Tag Archives: rent control

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This is the Wrong Prop 98: Look who’s funding the Hidden Agenda Scheme.

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Now also in orange. Recs and comments appreciated there as well.

Today, in the LA Times, Patrick McGreevy has an article about the funders of what will become, unfortunately Prop. 98. A sidebar real quick about the ballot designation of propositions. I’ve always felt that the initiatives that are particularly noteworthy should have their ballot designations retired. Take 98 for example. When somebody says Prop 98 to you, what do you think of? Education, probably. Well, now you’re going to have to start thinking of the the Hidden Agendas Scheme as well, so for the next 4+ months, you’re going to have to remember No on 98/Yes on 99. Put them together, remember them both. It’s vitally important that, just for these few months, we hear, we know, and we repeat the phrase: “This is the WRONG Prop 98!”

So, back to the LA Times story. Basically, the fact that this is about rent control, pure and simple, is made plainly clear by the sources of funding: Apartment and mobile home owners. And coincidentally, Sam Zell.

In the spring, voters will decide whose interests prevail. More than 100 owners and operators of apartment buildings and mobile home parks spent nearly $2 million to put an initiative on the June 3 ballot to phase out California’s rent control laws. About 1.2 million people statewide are covered by such laws.

***

Big financial backers of the California Property Owners and Farmland Protection Act include the Howard Jarvis Taxpayers Assn., which gave $100,000 to the effort and lent the campaign $200,000; the Western Manufactured Housing Communities Issues PAC, which contributed $150,000; and the Apartment Owners Assn. Political Action Committee, which put in $100,000.

Among the donations is $50,000 from Equity Lifestyle Properties Inc., which owns 27 mobile home parks in California, and many more in other states. Equity Lifestyle’s chairman is Sam Zell, chairman of Tribune Co., which owns the Los Angeles Times.(LA Times 1.29.08)

More evidence of the hidden agenda over the flip.

The landlords continually plead poverty as an excuse, but that is far from clear.  Take Jade Bay Mobile Lodge. They just declared for bankruptcy, allegedly because they couldn’t afford rent. But what, they forgot to cover their tracks:

Kubota, for his part, says rent control helped ruin Jade Bay Mobile Lodge. He says financial problems developed at the 75-unit park after Chula Vista adopted a rent control law in 1986, and there’s been an operating loss in each of the last five years. The site is now fenced, and the mobile homes have been removed.

“The income never matched the expenses,” Kubota said. He couldn’t afford to make improvements, and “the whole park deteriorated.”

Some tenant activists say that Chula Vista’s rent control law allows landlords to petition for increases so that they can make a “fair return” on their properties. To do so, they must open their financial books to the city. Tim Sheahan, president of the Golden State Manufactured-Housing Owners League, said Kubota’s firm did not take advantage of the appeal because it wanted to shut the park down so it could be redeveloped with condos. Kubota declined to discuss the current status of the park, but city officials said an application had been submitted for a zone change that would allow apartments or condominiums on the site.

The fact is that too many people rely on rent control, like Mary Kubancik, who will have to leave her mobile home park in Sylanmar because her $919 social security check just can’t cover the $702 rent. You can find this same story repeated over and over again throughout the state. Rent control helps REAL people. REAL Californians. That’s why we need REAL eminent domain reform, not some hidden agenda meant to eliminate rent control.

As Mark Leno suggests, there are many reasons to oppose what will soon be known as Prop 98, not the least of which is rent control. You could also oppose it based on environmental factors, or water storage factors, whatever.  We just need to keep reminding ourselves that “This is the Wrong Prop 98!”

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Using the Hidden Agendas for our own Agenda

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( – promoted by Brian Leubitz)

Well, today the good folks who want to “reform eminent domain” (notice the quotation marks there) have turned in their signatures to the Secretary of State.  This little shadily crafted hidden agenda masquerading as a eminent domain reform was attacked from all sides.  But one quote stood out to me, from Nan Brasmer, president of the California Alliance for Retired Americans:

Wealthy apartment and mobile home park owners spent close to $2 million to qualify their deceptive rent control rollback proposition for the June 2008 ballot. The landlords are going to try to trick voters into believing their measure is about eminent domain. But they won’t be successful. We will wage an aggressive campaign to educate voters that this measure is nothing more than a greedy scheme by landlords to eliminate rent control so they can make millions of dollars off the backs of seniors, veterans, working moms and other Californians.

Something came up on Calitics a few days ago about why language to abolish rent control was included in the Hidden Agendas measure. It seems pretty clear the rent control language is in there to help raise money from apartment owners.

Now, rent control is a fairly popular concept. I’m not saying its universally popular, but, in many of these safe-Democratic seats held by many of the leaders in the Assembly and Senate Caucus, rent control is viewed as a positive. And leaders who take a strong pro-rent control position are generally well-received. You don’t really need to look much further than the very well-attended event last Wednesday to see that there’s quite a bit of support in San Francisco. A couple of weeks earlier a similar rally was held in Los Angeles and I’m sure that same rally could have been held in several other cities across the state with equally strong attendance.

Unfortunately, the Legislature hasn’t been too kind to tenants in the last few years. Sure, it could be worse, but major pieces of pro-tenant legislation have been few and far between. That is the case for a variety of reasons, but there has been no real incentive for legislators to touch rent control for a while.

But, if the Howard Jarvis/Howie Rich eminent domain “reform” package makes it to the ballot, rent control will be a major theme of the race. And once that disastrous package goes down in flames, housing activists can work on using that informal poll on the popularity of rent control as a means to pursue more tenant protections.

