Amongst the items on the agenda for San Francisco’s Land Use and Economic Development Committee this afternoon, another informational hearing on the proposed redevelopment of Treasure and Yerba Buena Islands and a proposed “Good Samaritan Base Rent” ordinance which would apply to the emergency dislocation of a tenant.
[The proposed ordinance would] provide for temporary Good Samaritan base rent when a landlord and new tenant agree for the tenant to commence occupancy following an emergency such as fire or earthquake or landslide that required unexpected vacation of the tenant’s previous unit, and the agreement includes a reduced rent rate for up to the first three hundred sixty-five (365) days of occupancy (Original Good Samaritan Status Period); initial base rent for purposes of calculating annual CPI increases per Section 37.3 shall be the rent payable upon expiration of the Original Good Samaritan Status Period, or upon expiration of any Extended Good Samaritan Status Period as agreed by the landlord and tenant in writing, for a total of no more than 730 days of Original and Extended Good Samaritan Status days combined; Good Samaritan status may be utilized only upon written certification by a specified City Official, that identifies the emergency and the resulting unit vacation on grounds of public health, safety, and habitability.
With respect to Treasure Island, we’re assuming the Good Samaritan ordinance would apply in the case of tsunamis as well.
∙ Land Use and Economic Development Committee Agenda: April 11, 2011 [sfbos.org]
∙ Good Samaritan Base Rent Following Emergency Dislocation of Tenant [sfbos.org]
∙ The Draft Plan For 550 Acres In The Middle Of San Francisco’s Bay [SocketSite]
Why would a landlord want to rent to a renter coming from such situations?
I assume that the purpose of the Good Samaritan rent is to make landlords feel at-ease that they can offer emergency housing without being exposed to locking in a lifetime tenant on emergency terms. Otherwise landlords might keep their vacancies off of the market despite an urgent need for housing. Sounds like a good idea.
I’m a little concerned about the “written certification by a specified City Official” part during a large disaster (namely the Big One). tracking down emergency water could be a challenge during the first few weeks let alone tracking down that specified city official. Why not just allow the city to declare blanket emergency terms after the Big One allowing all new leases issued within X months to be by default free from rent control? After the emergency period concludes and things get back to a semblance of normalcy RC can be re-enabled and emergency housing cases reviewed by the city officials on a case-by-case basis.
Jimbo – The landlord would be renting to help out a distressed renter (or property owner for that matter) attain emergency housing, hence being a “good samaritan”.
er … “obtain”, not “attain”
Why not just rent to the highest bidder? I would predict that in a true city-wide emergency, liveable housing would rent for a huge premium … and rightly so, given the natural laws of supply and demand. This law seems like a mis-placed band-aid to rectify the distortions introduced by fundamentally flawed rent control laws.
“Why not just rent to the highest bidder? ”
Consider smaller disasters such as the recent fire on mission, where not enough people are affected so as to change the supply and demand balance.
Particularly if the owner has a deeply negative price/rent ratio, the highest bidder may not bid high enough since the owner would be stuck with the monthly cash flow loss. Having a rent controlled tenant paying below market would also seem to impair the sales value of the unit. So the unit stays off the market even though both the owner and the displaced tenant would be better off were the transaction to occur.
“Why not just allow the city to declare blanket emergency terms after the Big One allowing all new leases issued within X months to be by default free from rent control? After the emergency period concludes and things get back to a semblance of normalcy RC can be re-enabled and emergency housing cases reviewed by the city officials on a case-by-case basis.”
Because common sense is not generally used for issuing regulations in the City and County of San Francisco?
The one thing the proposed change does mention is that the tenant will still get their windfall for vacating the unit.
tc_sf does bring up a good point — this allows case-by-case monetization of currently unused property. Maybe it’s a response to 8% of property being vacant.
I still don’t really understand this law. If I was a landlord who had a vacant unit in an emergency situation, I’d rather rent to somebody who had been paying full and fair rent up until the emergency, than give somebody who had been baying far below market rate rent a continuation of their low rent. I would also be concerned that even with this “good samaritan” exemption the tenant would sue me over rent control as there are many rent-control related lawsuits, and I would be worried that even if I prevailed in the end any lawsuits would be very expensive.
