A group of San Francisco tenants and advocates delivered an eviction warning to Assemblymember David Chiu today, urging that he help push a repeal of the notorious Costa-Hawkins bill through the Legislature.
Chiu is the chair of the Assembly Housing Committee, the first stop on the path toward bringing the repeal bill to the floor.
The author of the bill is Assemblymember Richard Bloom of Santa Monica. Chiu is listed as a co-author, but tenant advocates say he has not made the measure a priority.
Costa Hawkins, passed in 1995, bans cities from extending rent controls to vacant apartments. Vacancy control would radically reduce evictions. When rents rise to market rate after a tenant moves out, it gives landlords a huge incentive to get rid of long-term renters who are paying below-market rent.
A large group began a rally at City Hall, while a smaller group walked over to the state building, where Chiu has his district office.
Chiu wasn’t there – he was at a fundraiser in a bar in the Twitter Building. But Judson True, his chief of staff, met the protesters, many of whom are now facing or recently faced evictions.
“We are sick of politicians telling us that they are on our side and then not taking action” Fred Shrerburn-Zimmer, director of the Housing Rights Committee, told a crowd outside the building.
Inside, the group taped a 45-day notice to Chiu’s office door and repeatedly asked True whether Chiu would schedule the bill for a hearing before later January, when the measure would be dead for the year.
True kept saying that “tenant bills in Sacramento are challenging,” which is a polite way of saying that the real-estate industry owns the state Legislature. He said that if Bloom wants a hearing, he will get one.
I asked True what possible downside there would be to bringing the bill to committee. He said that for some of the other committee members, this would be a “hard vote,” and that Chiu might not want to force his fellow Democrats to vote on a bill that might offend powerful interests if it had no chance of passing on the Assembly floor.
In other words: Don’t make Democrats who are sucking up to landlords actually take a stand on a key tenant issue unless they really, really have to.
Here are the members of the committee. Five are Democrats; two are Republicans. The current leadership of the Assembly and the Democratic Party have no made tenant issues a priority, and apparently don’t want to put pressure on anyone to vote to help renters.
I called Bloom’s office, but they didn’t get back to me.
What’s happening here is a strategic decision, the kind of thing that happens all too often in Sacramento. Chiu votes the right way on a lot of bills – but he doesn’t want to be the progressive leader who is willing to push the envelope, to call out his colleagues. Tom Ammiano played a very different role when he had the same Assembly seat – and in the end, earned the respect of other members for his political courage and consistency.
Tenants groups never had to demonstrate at Ammiano’s office — he was always on their side.
The tenant organizers in the room told True that they wanted the committee members to vote – so that they could be held accountable, possibly through primary challenges. That’s not how the leadership in Sacramento – which includes David Chiu – likes to work.
The emergency is here.
“I’ve been living in my apartment at 634 Powell for 25 years. When Veritas, the largest private landlord in SF, bought it, many long-term tenants, including myself, began feeling harassed. We shouldn’t feel targeted just because we have roots in our city, decades of life, and, because of rent control, affordable rents,” said Amina Rubio, one of the tenants who went to Chiu’s office. “These corporate landlords are ruining our homes, health and lives. We need to repeal Costa Hawkins and implement vacancy control to discourage speculative landlords like Veritas from buying rent-controlled properties to squeeze out millions in rent.”
True said Chiu wants to meet with the tenants, and that’s fine. But what we have here is a very different philosophy. Chiu has endorsed Sonja Trauss, the build-at-all-costs candidate who no tenant organization would ever support, in District 6. He doesn’t look to the Tenants Union and the Housing Rights Committee for direction; he looks to what’s good for his relations with the rest of the Assembly Democrats, who are often real-estate shills.
That’s what today’s demonstration was about.
Too confusing for a clueless lib to understand, I suppose.
Just Do It! That will surely create thousands of new units to keep up with new demand.
So you’re saying the beneficiaries of your policy will be primarily high wage earners. I’m replying to what you said would happen, that landlords would still prefer rich tenants. I don’t think that’s entirely true, and it would be no worse than now.
As to tax revenue etc., that’s kind of simple minded. If the landlord’s rent receipts are lower, the tenant’s disposable income is higher. Which generates more taxes in the long run? That depends on a complete economic analysis.
The little guys are being squeezed out, and only the corporations will remain—if you mean landlords, yeah, that’s a big problem that I haven’t seen discussed much. I’ve had good and bad landlords, but even the bad were people. Big investment corporations running hundreds of rental properties are bad news.
… tenants in abusive relationsships with their roommates (cuz there’s nowhere to go – sure, there are occasional cheap units that open up, but they’re quickly snapped up.
I don’t see VC as really helping those who are the intended target (low income workers, seniors, teachers, etc).
IOW, its a solution in search of a probable problem.
I agree, the solution is to create more units. Or kill off all the high income jobs (but then, that kills of a lot of the service jobs. But that still leaves all the trust funders and independently affluent to fight for the decreasing supply of rental apts.)
“renting only to the rich—wouldn’t be any worse than it is now.”
So you’re saying the beneficiaries of your policy will be primarily high wage earners. Ok. Good. Thx.
Of course, one other spin-off of a VC policy is that state (and US) tax revenue will be depressed, due to landlords filing smaller net returns. IIRC, that was the principle that lead MA to outlaw RC altogether.
Somehow, and I’m just waiting at it will happen after I’m out of the game (cuz the little guys are being squeezed out, and only the corperations will remain) – some mega-corp takes the state of CA (or maybe the City – easier) to the WTO and demands compensation for unreasonable restrictions that deny potential future profits; and ends up with a huge settlement, leaving the City with a huge legal bill (and sanctions) and repeal of RC altogether.
