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UncategorizedAirbnb bill goes to supes today -- as activist...

Airbnb bill goes to supes today — as activist release list of the problem landlords

Sup. David Chiu is going to face a series of major amendments to his Airbnb legislation today
Sup. David Chiu is going to face a series of major amendments to his Airbnb legislation today

By Tim Redmond

OCTOBER 7, 2014 – The Board of Supervisors will take up the Airbnb legislation today – and just in time, the Anti-Eviction Mapping Project has released its list of the 16 landlords who it says most represent the problem.

The “Sleazy 16” is a list of property owners who are “displacing tenants for tourists” – in some cases by offering multiple properties as short-term rentals.

The legislation by Sup. David Chiu seeks to legalize — and regulate – the use of private homes and apartments as hotels. A remarkable coalition of tenants, landlords, neighborhood activists and hotel workers (among others) is fighting for key amendments to the law, which they say is way too lax.

Among other things, there may be a move at the board to link the legalization of Airbnb-style rentals to an agreement that the companies making money off the practice pay their back taxes.

It’s going to be a heated discussion at the board, and I can pretty much guarantee that most of what the activists want will be introduced as amendments, and there will be some telling votes over the course of the afternoon.

The item is number 10 on the BOS agenda.

Tim Redmond
Tim Redmond has been a political and investigative reporter in San Francisco for more than 30 years. He spent much of that time as executive editor of the Bay Guardian. He is the founder of 48hills.
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37 COMMENTS

  1. Eleen doesn’t get what many proponents of rent control don’t get i.e. that it suppresses supply and reduces turnover.

    Those two factors taken together mean that rents at the margin are massively inflated. Moreover no new rent controlled homes can be created by state law, so SF is doomed to see smaller supply and higher rents forever, as the number of available rent-controlled homes dwindles into insignificance.

    But she doesn’t care as long as she can grimly and desperately cling to her cheap deal until she has to be carried out of there, sans eyes, sans teeth, sans everything.

  2. Idiot. My point was that RC does a DISSERVICE to younger renters because it keeps so many units off the market. I’m not complaining about it due to my profits. I’m complaining about it because it’s totally unfair. Get a fucking clue.

  3. If only those meeting your criteria became landlords then there would be far fewer landlords, meaning far fewer places rented out, meaning far higher rents.

    For many landlords, the returns are only competitive with other alternative forms of investment because of the tax breaks and general RE appreciation, and not because the rental income numbers crunch.

    That should worry you. Be careful for what you wish for.

  4. Saying someone is wrong adds nothing to the debate. To be credible you need to explain WHY they are wrong, using facts, evidence and argument. Simply gainsaying someone is vacuous.

    To claim someone is “demonstrably wrong” entails that you demonstrate it. And one word responses simply reveal that you probably do not have the arguments.

  5. Please identify which of my arguments are not effective refutations of Tim’s rather fanciful ideas, if you can.

  6. “So the suburbs have built far more housing than they need so that SF can have the workers it needs without having to worry about housing them.”

    WRONG.

    “But the two biggest driver of housing costs in Sf are rent control (for rents) and NIMBYism (for owner occupied housing).”

    Demonstrably WRONG.

  7. Thank for this intelligent analogy.

    I don’t understand how anyone who doesn’t fully comprehend the reasoning, social contract and actual laws around rent control could ever become a landlord.

    It is that they don’t understand contracts or compound interest?

  8. Aggregate property taxes have increased by an average of 7% a year since Prop 13 was passed in 1978. Are you seriously suggesting that that is not enough for the government?

    I don’t really care if rent control is repealed or not, since there are ways around it anyway, and the net result can be very profitable for shrewd property owners. I just think it is sad that so many people can no longer afford to rent a home in SF because the existing stock is being hoarded by the fortunate privileged few.

  9. SF’s infrastructure does not carry the weight of all the other Bay Area cities. It’s the exact opposite.

    Far MORE people commute into SF for work every day than commute out. About five times as many, in fact.