As a renter I wouldn’t expect an owner who I had no prior relationship with to give me a continuation on my rent controlled price.
Am I missing something or misunderstanding the point? I just don’t get this at all. Does anybody know if this situation has ever happened in real life where a landlord has given a displaced renter they’ve never met before an apartment at the original rent controlled price?
It just seems to point out another problem with rent control to me.
Good questions lyqwyd and those probably require a RE lawyer to appropriately answer.
As for why a landlord would rent to a below market renter vs. full rent, suppose that a week after a disaster there were still thousands of homeless residents living in tents or basketball courts. You’re a landlord with vacancies but haven’t yet found tenants that meet your pre-disaster criteria. Should you continue to hold out for a properly qualified tenant? My impression is that this law is geared towards making landlords feel at ease with not holding vacancies for qualified tenants so that displaced residents get a solid roof over their heads quicker. I could be wrong though.
I do get the hypothetical thinking behind the law, but I don’t think it would ever likely play out like that in the real world. An event that would leave thousands of units vacant would result in many below market and fair market renters without housing, so by the time all full market renters were housed at fair prices, there would likely be very few vacant units left, since so much housing would have to have been destroyed or otherwise be unusable.
I imagine demand for housing would skyrocket since there would be many more people without housing, and fewer total units (due to the emergency) and landlords would be able to pick the cream of the crop.
While I am no expert (or advocate) for this law nor rent control in general, my read of the above was not that the displaced tenant could bring their old base rent along with them, but rather that a landlord could rent to them for up to 2 years without the rent being locked in under rent control.
i.e. Say you would want a rent of $7k for your unit but the best the market would bear is $3k. You leave the unit vacant so as not to have a tenant locked in at $3k. After a disaster, you could offer the unit at a good samaritan rate of $3k (market) stipulated to increase to $7k after the good samaritan period. You are better off since $3k/month is better then nothing, most likely when the rent rises to $7k the tenant will leave. But even if they do not they are paying the rent which you calculated as being acceptable.
Your concern about getting bitten by some other rent control loophole does seem quite valid though.
I think your explanation of the law is the most concise, tc_sf. This law is intended to relax the artificially high market rates created by RC during a disaster as well as protect landlords from being trapped by RC and encourage them to ease the problems created by the disaster. The end goal is to house displaced people more rapidly than if RC was in full force.
Interestingly this law is sort of a tacit acknowledgement that rent control raises market rate rents.
I don’t understand how after an emergency causing demand to increase and supply to decrease, a landlord would be forced to rent for less than what they could before the event. It flies in the face of basic economic principles. Maybe they would want to…
I guess my point is that the likelihood of it happening is so low that it’s a complete waste of time for our legislators to have spent any effort drafting and passing it.
It isn’t forcing but rather inducing. Sure, there will be increased demand and reduced supply. That still doesn’t mean that there will be enough people needing the vacant housing who can afford it.
This law is forward thinking and hardly a waste of time. It is better to draft this sort of emergency measure now while things are quiet than to scramble to solve secondary issues like this while a disaster is unfolding.
I’m not suggesting the law is forcing the landlord. I think it’s better to scramble and pass a law like this when (if) it’s necessary at the time of need, rather than now in a manner that I believe will turn out to be completely ineffective at the time an emergency occurs. I believe it will be ineffective because I think it’s poorly thought out. I believe this type of law is much more about politics than effective leadership.
I just don’t see a situation where this law will be of any real benefit, maybe a fraction of a percent of owners would use it.
I do understand your perspective, and I think the law was done with good intentions, I just don’t think it’s very well thought out.
I think another target for this law is not people that are in the rental business but more casual potential landlords that would be willing to offer a short-term place to a friend, co-worker, friend of a frend, etc. Someone that has one of those seasonal or recreational places, or in-law type unit that they normally are not renting out but could let someone that was displaced stay temporarily. This would help encourage that by not subjecting the arrangement to rental control.
lyqwyd – I’m not lawyer enough to form an opinion on whether this law is well thought out. My opinion comes from understanding the intent. If it is a bad law then the details should be fixed rather than abandoning it altogether.
I disagree that it is better to slap something together after an emergency. That’s how really bad laws are born.