Vacancy control isn’t exactly a fantasy. But it is a price control, and will inevitably lead to scarcity. SF’s already low vacancy rate will drop to 0. Instead of money, seniority will be the new currency used to get SF rentals. That and social capital (knowing someone in your friend is about to vacate a place). Of course people with money will still want a place to live, so expect a black/grey market to pop up where tenants buy out other tenants.
In some ways, this might be a “softer” crisis. Certainly less wealth will be directly transferred from renter’s pockets to vampire landlords. But we’ll still have many of the same hallmarks: tenants overcrowding, tenants in abusive relationship with their landlord because there’s nowhere else they can move, the next generation being shut out. Basically, all the problems Stockholm now has: https://www.theguardian.com/world/2015/aug/19/why-stockholm-housing-rules-rent-control-flat
In addition, if the ownership market stays uncapped, then all efforts will be made to convert vacancy controlled rental units into ownership units, including all manner of unsavory means if the delta between the two markets is large enough.
I don’t hate it, but I don’t love it. It’s treating the symptoms and not curing the disease (housing stock severely trailing housing demand).
Vacancy control may be a fantasy. But it would eliminate the housing crisis without the need to add to the supply. The percent of income spent for housing would come way down. If a better class of renters go to the head of the line, the percent for rent would be even less. That extra income not spent on rent would be spent on goods and services, creating more service jobs. And as landlords lose income and start converting rentals to owner occupied, ownership too will be more affordable as the supply increases. Increasing owner occupied would have a positive effect.
VC has one straightforward side effect, that the vacancy rate quickly goes to zero., but it’ll be a matter of people having about two seconds to get an apartment. Santa Monica was notorious for that. Even if Costa-Hawkins was repealed, I doubt that in this day and age old-style VC would work, but cities could experiment around.
About landlords renting only to the rich—wouldn’t be any worse than it is now.
I don’t know about “cheap”. Affordable, though, is rare, because of increasing wage inequality. People at the low end are competing with people earning 5x as much as opposed to merely 2x as much. This problem is everywhere in this day and age, except for a few cities which have a relatively small percentage of high spenders: Chicago, Montreal, etc.
The reason for Ellis and Costa Hawkins was a Republican majority in Sacramento, who thought that rent control and tenant rights were a commie abomination. Commie Santa Monica and Berkeley were just obvious targets.
If you increase the supply of ownership units – on a limited supply – then you DECREASE the supply of rental units.
Vacancy control is a fantasy. Its a fantasy that poorer tenants think they will find something ‘affordable’ if they have to move. In reality, those kind of tenants would be at the back of the line to rent available VC units. A landlord is always going to prefer a higher income, more stable, better class of tenant that a sketchy, marginal, just-hanging-on type; which describes so many currently frightened of losing their RC units.
The real winners will be the young, techie newcomers, who will get a cheap apt (which they’ll then probably sub-rent to friends – just like them). OH, and the pols – who play this fantasy to the voters as ‘progress’. The losers will be long term tenants. And, or course, landlords; who will fall further behind on keeping up with ever-rising costs.
The Bronx is a classic example of these caps on apt rents and how that effects the housing stock. NYC eventually moved away from those types of regs, or lessened their impact.
I’m not saying its cheap to live in NY these days. Its only cheap to live in places that have existing housing stock and which those places are not v popular, for whatever reason. Cincinati. Detroit. Chicago.
BTW, Santa Monica was the whole reason for the Ellis Act in the first place. So, can’t say things were ‘hunky dory’ under vacancy control.
Good investment in the 80s? Only in the sense that prices for real estate were rising, so ‘getting in now’ was the wise thing to do. It wasn’t a smart investment, in many cases, to get in on the rent-stream aspect, even though, for small bldgs, there was a way out of rent control.
And even if the case could be made – that revolving tenants would increase the rental income steam – was only possible because there was NOT Vacancy Control (VC). Combining RC and VC is a formula for decreased real estate values. Now, maybe you’d like to see that. However, when construction costs continue to skyrocket, along with just about every other associated cost, declining real estate vales does not bode well for increasing or even maintaining housing production or maintainance.
The fallacy of those who propound VC is that they think their sorry arses will get them a newly-rent-limited unit. However, those now-cheap units will also be sought after by techies and other high-income individuals. And who do you think a landlord is going to want to rent that now-cheap unit to – someone with assets? or someone without assets and an inclination to game the tenant system? Sorry, Charlie. You lose, with VC or without it.
It may reduce the supply but it would lower the percent of income people pay for rent, thereby eliminating the housing crisis. If landlords get out of the rental business it would increase the supply of ownership units making them more affordable. The less people pay for rent or mortgage means more money they have to spend on goods and services.
Vacancy control would eliminate the housing crisis. People would be paying the rents they can afford. And if employers with high paying jobs keep coming to the area, tenants would have much more income to spend on other things like restaurants and consumer goods. If it causes some landlords to get out of the business it would increase the supply of ownership units making them more affordable; a win-win.
If we repeal the Ellis Act, and treat housing as a regulated utility instead of as a market commodity, we will have fewer evictions.
I’m sure you’re very annoyed at my incessant replies to you, but I do think we’re having a relatively civil discussion.
“Why should they not be held to their own claims?”
Historical evidence and current economic analysis do hold up their claims. Whether or not you think they are *all* based on shoddy data is your own opinion, I suppose.
“Why would we have built more long ago when there was not so much of a need?”
That’s a good question, it’s kind of a chicken or egg thing, right? SF isn’t the only place in the country or world to experience an economic boom. Other places have just ramped up housing production faster and have thus experienced a less dramatic increase in housing costs. Correlation doesn’t equal causation but it’s a very convincing argument.
“I moved here in the 90’s with no job. Plenty of room.”
You recognize you moved here in a time with low demand (the 90’s) and high supply (plenty of room) and got a place at market rate. You entered the area at market rate at one point too. You don’t think the market at the time was favorable to you? Why don’t you think a similar situation couldn’t happen again and benefit a new wave of people? It’s not like there’s new rules in place since you moved here, just new people. If everyone like you has stayed put, and rightfully so as I can tell you and many others that are passionate about gentrification are invested in your city, then where is the “plenty of room” for the next generation without building more housing?
