As we wrote two months ago: Proposition 98 would prohibit the use of eminent domain for private development and phase out rent control, while the competing Proposition 99 would simply prohibit the use of eminent domain on single-family homes and condominiums.
As a reader writes today (or rather yesterday):
i’m a little mystified that prop 98 is not getting more play in SF. prop 98 is the state-wide initiative on the june 3 [ballot] that limits eminent domain, and importantly for SF, phases out rent control.
given the huge significance of this, i am amazed that the realtor community is not heavily pushing this. but more peculiar, i am only seeing limited involvement from SF apartment advocates, and the larger apartment holders in the city (i.e. citiapartments, etc.) it’s clear that prop 98 will not pass within SF proper, but that does not matter as it’s the massive outlying suburbia that will have the voting power to push it through. still, i’d think that cities like SF would want to make a lot of noise about it, so the rest of the state can see how significant it is.
so now i am of two thoughts about it: 1) the collective SF real estate community is basically acting like wimps, in case 98 fails. this would hedge the ‘antagonist’ quotient with the myriad socialist renter advocacy groups and a largely insane board of supervisors. but why does this matter? if it fails, it fails. if it passes, it is certain that the aforementioned groups will literally go ape shit challenging it in court.
2) in a perverse sense, i think many SF apartment owners are ambivalent or silently against prop 98. on the surface, it seems obvious that phasing our rent control would benefit them. but that would make the SF apartment market like any other city. with RC, SF apartment owners get to play in an exclusive fiefdom, which many out of area investors are just too scared to touch. RC also causes a large dynamic in rents between long term tenants and recently vacated ones. savvy apartment owners quietly go about effecting tenant turnover, and add huge rental gains in one fell swoop.
An interesting perspective (especially with regard to the second point). And while we’re anti-rent control (as it currently exists) we’re not necessarily anti-eminent domain (think the Hugo Hotel).
∙ A Few June Ballot Measures Guaranteed To Raise Some Ire [SocketSite]
∙ And Now Back To The Hugo Hotel (And Eminent Domain On Sixth) [SocketSite]
Couldn’t agree with the writer more. I’ve asked several times on this site in last few weeks for readers’ opinions on 98 passing and no one offered one.
I doubt it will pass but you’re right, it’s bittersweet if it does. We capitalists in our hearts believe rent control is socialist lunacy. However, as I’ve stated before, ridding one’s buildings of rent-controlled/protected tenants is too risky for most mortals, and is still the best way for a risk-tolerant investor to make a sure profit in the SF real estate market.
I think Prop 98 will increase rents for existing leases but surprisingly enough will probably lower the rents for the new rentals.
Existing tenants will either have to pay market price or just get out (to go where is the 64K question). But that will free up many previously cheap and unimproved units and supply will be up for new tenants, potentially pressuring prices on the down side.
There will be more potential home buyers within former renters kicked out by high prices (and a few probably stashed some cash thanks to rent control), but also more people drawn to rentals if new lease prices go down.
Overall, rents will probably go up and things will even themselves out across all rental markets. And maybe landlords previously in difficulty will make enough to properly maintain their places.
“prop 98 is the state-wide initiative on the june 3 ballet”
Is that like the San Francisco Ballet?
In my state voter information guide, the argument in favor of Proposition 98 makes the claim that “Proposition 98 will never cause renters who now have their rents limited to lose their current rent control” (p. 12). I couldn’t find any mention of this in the actual text of the proposition at the end of the guide, and I haven’t heard it repeated elsewhere, but at the same time, the argument against the proposition doesn’t refute this claim… so I’m inclined to believe that it’s true.
Much (all?) of the opposition to 98 that I’ve seen makes heavy use of the image of renters getting forced out of their apartments if this one passes, but it sounds like this might not be the case after all. It certainly doesn’t seem like rent control is doing anything to help people who are looking for an apartment in SF (and I’d go so far as to say that it’s hurting them… If I were a landlord rather than a renter, I’d jack up prices beforehand, knowing that I might not be able to do so later because of rent control).
