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Rent Control: Things We Might Agree On
by Landlords for Rent Control
Friday Sep 28th, 2018 8:31 PM
As landlords and homeowners, we understand why some of our landlord friends are anxious about the proposed rent control ordinance on the ballot. Some of us are nervous about Measure M's potential restraints on our power to raise rents and evict tenants. We all grew up here in the US—property is sacred.
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But we also agree that rents have gotten too high. We want community stability. We understand that forcing people out of their homes causes a community-level trauma, disrupts our schools, and drastically weakens the very fabric of our neighborhoods.

It’s not difficult to imagine being that person who now has to drive an hour to work after dropping their kids at a new school and then drive even farther to get to a job that used to be nearby. We agree that keeping renters and their families in their homes is crucial for all of us, if only to slow the increase in commuter traffic.

And many of our landlord friends support the regulation of housing, even rent control in principle, just “not this ordinance.” We know there was some early misinformation that suggested Measure M would stop nuisance evictions (which it doesn't) and allow endless subleasing (which it doesn't) but those have long been debunked, so why the worry?

Is it relocation costs? To move into a new home, renters usually need about three months’ market rate rent for first last and deposit in addition to the extended and sordid costs of relocation. This translates for landlords into a relocation fee of 6 months’ of HUD level rent that is a tax-deductible cost that, while certainly substantial, would occur only in the case of an eviction that is not the renter’s fault, and that we might foresee, like a family move-in. Most of us already have to budget for this kind of expense as homeowners. Formalizing this planning seems quite doable given the benefits it provides us.

But what of the rent board? Maybe that is what folks are worried about? The rent board will likely have both renters and landlords on it, since it is an elected body. If it works like rent boards in other cities, it might be volunteer or salaried. The cost will be zero to the city and negligible to landlords (Mountain View’s board costs $160/unit/year, or about $14/month/unit). And the benefits from the flexibility and oversight it brings will be substantial. Without a rent board, local people have no way to manage the process of preserving a healthy community for all of us. The rent board will be there to help both landlords and tenants to maintain our freedoms.

But then also, some of our friends have heard negative predictions about the rental market. Those fears turn out to be unfounded. The big studies, like Stanford's, and Haas' (even the LAO) make it clear that rent control does not prohibit landlords from evicting problem tenants, and it does stabilize communities. In Santa Cruz already, the temporary rent freeze has protected dozens of community members who want to stay in their homes. What is true is that the largest out-of-town corporate land investors are funding the opposition and pushing the negative story. They do not want our community to come together to support families who rent. It’s mom and pop (or mom and mom, or pop and pop etc.) landlords and homeowners, like us, who do.

Most importantly, we small landlords and homeowners want to treat our neighbors as we would be treated ourselves. We want them to have a home that is stable, neighborhoods where kids can make friends, be safe and build lives for themselves. This is why we bought property—to make this world safe for ourselves and our kids. But it won’t work if we don’t support stability for neighborhood renter-families too. We can be as stable as we like, but if we don’t help our neighbors grow roots, then our dream of living in a community of people who share eggs and recipes and help each other fix their cars and plumbing will be just a fantasy.

What is really sacred in Santa Cruz is caring for each other. We believe regulation should be used to balance power. And we have now planted the seeds for a new vision of community, one where we all feel like Santa Cruz is home. We have an opportunity to nurture these seeds through reasonable rent control. As landlords, home-owners, and community members, we are supporting it. On reflection, we think, in your heart, you may, too.

This letter is from some of us landlords and homeowners who organize with "Landlords and Homeowners for Rent Control": Kyle Lane-McKinley, Rob Lemon, Zeke Bean, Debbie Gould, Laurie Palmer, Michael Gasser, Constanza Rampini, Mary Graydon-Fontana, Jeffrey Smedberg, Madeline Lane-McKinley, Rachel O'Malley, Ron Pomerantz, Josh Brahinsky, Josh Muir, Michelle Glowa, Nita Hertel, Akiko Minami, Dr. Elisa Breton, Rick Longinotti, Michael Levy, Matt Nathanson, thanks for reading.