There’s plenty of blame to go around and I actually did reply to your rebuttals to Howard in a less conservative-asshole way but I think it either got deleted or Disqus shit the bed on me.
Well, I don’t find this all that civil when you keep reinterpreting what I say or ignoring whole swaths of it, shifting the ground, and making unfounded accusations about my thoughts and motives. I’m not going into it with you.
But let me remind you: YIMBYs CLAIM TO BE ABLE TO PREDICT THE FUTURE (not yelling, just emphasizing.) Why should they not be held to their own claims? Why would we have built more long ago when there was not so much of a need? I moved here in the 90’s with no job. Plenty of room.
I obviously don’t agree that price controls caused this crisis. What’s with the blaming progressives? So the blame game is okay for you to do?
Oh, and by the way, one of the commenters on the YIMBY side, Howard Epstein, just told me to move to China. Why don’t you tell him to be civil?
Over and out.
So the progressives that passed these laws years ago (that are very convincingly evidenced to have exacerbated this crisis) didn’t have a crystal ball to predict that the population was going to increase so much, and that’s excusable. Despite the fact that price controls leading to shortages is a predictable outcome, Econ 101, it happened anyway. Yet the YIMBYs need a crystal ball to prove numbers otherwise their argument isn’t valid? Why are the YIMBYs held to such a high standard (you’re asking them to predict the market which literally no one can and ever will) yet the progressives who took a gamble with price controls get a pass? All of the studies about supply and demand exaggerating the housing crisis from all of those sources are based on faulty data? This is some serious denial here. I’m sorry, but I just don’t think it’s working and I don’t think expanding it will magically make it work, and a ton of people outside of the progressive sphere you’re in agree with this. YIMBY or not. You will lose the numbers and facts game every time. It happens every article. The evidence does not support socialized housing working.
It’s very basic stuff. If there is no vacancy and people want to live here you can do two things: build for the people who want to move here, or tell them to go away. I want the former. You want the latter. I do not think excluding people is progressive. I think if enough were built years ago we wouldn’t be in this mess. There’s no better time to try to catch up than now. But hey, we can do this all day..
Also, nativism is not a YIMBY term. I’ve known it to be a very serious thing in this area long before Trauss clumsily brought it up. Based on the comments I’ve seen on pages like this and social media, it’s very real. “Go back to the midwest techie scum!” … Are you saying you’ve never seen someone say something like that? Is this not bigoted?
Hasn’t history shown that price controls create shortages.
Why does SF have less of a housing crisis? According to the State “crisis” is defined and percent of income for housing. It seems logical that rent control would be a factor. SF is not in the top 10 counties by that measure, but Alameda, Contra Costa and Santa Clara are. They should be adding housing before SF does.
With vacancy control the crisis would all but disappear and we would not need to add much more housing. There may also be other benefits, as renters pay less than they can afford that should be a benefit to restaurants, etc. Gentrification has created more service jobs, helping lower income workers to stay longer.
I actually have other things to do than argue with you but I’ll try to be brief. I think you are projecting something onto what I am saying. I also think you are being unfair and perfectionist when it comes to older progressives who have been here for awhile. I’m going to say “they” because I have not been here as long as others and can’t take credit for most of the protections they passed. What they have done with limited power HAS worked for the most part.
They did not have a crystal ball to know what was coming or the resources to prepare for it anyway in our broken economic system. I am not scapegoating tech workers, simply saying that the YIMBY proposed solution at best helps ONLY wealthier people, a lot of them being tech workers. It is lopsided and leaves the rest of us in the dust. (Some tech workers actually don’t make a ton and the YIMBY plan does not include them either.) And that’s at best because it assumes that they actually believe what they are saying.
If you applied the same level of questioning of their theories that you do to ours, and applied the same standards to their manners, maybe you would not be so supportive of them. And don’t say that they provide links to studies because I have read those studies and they don’t say much and some are based on faulty data and/or partial data.
Do you realize that even by their theory they say that it would take decades for prices to come down, and then they cannot say by how much. They estimate about 10 percent. Well, I can’t afford 90% of market rate rent. And then what happens when demand increases again? Are they going to tear down the sky scrapers to build even bigger ones? Because they are trying to fill every possible space with towers already.
This is a question to think about, not answer right away: What makes you think that vacancy control and expanding rent control does not protect tenants for generations to come? And what makes you think that not having these things will, particularly when what is currently being built is by a huge majority, not affordable?
And stop using YIMBY terms like “nativism” on me and my allies if you want me to take you seriously.
Oh, well, so much for brief.
Tenants are not subsidizing housing providers life styles. Housing providers are proving a service like all other businesses that tenants pay for just like all other services.
That’s ridicules. Governments are not subsiding housing providers. Housing providers pay more than their fair share of taxes. There’s property taxes, sales taxes, etc.
Again, ridicules. First, housing providers do not make huge profits off long term tenants. It’s obvious you know nothing about maintaining buildings or the rent control ordinance. Annual rent increases are limited to 60% of annual CPI but may not be more than 7%. Contractors, appliance dealers, hardware stores, etc are not limited. They go up with CPI every year. With long term tenants housing providers lose every year.
Simple. They bought and paid for the property, the tenant didn’t.
It is not the duty of the housing provider to subsidize the tenants. If they want susidised housing they should move into public housing.
Again, that is absolutly ridicules. You’re showing your ignorance. We are not a sociallists society. Entrepreneurs invest to get a return on their investment.
Again, you’re showing your igonorance. Why don’t you pack your bags and move to a socialist country like China where they do things the way you like them. Or, why don’t you put an initiative on the ballot for SF to declare eminet domaine on all rental housing in The City so City Hall can dictate all rents.
