Despite evidence which clearly shows that a building I developed in Oakland is not subject to rent control – it is classified as new construction and exempt from the controlling ordinance – a tenant filed a petition to have her rent increase voided as it was [barely] greater than the allowed increase for controlled units. At a hearing, the tenant acknowledged that she was probably not subject to rent control but pleaded that all she wanted was a fair rent. After the hearing, I wrote her as follows:
“With respect to your assertions at that hearing, I would like to share the following with you:
- While I can appreciate that you might well find that your rent is burdensome, your rent cannot be based on your ability to pay. We are a business and cannot assume what would be a social welfare function. We only rent to tenants who can cover the initial rent at the start of a tenancy and cannot be responsible for the economic vicissitudes in their lives thereafter. Interestingly, no one has ever approached us, or any property owner of whom I’m aware, saying that the just got a promotion and a raise and that they would therefore like their rent increased accordingly.
- Rent increases are not meant to be punitive or in any way personal. I know that it feels otherwise to you. We have millions invested in this property and we did so for the benefit of ourselves and our families. In so doing, we passed on opportunities to otherwise enhance our lives. We are entitled to the benefits of the sacrifice. We appreciate our tenants as customers and seek good relations with them. We cannot, however, put their needs above our own.
- No other business is asked to consider a customer’s ability to pay in determining price. Do you ask a restaurant to lower your bill because you are short this week? Do you pay for anything you buy with your ability to pay being the determinant of price?
- Our investment in rental property is principally made for our benefit. We nevertheless take some pride in having carved thirty lofts out of an economically superfluous warehouse. The previous use of the building was to tie-dye tee shirts.
- You spoke of only wanting fairness. I assume from that that fairness for you is a rent you find affordable. How are we to determine that? Do we do this for everybody? People lose their jobs and people win the lottery. We can and have made short-term accommodations for temporary hardships, but cannot routinely have our income determined by yours.
- The purpose of our annual rent review is to keep rents at market level. That is why we are in this business. We, in fact, do not seek or get the absolutely highest rent possible. We can judge this from the number of responses we get to postings for vacancies. An exorbitant rent – a rent above market – would get no response. We get many prospective tenants wanting our lofts.
- We have no responsibility to rent to tenants at below-market rents. We do, as citizens and taxpayers, have a responsibility to pay our fair share toward any government welfare program including those which subsidize housing. We do, in fact, pay substantial and personal business taxes and thereby fully meet our social responsibility for housing assistance.
For all these reasons and others, we choose to keep our rents at market. I don’t expect you will like this explanation, but it is a policy we find necessary to meet our needs and protect our investment.”
Albert Sukoff, is the Editor of BPOA – a regular publication of the Berkeley Property Owners Association.