners from simply terminating residents to avoid the rent increase restrictions and then taking significant rent increases, which ironically is also the purpose of a just cause provision.

      In reviewing the numbers I provided above, the stats seem to indicate that the relocation assistance payment requirement has virtually eliminated the economic motivation for terminating tenancies (also the purpose of just cause) without resulting in a measurable loss of rental housing stock at this time (three years into the restrictions) and noting the exceptions I stated above. Which begs the question, “Why do we need to have just cause when economicly motivated terminations appear to have been significantly reduced?

      The next comment I post will cover just cause verses relocation assistance – The down side. Hopefully on Monday.

      Comment by Jeff Cambra — May 17, 2019 @ 11:49 am

  4. Number of rental units in Alameda in 2013 was 16,793. Number of rental units in 2019 is 13,389. How do you like those roses, Comrade.

    If anything the 2013 numbers are approximately pretty low. In 2013, SFH/Condo owners as well as Mom and Pop just listed their units on Craigslist, and rented their space without notifying the city as most did not require a business license tax.

    Now, the numbers are exact. Landlords just got their “Rent Program Registration Fee Due” notifications in the mail yesterday.

    “Please be advised that the Fiscal Year 2019/20 Rent program fee CANNOT be passed through to a tenant”. Heh.

    I don’t know which is sadder. The faux outrage regarding the foreseen public humiliation that tenants are exposed to at RRAC, or the chagrin that hoped for opprobrium against landlords requesting legally entitled market rate rent never emerged.

    I don’t know which is more obtuse. The feeble attempts to block market forces via price control, or the failure to comprehend, that when you start punishing people for providing a good, you get LESS of it.

    Nothing to see here, Ivan, just Bread and Roses. Ouch, what’s that pointy thing in your back?

    Comment by Alameda Landlord — May 17, 2019 @ 10:09 am

    • Thoughts and prayers, AL! The massive oppression you’re going through is just terrible!

      Comment by Rod — May 19, 2019 @ 7:20 pm


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