You really shouldn’t write about what you don’t know about. BTW, whats your real name. Are you ashamed to let people know who you are?
Rent Control in a rising rental market (like SF) is the reason for the crisis. Rent Control is NOT why SF has less of a housing crisis. The other counties have recently had crisis but way after SF had theirs. The Anti-Eviction Mapping Project and Eviction Free SF started their protests in SF… now they have moved their protests to the south and east bay.
“ets means test the landlords to see if they need the rents they are asking for”
“Wouldn’t that encourage landlords to avoid low-income tenants?”
Not necessarily. If means testing was done to landlords too, landlords who have owned their rental property longer have a lower cost basis, thus will be required to charge lower rents. New landlords that buy a new building at higher costs can charge higher rents since their cost of doing business is higher.
Not claiming that you are a centrist. Perhaps I used the wrong term; your views are more “objective” than I had originally perceived. It is also fair to push back on YIMBYs, their shady dealings and funding from developers should be noted. I don’t know how you can say it not working is YIMBY propaganda when you just cited quite a few examples of it being broken (like the guy living in a 2BR because it’s cheaper than a 1BR, the incentive to evict, etc.). I don’t think your outlook is fair to anyone new to the city. I don’t think that wanting people to leave the area is progressive. I don’t believe in scapegoating an entire industry, or the people that work in it, gets us anywhere. They’re just jobs, and most techies can’t afford a home either. I see a TON of disgusting vitriol against these people coming from progressives and it’s hard not to think that this is the result of xenophobia and nativism, two very conservative traits.
I think socializing all rental units would just leave to more severe shortages, and I’m not alone in that. Those shortages will hurt tenants in the long run as the population increases, while those that simply got in early reap the benefits.
It seems like the progressives want to do everything they can to help the people here now, and I think that’s fine, but as long as it’s not at the expense of the people in the future. None of the progressive policies seem to care about what the market will do 5, 10, or 20 years from now because they all just want the market to go away. Well, it won’t. We’re basically arguing socialism vs capitalism at this point and we just won’t agree.
Since rent control gives SF less of a housing “crisis” compared to other counties, maybe vacancy control will mean even less of a housing crisis.
Um, not to stir the pot but I do want to correct an assumption. I am not at all against expanding rent control. I am very much for it. I don’t think a two-tiered system is healthy, and expanding rent control gives tenants more options if they have have rent control and want to move. I do not believe we need more market rate housing. I am not centrist but progressive. I do not equate progressive with “fuck techies and landlords, socialize all housing, I got here first,” but with an ideology that puts human rights first and a desire to level the playing field. Though, yeah, why not socialize all RENTAL housing as a long-term goal?
I honestly do not think comments of the nature of the above quote are anywhere near the majority. Clearly, people get rude on both sides of the argument but more often that is the way the YIMBYs portray their opponents, not what we are really about. It is not fair, and sure, it stirs up emotions at times.
YIMBYs are representing high-earning individuals who are mostly white men, and are close allies with real estate developers. So, they are in a bind if they are to take the moral high ground when these allies are displacing lower income people of color. Thus, they act as if their only opponents are self-interested home owners. Those people exist, I’ve witnessed them, but others of us have been advocating for the rights of vulnerable tenants long before they got here. No YIMBY came and talked to us before they went on the attack. It is only human to sometimes strike back, and this is why the YIMBYs have a brilliant strategy. But this does not make them right.
And as for our way has not been working, that is just more YIMBY propaganda. It is a myth to think that progressives have held much power for very long. We have been able to pass a lot of protections for tenants, and those have helped a lot, but they are not enough to resolve the boom town crisis we are in now. We are criticized for not having built enough over the last 40 years, but at the same time told that builders won’t build without an incentive, which is high profits. Well, until recently, that incentive was not there.
SF has been a desirable city, and all kinds of people have moved here at all levels of income. But right now, we are in a situation in which only very wealthy people can move here, and they are doing so in droves because of the tech industry. It’s too imbalanced. And it’s very scary for a lot of us who can’t enter that industry, or frankly don’t want to. What is wrong with the fact that we push back at people like the YIMBYs who are openly hostile to us and do not care what happens to us as they move forward with their agenda?
Wouldn’t that encourage landlords to avoid low-income tenants?
Maybe rent control is why SF has less of a housing “crisis” than many other California counties. According to the State, SF is not in the top 10 but Alameda, Contra Costa, and Santa Clara are. It would seem these other counties should be adding hosing before SF does.
“Why do you believe that landlords are entitled to have their lifestyles subsidized by wealth creators who are paying far too much in rent?”
Because they already risked a ton of money to buy the property. Being a landlord is a job.
“Why do you think that governments should subsidize landlords who are making huge profits off of tenants who already pay taxes on their own incomes?”
The tax breaks they get, which tenants don’t really benefit from, is “unfair” but again, they put forth the risk. They run the building. The tenants just buy the product with very little risk when rent controlled.
“Why do you think that the cost of maintaining buildings is unlimited and not covered already by the high rents they charge?”
If a building is 100% rent controlled and the tenants have been there each for 10+ years it’s not inconceivable for the landlord to go underwater due to major work needed on a building. If passthroughs are the answer, reform passthroughs so that they actually work and are fair for both parties. From my understanding passthroughs are denied often and/or are magnets for litigation from tenants.
“Why do you believe that landlords who want to move into their properties do not have some responsibility to tenants, who have been paying down their mortgage, often for decades?”
They do. Buy outs are a thing. Close the loopholes, don’t remove the landlord’s ability to OMI (if that’s what you’re talking about).
“Why do you believe that those who cannot afford to buy properties of their own should not have some stability in their lives?”
