Measure C Opponents See Unintended Consequences in Rent Control

Saturday, May 27, 2017
Kevin McCallum
Santa Rosa Press Democrat

As the owner of DeDe’s Rentals, one of the largest property management firms in Sonoma County, Keith Becker has been one of the most consistent voices opposing the city’s effort to impose rent control and just-cause for eviction rules.

He has addressed the City Council publicly on numerous occasions over the past 18 months, imploring members not to make what he views as a fundamentally misguided public policy decision.

“Making such a dramatic and severe change to our housing ecosystem has the potential, it actually has the probability, of predicating an entire series of unintended consequences,” Becker told the council a year ago as it was moving toward a rent control decision.

His main objection is that the City Council never seemed to take a collaborative approach to the issue. It rejected a call for a task force to explore the issue. It proposed a rent moratorium that caught most landlords and property managers unawares. And it ultimately wrote the ordinance in a way that seemed to fundamentally distrust landlords, he said.

“The way this measure was written, it creates an ‘us versus them’ mentality, no matter which side of the fence you’re on,” Becker said.

He points to the cost of administering the rent control law — estimated at $1.4 million annually, funded by new fees on rental units. While landlords can pass on half of those costs to renters, Becker thinks that number can only climb given the changes to the program that are likely to increase the city’s administrative workload.

Also striking him as excessive is the notion that landlords will have to pay tenants three months of relocation expenses, plus an additional $1,500, in situations where a landlord has to move a renter out. Even Vice Mayor Jack Tibbetts said as much, suggesting that provision should be revisited by the City Council after the election, Becker noted.

Tibbetts also has suggested the council rethink the provision in the ordinance that calls for the city to consider repealing rent control if the vacancy rate drops below 5 percent for a year, something Becker notes hasn’t been the case since the early 2000s

But Becker sees little if any likelihood of either of these things happening if the referendum vote passes.

“Do you really think the voters who vote for Measure C sure would allow the City Council to dilute what they were so adamantly demanding?” he said.

Becker is just one of numerous landlords and real estate industry professionals who have vehemently opposed rent control and sought to block it at the ballot box.

The No on C campaign, which is outspending supporters by a 7-1 margin thanks largely to contributions from out-of-area real estate groups, has been blanketing the city with mailers and other media focusing on all the things rent control won’t do: It won’t lower rents; won’t solve homelessness, won’t build new affordable housing.

For Beth Streets, property manager at the 118-unit Willow Tree Apartments on McBride Lane, the biggest issue with rent control is that she believes it will discourage regular maintenance of rental properties.

The cost of major capital upgrades can be recouped through rent increases higher than 3 percent, if approved by the city. But smaller projects that aren’t big enough to qualify won’t, and therefore might not get done, she said.

In that case, it’s the tenants who will suffer when repairs and upgrades are made less frequently to apartment complexes, she said. She has $50,000 in projects queued up, but doesn’t know if she should move forward now or wait to roll them into a bigger capital project if rent control passes.

“I’m really afraid that I’m not going to be able to treat my tenants with the respect that they deserve and maintain the property and protect this owner’s investment,” Streets said, noting that the owner lives in Santa Rosa.

Concerned that rent control might pass, Streets said she increased the rents on more than 80 units by $200 per month recently out of a concern that future rent increases would be capped at what were below-market rates.

That amounts to about $200,000 more revenue per year for the complex, she acknowledged, but it’s less than it sounds, she said, noting a recent $125,000 parking lot upgrade and $75,000 pool upgrade.

The notion that a subset of the city’s property owners would have to document such improvements to recoup their investments through higher rents strikes her as fundamentally unfair.

“No other business has to open up our books to the city like that, and we shouldn’t have to,” she said.

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