Not if it’s a temporary law that specifically addresses the matter at hand. Here’s my shot at a better example: rent control is suspended for any vacant unit in a time of emergency: a landlord can rent at any amount they want, or house people for free, as long as they want, but can evict them at any time thereafter. All that’s required is a simple agreement stating that it’s emergency housing and the tenant is being provided the emergency housing at the will of the property owner. Simple, clear, concise and I think it would be more effective than tying emergency housing to rent control and providing time limits.
I think it’s a bad idea to try and predict every eventuality in detail advance, it never works. Much better to have general emergency planning, than to concoct weird rent control exemptions that are going to sit on the books for decades and, in my opinion, prove to be entirely ineffective if the situation they are attempting to address ever occurs. Having laws that pretend to address emergency situations are worse than having no planning at all: it’s a false sense of security.
Essentially, the law suspends the price control component of the rent control ordinance for prospective tenants displaced by an emergency. While the landlord would presumably still be restricted as to evictions, the post disaster rent could be set to a point that would be acceptable to the landlord or induce the tenant to relocate.
I agree with you that giving the landlord a explicit right of “no-fault” eviction at the end of the lease would make better law.
I’m not sure why you think that the situation intended by the law would never apply. I know people who are currently letting units go fallow primarily due to the issues posed by a rent controlled tenant. As I stated above there was just recently a fire on mission that rendered a few buildings uninhabitable. It’s also unclear that the disaster need be in SF. People in SF could have friends or relatives in Japan that would seek short term housing here.
I know that units are intentionally being left vacant now, I just don’t imagine the owners doing that would be enticed by a partial modification of rent control during an emergency situation.
I just can’t imagine anything other than a major event with thousands of people displaced having the slightest likelihood of this law being taken advantage of. Even if this law applies to fires, I certainly don’t see why a landlord would care if a few people on really low rent control would be displaced by a fire. There’s apartments available, they would still be able to pay market rates as their jobs wouldn’t have burned, they should have had insurance. And in a major emergency there are much better solutions.
Sure, the sentiment is good, but to me this law just has too many things wrong and not enough right, it’s poorly thought out and unlikely to be effective.
“I just can’t imagine anything other than a major event with thousands of people displaced having the slightest likelihood of this law being taken advantage of.”
… and that aptly describes The Big One. FEMA had predicted 4000 to 11000 dead within the Bay Area and about 5X that many injured. You can imagine how many will become homeless.
I think that this law is written with the Big One in mind and prompted by Japan’s recent Tohoku quake. Small disasters can be dealt with as they come: I don’t see much value in using a law like this to handle a few hundred displaced by a fire. But preparation like this speeds recovery from a really big disaster.
The whole thing is rather stupid. If there are thousands (or tens of thousands) homeless, many people (with money) will be looking for new places to live. And so the artificially high rents now due to rent control will be even higher. And landlords will happily rent to people at nice high rent controlled prices.
@MoD, I understand the thinking behind it. I just think it’s a poor solution and probably does more harm than good. It’s like people that donate clothing to poor countries but don’t realize they are destroying local businesses. The sentiment is good, the implementation is bad.
lyqwyd, that link actually says the reverse — if you donate used clothes to Goodwill, you will prevent the development of clothing factories in Africa. The premise is not that great actually. Yay, let’s encourage waste so that Africa gets more factories that we don’t need!
@sfrenegade, the premise is that donated clothing harms native clothing production. There is evidence and studies to support the premise.
Here’s an academic study that supports the premise.
I only read the abstract, here’s the conclusion from the abstract:
“Following this methodology, used-clothing imports are found to have a negative impact on apparel and textile production in Africa, explaining roughly 40% of the decline in African apparel production and roughly 50% of the decline in apparel employment.”
I’m not sure how you get to a comment about waste, the clothing should be used here to it’s full life-cycle if you are concerned about waste.
I assure you that most African countries need as many factories, and employment in general, as they can get.
Okay, I think I misread your statement. When you said “destroying local businesses,” I thought you meant businesses locally in the U.S. That said, I don’t think people necessarily realize that Goodwill’s clothing goes to Africa. When I think of Goodwill, I think of the Goodwill stores in our communities that function as thrift stores. It seems like the process you’re describing, however, is that there are some exporters who buy Goodwill’s stuff and then send it to the third world. Does that mean we shouldn’t donate to Goodwill?