I don’t think that’s what he’s saying. Again, balance. People who rent should have stability and not live in fear of retaliation, but a life time lease with a locked in rate is exceptionally generous and presents a ton of unintended side effects. Not saying it shouldn’t be a thing, but it should be re-tooled. If you think people should be means tested for similar subsidies like food stamps, why not rent controlled apartments? Give priority to teachers, for example.
“Why don’t you believe in means testing of landlords to prove they need to charge the high rents they charge?”
Pretty sure this is where the divide is. You’re right. I just think it’s a losing idea in this country and would be viewed as unconstitutional. America. Capitalism. You can fight it but I don’t think you’d win. From a realistic perspective, try to work with what we have. Can’t tell someone to not make money. If you agree to buy a can of soda from me for $75 I have the right to sell it for that much.
Thanks for the very thoughtful reply. You bring up some very good points and your view is a lot more centrist than I had originally perceived. The regulated “bump up” between tenants is a new idea to me and I can’t say it doesn’t make sense for current rent controlled units. I am swayed a bit. However, I would still disagree that rent control should expand to MORE units as many others would like to see happen, purely because it unbalances the market so much. You admit that to be true to an extent too. There are huge flaws in the way rent control is working now and expanding it seems like a scary idea.
Is it that unreasonable to think that one can be both pro-tenant protections and pro-building? So perhaps, with reasonable regulations that you imagine that still consider that the landlord is not an inherently evil entity, and an increase in new units coming to market, we can help tip the balance away from it being a sellers market to a buyers market (naturally curbing speculation that we both agree is driving up prices to ridiculous levels). I get that a Costa Hawkins repeal just opens the door to these types of negotiations, so I realize I’m falling into the slippery-slope fallacy of what would happen if CH disappeared.
My stance isn’t so much “deregulate” as it is “re-regulate”, so I suppose it would be a good first step in theory. The only problem is that the current discourse isn’t nearly as non-partisan as the discussion we’re having in this thread. It’s either “fuck techies and landlords, socialize all housing, I got here first” or “YIMBY build build build, laissez faire libertarian wet dream”. Both are ridiculous extremes but from a facts-only standpoint I think leaning toward the latter here would be more beneficial to the region as a whole than the former, as the former hasn’t really been working very well in a lot of ways. I guess you and I may never agree on that, but hey, at least we have more in common ideologically than you probably thought.
Oh I see, the guy (Tim Redmond) that was fired from the Guardian for refusing to trim costs thinks that 60% of the consumer price index is fair. If 48 Hills operated under the 60% model it would be out of business by Easter…..maybe it’s a good idea after all.
To answer your question about vacancy control: The way it works is that the raise between tenancies is not so great that it provides an incentive for landlords to illegally evict tenants the way they do now to collect double, triple the rent.
Also, by the way, the raise would not be so high that it prohibits tenants from voluntarily leaving. I see a lot of criticism of rent control on this forum and elsewhere because it locks tenants and landlords together in a contentious relationship. This is true — largely because tenants who remain in their units more than a few years would have to pay so much more that they could not afford to, or are not willing to move.
We are currently in a situation in which we have people living alone in two-bedroom apartments once shared by roommates or family because it is cheaper than moving to a one-bedroom or studio. That is because rents have been artificially inflated by speculation. Imagine if that person could move to a smaller place and SAVE on rent. They might actually do it. Some would not, but many would.
This is ultimately better for landlords too, because they would get to raise rents more than the rent control rate more often. In the scenario I just described, if the tenant moved from the two-bedroom to a studio, then their landlord could get in new tenants who pay a little more. Maybe those tenants are students and leave after a couple of years, then the rent goes up again for the next set.
In the 1980s and early 1990s, I moved around a lot, sometimes to get a better place for $50 more a month, sometimes because I did not get along with a roommate. It was easy. Sometimes it would be an empty apartment I moved to with roommates, other times I moved into an existing household. It did not make much difference as rents were relatively flat even without vacancy control. Landlord were not using the Ellis Act to jump ship and made a decent living.
Now, you are right that the owners now are mostly speculators and they are not in the business because they like it or are even good at it. What they are good at is harassing and intimidating tenants into moving out. Greentree, for instance owns hundreds of buildings in SF and plays a lot of dirty tricks I’d rather not describe here lest I give some other unscrupulous landlord ideas. Why would we not welcome their exit from the business?
Landlords running a legitimate and honest business are not doing those things. This is not some kind of blood thirst for ALL landlords. But speculation is out of control and needs to be reined in. Do you think that RE investors should be allowed to play with people’s lives the way they do? Do you think of apartments first as homes or as commodities? I think of them as homes first.
If you think that landlords should be allowed to charge whatever they can get, well then, I guess SF will need to force tech companies to curb demand by hiring and training existing residents. I don’t know how else you can curb this crisis without doing either of these things. You already know I don’t agree with the build, build, build and deregulate model.
I apologize for getting sarcastic with you previously — your fears may not be completely unfounded. We are in a huge mess and there is no easy way out. But Costa Hawkins prohibits local governments from doing much about it. This needs to be overturned now, so that we can figure out the best strategy for SF. Perhaps it would be wise to close the Ellis Act loopholes first before pushing for vacancy control. Perhaps there are other protections that could be put into place in the meantime. But you can’t have a discussion about what to make for dinner when the refrigerator is empty.
You bring up good points. Ellis Act has definitely been abused, and is open to abuse, and I’d agree whole heartedly that the loopholes should be closed. But it’s ultimate reason for existing, for a landlord to be able to exit the business, needs to remain. Otherwise you’re coercing people to continue owning property; forcing them to work a job they don’t want.
You’re the first I’ve heard to talk about a bump up between tenants. So it’s like a pre-determined bump, but a bigger bump than a normal rent control bump? How does that solve the “incentive” problem that Tim mentions? Genuinely curious as it doesn’t sound as draconian as a *permanent* price fix on a unit.