It seems to me that rent control and prop 13 should go together. Prop 13 protects owners from escalating property taxes and rent control protects renters from escalating rent. The scenarios are analagous. It would suck just as much for the old woman who owned her house all her life to have to move just because the property value (and hence taxes) went up as it would for her friend next door who has rented her whole life to have to move because the local rent rates skyrocketed. I don’t see how one can argue that renters don’t deserve the same right owners get.
hotep,
Rent control and long-time Homeowner subsidies (which is what Prop 13 actually is) are a big reason behind high rent and high home prices.
Keeping them just keeps this city stale and old.
The young have to commute 30 miles while the old are subsidized by the young. These laws that were supposed to impose equality just pushed inequality to another place: the generation inequality.
I am sorry I don’t understand the connection between Prop 13 and rent control. While you may be able to find some analogous situations, there is no reason they should be linked. Rent control is government interfering with private property rights and screwing up the rental market. While I don’t agree with Prop 13 (because it cause people to pay grossly unequal taxes), its premise is entirely different
Prop 98 is poisoned politics at a couple of levels. First, the main idea is to scale back emminent domain just a bit. That is a big deal and deserves to stand on its own as an issue. Second, rent control is a deep divide and popular enough that trying to get rid of it is not only going to be very difficult, but will also leave any politicians who touch it with stained hands. That the policy ideas may be sensible unfortunately has little to do with the political context in which such matters are decided.
Well, NoeNeighbor, there IS an indirect but major connection between Prop 13 and rent control.
Prop 13 applies also to landlords. Having property taxes following home prices would increase taxes to a lot of landlords, who would then find themselves with escalating costs on one side and rent control on the other. The economics which are pretty bad for old-time landlords would become more unsustainable.
Rent control is a feature, much like a luxury kitchen or a nice view, that has a price. And property owners seem to be charging a lot for this feature. Without this feature built in, it would appear the rents will drop.
As one of the posters noted above, Prop 98 will do nothing to phase out rent control with current occupied rentals nor does it do anything to accelerate the eviction process. Careful reading of the initiative suggests that units can be adjusted to market value when the current tenant leaves. Pretty much the same as now…
Much ado about nothing — neither prop will so much in the short to medium term.
Rent control was abolished in Massachusetts in 2000 and the world has not come to an end.
Prop 13 should be overhauled, but the two are not linked.
Rent control is indefensible in a free market society – which of course we don’t have in SF. One benefit of eliminating rent control would be the elimination of the SF Rent Board. I’m sure it’s just a drop in the city’s bloated $6B budget – but ever drop would help. Lots of bureaucrats, attorneys, and tenant advocates would then be free to go and seek productive employment elsewhere.
For a history of rent control in San Francisco and its connection to Prop 13, you can follow this link:
http://bss.sfsu.edu/urbanaction/ua2007/articlesPDF/rentControl.pdf
IMO, it is a leap of logic to assume that prices will go down if rent control is abolished. The existence of rent control has not impeded development of new units as any apartments constructed subsequent to the imposition of rent control are not subject to the law.
Rent control is a condition of the local environment…not an optional “feature” that is provided at a market-determined price. LLs typically charge new tenants the maximum that the market will bear (determined by supply and demand).
Remove rent control and rents are unlikely to decline although tenants in certain types of units may become less “sticky”.
Any plan that would end rent control is a give-away to current building owners who were not building owners at the time rent control was imposed. Any property owner who purchased since rent control passed did so with the expectation of limited rent increases on existing tenants. The diversity and affordability of residential housing would be adversely affected if this bill passes.
Rent control and prop 13 were historically linked:
When prop 13 was enacted, SF and Berkeley landowners begged their heavily-rented cities to pass it, promising that the benefits of prop 13 would trickle down to the renters.
Prop 13 passed, with the help of the renters who had been convinced it would help them too, and the property owners jacked their rents even higher. The renters, having felt betrayed, passed rent control measures in cities that had been heavily renters, and thus were courted by property owners trying to get prop 13 passed.
So the two ARE linked.