    So the suburbs have built far more housing than they need so that SF can have the workers it needs without having to worry about housing them.

    We owe them. They don’t owe us.

    As for many rents going down if rent control goes away, that was the experience when Boston revoked its rent control. And that is another affluent, crowded town with a shortage of housing, and yet the effect was still noticeable.

    Their turnover rate and vacancy rate also went up. You also find higher turnover and vacancy rates in Bay Area cities with no rent control, which is most of them.

    None of that is to say we can magically make Bay Area housing cheap. We can’t. It will always be expensive and that doesn’t suit everyone. But the two biggest driver of housing costs in Sf are rent control (for rents) and NIMBYism (for owner occupied housing).

    Over-regulation and high taxes account for much of the rest.

  10. So you want to completely ignore the elephant in the room? Ok then.

    Also, you cannot say that some rents would go down as supply is freed up and NOT talk about the total lack of housing available. Those units will be snapped up, now at a higher rent by the people that have been already looking to move here. Its really simple. Get rid of rent control and all you get is higher rents and still no units available. We arent even close to the ratio of people that want housing to the almost zero housing stock available to make any rents decrease.

    And unless you have some facts to back up your claim regarding availability of San Mateo housing because it does not have rent control, its just your opinion and nothing more. If you look up and down the peninsula you’ll see that housing is a major issue everywhere. I addressed that fact by stating NONE of the cities on the peninsula want to increase housing construction to be more inline with the office buildings they have approved.

    Facebook wanted to build apartment like condos right on their own property and the city shot it down.

    Why should SF’s infrastructure be made to carry the weight of all these other cities that do not want housing built to match the people they want to work there? It makes no sense.

  11. Tim, can you help me understand why any landlord would rent to a low-paid person if the rent had to be set at 30% of their income? That’s an obvious problem with your scheme.

    Another problem is that there is no grand allocator of housing in the city, except perhaps for public housing. This isn’t college.

    So your idea first requires that the city buy up all the privately-held rental housing in the city. The cost of that? Hmm, let’s call that 300,000 rental units at $500,000 each – that’s $1,500,000,000,000

    Does that sound like a smaller number if I just call it 1.5 trillion?

    I guess you need us landlords after all.

  12. Ok Tim. Your triple comments are cute and all, but you can’t equate a full blown socialist system (which is what your comments suggest with food, healthcare, etc.), with solving a specific issue in a specific city. Furthermore, monitoring all these advantage/disadvantage statues would be a logistical challenge that would make Stalin, or Castro, proud.

    I actually don’t like means testing either as a solution. But I think it’s better, and more fair to the tenants of this city! Seriously. I pointed out above that there are many well off tenants benefiting from RC, and they are keeping those units off the market. That makes the marginal rent very high. It also leads to great animosity between tenants and LL’s, as it’s clear when someone is getting a free ride from the system, or worse, abusing it by subletting at a profit (this is quite common, and many LL’s are scared to fight a tenant about it.)

    The other aspect you are forgetting is that rental property is a business. Just like selling clothes and food. I’m quite sure means testing, for say burittos, would be found unconstitutional (taxation without representation.) A poor person would get a discount at a Chipotle (a large chain), but not El Farolito which is a local business. Yeah, that ain’t happening in America. Sorry.

    High demand for SF housing is a reality. If you want to create affordable housing, then find a way to tax ALL SF RESIDENTS, not just property owners. Pro rate this tax for income. Use that to buy land, or upzone existing city owned properties and create affordable housing. Have the city manage it (for gods sake, not the Feds).

    The reality now is that we have a very warped and kooky system. Many tenants that don’t need RC take advantage of it, and landlords have learned how to work around the system to their benefit. Look, I don’t think its inherently fair, but it sure is entertaining and interesting to maneuver around in this system

  13. Occasional home-sharing is not the same as a hotel.

    Why do you hate the visitors to our city and wish to deny them the experience of staying with a SF family?