Values going down due to new units coming to market (via normal market movements) is far different than manipulating the market to artificially lower costs. What you’re advocating for is to legislate a way to (almost intentionally) jeopardize landlord’s investments because you *think* they make enough money. Who are you to say they make enough, or what the limit is? When Ellis Act loopholes are closed, and tenants have strong legal rights against bullshit evictions, evicting a sick and elderly person elicits a ton of rightful public shame etc. then why continue to seek vengeance against ALL landlords who may run a legitimate and honest business? It’s like we’re so bloodthirsty to get back at the evil landlord we forget that not all are that way.
I don’t think a huge uptick in Ellis Act evictions, aka landlord’s ditching the market, is unreasonable to think of when the impending laws will undoubtedly threaten their bottom line or just be too risky to plan for. It would just make sound business sense Ellis out. Given how many corporations run apartments as opposed to mom and pops around here, they’re not going to do it because they like it.
Why do you believe that landlords are entitled to have their lifestyles subsidized by wealth creators who are paying far too much in rent?
Why do you think that governments should subsidize landlords who are making huge profits off of tenants who already pay taxes on their own incomes?
Why do you think that the cost of maintaining buildings is unlimited and not covered already by the high rents they charge?
Why do you believe that landlords who want to move into their properties do not have some responsibility to tenants, who have been paying down their mortgage, often for decades?
Why do you believe that those who cannot afford to buy properties of their own should not have some stability in their lives?
Why don’t you believe in means testing of landlords to prove they need to charge the high rents they charge?
Oh I guess your last question answers all of mine — you are a right wing Libertarian who believes in property rights over human rights.
I’m totally down for means testing too — lets means test the landlords to see if they need the rents they are asking for.
There are decent landlords here who support rent control and repeal of Costa Hawkins. They don’t need to make astronomical profits and enjoy their relationship with their tenants. It is a system that works for those who have a heart and a soul. I bet they are far happier than the speculators who do everything they can, both legal and otherwise, to squeeze as much from their tenants as possible.
Those were landlords who took unnecessary risk and should suffer losses if what they claim is true. And as I said in my longer response, many of them are serial Ellis Act eviction users. They know exactly what they are doing and are not suffering — they are causing suffering.
Hard to know where to jump in here. Huge loopholes in the Ellis Act should be closed, or it should be repealed altogether. Currently, it is being used most by speculators who buy a building, go out of business, buy another building, go out of business, buy another building….It’s total fraud.
As for vacancy control, it does not freeze rents; it allows for a bump in rent between tenants that is greater than the rent control raise in rent for sitting tenants. If a building goes down in value because of it, so what? The values are ridiculously inflated anyway. In fact, isn’t that the plan your YIMBY pals have, for values to go down due to over-building? Well, this could have a much faster effect. Sadly the rents are already too high for too many people, making it still a great investment for some rich person you clearly have sympathy for.
Housing should not be a big money scheme, it should be a place where people live, and where responsible, smart landlords make a decent living. Why do they have a right to make a killing? Not all doctors are multi-millionaires, not all lawyers are. Some people choose to do what they love sometimes even when the pay is not sky high (though that option is harder to justify with the cost of housing being so high).
It’s a fair question to ask what would be the consequences of vacancy control, but not fair to jump to the conclusion that chaos will ensue and landlords will suddenly run through the streets with lit torches as sharks fall from the sky. The time for that discussion is after the repeal of Costa Hawkins, which only opens up the possibility for vacancy control. Municipalities have to vote it in, and as they do so, they can pass laws to protect tenants from the consequences you fear.
Not after the fact. I mean before then, if they need to illustrate a persistent problem.
And thank you!
Well yes, it’s easy to say that the city needs to buy all the rental units in the city but you are talking about several decades of planning for that one.
And that is assuming that people want to live in Soviet Union 2.0 where the government doles out places to live.
Even Bernie Sanders winning the White House wouldn’t help much.
Yeah, that was good.
Do the math…probably the biggest financial decision of your life: Buy an asset when you know that your revenues will never increase beyond inflation.
Meanwhile your legal, insurance, common utilities, janitorial and maintenance costs have no such controls. Replacing the roof is on you; you’re not going to be able to pass that on to the tenants.
You can’t even fantasize that the people living in Unit A for 15 years will move out.
Suddenly, a combination of Apple stock and T bills don’t look so bad.
After the fact? Then do they sue the city for damages or what? Just sounds too risky for everyone involved. It would be uncharted territory; strict rent control and price fixing in an area in which many economists believe that even moderate lax rent control of today is a factor in the housing shortage and high prices. Also, the whole property rights issue would probably take this to the higher courts. Agree to disagree, I suppose. Thanks for a thoughtful debate, I wish there were more comment threads like this.
Fair point, somewhat. It would be good to see an analysis of how much a building would depreciate because of vacancy control.
It is the changing legal environment that is most alarming. You buy a building with two or three flats, you live in one and use the rental income to help with the costs of buying the building. Now, let’s assume Costa-Hawkins is repealed and the City passes vacancy control. Your plans of living in your flat until you need to sell to pay for your assisted care room have evaporated because the value of your building has substantially decreased.
If we want to fix our housing crisis, we need to buy all the rental units in the City and then provide the living spaces to our lowest income residents. Residents of the City proving at least six months of residency would be at the top of the list.
“Losses” often mean “less profit than we’d like”. If they want legal protection from ruin, by all means, let them show some numbers.
Landlords have cited suffering losses due to rent control as a reason for taking advantage of the Ellis Act. Short of opening their books to the press I don’t know how that could be proven. You don’t think with razor thin margins dictated by the government (with vacancy control on top of rent control) that landlords couldn’t realistically face hardship? They will always make “enough” money, no matter what laws are imposed?
“I don’t think that’s worst case scenario.” I meant what you listed for the landlords: lawsuits, disasters, etc.
