Where Does the Apartment Market Stand?
A Tale of Numbers
By Kimberly Roberts
Property Owner Liability
for Serious Criminal Activity
By Edward Morrison, Jr.
|
Dear Rental Housing Provider: August 3rd, 2005, marked the 10th Anniversary of “historic” legislation for beleaguered rental property owners in rent controlled/property controlled jurisdictions in California. It was on that date, then Governor Pete Wilson signed legislation approving AB 1164, which became Section 1954.50-1954.535 of the California Civil Code and which we refer to (with reverence) as the COSTA-HAWKINS RENTAL HOUSING ACT. You’ll recall, from August, 1995 until January 1, 1999, the Santa Monica Rent Control Board, anxious to have owners shake loose units held off the market since 1979, “permitted” (how I hate that word) owners to raise rents on vacant units 15%. January 1, 1999, was the first time in 15 years of tyranny by politically obsessed bureaucrats; owners had a vacancy decontrol/recontrol ordinance. While not the perfect solution, it proved an approach that was less stifling for owners in Santa Monica, West Hollywood, Cotati, Berkeley and East Palo Alto. Vacancy decontrol– wow! What powerful words! Are you old enough to remember how many thousands of dollars and how many failed attempts were made to accomplish what should have been a basic right of owners? Do you remember the ACTION ARMY and the old war horses Jim Baker, K.B. Huff, John Rodriguez, Al Kindt, Chet Hoover, Wilho Miller, John Jurenka, to name a few? I firmly believe rent control shortened their lives. And I would be remiss if I didn’t mention the contributions of past presidents Wes Wellman, Herb Balter, and Gordon Gitlen. And how about Jim Costa and Phil Hawkins who carried the final bill? But, perhaps the most deserving of all are the statewide associations who pulled together and YOU who provided the necessary resources with testimony before the committees and financial support to make it happen. My friend, while there are those of us who have been fortunate to have had vacancies and are not running our buildings at a negative cash flow, some ACTION members still have tenants paying $500, $600 and $700 a month. I happened upon a Rent Board market rent report dated December 31, 2004. The report was based on the effects of vacancy decontrol after six years. By the end of the sixth year, 12,132 units (representing 44% of the controlled rental units) had been rented at market rates. However, 56% of the controlled rental housing units (15,377 units) had not received market rate increases. The Rent Board’s figures were based on a group of 27,509 controlled units. Were you aware that the number of new units rented at market rates decreased each year since 1999? In 2004, only 854 new units were rented at a market rate for the first time, the lowest number yet for a one-year period. It figures that once a unit is rented at market rate, the tenant has less incentive to stay in place and almost 48% of the market rate units have been re-rented at least once, while almost 8% of the units have been rented at market rate four or more times. I’m sure you are all aware that our hopes were momentarily dashed with the recent decisions that came down from the United States Supreme Court on property rights!. Not one, not two but THREE. Property Rights Cases 0-3! Has senility set-in the U.S. Supreme Court? The third decision was a real shocker. In Kelo v. City of New London the Court said that the government can take your private property and give it to a private developer who will increase the city’s tax base. Previously, in Lingle v. Chevron this same court held that gas station rent control is constitutional and in San Remo Hotel v. City of San Francisco, the City imposed (extorted) $567,000 under the Hotel Conversion Ordinance as a condition of a permit allowing tourist use of the hotel. We’re talking property rights here in the USA! On a more positive note, ACTION has been networking with other associations in property controlled areas and they have put forth some interesting ideas. I think we are all in agreement that until a private property rights jurist might be confirmed as a replacement for Justice Sandra Day O’Connor, looking for relief from that court is an exercise in futility. Our Association friends up north are exploring a statewide anti-rent control initiative similar to the one successfully used to beat back rent control in Huntington Beach., CA. They feel the time is ripe in view of the Kelo (I mentioned this case before) decision and the perceived outrage of home owners whose property could be seized by eminent domain that they would vote with rental housing providers on a statewide Initiative.. The old axiom: “When it is your ox that is being gored….” Another proposal put forth is a modified “means test” similar to the one passed in New York City. A tenant with an income in excess of $250,000 wouldn’t be protected by rent control. And ACTION’ lawsuits are still alive. You’ll recall we have had two positive Appellate decisions on our Tenant Harassment suit and we are hopeful we can put this one to bed with a positive decision from the California Supreme Court shortly. And our Constitutionality of Rent Control case should be coming up in Federal Court as I write this. At its last meeting, your Board grew so nostalgic talking about the early rent control days commenting that after 25 years of property confiscation what was needed were the firebrands I mentioned earlier and their ideas of going back to basics in litigation. In other words your Board is considering a number of smaller cases that KB Huff and John Rodriguez would have called “Shin-kicker cases.” These cases would be based on your personal tribulations with the City and more specifically the odious and hostile Santa Monica Rent Control Board. Hopefully by the time they would wend their way through the state courts, private property would mean something once again. But even “Shin-kicker cases” require hours of preparation and money, funds, euros, dinero, gelt!. Amicus briefs, Research, Polling and Surveys for proposed Initiatives cost money. And all the ancillary activities and overhead cost money. And quite frankly, our funds are tapped-out. A friend of mine commented that the lawsuits that grab the headlines are all about celebrities and the piles of money spent in defense…ala O.J., Robert Blake, Michael Jackson. Unfortunately, ACTION APARTMENT ASSOCIATION doesn’t have celebrity status nor does it have piles of money. But what we do have is a tenacious spirit and a desire to win back our private property rights. And with your financial support we are out to win! Please take a minute to fill out our short survey by clicking here and return it with your most generous contribution. And always remember …
Sincerely,
|