Prop 13 passed because government spending was out of control; it didn’t have anything to do with renters. In fact if I’m not mistaken rent control was passed in SF AFTER Prop 13 passed.
Either way, why is up to individuals to subsidize the foolish choices folks make by renting and not saving for home? That’s public housing is for.
M.R.
i need to clear up a misconception about prop 98: ALL CURRENT TENANTS with rent control can remain in their units. it is ONLY AFTER they leave that the unit becomes non rent controlled for all future tenants.
fyi- i have heard that it is slightly behind in the poles. but i think much of that is due to silence from the major cities with RC, i.e. SF, berkeley, LA, etc. hell, if the places affected most by RC are not pushing it hardcore, why would california’s bedroom community rise up? i personally believe that the average family in concord, modesto, riverside, etc. is somewhat against RC (and certainly concerned with under regulated eminent domain claims.) and this is where the votes are- these are the people that will make the difference if 98 passes.
as for the effects on future rents in SF, that’s a good question. on the one hand, there will be less units in the future with artifically low rents. that will put pressure on rampant future rent increases. additionally, landlords will feel less pressure to max the rents at every opportunity, as they can always raise them once a lease expires. personally, i think that as time moves forward, the rents in SF will be overall lower w/o RC than with it. but i’m talking about 10-20 years.
the interesting point, is that i think most SF apartment owners are actually content with the current system. as i said in my OP, w/o RC, SF becomes just like any other city. many outside investors could come in, institutional investors, etc. as it stands now, there are few national institutional investors in SF apartments (the exceptions are some of the newer, non RC high risers in dowtown and maybe SOMA.)
as for effecting rate of new construction, it will not have impact. 1- almost all new constructon in SF is mapped for condos, so they can be rented (RC free, as it’s new constr.) or sold. 2- the limitation is (of course) lack of buildable land and an insanely difficult and expensive entitlement process, nimby’s, activists demanding below market housing, etc. don’t worry, with or w/o 98, there will still be little new construction in most parts of SF!
bottom line is, if you look at the appreciation rate for apartment building over the last 20 years, it’s been phenomenal. and RC, in a perverse way, has helped with that. i think the owners are asking themselves, “why mess with it; let’s leave RC in place. it’s been good to our pocketbooks.”
@ chuckie, here’s the difference:
Under prop 98, once the current tenants moves out of a rent-contol unit, that unit is permanently released from rent control. Thus the landlord can raise the rent at the end of each month or lease term.
Under current laws, the landlord’s ability to raise the rent is limited so long as that tenant occupies the same unit, regardless of whether he has a long-term lease.
I agree with JohnK in the short/medium term. Prop 98 doesn’t affect current tenants who get grandfathered in under rent control – not much will change right away. However over the longer term as rent controlled tenants die or move out of SF, the new tenant will no longer be rent controlled.
I don’t think evictions of existing tenants will be any easier/more difficult. But evictions of anyone who rents after prop 98 passes will be a snap – just double their rent whenever you want (after lease expires).
Doubt it will pass but I would think if you are a potential landlord between now and election day, just wait til then in case it passes.
If Prop 98 passes, you’ll surely see a constriction of apartment supply resulting in overall higher rents.
Anybody in their right mind that has a current lease under rent control would not give it up in favor of a comparable lease that doesn’t have rent control. Your rent controlled apartment will become even more of an “asset”.
AMinSF is correct. My buildings have quintupled in value during the past 20 years. Why mess with a system that is making most people rich?
Killing rent control is more about regaining control over your property. Currently if a pimp, prostitute, or drug dealer resides in unit, RC ties your hands and makes it almost impossible to evict, even though these types of situations ostensibly damages building values and neighborhoods in general. As good citizens, the noose of RC should be loosened to remedy this.
I’m curious if any landlords are purposely keeping newly vacant units offline for a few weeks so that their leases would be considered non-RC. Does this thing go into effect immediately or at some future date?
I like SPUR’s analysis of both propositions – they’re both crap, vote no.
This thing is so lopsided it will never pass. It wouldn’t pass in Texas. It sure as hell won’t pass in California.