You are making it seem like being a landlord of a rent-controlled building is risky and/or a money-losing business. You haven’t shown any evidence for it, and I believe you are wrong.
Four cities had vacancy control in California until Costa-Hawkins: Berkeley, East Palo Alto, Santa Monica and West Hollywood. Again, I don’t know of any ruined landlords or abandoned rental properties in those cities.
I don’t think that’s worst case scenario. I think worst case scenario would be landlords just straight up abandoning their buildings and responsibilities en masse, creating a huge burden for the city. Or worse: arson. I don’t think landlords saying “my business isn’t what it used to be” and doing whatever they can to exit (buying out tenants and demolishing the building) is unrealistic. I mean, even if only 1 in 10 do this, the city can’t afford to lose rentals at all.
Rent controlled units have been razed already, but it’s not an epidemic, you’re right. As it is now is not *totally* broken as some others would imply. I’m just saying that tilting the scales even further would have very unintended consequences. Right now landlords can raise their units to market rate to make up for the difference when people move. Without that, being locked in forever, the risk would become too great for many and the incentive to demolish would go through the roof. This is, of course, IF Costa Hawkins gets repealed, and IF vacancy control passes, and then IF the Ellis act also get repealed. So maybe we’re diving too deep into hypotheticals.
I thought you were talking about rent control, not vacancy control.
You do know that there was no vacancy control in San Francisco 1990, right? If not, here is a history written by Randy Shaw on the period:
If you can think of a real example of a landolord’s revenue being permanently capped it would be great.
So limit condo conversions. You plug the loopholes until none are left.
“Because rent increases are limited landlords are more likely to leave a unit vacant until they find a tenant who can pay as much as possible rather than discounting rent to fill the unit faster.” That’s makes little difference. They can only price it so high, and they can only sit on vacancies for so long.
“So you give me the name of the market and I’ll find out how the property owners there manage.”
That’s what I’m replying to. People were buying rental property then. It was a good investment even before anyone dreamed of dot-coms.
You are coming up with a worst case scenario. Typically you buy property if the lender can see that you can make payments and maintain the building given current income, including from current tenants. So you build equity in a building that appreciates, with limited taxes, and when you’ve paid off the mortgage you’re still getting rental income.
There are hundreds of thousands of rent-controlled buildings in SF. I haven’t heard of any of the despondent landlords that your scenario would imply.
…at a substantial loss because only an idiot would purchase something with such an awful risk to reward ratio.
“Would you like to buy my building? Your return on investment is entirely determined by the government, but your risks are entirely determined by the market. Unexpected maintenance expenses, litigation, a downturn in the market, or a natural disaster will eventually ruin you. Also, when you go to sell, you can only sell to someone more foolish than you. Good luck!”
Thanks. That worked out just great for renters, obviously. 1990? I wonder why no one is jumping in trying to replicate that success story..
Rent control decreases the available housing supply because it incentivizes rental units being taken off the market and either converted into Condos or TICs or left vacant. Landlords are incentivized to find short-term tenants over long term tenants for whom the compounding annual effect of rent control would be more significant. Because rent increases are limited landlords are more likely to leave a unit vacant until they find a tenant who can pay as much as possible rather than discounting rent to fill the unit faster.
San Francisco, 1990.
Good question. Give me the name of a market where rent increases are permanently capped at slightly less than inflation and where you cannot convert your property into any higher revenue producing use.
So you give me the name of the market and I’ll find out how the property owners there manage.
“Living hell”? They get a steady income. They have equity to back up loans. They get a safe investment. How do you think property owners manage in markets where rents don’t soar like they do here?
Great. Let’s do whatever we can to make life a living hell for anyone who owns a rent controlled building. Lets take away any chance of their revenue increasing while their expenses go up.
I’m sure that things will therefore workout wonderfully for the people living in their buildings.
Sell to another landlord.
“When salaries don’t keep up with housing prices, it gives tenants financial security.”
It appears that way on paper, but in practice it hurts more people than it helps. If by “tenants” you’re talking about the very specific sliver of tenants who are benefitting from rent control and have a good rapport with their landlord, sure. If by “tenants” you mean the entire renting population as a whole, you’re wrong.
Tenants that don’t have it subsidize those that do. Tenants on the market who are looking for a place to live get screwed by rent control. The tenants who have it and are constantly living in fear of their landlord are victimized by rent control. The tenants who have it and are witnessing their unit/building fall into disrepair are victimized by rent control. Not even talking about the landlords here; overall, rent control has hurt tenants more than it helps. This is not a fringe theory. It should just phase itself out naturally over time as designed.
There would be a floor to the means testing, meaning if you currently live on the floor/sidewalk, you still have to pay a “minimum” rent.
“Rent control holds prices to be consistent with the cost of living”
NO it doesn’t!
As quoted from the SF Rent Board’s site (see link below):
“This amount is based on 60% of the increase in the Consumer Price Index for All Urban Consumers in the Bay Area”
NOT CONSISTENT WITH COST OF LIVING (only 60% of CPI for all urban consumers in the Bay Area) Bay Area wages are lower than it is in SF, now you only take 60% of that… that is 2X a shitty deal)
DOES NOT TRACK EARNING POWER.
So then how does a landlord exit the business? Retire?
Let’s literally enslave landlords and force them to house people until they die.
Means testing? So if a tenant starts earning less money they get a rent cut? Sounds good to me!
Well, the Ellis law should also be repealed…
Rent control holds prices to be consistent with the cost of living, which tracks earning power. When salaries don’t keep up with housing prices, it gives tenants financial security.
It decreases housing supply only in the sense that evicting people increases the housing supply.
But leftist extremists vote. Although I haven’t seen any Maoists in SF lately. Plenty of reactionaries, though.
Chiu provided the swing vote in destroying 1,400 rent controlled
units at Park Merced. His astroturf outfit that took $350k from
the RNC to elect Bush II.
