Rent Control Measure Threatens Historic B'game

The Daily Journal and the Post are reporting that the B'game rent control measure has sufficient signatures for the November ballot with more than 2,332 verified signatures.  There is some legal wrangling on whether the process has been followed, but let the analysis begin.  The Law of Unintended Consequences is in effect in triplicate now.  First, the Post notes

The measure would limit increases to between 1% and 4% a year and apply to complexes built before Feb 1, 1995.

That means that any complex that is more than 21 years old is ripe for tearing down.  Not only are those some of the more characteristic buildings in town they also probably provide some of the more affordable units in town.  Why wouldn't a landlord just avoid the whole thing by scraping, building bigger, newer and pricier?

Second, we have already heard from a Voice commenter that some landlords in San Mateo are already holding vacant units off the market to see what happens in November.  Net effect:  less supply, higher prices.  As another commenter noted rent control hurts all the wrong people--the ones it is designed to protect due to basic economic reality.

Lastly, I have to wonder who would police all of this?  Would the city be on the hook to hire staff to collect all leases, catalog them and then follow the annual increases?  How many staff is that and who is going to pay for it?  I was thinking I didn't personally have a dog in this fight since I am neither renter nor landlord, but now on further reflection Unintended Consequences #1 and #3 cause me to oppose the measure.  More to follow as the fourth or fifth flavor of problem surface over the next few months as I am sure they will.

Comments

[hillsider]

I would bet that if it passes they will add some sort of processing fee paid by the landlords to cover it. That would usually be passed to the tenants but not this time.

[Sell, sell, sell!!!]

Sell, sell, sell!!!

[Joe]

Here is the DJ's piece on the vote on whether or not to vote on rent control in November:

The fate of a ballot initiative to repeal the ordinance preventing rent control in Burlingame and replace it with a variety of tenant protections rests in the hands of city officials, who will vote Monday, Aug. 1, on floating the proposal to voters in the fall election.

The Burlingame City Council is set to decide during a special meeting whether residents will vote on a proposal aiming to do away with Measure T, the city’s current rent control prohibition, and instead implement new policies limiting the power of landlords.

“A voter reading the petition submitted to the City Clerk here would understand the nature of the law being proposed and that its intent is to wipe out all previous laws that may be inconsistent with it, including Measure T,” responded Kane to a letter from Ashlee Titus, an attorney hired by the California Apartment Association, claiming the petition with signatures supporting the rent control movement should be disregarded as it allegedly violated state election laws.

But Titus said in her letter city officials are obligated to throw out the rent control effort, because the advocates’ petition was incomplete as it did not include the complete Measure T text, making it impossible for those signing to know all the necessary details of the ordinance up for repeal.

- See more at: http://www.smdailyjournal.com/articles/lnews/2016-07-30/rent-control-heads-to-council-burlingame-san-mateo-officials-to-vote-on-placing-initiatives-on-fall-ballot/1776425165880.html#sthash.hRLQPioL.dpuf
_____________________________

My question is did the "sample" of the full text they were walking around with include the bit about Feb 1, 1995? If not then it was insufficient in my opinion because it did not represent the threat to historic Burlingame buildings which is a strong public interest.

[hillsider]

The Post is describing last nights council meeting as rowdy with lots of audience member interrupting other audience members trying to speak and interrupting the mayor. How to win friends and influence people!

The council sounds like it has also figured out that this might cost everyone in town a lot of money for the Rent Control Board that doesn't exist now.

This petition is wrong headed.

[Joe]

Here is another consequence I had not stated explicitly:

Some property owners suggested the rent control initiative would result in unintended consequences, such as penalizing honest landlords who have not gouged their residents by limiting their capacity to receive adequate return on their considerable investment.

The full article is here:
- See more at: http://www.smdailyjournal.com/articles/lnews/2016-08-02/burlingame-rent-control-moves-to-november-ballot-council-unanimously-approves-measure/1776425166013.html#sthash.3YuDxIcR.dpuf

[Mom]

This will be bad either way. A waste of time and money.

[Becca]

Rent control is the last thing Burlingame needs now. Please vote against it. Has not worked in any city it was implemented in.

[Sisyphus]

The only person who will benefit from this rent control ploy will be the first renter able to afford the huge initial rent who plans on staying put for decades- oh, and the paid members of the Rent Control Board. Wanna bet one of the ballot-measure authors ends up on the board?

[Samiselfie]

Watched the city council meeting on 8-1-16. Many speakers spoke eloquently.

A. Keighran is wound so tight. Scolding people not to clap or talk.
Wish she would lighten up. Relax Ann, you cannot control the human spirit. So what if people clap. As one speaker told you, the council represents ALL of the residents. You own rental properties and your bias is showing when owners of apartment buildings approach the podium and you DEMAND perfect silence.
Smile more, scold less.