It ABOLISHES all government restrictions on property. Want to build a nuclear power plant in your backyard: feel free.
Neighbor wants to build a skyscraper next door: no problem.
Your neighbor wants to open an auto repair shop in his garage: go ahead.
People on the coast want to restrict access to their beach: build a fence.
Your neighbors want to put an apartment building in place of their home next to yours in the burbs: nothing to stop them.
Neighbors want to build right to your lot line: feel free.
As for rent control: it will provide an immense incentive for your landlord to kick you out once and for all to abolish any restriction on renting in that unit.
The whole thing is so stupidly written, it will be impossible to pass. EVERYONE will be against it, except people who own property that they don’t live in.
As as live in landlord in a three unit building I am not very excited about the rent control aspect of this proposition. Even if it were to pass it would not affect me until my tenants decide to move out. In order for real change, rent control would need to be abolished without a grandfather clause for existing tenants.
I’d love to see a stat sometime about percentage of landlord ownership big buildings versus small. But it seems to me for the most part SF has a lot of flats, owned by small time landlords such as myself. I’ll still vote for it tho. I’m against eminent domain.
Tipster,
If it passes it is not going to supercede zoning rules for private citizens.
the discussion here seems to suggest that prop 98 is only about rent control. if it were that simply, does anyone think that the california chamber of commerce, pete wilson, arnold schwarzenegger, spur, etc., would be opposing the measure??? these groups are concerned about its impact on major infrastructure projects, like water, and the uncertainty that the measure’s language could bring to the development process. there is no reason that such diverse issues should be linked. the measure is a major over reach by zealous property rights groups.
Got off my butt and looked up the effective date on my own. If it passes it goes into effect on 6/4/08 in case you were wondering too.
98 has a prohibition on laws or regulations that “transfer economic benefit to one or more private persons at the expense of the private owner.”
That’s what zoning laws do. It will be used to abolish them, or the threat of a lawsuit will make local governments roll over and give any owner whatever they want for fear of a lawsuit that would open the flood gates to anything goes.
This thing is absolutely nuts. You’d have to be some sort of fool to pass it. Opponents include:
LA times.
SF Chron
Sac Bee
The Gov.
Feinstein and Boxer
It has no real chance of passing.
The way that the language reads, government groups (the california chamber of commerce, pete wilson, arnold schwarzenegger, spur, etc.) would not be prohibited from using eminent domain to seize property. They would just be required to pay just compensation and it would have to be for a public purpose.
I also don’t know where Tipster got his “sky is falling” information. If you read the language that 98 proposes, it only says that the government can’t limit the transaction price if a land owner enters into a contract for sale or use of the property. The government can indeed place zoning type restrictions on property, they just can’t place price restrictions on property.
Proponents of prop 98 are doing a HORRIBLE job of marketing this crucial legislation. They got the million signatures to get it on the ballot, why not do a better job at promoting it?
Since this is backed by the Howard Jarvis Taxpayers Association, the line should go like this.
“If you supported prop 13, you should support prop 98.” Nuff said. Instant victory. Instead, it appears that this legislation was orphaned and with the oppositions prop 99 also on the ballot, confusion rules the day.
“June eminent domain measures trailing — Page 20
Propositions 98 and 99 are aimed at changing the government’s power to take private property. While seven in 10 likely voters say the government’s power of eminent domain needs major changes (39%) or minor ones (32%), support for these two propositions is falling short of approval.
Proposition 98, which would bar state and local governments from seizing private property to give it to another private party, would also ban rent control. When they are read the ballot measure, 30 percent of likely voters say they would vote yes, 48 percent would vote no, and 22 percent are not sure. This is a drop in support for the measure since March (37% yes, 41% no, 22% unsure). When asked their views about rent control, 54 percent of likely voters say it is a good thing and 38 percent say it is a bad thing. Attitudes toward rent control are favorable among both homeowners (51%) and renters (63%). A majority of Democrats (66%) and half of independents (51%) favor rent control, while a majority of Republicans (53%) say it is a bad thing.
