The housing crisis is one of the most widely discussed local issues in San Francisco. While virtually everyone agrees that to solve the housing shortage (not crisis) we need to build more housing, almost every proposal to add even a few units is met with the same tired arguments: congestion, parking, blocked views, and a host of others.
SB 35 Seeks to Accelerate New Construction
State Senator Scott Wiener’s SB 35, just passed, will reduce NIMBY opposition and local Board of Supervisor delays. The Mayor’s goal of adding 30,000 units to our housing stock is laudable, but comes without acknowledgement that the policies of city and county governments across the Bay Area have been a significant factor in creating the shortage in the first place.
National demographics are changing. In 2013, the U.S. Census Bureau indicated that 2.3 million more Americans had moved to the cities, a trend driven primarily by two groups: young professionals, and Baby Boomers, who are now retiring and moving back to the cities they left when they started their families. However, this back-to-the-cities trend is now slowing. McKinsey Global Institute, in its 2017 report “Urban World Meeting the Demographic Challenge” states: “Population is now declining in the world’s largest cities in developed economies.
From 2015 to 2025, we expect population to decline in 17% of large cities in developed regions and in 8% of all the world’s large cities.” The housing shortage is in the city’s lower-income and no-income economy. Many factors contribute to this situation. High-paying jobs are available, but require high-value skills.
Misguided Proposal to Tax Vacant Units
A recent proposal by Supervisor Aaron Peskin, himself a landlord, is to tax owners of San Francisco residential units that are vacant for more than a short time. His proposal stems from news reports that many thousands of San Francisco rental units are being kept off the market. The idea of forcing these units back onto the market by punitive measures is still being massaged into something to present to the rest of the Board of Supervisors, possibly as an addendum to existing Ordinance 182-14, which places a $765 annual inspection fee on vacant buildings, both commercial and residential.
But What is a “Vacant” Unit?
Recently, I have been pondering exactly what San Francisco considers “vacant.” The picture most people have of a vacant building is one that has its windows and doors boarded up with plywood and a padlock on the entry. However, this is not the general standard for identifying empty living spaces. Some empty units are NOT vacant. I came across an old case from the Rent Board in which an owner was found to have imposed an illegal rent increase on a tenant who, he claimed, no longer used the unit as his primary residence. The Administrative Law Judge (ALJ) ruled that the unit was, in fact, not vacant, that the tenant simply lived in the unit and in Lyon, France! In another case, my neighbor was unable to prove that his tenant had left for more than a year and that the place was occupied by various family members (reunited by ads on Craigslist). Owners do the same—keep a condo in San Francisco while living in another city, for use as a pied-à-terre when visiting. Are any of these units truly vacant? Is the unit used by the owner as a studio and crash pad for visiting family vacant?
Pandering to the Far Left
Supervisor Peskin’s proposal to tax vacant units would be very difficult to implement without an enormous bureaucracy to support it. One has to ask if his proposal is a serious one, or whether the supervisor is just playing to his constituency on the far left.
AB 1506: A True Housing Killer
Another elected official who ignores the knowledge that he must have acquired as a business owner is Assemblyman David Chiu. Chiu is one of the authors of the nefarious bill AB 1506, that would repeal the Costa-Hawkins Rental Housing Act of 1995. As discussed in past newsletters, such a repeal would be disastrous, closing the door to the last few vestiges of sanity that still exist for rental housing owners in California. Repeal would be a true HOUSING KILLER.
New construction could be subject to rent control and all rentals under vacancy control. Rent increases to cover lost revenue that would pay for maintenance and improvements would be prohibited under vacancy control. Rent control could be extended to single-family houses and condos. When properties are stripped of economic viability, slums are the eventual result. How does all of this sound as a method to solve the housing shortage? Let us defeat AB 1506 and keep Costa-Hawkins intact.
San Jose’s New Tenant Protection Ordinance Requires Just-Cause Termination of Tenancy
The San Jose City Council recently adopted its new Tenant Protection Ordinance. As can be seen by a review of its provisions, it’s clearly far more reasonable than the San Francisco Rent Ordinance, especially with regard to subject properties. Under the new ordinance, San Jose landlords of multifamily dwellings, guesthouses, and unpermitted units will only be authorized to terminate tenancy for one of the following 12 listed causes. The Ordinance outlines landlord responsibilities and tenant rights regarding notices to terminate a tenancy:
Just-Cause Reasons Based on Tenant Actions
• Nonpayment of rent
• Violation of the lease
• Damage to the unit
• Refusal to agree to similar or new rental agreement
• Disorderly behavior, disturbing the peace
• Refusing access by the landlord or his agent to the
apartment requested in accordance with the law
• Unapproved holdover subtenant
Just-Cause Reasons for Eviction Based On Landlord Decision or Result of Action
• Substantial rehabilitation of the unit
• Removal of units from rental market via Ellis Act
• Owner move-in (OMI) eviction
• City code enforcement actions requiring a move-out
• Conversion of unpermitted unit to permitted use
“Just Cause” Applies to:
• Rent-stabilized units
• Rental units, except permitted hotels and motels
• Guest rooms in any guesthouse
• Unpermitted dwellings
Buildings Exempt From “Just Cause”
• Duplexes
• Single-family homes
• Single-family condominiums
• Townhouses
• Permitted second units
For more detailed information on the Tenant Protection Ordinance, visit the City of San Jose’s website at http://www.sanjoseca.gov/index.aspx?NID=5518.
Reprinted with permission of the Small Property Owners of San Francisco Institute (SPOSFI) News. For more information on becoming a member of SPOSFI or to send a tax-deductible donation, please visit their website at www.smallprop.org or call (415) 647-2419.