OUTRAGEOUS GOINGS ON AROUND TOWN (page 1)

Well May 2001 is here. We are looking forward to better weather, no rain (roofs leak) and some sunshine (dry out the mold). Rents around town are universally down, and spot surveys show that if you have a vacancy for any length of time you need to study the market very closely to reduce your asking price to a rent that is collectible. It does not appear that rents are going back up any time soon. We have enjoyed a great run-up in rents but that time seems to be over. Good news in that the Fed did just cut their lending rate by another half point (.5), which makes it a great time to borrow. If you remember last issue we were hoping that the Fed would cut the rate by .75 or 1.0 in April, but they only cut it a half point (.5). The Fed still meets later in this month and it is possible that there will be another rate cut. If so, re-financing should be brisk so get your re-financing loan application in the works now, and don't wait for the late may crush. Remember you are looking for a fixed rate loan between 6% and 7%. Anything under 6% would be a steal.

Pending and Past City Council Ordinances
Short-term housing is now all the rage. At least it seems that the City Council is upset about it. They have directed the City Attorney's office to prepare a moratorium (emergency ordinance) imposing a temporary moratorium on the permitting or construction of corporate housing or conversion to corporate housing, to be in effect while staff reviews options for appropriately regulating this use in the city. It seems there is a hot market for turnkey furnished apartment units rented on a weekly or monthly basis. The normal stay in one of this hybrid (not a hotel and not an apartment unit) is from 2 weeks to 3 months. The problem with these short-term housing units is that the landlords are making way too much money (say $3,500 per month on average). It's not that these units are not in desperate need, but some how the City Council feels that these units are a threat to rent control. The Council does not want to see any more of them, especially not in the coastal zone where they look too much like hotels. (Remember, the Council does not want any new hotels in the coastal zone). The question of this magazine is whether the existing under construction units will be able to be used as short term housing, or whether the moratorium will apply to these units.

Tenant Harassment Has Not Stopped
But it is actually tenant harassment of landlords. As you might know, the City Council is hard at work harassing landlords as well, by amending the existing ordinance to provide for more meaningful and draconian provisions. Now it is illegal (criminal jail time) for a landlord to interfere with a tenant's right to privacy (whatever that means). The City has also doubled the civil fine from $500 to $1,000 for a violation of any provision of the Harassment Law, and has inserted a provision where the City can obtain punitive damages against a landlord. Now, you might be asking how does a Landlord insure that a tenant does not illegally sub-rent his or her unit, if the Landlord cannot keep a close eye on the tenant? Well, that is really a good question and we have no answer. However, this new law has some social redeeming value. If the tenant- who sub-rents in violation of the terms of the rental agreement- claims (don't they all sooner or later) that the landlord waived the breach by not complaining about the subtenant sooner, the landlord can respond by saying that s/he was seriously hampered from investigating by the City's Tenant Harassment Law since the law prohibits invasion of tenant's privacy under criminal sanctions. Thus the landlord could neither ask nor look to see if a sub-rental was going on in the unit. This stay-away policy was imposed on the landlord by the City's laws. The anti-invasion of privacy policy is a tough one to understand, and landlords need to be very careful about which strangers at their buildings they question, and what questions they ask these strangers. Unresolved issues exist concerning security cameras in common areas, landlord questioning of strangers who show up at the property, landlord's questioning tenants about stay over guests and the like. It was clear from the city council hearing that the Council expects the City Attorney's office to file and prosecute more landlords. The quota has been raised. Of course to get more filings against landlords, there must be a lowering of the previous prosecutorial standards of review. More and more weak cases will be filed. Finally, to help run this show, the Council has approved the hiring of an additional investigator to help the City find (manufacture) evidence against landlords.

Street lighting districts
Street lighting districts have recently been established, six (6) of them to be exact. The importance of this fact is that the tax you pay for the lighting (if you are within the district) can be passed through to your tenants just like the property tax bonds.
The new districts are as follows:
District "A" on Ozone Avenue from Lincoln Boulevard to Frederick Street
District "B" on Dewey Street from 17th Street to 23rd Street
District "C2" on Robson Street from 17th Street to Dewey Street
District "D"on Marine Street from Lincoln Boulevard to 17th Street
District "E" on Strand Street from 5th Street to 6th Street
District "F " on Frederick Street from Marine Street to Dewey Street.
If your rental property is in one of these districts, then your property tax bill is being increased to pay for more street lighting, and you will be able to pass through that increased property tax to your tenants.

Go to Page 2