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Arguments For And Against The Renters Coalition Rent Control Ballot Measure Submitted To City Clerk

Arguments for and against a strict rent control November ballot measure have been submitted to the city clerk. (File photo)

Arguments for and against a strict rent control November ballot measure have been submitted to the city clerk. (File photo)

Three ballot arguments, one for, and two against, have been submitted to the City Clerk for Alameda regarding the Alameda Renters Coalition strict rent control measure on the November ballot.

Proponents of the measure, which include Gray Harris, a local school board member and Jeff DelBono, president of the local firefighters union, argue that tying rent rent increases to the rate of inflation will allow “families to plan for the future,” keep residents in their home, and not unfairly burden landlords.

The argument against the measure that will appear in the voter guide was signed by Alameda Mayor Trish Spencer, Councilmember Tony Daysog, who earlier this year was circulating his own petition to moderate for small landlords a city-enacted rent control ordinance, and Kathleen Schumacher, president of the Alameda Citizens Task Force, and two additional residents.

They argue that the measure is inflexible, and that the cost to administer the independent rent control board proposed by the measure would cost between $3 million and $3.7 million per year.

Marilyn Schumacher, who sponsored a “no rent control” ballot petition that failed to qualify, Jose Cerda-Zein, and Steve Sorensen, president of the Alameda Association of Realtors, submitted a second argument against the measure, which will not appear in the voter guide. (Only one argument for, and one argument against, a measure can be included.)

They argue that, while the measure is well-intentioned, it “mistakenly omitted critical language that would limit those rental subsidies to only those families who actually need housing subsidies,” and will “force rental owners to subsidize the rents of even those tenants with high‐paying jobs who could afford normal rents, while making it even more difficult for struggling families in need of housing.”

All three submissions are reproduced below.

Alameda Rent Control Arguments by bayfarm on Scribd

16 comments to Arguments For And Against The Renters Coalition Rent Control Ballot Measure Submitted To City Clerk

  • I have asked the city clerk for documentation and support for the mayor’s patently absurd if not fraudulent $3-3.7 million estimate of the cost to administer the Coalition’s charter amendment, including the name of the consultant who produced it and his or her qualifications.

    I am a retired CPA/CFO and was present at the Council meeting where the “consultant” (whose qualifications were not presented) made his assertion. His argument almost made me laugh aloud. He provided not one stitch of physical evidence to support his number–no charts or graphs, not one calculation. He only asserted that he thought ARC’s measure was more complicated than the city’s ordinance, and this DESPITE the fact that the city’s ordinance is seven pages longer than ARC’s measure.

    The City better have support for their $3.7 million. I’m betting they’ve got zilch.

  • Monty – those figures came straight out of the July 5th, 2016 city council packet.

    “Under the Renters’ Initiative, there would be an elected, five-member Rent Control Board with its own administrative and legal staff funded by annual fees paid by landlords. The Board would have the power to establish rents, issue rules and regulations, conduct investigations and hearings, impose fees on landlords, and impose penalties for non-compliance. The consulting firm that conducted the fee study for the City’s rent program has prepared a fiscal analysis, based on similar rent programs in Berkeley and Santa Monica that largely mirror the rent program under the Renters’ Initiative, and estimates the cost to administer that program to be $234/rental unit, or $3 million – $3.7 million annually, depending on the number of units covered by the Initiative. The Renters’ Initiative requires that the Rent Control Board be elected within 90 days after the initiative is passed, which will require a special election, at a cost to the City as discussed above. In addition, property owners who conclude that the rent increase provided under the Renters’ Initiative constitutes a “taking” or otherwise deprives them of constitutional rights may seek damages and attorney’s fees for which the City, not the Rent Control Board, would be legally responsible.”

    https://alameda.legistar.com/LegislationDetail.aspx?ID=2769327&GUID=877F1502-45FB-471E-9AB6-F7D58299C5C2&Options=&Search=&FullText=1

