TRADE SHOW WAS SPECTACULAR!
Thank you so much for putting on such a spectacular event. The information was phenomenal, and your speakers were out of this world. They were so giving and generous with their time and knowledge; it’s unbelievable that AOA puts on this event for free. The education I received was worth far more than conferences I’ve paid hundreds of dollars to attend. This couldn’t have come at a better time, my family is growing and now I have new tools and resources for making, keeping and protecting what we’ve worked so hard for. I would recommend your trade show and your company to anyone interested in investing and becoming successful. Katherine Norland
The below is a letter sent to Ed Chau Re: AB 1506:
I own a property management company and we manage 3,300 units. I understand that you are a fair guy and may hold the swing vote on Costa Hawkins. This will have a severe impact on the housing industry in California.
- Both rent control and property taxes are eventually paid for by the consumer and society.
- Both are a taking of property and have nothing to do with a person’s ability to pay the tax, or a person’s ability to pay rent, or person’s ability to subsidize a tenant (over 80% of whom make three times more income than the rent they are paying).
- The proper way to subsidize a tenant who can’t afford rent is Section 8 welfare programs.
- If an apartment investor makes a profit, he gets taxed and that helps society. If he doesn’t make a profit, the government will need to take over the housing industry and that would be disastrous (check out countries who have tried this). The first thing that goes when not making a profit is the aesthetics and maintenance of the property – – and eventually it goes back to the bank.
- I still have properties in L.A. City rent control that I manage. Tenants rarely move and when they do move they sublet the apartment to family and friends. Because they rarely move, the vacancies are fewer causing higher rent on the vacancies.
- The values of the properties drop which means less property tax for the state and less capital gains tax for the state upon sale.
- The BOTTOM LINE is this is not a rational solution to achieve balance in the housing market. It may be a populous idea, but when the cost of providing food and shelter go up, the consumer ends up paying for it or the suppliers go out of business, or move out of state, or move into a different business.
I hope you do the right thing and save the populists from themselves. Sincerely, Jerry M.
OPPOSE AB 1506
(Sent to City Councilmen Chiu, Bonta, Bloom, and Rendon)
Most recently, as you’re aware, the Santa Monica and West Hollywood Councils and Rent Control authorities advised that under no circumstances would any of the city’s tenants be responsible for paying any portion of the rent control mandated earthquake seismic retrofit program. Again, tenants will pay nothing.
In support of their position, the rent control authority suggested that the landlords were making a great deal of money if you consider the “impact” of the 1995 Costa-Hawkins Fair Housing Act. When a unit became vacant, the owner could, at their discretion, elevate the rent to “market rates.” Santa Monica suggests that the turnover has been 75% or more. So, the owners allegedly have a great deal of discretionary money. Thus, they can underwrite the earthquake retrofit program and no tenant need contribute. On the other hand, Los Angeles has a similar program yet the tenants contribute 50%. There are no financial programs in West Hollywood, Berkeley or Santa Monica to help owners.
Accordingly, if you repeal or eliminate Costa-Hawkins, then you destroy the “premise or logic” offered by your friends in Santa Monica and Berkeley. Owners will have insufficient funds to do any mandated safety protocols. Smoke alarms, carbon monoxide alarms, special locks and of course, earthquake retrofit will simply go unattended and owners will, as you suggest, “remove” the properties from the market pursuant to the Ellis Act. This is wrong.
So, I suggest that the Housing Committee simply put the bill of my good friend and neighbor, Richard Bloom, in a file to be examined several years from now, after we have completed the earthquake retrofit program and have provided safety to the tenants.
As you’re aware, the San Francisco and Los Angeles programs provide minimally sufficient engineering standards so as to “shelter the tenants in place”, however, the building itself will fracture and partially collapse. There is no benefit to the owner. Unless you agree that owners love their tenants and want to protect them and preserve their safety. We believe owners love their tenants.
So, you’ll be under pressure from SMRR, Tenants Together, Tenants United and others.
Rents are high. Operating expenses have increased by 400% if you track the same expenses allocated in 2007. Remember, a vacant unit offered for market rent essentially subsidizes and underwrites the older tenants who have been in their units for years paying far below market. This is re-allocation of wealth wherein several or more of the tenants in the building are essentially paying for the operating expenses and allowing the other tenants, who are paying far below market, to remain in their homes. This is the true test of rent control – it destroys housing and jobs.
So, single family homes, condominiums and granny flats as well as new construction should be exempt. When a unit becomes vacant, it should be established at the market rate, and if you want to install some form of cap, you need to examine the entire rental picture.
Water is Not Rent
Every tenant in the state of California should pay for water, sewage, trash and parking. Tenants should pay for municipal charges and fees. [Add these charges to your new tenants as being separate from the rent.]
The annual rental adjustment should be no less than 7%.
When a unit becomes vacant, its rent should be established at the exiting rent and elevated to an amount no greater than 15%.
We can’t build our way out of the housing crisis. Set up a program using the same source of funds and provide housing vouchers to “rent burdened” tenants. Let’s work together. Let’s be fair. Sincerely, Michael Millman
Sent to: Assembly Committee on Housing and Community AB 1506
From: Jerry Marcil
Re: Inaccuracies in the Analysis Report
Below is an analysis of your official analysis.
- Paragraph I: San Francisco is not all of California and rent there did not go up 44% in a “couple” of years. It was over 5 years and it s because there was an influx of the highest paying jobs in the country and a lack of local communities to allow new construction.