In addition, taking the argument to its logical extreme suggests we should donate nothing to Africa, so that Africans can produce everything themselves. That doesn’t necessarily seem like the best answer either.
Another option: don’t buy or produce stupid t-shirts!
There must be some kind of internal prize offered to academic economists, that the rest of us just don’t know about, for the paper or other published work that is most counterintuitive in “showing” that the main source of inefficient economic action is well-meaning but misguided efforts by progressive activists to help poor people. Witness the now de rigueur chapter in undergraduate macro texts “showing” that fair trade or shade-grown coffee actually hurts agriculture in underdeveloped countries.
I agree with Milkshake that the time to get this kind of thing in place, in whatever form and details it should take, is before the disaster happens. Remember the state of local governance in New Orleans even months after Katrina.
The point is not whether to donate clothes, or anything else, but that good intentions without sufficient thought, can lead to more harm than good, hence the ‘good samaritan’ law above. Good intentions, bad implementation.
@Brahma, sure it’s good to plan for things that can be planned for, but what does this accomplish? To me nothing.
If the idea is to provide housing during an emergency then why is their talk of CPI, 365 days, then 730 days and other legal mumbo jumbo. If I’m a landlord and I see that, I see lawsuit, and I would run for the hills. It’s way too complicated and I wouldn’t want to be the guy who gets to test this in court.
A good way to plan for emergency housing needs… is to plan for emergency housing needs, not expect some random unknown property owner good samaritan to provide for it and write a complicated law that’s never been tested in court.
If the goal is to actually encourage good samaritan behavior in an emergency situation, then make it clear and simple.
Plans for emergency situations need to be general and flexible because the emergency will never play out the way people expect it to. Once it happens, then you make moves according to the specific situation, using the general emergency response framework.
“There must be some kind of internal prize offered to academic economists, that the rest of us just don’t know about, for the paper or other published work that is most counterintuitive in “showing” that the main source of inefficient economic action is well-meaning but misguided efforts by progressive activists to help poor people.”
Yes, I think it’s called “the field of economics.” 🙂 To be fair, I don’t think economics actually supports half the things conservatives want to do either (e.g. the Laffer curve is a joke — should be called laugher; Reagan actually raised taxes more than he lowered them). More generally, lots of conservative/libertarian think tanks engage in this kind of research, and lots of those think tanks are funded by oil companies, for example Reason.
In addition, there is a lot of research into “Freakonomics”-type premises that, even though they rarely advance actual scholarship, are sexy topics of conversation, so they get noticed. These find weird correlations that are fun to talk about at cocktail parties, but they rarely have anything valuable to say about how we should shape policy.
I’ll agree that much of economics is charlatanism, yet much of it is valuable…
On the other hand, many people like to dismiss studies merely because they disagree with their pre-conceived notions.
Even if much of economic science is currently worthless, the study of economics is important as it moves us closer to a point where there is real science behind it.
I’ll assume we are discussing this in a hypothetical sense and that you are not attempting to discredit the study linked above. (The link I provided above was an older version, here’s a more recent one.)
lyqwyd — That’s a fair assumption. I wasn’t talking about scholarly economics writing, but rather about the recent line of fake scholarship that is similar to Freakonomics. Basically, the Freakonomics line of studies mines data to find some random narrow correlation between two factors and doesn’t really involve any scholarly thinking. It might be interesting, but it doesn’t really expand the field of economics. It’s not even necessarily clever because it goes into useless questions that no one actually needed to answer or questions that could have been answered quite easily. Here’s a good article on the phenomenon:
http://www.tnr.com/print/article/freaks-and-geeks-how-freakonomics-ruining-the-dismal-science
But yes, I wouldn’t apply that to the article you sent.
agreed regarding freakonomics stuff, it meets a certain interest factor, but there’s not a whole lot of useful information. Even if there were, and it was shown to have some causal relationship, there never seems to be any suggestion of what we should do with the information…
“I’ll agree that much of economics is charlatanism, yet much of it is valuable…”
Most real economics is done quietly in dark corners so that it doesn’t get in the way of modern economics primary purpose of being a social control myth.