For specific answers to many outstanding questions about rent control please read the FAQ below.

If you want to join Landlords and Homeowners for Rent Control please email landlords4rentcontrol [at] gmail.com and send us your phone and address.

If you have any time and energy (even a little) to make calls or talk to neighbors for the Yes on M campaign please click here to sign up: https://santacruzrentcontrol.org/canvass/


Measure M - A Landlord's Frequently Asked Questions (FAQ)


Does the law apply to housemates living in the same shared space with a landlord?

No. If a tenant shares a bathroom or kitchen with a landlord in the landlord’s permanent residence, the tenant is not covered by either rent control or Just Cause eviction. Also, Just Cause protections would not apply to a sublessee in a similar situation, permitting a master tenant to evict them.


Can I evict difficult tenants?

Yes, as long as you can provide just cause for the eviction. Landlords will retain the right to evict a problem tenant for valid and reasonable causes, including failure to pay rent, breach of lease, creating a nuisance, use of rental unit for illegal purposes, failure to give access, refusal to execute a new lease, or an unapproved subtenant in sole possession or the rental unit at the end of a lease. These violations are all considered to be the fault of the tenant and therefore the landlord may evict the tenant or sublessee at any time without penalty to the landlord, or any responsibility to pay relocation costs. Having documentation to support an eviction with just cause is a fair and reasonable approach that protects both tenants and landlords by raising the standard of eviction to require a valid reason, rather than none at all.


Will I be able to manage my property?

Yes. The Just Cause provisions of this measure were crafted to ensure a process that protects both parties. Landlords are expected to create a proper lease, issue three-day notices to cure lease violations, maintain proper documentation, escalate to unlawful detainers to end tenancy, and give substantial notice for family move in. Just Cause provisions ensure that landlords will follow a process that lowers their risk of civil liabilities for acts such as retaliation, discrimination, or violations of state and federal fair housing rights. Landlords will be required to use fair and transparent processes in their relationships with tenants, which makes it easier for everyone when resolving disputes.


Will rent control make the housing crisis “worse”?

The idea that the market might shrink because of rent control, has been challenged both through evidence over the last year in Santa Cruz (see letter above) and data showing that Berkeley's housing reduction is matched by its neighboring towns without rent control. Average rents in Santa Cruz have already climbed 52% in the past four years, and currently there are almost no lasting protections against further price increases or displacement. Rent control will help alleviate the housing crisis by permitting current residents to remain in their rental properties, rather than be forced out by higher prices, which would only create additional demand in a rental market that is unable to provide an adequate supply of rental units. Longer-term measures must be taken to increase the supply of housing, especially for low- and middle-income families. However, only rent control can help those people with the greatest need for protection in the short term.


Will this law allow tenants to sublease to anyone they want?

No. Subletting is only permitted to the extent that a property lease permits or restricts it, and tenants must obtain the landlord's approval of an applicant, before subleasing to people other than family. A sublessee will be granted the same protections as the leased tenants once the landlord gives approval to move in. If a tenant permits a sublessee to move in without landlord approval, they may be in violation of the lease and subject to eviction by the landlord. The exception would be to allow a family member to move in, which would be permitted by law, in order to give renters the flexibility to support their loved ones in times of need. This includes the following family members of the tenant: spouse/partner, child, foster child, parent, grandchild, grandparent, sibling, or the spouse/partner of such relatives.

A lease that permits subletting may set a maximum number of occupants, but this limit would not apply to a tenant’s family members, as long as the maximum number of occupants complies with the limits in CA Health & Safety Code Section 17922 and Section 503(b) of the Uniform Housing Code, interpreted as two people per bedroom plus one additional occupant per unit. State occupancy limits remain in effect and are not changed by the Rent Control law. If the allowable upper limit for a unit is six people, a renter may not sublet to more than five others, whether or not they are family members. The Just Cause for Eviction protections provided by Measure M only apply to tenants and sublessees who are named on, or allowed by the lease, not unapproved sublessees. If a lease expires and an unapproved sublessee remains in sole possession of the unit, the sublessee can be evicted without penalty to the landlord.