  14. No, it wouldn’t make any difference. For instance, many landlords refuse to take Section 8 tenants already. and most landlords will always choose a better-paid professional with upwardly-mobile talents and skills over someone who is more likely to squat.

    Trust me, SF LL’s develop these intuitions about tenants very quickly.

    What means testing would do is better direct subsidies to only the people who need it. That in turn would greatly reduce the number of no-fault evictions for those units where reasonable rent increases can be applied.

  15. Oakland does that although it is a tiny percentage. The problem with trying to attach higher taxes to rents is that it is inflationary and drives up housing costs.

  16. The more I think about this, the better means-testing for housing sounds. When I was in college, everyone paid the same amount every semester for housing. First year, seniors …. didn’t matter. Same price for room and board.

    Except that the seniors got way better rooms. See, housing went by seniority — first year you get a crummy double dorm room, second year a little better, third year a nice place, fourth year the coolest housing on campus. All the same price.

    So we do means testing — everyone pays 30 percent of his or her income — and then allocate housing by seniority, just like in college. First year in SF? Live in an SRO in the Tenderloin. After a couple years, you get a studio or 1BR. After 20 years of living in and contributing to this community, you get a nice house in Noe Valley.

    Same price, means-tested — 30 percent of your income.

    Sam, SFRentier — you must love this idea. Right?

  17. Let’s go further, since we’re on means-testing. Let’s say that everyone — rich or poor — pays exactly 30 percent of their income for housing. A person living on SSI pays a few hundred bucks a month; a Google senior engineer pays many thousands a month.

    The landlords who are just starting out and struggling get the big money from the Google engineer, whether he lives in their building or not. The big, rich landlords accept the SSI person at a cheap rent because that’s what he or she can pay.

    Means-test food purchases: The poor get the same filet mignon as the rich, and pay much less.
    Keep going: Sam, who clearly has more money than me, pays the corner store twice as much for a bottle of bourbon so I can get if for less. (Don’t worry, Sam, I will share the wealth. In a paper cup.)

    Means-test health care: Mark Zuckerberg can pay full freight for his health insurance; I get mine for much less. Same doctor treats both of us. Except that if he’s rich, he only gets paid the cheap rate, and if he’s a year out of residence with $500K in student loans, he gets to soak Zuckerberg.

    The more I talk about this, the more socialist this rent-control means-testing sounds. You know I’m liking it.

  18. I thought I already talked about means testing. Maybe in another thread.

    Could we do means testing for landlords, too? A really rich landlord who has $100 million in the bank doesn’t need high rents, so the city should reduce the rents on all of his or her properties. A really rich tenant doesn’t need rent control, so his or her rent can go up.

    Bill Gates and Warren Buffett don’t need the mortgage-interest deduction, so why give it to them? It’s supposed to help middle-class people buy homes.

    See, this is all great except that it’s really hard to enforce. Say I’m a law student. I get rent control while I’m in law school and have no income, then I keep it while I work for a nonprofit that pays very little, then I get a job with the city that pays a little more, then I get a job with a private firm that pays even more, then I win a huge settlement and have $5 mill in the bank … what, does the city check my income every year and change my rent?

    Let’s play it our for landlords. I scrape and save to buy a four-unit building and live in the basement while I fix the place up and charge rent, then I get far enough ahead to buy another building, then another, and after a while I own 20 and the prices soar and I’m worth $30 million … when does the city say that I have to charge lower rents because I’m rich?

    Hey: I’m all for means testing. Tax the rich; feed the poor. But make it even for all — and then try to figure out how to enforce it. Hasn’t ever seemed to work.

  19. So you’re now living in a zoning district that now allows hotels, congrats.

    Hopefully there will be a referendum on this travesty.

  20. marcos, do you seriously think that we landlords don’t do that already?

    A key factor in the profitability of any Sf LL is the intuitive ability to predict which tenants will move on with their live and which ones will hoard their units to try and arbitrage the rent control rules.