[Mom]

Council meetings are not a sporting event or a concert. Residents should not be heckling other speakers or the council. I bet a lot of the hecklers are not even from Burlingame.

[professorawesome]

I thought the council meeting was productive, and that most council members spoke intelligently about the need for voters to decide the issue in November. The entirety of the council opposes rent stabilization, but Michael Brownrigg also suggested that it would be good for voters to repeal Measure T. Emily Beach asked good, meaty questions and is clearly the star of this council. Mayor Ann Keighran is an embarrassment--her personal diatribes made her sound more like an angry citizen than a mayor.

And yes, community members tend to be bumbling speakers, but l was glad to see that most of the public comments were made by Burlingame residents (though one of the nonresident property owners claimed she shouldn't have to pay taxes without representation--lol).

[Samiselfie]

Professor - agree.
But more to the point.
It's not what you say but how you say it.
One of the golden rules of life.

[hillsider]

Wrong. So wrong. It's what you say and more importantly what you believe.

[Bruce Dickinson]

Why ANY non-Burlingame resident would be at this Burlingame city council meeting is the bigger question, if ya know what I mean?

Anyway, Bruce Dickinson just got back from a six-week Antarctic adventure and ice-breaker cruise, and expected a welcome relief from the cold weather only to see the rent control issue frozen on the pages of the BV. Look, I don't want to explain Econ 101 for the 47th time, but any respectable data gathering exercise would prove that rent control only benefits incumbency and results in higher real estate prices overall and rents for newer properties.

Glad to see this measure make the ballot so it can be cut off at the knees once and for all!

[maintaining the fabric of the community]

Free markets are generally better than government controlled markets.

True rent control = reduced availability. Even rent increase control would have a simlar impact.

It is time to incent a lot of tear down and modern rebuilding of the haggard apartments of Burlingame.

In the commercial real estate world (office, retail, industrial), the typical annual rent increase is 3% for office properties. In retail, it might be 3%, or in more prime properties, 10% increase every 5 years. CPI increases are less common.

The apartments are mostly someone's retirement investment, just like your 401(k) folks. Should stock returns be artificially limited by the government?

The externality to no rent increase limits is that some residents may need to move to less expensive suburbs.

Also, Burlingame has some of the lowest Cap Rates on Apartment investments in the Bay Area. This indicates that the investment market believes that rents in Burlingame will significantly increase further in the future and thus map the actual Cap Rate a higher amount.

I'm working with an Apartment investor who has $2.5M in equity on a 1031 exchange with a desire to go $3M to $6M on the upleg. They haven't sold their downleg yet. Apartment owners in Burlingame, let me know if you'd like to sell your property. Joe and Russ know how to contact me.

Russ, good to run into you yesterday in Palo Alto! That country music band that you booked was excellent!

I would suggest a 5% rent increase cap, because the topic has many impacts including helping to maintain the fabric of the community, including consistency for the children in schools, friends, etc.

[Tom Hornblower]

We do not have free markets, the central banks of the world see to that. Since the 2008 blow up the Fed's lowering of interest rates and multiple QE's (those are not free market actions), have created both stock & real estate bubbles. If you are invested in either, good for you, if you haven't or don't have the money to, you're shit out of luck. The middle class is becoming lower class and the lower class is becoming homeless.
In the 90's I worked for the property management co. for the owners of NorthPark Apts. here in Burlingame. The large apt. complexes run by these management cos. and REITS dictate the median apt price levels in the SF bay area, the mom and pops just follow their lead. It's supply & demand. We called the competition weekly and when we saw someone raise rates, all the others eventually had to follow suit or look bad to management/owners for having lower rates than the competition. I know a lady who lives at NP and this year her rent went up 12% and last year 11%. Supply and demand, gouge the public, simple as that.
With 55,000 new jobs in the last 12 months in San Mateo county and only 2500 new units, there will never be enough supply to stop these double digit yearly rate increases.
I once worked at Franklin Templeton back in '97-'99 and was getting 10% yearly rent increases and instead of raising salaries for their service level employees, which I was one, they moved those jobs outside Sacramento & Florida and said if you want your job you must reapply there. I see Franklin now wants to build some more buildings on their San Mateo campus, but it's not to make more room for Franklin employees, they want to rent the space out to other companies. The bay area simply does not have the infrastructure to accommodate this continual influx of people.
If you don't like rent control on the ballot and homeless people on the peninsula and a surging rate in burglaries, I suggest you get used to it, because our economy is in big trouble. 2008 was a cake walk with rates then at 4-5%, next time they'll be at 0% with no place to go except negative, then all hell breaks loose.

