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Landlord Addresses City Council on Rent Control

Action Alameda News received a copy of this written address to Alameda City Council from the author, Ed Hirshberg.

City Council Meeting January 5, 2016

Good Evening Honorable Mayor and City Council Members

The proposed rent and eviction regulations all have a sunset date. Any law enacted by man can be amended, replaced or revoked by the governing elected body. So the sunset date on these proposals has no real meaning. Certainly the proponents will seek an extension the date nears. Much like the emergency and temporary taxes we have seen of late, where the proponents of the tax argue for renewal saying that it is not now a new tax, as though a dollar new tax hurts more than a dollar of old tax. New York City passed temporary and emergency rent control during WWII. Generations later no administration has had the temerity to roll it back. Even though it has caused great harm. Witnesses say that the Bronx looked like Germany after the allied bombing.

Our company has one residential investment in Alameda. It is actually a mixed use project, half residential and half commercial, but both halves operate similarly. I reviewed the tax returns for the last ten years to see how expenses were tracking. Overall, expenses, counting only so called hard expenses, increased 46% in ten years. I was surprised to see that the biggest increase was in insurance, which increased 175%. The next largest increase was property taxes which increased 89.9%. How can the city ask for rents to be capped at CPI when it is raising taxes at almost 9% per year?

Repairs increased 35%, and garbage 34%. We also performed $123,000 of capital improvements. If the trend on expenses continues and a CPI cap is put on rents, then expenses will quickly overtake revenues. Would you buy a business or a stock where the expenses were increasing twice as fast as the revenues?

Until recently, the argument in Alameda was that the Free Market had done too good of a job of building too many rentals and creating too much density, now we hear the opposite. Ladies and Gentlemen, there is no good alternative to the free market. Government housing is torn down as fast as it is built, and non-profit housing does not house a significant percentage of the population. If you bring rent control to Alameda and the concomitant shrinkage of the housing stock and landlord/tenant litigation we will follow the track the other rent controlled cities.

Housing is not very affordable in San Francisco, Berkeley, Oakland or New York; but it was prior to rent control. Neil Diamond in his song I am I said compared New York City, a rent controlled city with high rents and Los Angeles his new home, he described Los Angeles as the place where “Palm trees grow and rents are low”. After implementation of rent control the palm trees still grow, but the rents are no longer low. Alameda deserves better. It deserves a free market. Thank you and good night.

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