  21. No. An owner takes on additional risks of ongoing obligations and liabilities. He is also exposed to deflation, which would favor a tenant. He takes on all future maintenance responsibilities as well as legal and insurance exposure.

    A tenant’s costs are limited, known in advance, and can be relinquished with 30 days notice

    No comparison.

  22. Which is why it would make more sense to “tax” the wealthy tenant the difference between his/her rent and the market rent (already calculated by the Controllers Office). This tax could then be used to help subsidize poor tenants that need housing.

    Of course, that would never be supported by the large numbers of tenants that don’t need rent control, but enjoy its benefits nonetheless.

  23. Off-topic, but still, consider this. When you buy a house or an apartment, you typically take a mortgage. That means the bank rents you money. The rent you pay on it is called the interest. If you get a fixed-rate mortgage, you will be renting that money from the bank on terms far friendlier than what an SF tenant gets from a landlord. Your interest is at a fixed rate, more fixed than an SF rent-controlled rent. It will not go up with inflation, which means if inflation is going up the bank eats the losses. If interest rates go down, you can refinance, and pay the lower rate until the bank is paid off, even if it goes up later. Unlike SF rents, the bank cannot add ‘operating expenses’ to the interest. The bank cannot tell you that it wants ‘to get out of the lending business’ and demand the outstanding principal be paid to it in a month’s time, under threat of foreclosure, unlike a renter subjected to an Ellis eviction. The bank will not complain that you, the borrower, are making a lot of money and can pay a much higher interest rate and that it shouldn’t be subsidizing you, as some blog commenters do.

    And this is as it should be. When you buy a home, the social contract that led to these laws lets you plan your life decades in advance, without having to worry about being uprooted or about having to double your salary when you are 50 or 70 years old. The same social contract should and does apply to renters.

  24. Means testing for rent control means that we will see redlining–renting to the applicant of the greatest means.

  25. I think the housing deficit in general is a different argument than rent control specifically, and for two reasons.

    First, because the shortage is throughout the Bay Area whereas rent control only applies in a handful of cities within the Bay Area.

    Second, because the shortage is also of owner-occupied homes, new homes, condos and SFHs, all of which are exempt from rent control under state law anyway.

    So in the case of SF, rent control is only a factor if its an old multi-unit building that is rented out – that’s a tiny percentage of all the homes in the Bay Area.

    Your comment about how rents would go up if we got rid of rent control is arguable. Certainly cheaper rents would go up. But my guess is that more expensive rents would go down, as supply is freed up. That was certainly the experience when Boston got rid of rent control.

    As to the local effect of rent control, it would be instructive to take a look at the southern city limits. You literally have cases in the south city where the buildings on one side of the street are under rent control (SF) and on the other side of the street they are not (Daly City, Brisbane etc.)

    In those cases, you will find some lucky people on the SF side but I’d be willing to bet that there is more availability on the San Mateo side.

    Rent control is a great privilege if you an incumbent in SF. What about everyone else who is paying more as a result?

  26. What those 3 people are doing is 100% illegal and you should call them out on that. You cannot as a master tenant rent out units above what the total rent for said unit should be.

    If Im paying $900 for a 3 bedroom and charging subtenants $1000 per room that is totally illegal. I would have to repay all that over charge to them per SF housing law.

    As for means testing rent control, in your opinion, whats the means? Do you have a cap on yearly income? A % at or above the poverty line? Do you have a set number of units that stay completely rent control forever? What are your thoughts on over half of the new condo’s being built today being used as second homes by the tech elite while they live in Menlo Park/Mountain View, should there be a vacancy tax on those units?

    Are you, like others worried about rent control abuse or the overall availability of housing in SF.

  27. I agree that rent-control should be means tested as happens in some other municipalities.

    The Master Tenant is another concept that needs addressing. I know three people in The Haight who have had apartments for more than three decades and rent bedrooms there at market rates. They keep all of the spoils while the landlord gets stiffed.