    From the June 21, 2016 packet, SCI Consulting Group is “the consulting firm”

    “The City contracted with SCI Consulting Group (SCI) to determine the costs of administering Ordinance 3148 and any related policies, such as the Capital Improvement Plan Policy, and to develop an appropriate fee that would cover the cost of the program. SCI is a public finance consulting firm with over 30 years of experience in helping public agencies in California with planning, justifying and establishing new revenues for public services and capital improvements.”

    https://alameda.legistar.com/LegislationDetail.aspx?ID=2748761&GUID=6D62E659-93F8-4939-A3F3-0A6C74147009&FullText=1

    Here is info on SCI: http://www.sci-cg.com/about.php

  • Edward Hirshberg

    It has occurred to be that it is possible to back test this regulation. Our firm has rented property in Alameda for a very long time. In 1970 we had just crossed the century mark with our rents for 1 bedroom apartments. ($100 per month) It is then a simple process to go to the government site and look up the CPI for that year and the intervening years. Using 1982-4 = 100 The CPI in 1970 was 38.5 and it is now 263.9. This is a 6.5 fold increase, and 65% of that is 4.45%. Consequently, if this law had been in place in 1970 our rent could not exceed $445. The expenses are higher than that, so it would be ruinous. If one questions if tenants stay that long, let me assure you that we have had several and at market rents. With below market rents it would be even more commonplace. The appeals court has recently ruled that rent controlled units can be passed on to children. Who knows what the next ruling will say. This law morphs the apartments into life estates, with someone else picking up the taxes, insurance, and other costs. In the long run it will be ruinous to property owners.

  • David, yes, I was there and heard it all. Again, he gave NO actual calculations, just generalizations. Santa Monica and Berkeley have, respectively 30,000 and 40,000 more people than Alameda. And it’s misleading to include the cost of the election as part of the annual operating budget. The $234 cost per rental unit is also suspect. Berkeley has a Cadillac program.

    The City has been on this topic since before November of last year and STILL has not come up with a budget estimate. Budgeting isn’t rocket science. It’s simple arithmetic. I’ve done it throughout my career with Deloitte-Touche and Price Waterhouse and with companies like Texas Instruments and Occidental Petroleum.

    Someone’s dragging their feet, and the only reason that makes any sense is there’s political advantage in hiding the numbers.

  • Monty – the Santa Monica rent control board memo is pretty clear – estimated expenses of $5.5 million for the current fiscal year, and consideration of $288/per unit administration fee.

    One of the other articles I posted indicated that Berkeley’s costs are lower than Santa Monica’s.

    Have ARC members, indeed yourself, not said that the Alameda measures is modeled after Santa Monica?

  • “Modeled after” doesn’t mean copied. ARC attorneys studied rent control throughout California, including San Francisco and Oakland, and cherry-picked the best practices and red-lined mistakes to avoid.

    ARC’s document–which I am still studying for a book I am writing on Alameda’s rent crisis–is highly streamlined compared with the City’s ordinance, which is 7 pages longer and much harder to administer. So I find it extremely hard to accept a budget number almost twice as high as the estimate for CC3148.

    I just got a supporting package from the city clerk, which I will be combing through over the next few days. I guarantee you I’ll be completely up on these estimates in short notice.

    I thank you for the links, which I will also be studying and responding to.

    Numbers aside, the argument for rent control is moral, not economic. There’s an expense associated with public health and safety, which includes safe housing. It is immoral to kick people onto the street to make a higher profit. The Bay Area’s burgeoning homeless population didn’t spring up from nothing; it was created.

  • I’m sorry, but the length of the ordinance document doesn’t mean anything to me in how much it will cost to administer. It seems to me that it’s the creation of an elected rent board that will drive the administrative cost.

    In any event, if it’s a moral, not economic, issue, then why even worry about rebutting the $3 mil. cost estimate?