Will I, or my family, be able to move into a rental property that I currently own?

Yes. As a property owner, you have the right to take your property off the market, in order to move yourself and/or your family in. In order to do so, you will be responsible for paying relocation assistance to the current tenants who will be displaced. However, there is a ‘Temporary Tenancy’ clause in Measure M, which gives the landlord the right to rent a unit for up to a year with a clear written agreement ahead of time that the renter’s possession of the unit is temporary and that the landlord has the right to repossess the unit after the time agreed upon without penalty to the landlord.


Will the Rent Board only help renters, or will it also help landlords with reasonable grievances with the law or tenants?

Many people mistakenly think that the mission of the Rent Board is only to protect renters, but it also offers protection for landlords, and provides a venue for landlords to address disputes with tenants without the need to file lengthy and costly court proceedings. In these cases, the Rent Board functions as a mediation agency and will seek redress for the landlord.


Will this law prevent me from making a profit?

No. It is in fact illegal for the government to make your financial investment unprofitable to operate. Measure M employs the legally-recognized Maintenance of Net Operating Income (MNOI) standard to guarantee property owners a fair rate of return. This formula ties profits of landlords of controlled units to documented inflation. Measure M restricts rent increases to the annual change in the CPI for the San Francisco Bay Area, but if a landlord can show the Rent Board that the cost of operation is more than what the current return affords, a petition can be filed for an additional increase to ensure profitability, which will be decided on a case-by-case basis.


Will I be able to recoup my costs, if construction work or other substantial repairs are needed?

Yes. The measure establishes a Rent Board that has the power to grant a landlord’s petition to raise rent greater than the standard annual adjustment, if they can show that the cost of repairs needed for health and safety purposes would otherwise prevent the owner from maintaining a net operating income. Likewise, if a tenant lives in an apartment that is already in need of extensive repairs, they may also petition the Rent Board for a rent rebate and/or a denial of rent raise, for example, if they were paying market-rate-or-higher rent in a substandard unit that had been neglected by the owner. Since tenants are protected from eviction simply for filing a complaint under Just Cause, they are more likely to ask for repairs on a unit that is deteriorating and has already been neglected.


I depend on my rental units for all or part of my income. Will I still be able to make ends meet?

Yes. The State of California protects the right of landlords to receive a fair return on their investment. Courts have long upheld the constitutionality of a landlord’s right to continue to raise rents in order to both maintain the income received in the past (Maintenance of Net Operating Income, MNOI), and in order to keep up with inflation (see Sections 11 and 12 of Measure M). All cities with rent control in California are required by law to meet these standards.


How will this law affect my property rights if my tenant is over 62, or disabled or terminally ill?

A landlord always has the right to evict a bad renter when the renter is at fault. This is as true for the elderly, disabled or terminally ill, as it is for any other renter. All Measure M does is deny a landlord the right to claim the ‘owner move in’ as the reason to evict these three especially vulnerable groups of people, referred to in Measure M as "Qualified Tenants", in situations where the tenant has lived in the unit for at least five years. Even then, a landlord still has the power to evict a Qualified Tenant, in order to move in a family member who is 62 or older, disabled, or terminally ill. As a last resort, landlords still have the right to remove a rental property from the market entirely, if they so choose. Landlords also have the ability to file a petition with the Rent Board, if there are unusual extenuating circumstances.


Will rent control create more affordable housing?

No, the purpose of rent control is to limit price increases on existing rentals, in order to keep people in their homes right now. The lack of affordable housing supply in Santa Cruz is an ongoing issue that can only be remedied using other long-term measures, such as new construction (especially low-income and other affordable housing), conversion of existing uninhabited real estate to rental units, changes to planning and zoning laws, stricter regulation of short-term rentals, etc. Conversely, will the absence of rent control create more affordable housing? Apparently not.