Proposition 99, which would block the government from taking a single family home or condominium to transfer to another private party, would allow eminent domain for public uses and would not ban rent control. Among likely voters, 44 percent say they would vote yes, 36 percent say no, and 20 percent are unsure.”
http://www.ppic.org/main/pressrelease.asp?p=837
Considering just rent control of the 146,000 rent controlled units identified in the other BAE study funded by SF in 2002… (http://www.bae1.com/t5publications.htm)
I don’t think rent control works, but I also don’t think Prop 98 is the way to eliminate it. It has other potentially significant damaging consequences noted by other passes. But if it passes, the opportunity to eliminate rent control in a mutually beneficial way for San Francisco will be gone, possibly forever. What if rent decontrol were handled in a way different from Prop 98 and a way that were mutually beneficial to all parties and interests, not just landlords? I would like to suggest such an alternative.
Would tenants in rent controlled apartments vote for a rent decontrol measure if they were bought out of their rent-controlled lease as a result of the measure passing? Their below market lease has a value that is recognized in the market already when tenants agree to be bought out by landlords, if on a one off carefully negotiated basis.
How do you calculate that buyout payment so that it is fair, and reasonable for all parties? Would it vary based on the difference between market and the tenants’ current rent over a duration? If that average buyout value worked out to $50k, that would mean $7.3B in transferred value city wide – that tenants could do whatever they wanted with such as pay market rents, use as a down payment to buy a house/condo, whatever. Prop 98 doesn’t address this property right, which has value, so why would rent-controlled benefiting tenants vote for it?
Would housing advocates vote for such a measure if the city were able to tax the elimination of rent control with the funds to go for city funded programs to build, subsidize, or provide grants for affordable housing permanently? What would a permanent solution cost? If the tax were $35k/unit, in excess of $5B would be generated for housing programs. Imagine that.
What if all this spurred huge investment in our existing housing stock, to improve it, increase safety with seismic upgrades and what not? If this amounted to an average investment of $25k/unit, this would translate into $3.6B of investment resulting in good jobs and tax revenue for the city and a safer housing stock for the city.
What if the units’ property value was reassessed at the time it was converted to market rate? This would result in a dramatic reset of the city’s property tax base to fund programs, police, fire, etc. This would have to be carefully evaluated with regard to Prop 13.
What if it were phased over 10 years to avoid market distortions, maximize predictability, and put the housing funding ahead of phased decontrol so well funded housing programs were in place ahead of time?
Would school advocates be behind the idea with 8% more households with children in market rate apartments than rent controlled apartments? Is this a correlation statistic or a causation statistic?
Finally, if tenants, landlords, housing advocates, school advocates, business and labor were behind it, and the program was well designed, would politicians get behind it and create good legislation to get it done?
Looked at differently, our rent controlled housing stock is an asset to the city that should be leveraged through market forces to actually solve the problem. And it is time the problem actually be solved.
for those of you interested in more info on this debate, SPUR has a pretty rigerous and detailed analysis on it:
http://www.spur.org/documents/0608_ballot_analysis.shtm
Rent control is a hopeless bureaucracy
Eliminate rent control and return funding of local, state, and federal HUD programs to 1960’s-70’s levels. The burden of housing the poor, low-income, should be shared by EVERYONE, not just a couple of land/property owners.
Amen HyphyJews, amen!
urban_angst- yes it would become effective the day it gets voted, and yes I know of specific landlords that are not renting newly vacant units until that date. I would expect a bit more supply of rentals to hit the market on June 4.
Prop 98 is a underhanded, trojan horse by our friends at the Howard Jarvis foundation.
Its an attempt to remove rent control under the guise of curbing eminent domain.
The reason its written as an eminent domain prop is because they know that a proposition to remove rent control restrictions won’t stand up on its own merits to the general populace.
I’m not even debating whether rent control is good or bad here. I’m just saying, I think people should vote against this measure on the principal of how it is being sold to the public.
Agree Shocked. I always vote against these trojan horse initiatives on principle, especially when their promoters provide such misleading and incomplete advertising.