  • Edward Hirshberg

    To your point. ARC’s charter amendment allows for a “reasonable profit.” There’s a provision for petitioning for higher rates. All you have to do is present your numbers.

  • Edward Hirshberg

    Monty, who decides what a reasonable profit is? What kind of cap rate? Is it based on today’s value or acquisition cost? Is something equivalent to a CD a fair rate? With allowable increases held so low, owners would have to appeal every two years or so. That could be 10-15,000 appeals per year. What a zoo.
    I know cases in San Francisco where the owners cannot get enough to maintain their buildings, and so the tenants are trying to do the work to keep them habitable. What sense does this system make?

  • Edward Hirshberg

    Whatever is decided, it would have to be something that made enough sense to keep landlords interested in continuing to rent their properties but low enough to drive out people like Matthew Sridhar and the Hong Kong hedge funds.

    During my e weeks of petitioning I learned that a great number of landlords don’t raise their rents to the max; they just want good reliable tenants.

    Regardless, the applications would be automated as much as possible. 90% could be done on-line.

    As far as San Francisco goes. maybe they paid too much for their properties or didn’t do a good job of inspecting.Or they deferred maintenance and used the cash flow for trips to Tahiti and buying expensive toys. That’s just poor business practices. Rent control can’t be blamed for bad judgement.

    A block away from me is a a decrepit Victorian mansion that’s been condemned. It’s been a rental for over 50 years, with no rent control. That’s just poor judgement or bad luck. It can’t be blamed on rent control because there hasn’t been any.

  • Monty, I think you are referring to the Central Ave. property which is an extreme outlier case. I don’t believe the story of that property has anything to do with rent control or no rent control.

    http://www.eastbayexpress.com/oakland/inspections-from-hell/Content?oid=2073865

    And how do you imagine that “the applications would be automated as much as possible. 90% could be done on-line.” ?

    The ARC measure mandates a rent control board to conduct hearings to enforce the rules – it doesn’t say anything about automation. It doesn’t say anything about processing applications online. It provides no funding to create an online system.

    In Oakland, “There is currently a three-month waiting period for a hearing at the Rent Adjustment Program. If a landlord or tenant wants to appeal a hearing decision, there is an approximately six to eight-month waiting period for an appeal to be heard.”

    http://www.action-alameda-news.com/2016/07/27/notes-on-upcoming-ballot-measures/

    And, can you please point me to the properties in Alameda managed by “Hong Kong hedge funds” and identify the funds?

  • :And, can you please point me to the properties in Alameda managed by “Hong Kong hedge funds” and identify the funds?”

    I’d like to know myself, after hearing three different people mention being evicted by a San Francisco property manager working for a Hong Kong hedge fund.

    Could be the one mentioned in this quote by Ian Wright, a local commercial tenant at Hangar 41:

    “Ian Wright:
    The very first funding we got was a super angel investor. A finance guy who’s in Hong Kong. Runs a private hedge fund. …And he put $10 million dollars of his own money into it.”

    http://www.alamedabusinessmagazine.com/#!ian-wright-article/c1lt9

  • dave

    A hedge fund or private equity shop investing in a business is your evidence for a claim that evil meanie hedge funds are kicking people out of apartments?

    It’s a baseless rumor, likely grounded in racist beliefs.

    But even if it was true (which you do not know and obviously cannot prove) why would it matter? In America, anyone is free to own property, regardless of origin or domicile. If rents are getting raised, it’s because the market allows for it; there is sufficient demand. Supply & demand are unaffected by identity or location of alleged owners.

    You claim a CPA/CFO background? Your ill-informed posts, here and elsewhere, belie that claim.

  • carol

    I searched CPAverify, a commercial site https://www.cpaverify.org/ No Monty Heying.

    Then I searched State of California’s California Board of Accountancy CPA Licensee Look-up, for just “Heying”. There are no, nor have there ever been any, California licensed CPAs named “Heying”.