Will landlords take their rentals off the market because of Rent Control or Just Cause Eviction?

Statistically, the total number of rental units available has not changed significantly in cities that have passed modern rent control laws. In Berkeley and Santa Monica, for example, studies have shown that the loss of rental housing under rent control followed the same trends occurring in adjacent areas without rent control. Some landlords in our city claim that they will leave the market if rent control passes - but they have the opportunity to choose whether or not to continue renting their properties in one of the most profitable housing markets in the country.


Will I be able to sell my property?

Yes, absolutely – rent control in no way prevents owners from selling properties they own. However, the new owners would be bound to honor an existing lease on the property. In the current real estate market in Santa Cruz, where prices are at an all-time high, many homeowners are tempted to sell, in order to cash in, which would be the case whether or not we have Rent Control.


Why should we choose rent control instead of building more housing to create more vacancy?

This is not an either-or decision. Building more housing, especially low-income and affordable housing, is definitely part of the solution, and we should continue to hold our cities and our county accountable for doing so. However, additional construction alone will not solve the housing crisis, and it will not stop renters from being pushed out of their homes. To the extent that additional supply could help drive down rents, it will be many years before we would even begin to see the results.

For instance, in San Francisco, local rent control has been protecting some households, while others were unprotected, due to the Costa-Hawkins and the Ellis Acts. During the last 15 years, the City of San Francisco chose to address their crisis by greatly expanding market-rate housing. Instead of improving the situation, this has actually made the crisis worse. A real estate consulting firm found in 2007 that for every 100 market-rate (unaffordable) units built, San Francisco needed another 20-43 affordable units to mitigate the problems caused by market-rate construction. This means that when the city houses additional high-income renters and homeowners, it needs additional workers in construction, food service, teaching, healthcare, police and first responders, etc. Therefore, even if 40% of new construction is devoted to affordable housing units, this would still do nothing to improve the original housing deficit problem. Now, San Francisco is even more densely built, with virtually no change in vacancy, and is facing a generational development deficit along with sky-high rents.


Will renter protections slow investment in housing?

In a city as attractive as Santa Cruz, this is very unlikely. Several studies show that rent control and just cause eviction policies do not impact development in any substantive way. Cities such as Los Angeles, Berkeley, and Mountain View have not seen slowed growth since rent control was implemented. In fact, many cities actually reported an increase in new building projects after rent control was passed. The Mayor of Mountain View, Lenny Siegel, recently explained that, “Once Mountain View signaled that we were open to housing construction, we were deluged with proposals. That interest has continued, perhaps increased since the enactment of Measure V, the Community Stabilization and Fair Rent Act in November 2016. One of the largest funders of the anti-V campaign is hoping to build thousands of new apartments in Mountain View.” Communities across the nation with rent control policies continue to experience accelerated development, as the relentless demand for housing drives the market.


What about the basic "supply and demand" principles of free-market economics?

Free-market economic models require an idealized market of perfect competition, where everyone is free to buy or sell at the price they choose, or go somewhere else. The housing market is in no way a free market, especially in Santa Cruz – it is a captive market, where land and homes are limited and their prices are artificially driven up by investment and speculation – which creates a severe hardship for tenants who are forced out of their homes when prices go up. Just as economics shows the need for antitrust laws and labor unions, it also shows that in this extremely uneven situation, we cannot rely exclusively on market forces to provide balance, and that we need legal remedies to keep families and workers in their homes.


Why are only certain rentals subject to the rent control provisions? How is this fair to these landlords, when other rental properties are not subject to rent control?

This disparity is the result of the Costa-Hawkins Act, which was passed by the California legislature in February 1995. As a result, only a portion of rental units in Santa Cruz are eligible for rent control – limited to those built before 1995, which are not single family homes or condos. We agree that this disparity is inherently unfair, but it would be remedied if California voters decide to repeal the Costa-Hawkins Act by voting Yes on Proposition 10 in November. This would significantly level the playing field not only between renters and landlords, but also among all landlords in the rental market.


