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Monday, September 27, 2021

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UncategorizedCity Beat: Why did the mayor endorse Chiu (after...

City Beat: Why did the mayor endorse Chiu (after waiting this long)?

Why Chiu -- but more important, why now?
Why Chiu — but more important, why now?

By Tim Redmond

OCTOBER 24, 2014 – In December, 2003, the local power structure had a genuine freak-out moment: A series of polls showed that Green Party member and upstart supervisor Matt Gonzalez had a chance to beat Gavin Newsom and become the next mayor of San Francisco.

The resulting four years would have been, to say the least, unpredictable, and power likes predictability. So Newsom’s people got on the phone and hauled in the biggest hitter they could. Developer Walter Shorenstein sent a private plane back east to pick up a guy name Bill Clinton, who came out and did a rally for Newsom.

I thought about that when I saw that Ed Lee had (with remarkably little media fanfare) endorsed David Chiu for state Assembly. Even Lee’s allies say the decision makes little political sense for the mayor. Lee is not close to Chiu.

But Ron Conway and the tech leadership are very close to the mayor (and in Room 200 City Hall, Conway these days has a lot more clout than Rose Pak or even Willie Brown). And Conway really, really doesn’t want David Campos to get elected.

I will say right now: I have no polls on the race. But if Chiu was comfortably ahead, why would Conway and Reed Hoffman be putting even more hundreds of thousands of dollars at the last minute into their anti-Campos Independent Expenditure committee?

And why would the mayor have gotten dragged into this?

I don’t think Lee’s endorsement means much either way. San Francisco mayors famously lack coattails, and most of the people who trust Ed Lee will vote for Chiu anyway. But it tells me that the Chiu camp, at least, thinks this race, as of today, is very close.

 

I’m very glad to see that City Attorney Dennis Herrera is going to appeal the really awful decision by federal Judge Charles Breyer striking down the Campos legislation raising payments for tenants facing Ellis Act evictions.

The decision hung on the notion that landlords can’t be forced to pay for a situation they didn’t create. Since the housing crisis is not the fault of any individual landlord, Breyer said, making a property owner pay the cost of helping a tenant stay in the city is unconstitutional.

Of course, by that standard – taking the case to its extreme – rent control would be unconstitutional; why make any individual landlord accept below-market rent when you can’t prove that any one landlord is responsible for high rents?

The courts have always upheld rent control – and in fact, both the state Supreme Court and the US Supreme Court have upheld the right of cities to tightly regulate rents – including extending rent controls to vacant apartments.

The state Legislature banned that practice, but the courts were willing to accept it.

The courts have also upheld the right of a city to prevent landlords from evicting tenants to sell the units as condos – in fact, that decision, coming out of Santa Monica, was the spur for the state’s Ellis Act. Again: The legislature says you can’t force a landlord to keep renting his or her units – but the courts were fine with that kind of law.

But there’s another issue side of the law, one that’s similar to Prop. G, the anti-speculation tax on the November ballot. The intent of the supervisors in passing the Campos bill was to give a tenant who is evicted a fighting chance to stay in the city. The impact, however, could well be to reduce the profit in Ellis Act evictions, and thus the number of evictions. That’s certainly the case with Prop. G – if it passes, and the city never collects a dime because the speculators have backed off, the law will have done its job.

The city can’t prevent landlords from doing Ellis Act evictions. But we can make it more expensive. And if the courts take away that right, they will be doing much deeper damage.

 

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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16 COMMENTS

  1. What whores Lee and Chiu are. And what crybabies these SF property owners are. Almost makes you forget the 7,000+ people who live here without any shelter at all.

  2. Prop G will do much less than intended; and here’s why.

    Yes, currently using the Ellis Act, and the unacknowledged ‘buy-outs’, can be profitable. However, this will still be the case. For example, say you have a two-unit w/ 4 rms each renting for $570/ & $1630/ – not unusual for a senior/disabled and a mid-term tenant (5-10 yrs). In traditional RE finances, that would peg a for-sale price or 100x earnings, or approx $220,000 ($110K / unit). Who’s gonna sell at that price? For $220,000 you get yourself a really cheap apt + extra space (AirBnB? office space? Self-Storage? dust collector?). Currently the price of a duplex >$1000k. Your cheapest TIC for a 4 Rm is going to be in the range of $600-900k, or $1200-1800k for the two.

    Begin to see the problem?

    What Prop G will do is lower the price on those duplexes. Bad for current small prop owners. But it won’t keep the current tenants inside. And it will force up the price on current units-for-sale, since less of them will enter the market. It won’t do much to lessen the disparity between what an RC unit is worth occupied and what it is worth empty; only perhaps what is its sale price.

    Currently bldgs sell, priced as units, @ >$600k/unit. Ellis Act (or buy-out) costs … $80-120?k, reno’s cost $3-500?k so additional cost = $200-300k/ unit in costs-plus-purchase its still going to pencil out.