- Paragraph II: A renter paying 30% of income is not “burdened”. The industry standard is a renter needs three times the income of the rent cost in low to moderate priced units, and two to 2.5 times on higher priced units. For example: “A high priced unit of $3,200 could be rented to someone making $6,400 because a person can live on $3,200 a month. So the statistics in this paragraph are grossly misleading. The bottom line is: rents can’t go higher than the renter’s ability to pay. It is higher rents that make it possible for builders to afford the cost of supplying more units to the market which then cause rents to level out.
- Paragraph III: When people move around to get lower rent, that causes competition amongst the property owners to adjust rent accordingly. If you can’t afford the rent, you should move somewhere cheaper. It doesn’t mention what percentage of the renters are here illegally – or does that matter?
- Paragraph IV: California has a disproportional amount of homeless people for several reasons:
1) If you are going to live in a tent then go where the weather is best.
2) If you want to be a “Sanctuary” State you are going to have a disproportionate amount of uneducated and unskilled people here illegally. This group represents about 10% of California’s population.
- California offers more help to the homeless than any other state. So it attracts disproportionate amount of homeless.
- Paragraph V: Santa Monica is a high rent area therefore you need more income to live there. It would be nice if everyone could afford to live in Beverly Hills.
– East Palo Alto: see comment above
– West Hollywood: see comment above
– Berkeley: see comment above
– It would be great if everyone could live right on the beach. This argument doesn’t even make sense.
- PARAGRAPHS 6 THROUGH 15:
- Rent control is a taking of property.
- Opening it up to local control, simply means that locations where renters are the majority of voters – – guess what is going to happen?
- In a Democracy when 51% of the people say your house is their house … then whose house is it?
- Rent Control does not promote supply, and supply is the problem. Therefore, the problem will only get worse.
- Subsidizing renters who can afford the rent is simply wrong and wasteful. The proper way to help someone who doesn’t make enough money to pay the rent is Section 8 welfare programs. Make them prove they need help.
- The legislators should visit the countries where the government dictates the rent. See how well it works.
- In L.A. City and Santa Monica, when a renter wants to move, they sublet their apartment to friends and family … or just find someone to sublet it to.
- When the property owners make a profit, they get taxed helping all of society. If they don’t make a profit you can’t make them stay in business. The first thing that gets sacrificed is the aesthetics, and next is the maintenance, and last is capital replacements (roofs, plumbing, etc.), and finally it goes back to the bank or the state.
- Rent control lowers values, which means the state collects less property tax and less capital gains tax upon sale, and less transfer tax.
- The capitalization rate of return on investment for apartment owners is 3% to 5% annually in Los Angeles, Orange, San Diego and San Francisco counties. How much should they make? They’re not making a killing. Costs such as property tax, insurance, mortgage interest, water, gas, electricity, trash, management, maintenance, capital replacements, health insurance, workmen’s comp., payroll taxes, insurance, legal, accounting, and administration costs go up every year. If the rent doesn’t go up proportionally, guess what’s going to happen? Our government will be housing all of us.
My Trash Collection Prices Increase 300% Over $1,000
Dear Mayor and Councilmen:
Since you legislated the “Franchise Trash System” my bill has increased 4X compared to what was paid before.
Prior to Franchise system, I was paying $363.77 monthly with Recology, and they were separating the recyclables.
After implementation of the Franchise system, it was increased to $418.82
This month, Waste Management has increased the monthly rate to $1,472.62!!
They are crooks. Please get rid of all of these franchises. George Gelsebach
$UPPORT YOUR RENTAL INDUSTRY!
I’m a retired person who bought my first building in 1976. Slowly and consistently, while working first in computers and then in real estate, I added to our small apartment building portfolio. The buildings are in West Los Angeles and West Hollywood. Building the retirement portfolio was difficult, mostly because the public’s attitude toward rental housing constantly changes resulting in illogical ballot choices and politically-driven policy decisions of local and state government. There is no consistent appreciation for the value of service we provide. We are indispensable!
The reason I’m writing is to let you know that I and my fellow small landlords are freaking out over the November ballot issue. I’m sure you, as well as your members, are to varying degrees familiar with all the issues. And, although we can examine and argue them all day long with supporters and non-supporters alike, that won’t affect whether or not the Referendum succeeds, come November.
It is my opinion that only one thing will protect the retention of Costa-Hawkins: that is a PROFESSIONALLY MANAGED CAMPAIGN, INCLUDING CANDIDATE-LIKE STRATEGIES, MEDIA PROMOTION (ELECTRONIC, PRINT, AND SOCIAL), AND MONEY.
The enormous investment that stakeholders in our rental market have in their apartment buildings more than justifies however many millions of dollars should be spent on such a campaign. Our funding will require but a small, small, amount when compared to the hard earned, collective equity in our assets.
I am a consistent contributor to AOA’s campaign requests and capital drives. I do not believe we have ever faced a challenge like that before us now. Passage of the Affordable Housing Referendum will structurally degrade the quality of our rental marketplace, buildings and both landlord’s and tenant’s economic welfare for decades.
If you have not yet done so, I urge you to address the need to immediately begin the economic, philosophical and practical defense of our industry in dealing with this dangerous threat. It should address both the November ballot issue, but also importantly our relevance and contributions to our cities. We are not an adversary.
I’m hopeful that when further educated about this clear and present danger, our members and those of other organizations like AOA will contribute – not just $50 or $100, but thousands of dollars each to defeat the Affordable Housing Referendum. We need to act now, because the buzz in our ranks is that the deal is done. Thank you, Ted Schneider