[Account Deleted]

Just a quick side note to our very own Mr. Dickinson- Nice to see "you" gracing the cover of the cover of this recent magazine (not sure how it came into my inbox...) :)

http://www.bjtonline.com/business-jet-news/bruce-dickinson

[Joe]

Not quite. From Wikipedia:

"More cowbell" is an American pop culture catchphrase originally derived from an April 8, 2000 Saturday Night Live comedy sketch which fictionalized the recording of the song "(Don't Fear) The Reaper" by Blue Öyster Cult. The sketch featured guest host Christopher Walken as music producer "The Bruce Dickinson" (as opposed to Iron Maiden's Bruce Dickinson)

[Account Deleted]

Thanks Joe - Haven't watched SNL since the Belushi/Akroyd days, so I guess I'm just a bit out of touch with American pop culture. (What else would one expect from a Deadhead, anyway?) :)

[Sisyphus]

Who will pay for rent-control? Rent control impact weighed: Broad-level analysis dives into economic impact on San Mateo
August 12, 2016, 05:00 AM By Samantha Weigel Daily Journal

In contemplating the financial impacts to the city of San Mateo if a ballot measure instituting rent control passes in the November election, officials will consider a brief economic analysis Monday night.

According to the study conducted by a Bay Area expert, over time the proposed measure may slightly reduce property tax revenue, and fees charged to landlords would be needed to support a requisite housing commission with an anticipated $2 million budget and approximately 10 dedicated city employees.

- See more at: http://www.smdailyjournal.com/articles/lnews/2016-08-12/rent-control-impact-weighed-broad-level-analysis-dives-into-economic-impact-on-san-mateo/1776425166568.html#sthash.KTyEMKjS.dpuf

[Bruce Dickinson]

Bruce Dickinson must laugh, yes chuckle at the purported "Bay Area expert". Guys, "Dr" Barton (a PhD in urban planning? c'mon seriously?) oversaw the Berkeley rent control stabilization board. Without opening his mouth, take a guess as to whether you think he will be for or against rent control. If this is the only "expert" being relied upon, we are in deep doo-doo as all you will see are cherry-picked statistics likely showing minimal impact that goes against nearly every real economic expert on the affects of price ceilings on goods and services.

Bruce Dickinson is gonna let you guys debate and decide what you think works and doesn't work about rent control by thinking about your own knowledge and experiences of the following cities with strong rent control ordinances: Berkeley, East Palo Alto, Santa Cruz, Santa Monica, and West Hollywood. What's good about those communities, what is bad? What common themes do they share? How do they differ from communities right next door? How is housing affected? What is desirable and undesirable? Folks, you can pull any statistics from your derriere and abuse them, but we have living examples of rent control right here and right now. No need to do a lab experiment...just observe what has already taken place in these locales.

You can't say that Bruce Dickinson doesn't get your noggin' neurons firing, if ya know what I mean?!

[Bruce Dickinson]

....Not to mention San Francisco, sorry about the obvious omission

-BD

[Joe]

The Post is reporting on the rent control initiative under the headline:

City bashes rent control initiative

that the council has released its ballot statement against the initiative. The article doesn't mention it, but I happen to know all five council members signed it. The article highlights that "Measure R unexpectedly broad, applying not just to apartment, but to homeowners who rent out a single unit." It also "mandates a rental housing commission; an unaccountable body with the power to assess fees, hire countless staff and lawyers and sue at will--virtually a blank check."

The Kremlin comes to B'game!

[Timothy Hooker]

Rent Control is a Trojan Horse. Once implemented the "unaccountable bureaucracy with a blank-check" (Politburo in Nature) slowly demands more Rights. Its a "Shell-Game" of sorts and the Rent Control Coalition knows it is their intent just to get a foot in the door and then eventually build on the massive boondoggle until it forces owners out of business altogether.

Their contempt for others who have worked hard to build wealth is evident in the terminology they use, such as; "rich; "top 1%, etc. In their eyes; anyone who owns real estate is "undeserving of their wealth" and so therefore this wealth should be distributed evenly among those without.

"From each according to his abilities, to each according to his needs." Karl Marx-The Criticism of the Gotha Program

Don't fall for their BS line stating "Rent Control" is their only goal. Once you allow a unaccountable bureaucratic monster in your community to control a large block of voters through a giveaway program, you will never be able to vote it out.

The Rent Control Boards are unfairly tilted towards the Tenants and the Rights of the Landlords/Owners are historically overridden in 3 to 2 votes.

The Legal Property Owner will be HELPLESS.

See links below:

http://www.statisticbrain.com/welfare-statistics/

http://www.eastbayexpress.com/oakland/oakland-seeks-to-tighten-rent-control-rules/Content?oid=3841369