“If Prop 98 passes, you’ll surely see a constriction of apartment supply resulting in overall higher rents.
Anybody in their right mind that has a current lease under rent control would not give it up in favor of a comparable lease that doesn’t have rent control. Your rent controlled apartment will become even more of an “asset”.”
—I disagree. Anyone that gives up a rent controlled apartment to move starts paying MARKET RATE rent again at the new location whether there’s rent control at the new place or not. How many renters really move into MARKET RATE apartments thinking they’ll be there for many years and that their rent controlled increases will be substantially less than market rate increases – i.e. they care about rent control looking forward. In today’s expensive SF rental market, nobody is taking newly vacant apartments thinking they’ll be a great deal in a few years under rent control.
In the long-run IMO rents will go down as rent-controlled units slowly disappear and more (permanent) market rate units are created. Obviously rents of the formerly rent-controlled units will go up but overall for the SF economy, rents should go down. Also contributing to the greater apartment supply would be 2 unit building owners in Noe or the Marina who have left one unit vacant in their home to avoid the potential hassle of rent control – they’ll be more inclined to rent these out
resp: I couldn’t have said it better myself. If Prop 98 passes, MARKET rents will go down, over time, as the pool of market-rate apartments increases. Nobody in a rent-controlled unit now will lose that, unless they decide to move… which is no different than today (if you move, you start out at market rent again.)
The city’s housing stock would improve, as there would be more turnover and landlords would have to fix up their buildings to be competitive. And future tenants wouldn’t end up “trapped” in their apartments, unable to move to something better because of the artificially-high market prices caused by rent control.
I support Prop 98 because I believe rent control to be wrong; it’s subsidized housing where you force building owners to pay the subsidy, instead of the society at large. I support Prop 98 even though, as a small landlord, I expect it would cost me money in reduced rents.
@Dave:
“I support Prop 98 because I believe rent control to be wrong; it’s subsidized housing where you force building owners to pay the subsidy, instead of the society at large.”
Unless you purchased your building when rent control was originally imposed, you are not subsidizing anything. The price you paid reflected future cash flow subject to rent control. The person who got the shaft was the one who owned the building when the law was passed nearly 30 years ago. To undo that now would present you and other property owners with an unexpected windfall…at the expense of tenants.
It is one thing to say that market rent growth in the future is likely to track inflation. It is another thing to say that a new tenant derives no value from moving into a rent-controlled apartment. Given geographic constraints in San Francisco, especially in the more desirable locations, rent growth may well exceed inflation. If you offered a tenant the opportunity to move into an apartment with rent control and one without, I’m sure they would take the former if they didn’t have to pay extra for that protection.
First of all I hate to have government involved in anything. If it involves, it has to be level playing field for everyone.
Both prop 98(rent control) and prop 13(increase property taxes) should go or both stays.
Infact I want tax breaks not only for mortgage interest, but also for rent. Why should people who rent shouldn’t get the same benefits as people who own????
“Infact I want tax breaks not only for mortgage interest, but also for rent. Why should people who rent shouldn’t get the same benefits as people who own????”
Good question and the reason why I think the deduction for mortgage interest should be phased out.
here’s the text, Dan, of the part in which current tenants enjoy continued protection, but when they move the unit is no longer subject to control
SECTION 6. EFFECTIVE DATE
The provisions of this Act shall become effective on the day following the election (“effective date”); except that any statute, charter provision, ordinance, or regulation by a public agency enacted prior to January 1, 2007, that limits the price a rental property owner may charge a tenant to occupy a residential rental unit (“unit”) or mobile home space (“space”) may remain in effect as to such unit or space after the effective date for so long as, but only so long as, at least one of the tenants of such unit or space as of the effective date (“qualified tenant”) continues to live in such unit or space as his or her principal place of residence. At such time as a unit or space no longer is used by any qualified tenant as his or her principal place of residence because, as to such unit or space, he or she has: (a) voluntarily vacated; (b) assigned, sublet, sold or transferred his or her tenancy rights either voluntarily or by court order; (c) abandoned; (d) died; or he or she has (e) been evicted pursuant to paragraph (2), (3), (4) or (5) of Section 1161 of the Code of Civil Procedure or Section 798.56 of the Civil Code as in effect on January 1, 2007; then, and in such event, the provisions of this Act shall be effective immediately as to such unit or space.