    That said, the ‘Sleazy 16’ list is the kind of transparency the public respects. There are people out there who are obviously gaming the system.

  28. Linda,

    Over the past 12 years, only once has the allowable rental increase been over 2% (the Prop 13 maximum property tax increase). I would bet that most, but not all, landlords would gladly trade a reassessment of their property value for the removal of rent control.

  29. Don’t landlords pay tax on the value of the property at the time they purchased it? That’s not market value. Maybe landlords should be required to pay property taxes on the current value of their properties in this hot new market. Why don’t you do that? Then you can have a leg to stand on when you talk about repealing rent control.

  30. Sam and SFrentier Rent control does not, I repeat does not change the fact that there is no housing stock in SF. period. If you removed rent control today and kicked out everyone with it you’d still have a housing shortage, just with higher rents. They would not go down.at.all. Those units would immediately be taken over by tech workers making six figures. There would still not be a single apartment available, to anyone. The only difference is the prices would be EVEN HIGHER than they are right now. Rent control is not the problem. The influx of monied people that have no available units to rent is the problem. Stop throwing up the straw man of rent control as the issue.

    The lack of any housing is the real problem and is not being addressed here in SF or any other city down the peninsula.

    SF has not been building anywhere near the number of apartments/condos/single family homes that it’s needed for years. Nor as any other city down the peninsula. Example: Menlo Park has approved enough office space for 35,000 workers thru 2030 but no where near the number of housing for those workers we are talking under 15% percent housing. Meaning, there is a housing shortage throughout the peninsula and the Bay. Mountain View, Palo Alto, Redwood City, San Mateo, Santa Clara and Sunnyvale have all approved massive amounts of office buildings/spaces and have refused to build housing to parallel that growth.

    I suggest you read this article to find out why housing in SF is partially the way it is, and it doesnt have much to do with Rent Control: http://techcrunch.com/2014/04/14/sf-housing/

  31. I’d also be interested in how Tim justifies Google employees making 200K a year getting rent control while ordinary working folks cannot find a home in SF because the vacancy rate is driven artificially low by all the people hoarding their units because of rent control.

    I suspect Tim would see any reduction in the number of units as being a “slippery slope”, in much the same way as I oppose new taxes on the rich because I know that eventually that new tax will apply to everyone, as we have seen with income tax.

    But means testing makes absolute sense, and that is how NYC works even though they have a stronger form of rent control because it includes some control of rents even upon a vacancy.

    The other way I would change things is to pay the subsidy from general taxes rather than a small minority of people i.e. landlords. A local version of Section 8, effectively.

    The combination of less tenants getting the subsidy and a larger number of people paying for it would ensure that there are no individual cases of hardship among property owners who get stuck with long-term tenants..

    A combination of these two simple steps would ensure no Ellis evictions, many fewer no-fault evictions, less trumped-up at-fault evictions, less TIC formations and less Airbnb’ing. This in turn would lead to greater certainty and security for both landlords and tenants.

  32. Kind sir,

    Can you please explain to me the utility of rent control? It seems that without means testing, too many well off people capture the benefit, thus restricting the supply of RC units to those who truly need them. My observations on the matter:

    ALL the apartments rented out from whenever to 3 years ago are now significantly under current market rent. That is probably 70-80% of the total. How many of those units are with long term tenants that are working class or artists? Maybe 30, 40%?? And the other 30-40% are rented out to people making much more money, including tech engineers, business people, doctors, lawyers, etc. I’m sure they are happy to save $1000+ on rent per month. But that means that a significant portion of apartments are rented at a discount TO PEOPLE WHO DONT NEED IT! That leaves very few apartments available at any given time, increasing their rent to new peole. That is why means testing is necessary in a small, constricted market like SF. Doing so will moderate the marginal rent level, yet still allow those in need to access, and retain the benefits of rent control.

    Please explain your position on this matter. Thanks.

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