What effect will this have on homelessness?

High rents, low wages, and the lack of a stable living situation are primary factors that lead to homelessness. It’s no coincidence that the city of Santa Cruz is the least affordable housing market in the United States, and it also has over 1,200 people without homes, the majority of whom lived here before they lost their homes. This law will be a key factor in reducing the number of renters who end up on the streets, by preventing more people from losing their homes due to unaffordability.


How will rent control affect public safety?

There is a false and prejudiced perception that rent control causes poverty and crime, because under “First Generation” post-war policies, rent control was often applied selectively in low-income urban neighborhoods where crime rates were higher than in surrounding communities, which has also been the effect of the Costa-Hawkins law in recent decades. If anything, the lack of rent control produces higher crime rates, because poverty is the primary driver of crime, and the exorbitant rise in rents within a community is a major factor that contributes directly to increased poverty rates within a community.

In fact, modern rent stabilization and vacancy control policies lead to the gradual increase of home ownership rates, with greater ethnic diversity of owner demographics, and the expansion of a vested middle class. When renters feel safe and settled enough to get to know their neighbors, their neighborhood is made safer. In terms of crimes committed by tenants, under this measure, landlords have every right to evict tenants who engage in illegal activity on their property.


Will this lead to more party houses in Santa Cruz?

No. Renters who create a nuisance to their community, because of loud parties or any other behavior, will still be subject to eviction based on Section 5(a)3. Because such behavior is the fault of the renter and not the landlord, relocation assistance would not be owed to tenants evicted in this situation.


Does this disproportionately help students and harm long term residents?

There is a possibility that, in the short term, some landlords will favor renters who are transient and will therefore ensure frequent vacancies, allowing rents to be regularly raised to their full market value. This is an issue that can only be addressed through stricter regulation of short-term rentals by local government, as well as negotiations with UCSC to construct additional housing for their ever-expanding student population. However, this problem could be resolved if CA Proposition 10 passes this November, repealing the Costa-Hawkins Act. This would legalize vacancy control, in which case vacated rentals would continue to be subject to the price controls that were set during the previous lease, which would do even more to stabilize rents across the entire rental market.


How will renter protections impact the local economy?

Renter protections help to give renters greater economic security, which strengthens economic stability within the community as a whole by leaving tenants with more disposable income. Because low-to-medium-income people tend to spend locally, rather than invest far away, local businesses are able to reap greater profits from the increased commerce. Renter protections are also beneficial for employers in Santa Cruz, who are more hard-pressed than ever today to recruit and retain good employees, given the unaffordability index, and rent control will make it easier for more good workers to afford to live in the city where they work.

Predictable rents under rent control will help stabilize the living situations of the bedrock workers who make our city's student- and tourism-based economy run, by allowing tenants to budget better for their futures. This allows them to reap the benefits of promotions or salary increases they earn, by investing into savings that they can use to build a better future, including becoming homeowners themselves, instead of those hard-won benefits going directly to cover the cost of relentless rent hikes.


Are there homeowners who support rent control?

Yes! You too can join us in stabilizing our community by supporting the Yes on M campaign for Rent Control. Many landlords, including many of our supporters, already charge their tenants below “market rate” and only issue small increases per year, if any, which is commendable. However, this clearly is not going to stop other unscrupulous homeowners from raising rents far higher, displacing more and more of our neighbors as they are forced to move away. Our community is made up of a diverse group of people and we believe that it is far more important to preserve the richness that this diversity brings to our lives, than it is to maximize the wealth in the hands of a small number of landowners. Rent control will help renters from all backgrounds, at all income levels, to ensure that Santa Cruz remains a vibrant, dynamic, prosperous and enjoyable city, where everyone can live and thrive. email us at landlords4rentcontrol [at] gmail.com