    Now look at the timeline. Currently tenant removal, and reno can be anywhere from 18-36 months. Prop G penalizes any sales prior to 60 mths. That doesn’t mean that all that prep can’t still be done. With the demand still heavy, it still makes sense to go ahead; its just slightly less profitable for a developer (“speculator”). If you figure that most current small properties sit in areas that have been upzoned (40′ to 50’+), even a “catastrophe” could be a blessing (can you say “Bronx”?). IOW, it is – and will remain – profitable to remove RC occupants.

    Breyer’s ruling won’t be the end of RC. No sense inciting the natives to restlessness, when delaying tactics will produce similar results. Most RC tenants who remain will find themselves increasingly isolated, and only WISH for a buyout in order to move somewhere that will feel more like ‘home’.

  3. I could find the judge’s decision but no documentation on the presented arguments. Are these available online anywhere?

  4. Have you sent your evidence to the DA? Or are you just speculating wildly?

    Lee ran for mayor on a pro-business, pro-growth, pro-jobs platform, and won easily. So why are you complaining that he has done what he promised to do and what we overwhelmingly voted for him to do?

  5. Herrera (regardless of his true thoughts on the Breyer decision ((his wife is a Realtor after all)) ), is opening up a can ‘o worms that the Rent Control Industrial Complex may regret. Those that oppose rent control in its current unbridled form should/will pursue the unconstitutional angle and that landlords can’t be forced to pay (unlimited) subsidies to private individuals.

  6. Lee is feathering his nest for his after politics career. In case you aren’t paying attention I’m saying pretty clearly that Mayor Lee is taking bribes from the corporate fascists.

  7. Dennis Herrera and his entire office staff are opponents of sunshine, the Sunshine Ordinance Task Force and are terrible with responding to public record requests, and he’s supposed to be the chief enforcer of sunshine laws!

    If you’re pissed off, vote Petrelis!

  8. Rent control is a manifest failure. Judge Breyer, born in San Francisco, obviously understands the extent of the disaster. His ruling this week was a clear and definite step toward reclaiming sanity.

    Why don’t Progressives work to build a system directed toward those who can demonstrate need? A secure and sustainable system whose costs are fairly shared by all taxpayers?

  9. If you read what I wrote (instead of your kneejerk reaction), the cumulative effects of bogus laws, may lead to overturning RC in higher court because it is being misused by this city. Kapish?

  10. Why are these people spending this kind of money and launching a full court press for Chiu? Because these people are playing for keeps, they’re gunning for your political extinction and for them money is no object. Keep on staring at the tsunami wave, Tim.

  11. SCOTUS has never ruled that unlimited control of rents is illegal. What they have ruled is that certain specific objections to rent control have failed to meet the burden of proof.

    Moreover SF’s rent control ordinance contains various provisions that are designed to pass constitutional muster, including a clear statement that landlords are entitled to a “reasonable rate of return”, fifteen just causes for eviction, and the ability to pass through various extra costs to tenants.

    Over thirty States have taken the view that rent control is not legal, reasonable or constitutional.

    But perhaps the most damning indictment of rent control is that it deters owners from offering rental accommodation, thereby suppressing supply and driving up rents.

  12. Maybe you missed the part about the Supreme Court already ruling rent control to be legal. But hey, no reason to let your ideological ignorance to get in the way.

  13. Your “analysis” of Bryer’s decision is quarter baked at best. It’s more than just that individual landlords shouldn’t have to pay for a situation that they didn’t create. It’s that the payoffs are totally arbitrary, and have NO CONNECTION to actual housing. So a tenant gets a hundred thousand dollars plus. S/he can do whatever they please with it! They can go out of the area and put a down payment on a home. They can cross over to oakland, pay much less, and start a nice savings plan. And if they are making a good income already (remember RC is given to anybody, incl. well off tenants), they can go out and buy a fancy Mercedes Benz! This is a takings if I ever saw one, plain and simple.

    It’s intersting how you and Sup Crapos blatantly disregard the constitution.

    And prop G and the buy out regulations ordinance, don’t worry, they will get over turned in court as well. I’m hoping that all this ruckus will make it to the Supreme Court, so once and for all they can bitch slap this city by banning rent control. Period. All these bogus laws that get over turned are an abuse of power by jerks like Crapos. At some point it’s unethical to continuously pass bogus laws that get over turned.

  14. Ideologically, Lee is much closer to Chui than Campos. And of course there is the Asian connection. So I am surprised that you are surprised that Lee is endorsing Chiu although, like you, I am not clear why he held off. For leverage, perhaps?

    Chui won by a few percent in June, nothing has really changed since then, and the 10% or so who voted GOP then will presumably back Chiu. So he should win comfortable, if not hugely. Campos really is unelectable in the eyes of so many because of his blatantly partisan identity politics.

    to the other, Breyer’s decision could be the start of a movement of moving away from the idea that a relatively small proportion of the population should be scape-goated as the cause of the fact that SF is desirable and therefore expensive. That would be no bad thing. Why should not society as a whole pick up the subsidies for renters?

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