SPUR has a pretty interesting analysis (thanks AM in SF). Rent control fan or not, other issues that come along with Prop 98
Cons
Arguments against this measure:
Prop. 98 goes beyond 2006’s Proposition 90 by preventing government actions “taken to protect health and safety.” Land use regulations that restrict building in unsafe or flood prone areas might be illegal under Prop. 98. This is not only unwise, but also unfair to future property owners.
It would eliminate a long list of tools that communities have to plan for their future, including laws and actions related to land use, the environment, tenants, housing, and public works. In many cases, Prop. 98 not only could prevent governments from passing new laws, but also from enforcing existing laws. For example, Prop. 98 would prevent environmental protection such as habitat preservation. It might eliminate inclusionary housing laws and other affordable housing regulations that require a certain number of units in developments to be priced below the market rate.
Prop. 98 eliminates rent control and many other tenant protection laws. If the proponents of Prop. 98 are concerned about rent control, they should run a campaign focused on the issue of rent control rather than mixing rent control with unrelated subjects.
Prop. 98 includes a specific prohibition that would prevent the use of eminent domain for public water projects. This is because the measure includes a prohibition on the “transfer of ownership … to a public agency for the consumption of natural resources.”
Prop. 98 would make public works projects much more difficult and expensive, as property owners would tie up eminent domain projects in new litigation over the value of “just compensation,” and would force the government to pay all attorney fees if the courts determine that the government should have paid even $1 more for the property than the owners were offered. For example, the measure could also jeopardize the San Francisco Public Utilities Commission’s seismic upgrade of the Hetch Hetchy water system.
Prop. 98 would result in thousands of new lawsuits to block new homes and businesses, harming our ability to grow our economy and house our workforce.
“”Infact I want tax breaks not only for mortgage interest, but also for rent. Why should people who rent shouldn’t get the same benefits as people who own????”
Good question and the reason why I think the deduction for mortgage interest should be phased out.”
– What do you think will happen to your rent if mortgage interest deduction is phased out and many more people decide to rent vs. own?
“Infact I want tax breaks not only for mortgage interest, but also for rent. Why should people who rent shouldn’t get the same benefits as people who own????”
NOT THE SAME THING! it is in the interest of civil society for people to own their residences, and hence a tax break is encourage by the government, and it is appropriate. it’s well established that homeowners take care of their property, are involved more in their community, etc. this is how neighborhoods improve. sure, a few tenants (operative word: few) also do this, but there are many more that do not give a shit about the property they rent. this is especially true with entitled SF tenant who think landlords own them something. this is what leads to slum conditions and leach-loser tenants.
people should buy their own residences! it’s fine to rent for a while, especially when you’re younger, relocating, etc. and no, you don’t get a tax break while doing so. and, if you can’t afford to buy in SF, either continue renting/throwing money away (and never establishing an asset base), or, move to a place you can afford! but to expect landlords to carry you (as in SF) and then have the gal to ask for a tax break- well, quite frankly, you’re out of your goddamn mind.
” What do you think will happen to your rent if mortgage interest deduction is phased out and many more people decide to rent vs. own?”
I don’t rent.
I also don’t think it would make much difference to the rent v buy equation, just as it didn’t when the UK phased this out. With an inelastic product like housing, this tax deduction increases the amount people can borrow, and thus has the effect of pushing up prices higher than they would otherwise be. Phase out the deduction over time and prices would likely be restrained more than they would have been with the deduction in place.
AMinSF,
I am probably out of my mind(because the general thinking is people want government to help only themselves[landlords, homeowners, investment brokers{BearSterns)…etc] but doesn’t want to accept restrictions on their benefits). If anyone is realistic, they are definetly out of their mind..