Sign Shohei Ohtani!
Rent control, especially vacancy control, doesn’t work well because it artificially holds down prices far below those set by the market. The farther you drive the artificial price the more landlords are incentivized to evict, convert from rentals to TIC or Condos, or to simply allow a unit to remain vacant. Rent control decreases housing supply and quality and increases aggregate prices. Not to mention unless rent control is means tested it will necessarily go to people who don’t actually need it.
I don’t actually mind rent control as it stands now in SF. Applying rent control to a lease in the form of limited price increases is a good way to maintain economic diversity and to protect vulnerable tenants, especially seniors. That said expanding it as a way to protect tenants is laughable, it won’t protect anybody. If anything it will just increase the number of Ellis act and Owner move-in evictions.
Authority now! Institutions = Swoon. /Sarcasm.
Not really… the tenants can petition the Rent Board and most of the time the Rent Board sides with the tenants. No/limited pass throughs. Only Mandatory Soft Story work under the Soft Story Ordinance has 100% pass through.
Costs of maintaining a building are passed through to tenants.
Hey Howard, here’s a thought: Maybe follow up with these advocacy groups directly.
Hello Tim, I have a few questrions for for you and the “adocates.’ Please answer.
Why do you believe that tenants are entitled to have their lifestyles subsidized by housing providers for years and multiple decades?
Why do they believe that housing providers are solely responsible subsidizing tenants housing costs rather than the city’s population as a whole?
Why are annual rent increases limited to 60% of CPI when the costs of maintaining buildings are not limited?
Why do they believe that property owners do not have an absolute right to live in the property they own without paying a ransom to tenants and their lawyers.
Why does renting a home in San Francisco essentially give the tenants lifetime leases rather than fixed term?
Why don’t they believe in means testing to qualify for rent control?
Why don’t’ they believe in the right to own and control private property?
Most of what people complain about is the chronic homeless not those who are temporarily homeless. Maybe one or two percent of those evicted become temporarily homeless. If more landlords leave the business and convert rental to owner, it won’t help prevent evictions
TIC’s have been a more affordable way for young people to become owners. Maybe there should be a move to end the moratorium.
No one is forced to move to SF. Discouraging more people from moving to SF, the Bay or the State may be a good thing. I am sorry if you cannot afford the City but there are many very nice places to live outside of SF that could benefit from you moving there.
Owner occupied generally means nicer, more stable, better maintained. In my owner occupied neighborhood people are entering all the time. Anyone who can afford the price of admission can have what I have. Most cities in the Bay Area are much more owner occupied than SF and people are entering those cities all the time.
“Vacancy control would radically reduce evictions.”
Vacancy Control will provide less unit turnover exacerbating the housing costs. There is a reason why the Mayor’s Office of Housing and Community Development are proposing to cap Teacher housing at 7 years. If the teachers were allowed to stay forever (what rent control and vacancy control does) there will be no room for new teachers.
Where are Donald Dewsnup and Sonja Trauss to rescue all of us 😆
“Vacancy control would radically reduce evictions.”
I couldn’t agree more. Over the long term, repealing Costa Hawkins will result in thousands of units exiting the rental market. With less rentals there will surely be less evictions.
“The San Francisco Housing Report came out this week” Link to the report that came out this week please.
The repeal of Costa-Hawkins would simply allow San Francisco (and all CA municipalities) to set their own housing policies, rather than being prevented from doing so by state law. People in SF love to complain about the homeless problem, But, perhaps they should think about landlords that make the problem even worse, by forcing out elderly, sick, and low-or-fixed-income citizens and creating even more homeless people. The San Francisco Housing Report came out this week, and it shows that we are LOSING affordable housing faster than we are building it. This is a direct result of Costa-Hawkins – it’s not even a debate. Allowing developers to set our housing policies benefits developers, not the city, and not the citizens.
I really hope people can think longer-term than you are here. More ownership and less rental units just puts the barrier of entry to the city (or the Bay, or the State) even higher. People can barely scrape up enough for first month’s rent and security deposit. 20% down is unthinkable.
This really sounds like another “good if you got it, fucked if you don’t” thing.
Why not push for a repeal of the Corporate exemption to Prop 13, that allows corporate property sales I(high rises, etc) to be exempt from re-assessment? Now THAT is indefensible.
The City has a moritorium on condo conversions. Also, I think Costa-Hawkins is the legislation that excludes SFH (i.e. condos) from rent pricing controls. If this is correct, repealing Costa-Hawkins would greatly reduce rental units in the City. Small buildings consisting of two to four units would convert to TIC owner occupied. I’m not sure what would happen to buildings of ten, twenty, or more units. We might see more devastating conflagrations in these buildings.
Welcome to America, Redmond.
Then maybe vacancy control is a good thing if it encourages converting rentals to owner occupied. More ownership opportunities would be good for the neighborhood and the City.
These tenant protesters have had their 15 minutes of fame and have burned all their political bridges. Politicians have figured out is better to ignore these leftist extremists than to feed these trolls. Leftist extremists should pick their battles and not pick fights with the police, health care providers, landlords, politicians, newcomers, techies, realtors, developers, contractors, etc… if you feel everyone around you is wrong maybe it’s not them.
True, but you’re playing chess. Progessives only play checkers.
“When rents rise to market rate after a tenant moves out, it gives landlords a huge incentive to get rid of long-term renters who are paying below-market rent.”
This is true.
“Vacancy control would radically reduce evictions.”
This is debatable. Who’s to say Ellis Act evictions won’t immediately skyrocket? If I were a landlord and the new rules meant I could never make a profit on my building, or my profit would be forever determined solely by the legislature, I’d be out. Done. Sold. Sayonara! Whoever buys next certainly won’t want to rent the units out when they know the price is completely capped either. So no more landlords. Sounds like a dream! Until they’re all converted to condominiums.
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