    Does CPA mean something other than Certifed Public Accountant?

  • L Brown

    I am a landlord that has 2 homes on one lot in Alameda, that’s it. This obviously does not make me a big-time landlord. I was lucky enough to scrape together (entirely on my own) the 3.5% down payment to buy my home at the bottom of the market. I would have otherwise never been able to buy in the bay area.

    I don’t have a lot of money, have very little saved for retirement and I had to quit my job last year to care for my terminally ill sister out of state. Luckily I was to be able to rent out my unit to help cover expenses which saved me from financial ruin. All this to say, I am not a member of the 1% nor am I aspiring to be but I would, someday, like to be able to retire. I feel lucky to have been able to buy my home but it was also a lot of hard work putting myself through college (I am the 1st in my extended family to get a college degree), paying off the credit card debt and students loans then saving what I could to hopefully someday buy a house of my own.

    Waiting for the dip in the market for many years, I was subject to some very unscrupulous landlords. I understand struggle and I was a renter until my late 40s. I haven’t studied in depth the ARC’s proposal but I did read a section that said that I have to be living in the larger of the 2 units in order to not be subject to some rather harsh and extremely expensive regulations. I guess because I never had children nor have I gotten married and happen to currently live alone that I should still be forced to live in the larger unit and forego that additional rent which would go toward my retirement? Due to my sister’s passing I have become solely responsible for the financial support and care of my mother whose only income is social security.

    As a direct result of the current rent control regulations, I am forced to leave my mother, alone, 2 hours away from me where the rents are significantly lower but in a town where we know no one, because I cannot afford to buy out the current tenants who are in my larger home. My choices are this or be forced to quit my job and be “displaced” out of the area. It sure feels to me that the rights of the tenants have superseded my own. Where does that leave my “community”? And in anticipation that you might have thought “Oh just move her in with you”, the front unit has 1000 sq. feet while my unit has only 475 sq. feet.

    I hope you can see how I cannot fit my mother, my two 60 lb. dogs (one was my sister’s) and me where I currently live. When I chose to live in the small unit, I could not have foreseen the death of my only sister five years from that time. I find this an extremely heavy-handed, unnecessary and un-beneficial to anyone regulation. In fact it seems to me to be encouraging quite the opposite of the intended consequences if in fact one of the goals here is to provide more available housing, not less. I have heard other landlords say that they feel like they have to raise rent now every year because of the new/current regulations. I have to say that I am inclined to agree with them. I am the kind of landlord that I always wanted to have but never did. I respond quickly to requests and I am honest and fair, as I have been told by my tenants, many times. In the past I never raised the rent on a good tenant. That is in the past, my friend.

    In response to: “Numbers aside, the argument for rent control is moral, not economic. There’s an expense associated with public health and safety, which includes safe housing. It is immoral to kick people onto the street to make a higher profit. The Bay Area’s burgeoning homeless population didn’t spring up from nothing; it was created.”

    I am about as far left on the political landscape as one can be and I completely agree that homelessness is morally reprehensible and our country as a whole is morally bankrupt but, I fail to see how, in a so-called capitalist society that specifically landlords have become to blame here and are now being made almost entirely responsible for this social ill. So the restaurants some of us cannot afford to eat in are not required to serve us, correct? I want to live in San Francisco but I can’t afford to live there so I live in Alameda. I could go on but I hope you get the picture. It is an unfortunate reality.

    There is most certainly “an expense associated with public health and safety” and my response to that was included in the quote; yes—it a “public” issue that requires a “public” and governmental solution, not placed squarely on the backs of private sector. I am not doing this as a business and as a private citizen, I don’t feel I am trying to get a “higher profit”. I am only trying to engage in a capitalist society as I understood it to be in order to someday be able to stop working so I won’t have to rely upon government programs or the kindness of strangers to be able to eat.

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