So, as a little suggestion, I refer you to the Costa-Hawkins Act. More over the flip…

This little piece of legislation, passed back in 1995, allowed what is now known as “vacancy decontrol”.  Basically, vacancy decontrol allows landlord to set the initial rate of rental whenever the unit is vacated. So, in many ways, it’s a slow weaning off of rent control.  Well, here’s a bit more about Costa-Hawkins from our good friends over at the California Apartment Association:

This law cleared the way for owners in rent control communities to establish initial rental rates when there was a change in occupancy at a dwelling unit – a policy known as vacancy decontrol. While cities and counties continue to maintain the ability to implement local rent control laws, they must follow the parameters established in the Costa-Hawkins Rental Housing Act. At the heart of Costa-Hawkins are a number of basic rules: (1) housing constructed after 1995 must be exempt from local rent controls, (2) new housing that was already exempt from a local rent control law in place before February 1, 1995, must remain exempt, (3) single family homes and other units like condominiums that are separate from the title to any other dwelling units must be exempt from local rent controls, and (4) rental property owners must have the ability to establish their own rental rates when dwelling units change tenancy. (CAA)

In other words, Costa-Hawkins is a huge gift to the landlords of the state. So, if I’m a freshman legislator from, say, San Francisco (future Asm. Ammiano, I’m looking at you), I think I would invest a fair amount of my time pushing Costa-Hawkins reform.  I mean, given the extremely high rental rates in San Francisco, we could, at the very least work on fixing vacancy decontrol.  And, the argument for Costa-Hawkins reform becomes a whole lot stronger after an initiative was defeated based primarily on its inclusion of rent control restrictions. I’m just saying…

Blog Roundup, Environment, Health Care, Orange County, San Diego, San Francisco

November 3, 2007 Blog Roundup and Open Thread

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California

Quick Thoughts on Rent Control and Property Rights Extremism

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Amendment V. “…nor shall private property be taken for public use, without just compensation.”

In 1791 the United States Congress, comprised of property owners, passed the above as part of the Bill of Rights, designed to strictly limit the powers of the new federal government. Over the years this has sufficed for most as a balance between individual property rights and the need to subordinate those rights, on occasion, to the public good. Combined with the Fourteenth Amendment this provision ensures that any taking of property will be compensated fairly.

However, in the 200+ years that have elapsed, a more extreme view has emerged. To believe that the Constitution is an insufficient guarantee is to take a radical view of property rights. It assumes that not only does one have a right to own property, but to derive the maximum amount of income possible from that property no matter what method is used to attain it. That extremist view was not held by those who authored the Constitution, or by courts that have for 200 years been interpreting that Constitution, or by those who have been making law under that Constitution.

And if one has that extremist view of property rights – that private ownership of property is not or should not be subject to any controls or limits of regulations – THEN you will see eminent domain in the same category as rent control, as environmental laws, etc.

Here in California this view is promoted by, among others, the Howard Jarvis Association. And that’s why they use eminent domain as a wedge to push unpopular and unfair ideas like ending rent control – not just because they enjoy Trojan Horses (though they surely do) but also because it fits their extremist logic.

Most Americans instead believe that the public should be able to legislate the use of property, within reasonable bounds. Very few Americans have agreed with the extremist view that any regulatory act is a “taking” – as the rejection of Prop 90, I-933, and Howie Rich’s other efforts last year proved.

Now to rent control. The notion that rent control actually hurts renters, that they’re better off without rent control, is a theory that only makes sense in an Economics Department seminar room. In lived reality rent control has been proved to be the far greater aid to renters.

The argument against rent control – one that we’ve seen employed in these comments – is that it creates a disincentive to build new rental housing stock, creating a demand crisis and driving up rents. But California rent control laws have been significantly weakened since Costa-Hawkins passed in 1999. And yet rents are STILL sky-high, are STILL unaffordable, and very little new rental stock has been added in California in the last 8 years, certainly not enough to meet the demand.

It’s not just in SF where this is a problem – the Central Valley and Southern California experience this crisis too. In Seattle, where rent control is barred by state law, a massive building boom has done nothing to increase the supply. The theory has failed. The absence of rent control has done nothing to aid renters through supply and demand.

Why has the theory failed? Because it assumes rental housing markets exist outside of other real estate markets. San Francisco, for example, has had a housing crisis for nearly 70 years. With land values being so high in the urban cores, it is extremely expensive to redevelop existing blocks to hold more rental units. To recoup the cost, a developer would have to rent the units out at a rate much higher than most folks can afford. Further, in a hot housing market, developers can make much more money building condos. Worse, landlords can make more money by converting apartments to condos.

Instead of being helped by supply and demand, renters face unaffordable rent increases, as Paul Hogarth explained earlier this week. Paul Rosenberg has written today about the California Budget Project study that demonstrated the actual cost of living to Californians is far higher than the federal poverty line. Much of that comes from housing costs, hurting renters in particular.

Any of us who rent have felt this first-hand. I was hit with three $100 increases in my rent in the year before I moved down from Seattle. Here in CA I’m thankful we’ve not had any rent increases so far, but I fully expect one before long.

Renters do not have the earning power to absorb these hits. Renting is an inelastic market. It does not quickly respond to demand pressures. Those who face huge rent increases have two choices – pay or move. Because rental units are in such short supply, moving is not always an option.

And thus the need for rent control. Rent control *works* because its intended purpose is to protect renters from being bankrupted.

Further, it’s democratic. This is ultimately what I do not understand about the anti-rent control argument. Why is it wrong for voters to regulate the market in which they live? Why is democracy bad when it comes to business? Why should an abstract theory be given precedence over our sovereign rights as citizens and as voters?