If 69% of SF rents, then according to you 69% of people are not involved in community. OK(a few are involved, like you said), So 68% are not involved. Its very naive and narrow minded in generalizing that many tenants doesn’t care about the place/community they are living in.
I guess if everyone who cannot own in SF doesn’t need to live here, you will be left with old or rich people. I am sure you wouldn’t want that.
As far as whats good for civil society – eliminating tax advantage for people who buy homes with mortgages upto 1 million dollars would be better than cutting various different civic services.
Atleast I am not a hypocrite when I say it should be level playing field and government should stay out( rather than give superficial reasons for asking government to help me).
AMinSF, the home ownership rate in the UK is slightly higher than in the US. And yet the former does not give a tax deduction for interest. Maybe this public policy isn’t particularly effective in its outcome?
This proposition is trying to undermine the democratic rights of communities to control their development and character.
They are written for developers and against communities.
In a democracy, communities should be able to regulate development, and have rent control if they want to.
This entire campaign is an example of the anti-democratic cravings of our economic elites.
I am a landlord in SF, albeit an owner of a two unit building.
I am against Prop 98, in fact I think it is total wing nuttery. It will go down to an overwhelming defeat.
tax break for renters, you are mixing apples and oranges. interest expense is the only part of owning a home that is tax deductible. As the house is paid off the interest expense reduces to zero, so this benefit dwindles to nothing over time. This interest expense is not the equivalent of “rent”. Rent is the monthly cost for your shelter. The cost for shelter for a homeowner is the price of the house. That is not tax deductible and therefore, the equivalent, rent, is not either.
and property taxes of course, before somebody jumpz on it.
The Howard Jarvis Tax people talk out of both
sides of their mouths and everyone knows it.
The same people who call rent control socialism
lobby tirelessly for the government to subsidize
jumbo mortgages. A five year old could see what
is wrong with that picture.
AMinSF: but to expect landlords to carry you (as in SF) and then have the gal to ask for a tax break- well, quite frankly, you’re out of your goddamn mind.
Excuse me, but the RENTERS have been carrying the LANDLORDS for quite some time. How do you think they are able to pay their property TAXES and INTEREST payments.. through the income of outlandish rent prices. A lot of renters pay more for rent than a mortgage, because we are smart enough to realize that anybody who buys in SF nowadays is a complete tool, as property values are just going to go down in most areas, and you will be stuck paying a 50 year mortgage on property that is worth 1/2 as much as when you bought it. Only fools buy property in inflated markets, the time to buy is when the market has completely collapsed or in a market that is just starting to boom. None of these pertain to San Francisco. I’ll continue to be a smart renter, and you can continue to be a sucker owner.
A lot of renters pay more for rent than a mortgage, because we are smart enough to realize that anybody who buys in SF nowadays is a complete tool, as property values are just going to go down in most areas, and you will be stuck paying a 50 year mortgage on property that is worth 1/2 as much as when you bought it. Only fools buy property in inflated markets, the time to buy is when the market has completely collapsed or in a market that is just starting to boom.
hey thanks for that…please call me and let me know when its time to buy…and tell me where smart renters like yourself are putting their money…
good one paco!
the self contradiction in his post is hilarious…i’m laughing all the way to the bank too.
If Prop 98 passed, the end of rent control — with its increased incentives for vacancy decontrol through abuse of tenants — would make large numbers of San Franciscans homeless and would drive many others out of town.
…but I suppose a human rights argument may not interest this crowd, so think about it in terms of amenities:
Decontrol would drive out San Francisco’s creative class. You’d be left with a boring, uniform, overpriced Disneyland of overworked yuppies. Anyone who chose to dedicate a good mind to an idea or an aesthetic vision instead of chasing after money would have to live somewhere cheaper.
You might even have trouble selling real estate in a town without a soul.
Martha,
The same could be said of rent control – it keeps the creative class out of the city. RC as it is may help the aging hippie artist stay in the city, but because it helps jack prices for new folks coming in – the 28 year old artist can never afford to move here in the first place. So we’re stuck with a city full of an aging creative class that never renews itself. Sad.
well said martha checker.