Ordinances Do Not Resolve Crisis

 

Attorney and real estate broker Christopher Hanson accurately predicted effects which would result after adoption of the rent ordinances. (“Rent Control Raises its Head in Town,” Nov. 12, 2015, and “Rent Control Unfairly Taxes Landlords,” Nov. 19, 2015). These effects include loss of affordable rental housing; decline in construction of affordable housing; conversion of rentals to condominiums to co-ops; loss of tax dollars; and global warming.

  • Loss of affordable rental housing. Single-family homes would leave the rental market. On my block out of 10 single-family homes, three single-family rentals were sold. Now they are owner occupied. Around the block, a home that provided subsidized Section 8 housing for years was purchased by Vice-mayor Malia Vella for $900,000. She did not rent out the three-bedroom home for $2,250 a month. Newer state statutes allow building units in yards. None of the new homeowners has done this.
  • Construction of affordable housing declines. In Oakland in 2015, after long-time rent control, 16 percent of permits for new construction were for affordable housing. In 2016 that declined to less than 2 percent. In 2017, none has been permitted. In Santa Monica, which has had rent control longer, 75 percent of all units are at market rate and nearly no new units have been built.
  • Rentals are converted to condominiums (or co-ops). This existed before the ordinances. Those that can be converted, are. Again on my street, a rental duplex was converted and sold. For a large building, one can sell a few condos each year, reduce tax consequences, establish a paid management system for insurance, roofing, maintenance, etc. and make a small profit for “management” that the landlord previously received, without rent control.
  • Loss of tax dollars. Landlords pay tax on rents, renters are not taxed on low rents. Turnover and sales prices of rental properties declines, losing higher licensing fees, transfer and other taxes. A means test to identify renters needing subsidy, instead of costly multi-million dollar government rent programs for all, including those who don’t need help, works. Cities that abandon rent control, verify higher sales prices with more turnover of rental properties immediately.
  • Global warming. In 1957, Utah Construction created the land from today’s lagoons up to Shore Line Drive by filling in the bay. Their engineering ignored the alluvial currents (and liquefaction.) Every few years, Alameda pays tens of thousands of dollars to replace sand washed to the San Leandro Channel by currents. Forever. How many apartments are between Shore Line and the lagoons? Insurance companies and banks are starting to consider global warming in financing and insuring properties. Who pays to save these units? The taxpayers? Compare this to the City of Pacifica.

Rent control and stabilization hopes to provide sufficient rental housing at an affordable level. It fails. Rent ordinance advocates, like those who ignore global warming, stick their heads in the sand. If one is in the last rental unit one will ever need, (and it is not between the lagoons) and then rent ordinances may be of benefit. For the rest, the reality does not meet the hopes.

 

 

Barbara Thomas is a former vice-mayor of Alameda.