An amendment which would require landlords to pay Ellis Act evicted tenants in San Francisco a relocation payment of up to $50,000, an amount which would be calculated as the difference between the tenants’ current rent and the market-rate rent for a similar unit over the course of two years, has been passed by San Francisco’s Land Use and Transportation Committee and could be adopted by San Francisco’s Board of Supervisors next week.

The proposed amendment would require evicted tenants to submit a sworn statement of their intent to use the relocation payments solely for housing or other relocation costs, costs which have been defined as “rent payments for a replacement dwelling, the purchase price of a replacement dwelling, and cost[s] incurred by the tenant in moving to a replacement dwelling, or any cost[s] that were incurred to mitigate adverse impacts on the tenant of the eviction.”

And by capping the payment amount and defining its use, the Supervisors sponsoring the amendment (Campos, Kim, Avalos, and Mar) are confident the legislation will reverse a District Court’s ruling that deemed the existing, but currently unenforceable law, as unconstitutional.

From the Legislative Digest for the amendment to the Tenant Relocation Ordinance:

Landlords have sued the City (Levin v. City and County of San Francisco, (United States District Court, Northern District of California, 3:14-CV-03352-CRB, 2014)), seeking declaratory and injunctive relief from [the] current ordinance, which required each to make relocation payments they deemed excessive. Under the ordinance, the landlords were required to make relocation payments in excess of $100,000 per tenant. The Court determined that there was insufficient nexus between the landlords’ conduct and the harm to the tenants (that the landlord did not cause the high rental market in San Francisco), and that the payments were not roughly proportional to the harm because the plaintiffs were not required to spend the payments on costs related to the eviction. The Court enjoined the City from enforcing the ordinance. The City has appealed to the Ninth Circuit. The amendments to the legislation attempt to address the Court’s concerns.

Or as we wrote when the amendment was proposed: “By specifically focusing on relocation expenses, expenses which are currently capped at $15,795 per unit (plus $3,510 per disabled or elderly tenant) and haven’t escalated with the city’s rapid rise in rents, the newly drafted law to mitigate the adverse impacts of being displaced will be much more difficult to defeat if it’s adopted by San Francisco’s Board of Supervisors and the Mayor.”

While California’s Ellis Act allows landlords to withdraw their properties from the rental market, for whatever reason, it also provides local governments with the power “to mitigate any adverse impacts on persons displaced by reason of the withdrawal” (see paragraph above).

Comments from Plugged-In Readers

  1. Posted by Hitman

    So now the cost for a landlord of getting out of a lease is $50k. It is no wonder SF is the worst place for renters in in the nation as this will also be the cost for a tenant of getting into a lease.

    • Posted by San FronziScheme (formerly known as lol)

      The rent is too goddam high!

      • Posted by Booger

        The $50k will barely cover their realtors fee

        [Editor’s Note: It’s a good thing sellers, not buyers, pay those fees. And as noted above, the $50K wouldn’t have to be spent in San Francisco.]

        • Posted by atila unchained

          The realtor fees are way too high.

          • Posted by Fishchum

            Realtor fees are negotiable.

  2. Posted by San Francisco

    This is insane. I love San Francisco for these deer in the headlight moments.

  3. Posted by Marc Walton

    This fixes the court’s judgement that “the payments were not roughly proportional to the harm because the plaintiffs were not required to spend the payments on costs related to the eviction”, but definitely doesn’t fix the second part of the ruling, “there was insufficient nexus between the landlords’ conduct and the harm to the tenants (that the landlord did not cause the high rental market in San Francisco)”. Therefore likely to be struck down again?

    • Posted by San FronziScheme (formerly known as lol)

      These 50k will not help much in the current RE climate, except if the city fast-tracks Ellis evicted tenants into BMR housing. It’s unlikely but not impossible…

      [Editor’s Note: Keep in mind that the $50K wouldn’t have to be spent in San Francisco.]

      • Posted by San FronziScheme

        Keep in mind that the $50K wouldn’t have to be spent in San Francisco

        Wow, this is even more stupid than I thought. If I resume the city wants a certain class of people to stay in SF and is asking for an Ellis-ing landlord to shell 50K for a relocation that might not happen in San Francisco?

        In short this is a punishment for the landlord, plain and simple, with whatever window dressing they just added.

        • Posted by Hitman

          Exactly – the certain class of people the gang of 4 communist carpetbaggers want are the stupid voters that support their failed policies, perpetuate the general notion of renter entitlement and the war with landlords. Those voters are too stupid to understand that they place the targets on their own backs. All the while, the big downtown developers capitalize on a system which allows them to raise rents and sales prices unchecked at the expense of mom & pop landlords. Yesterday, Forbes declared that SF is the worst city for renters…how much more is needed for people to understand that Rent Control is an absolute failure?

          • Posted by castroresident

            bingo. and the 4 carpetbaggers (love your definition) aren’t stupid. the voters don’t add 1+1 and keep voting them as their “Saviors”

          • Posted by EcceMorons

            Yes, this is hitting the nail exactly on the head. In a city with 60% renters, any politician who offers 60% of the voters free money out of someone else’s pocket, that’s a wise political move.

            I’m astounded that this “Tyranny of the Majority” isn’t played more often. I’m waiting for the Supes to put an initiative on the ballot that says the City can confiscate everything that Gordon Getty owns, and will distribute it equally to all other citizens. 800,000 ganging up on 1 should be a winner at the ballot box!

  4. Posted by San FronziScheme (formerly known as lol)

    If I sum this up, a rent controlled tenant is subsidized by a landlord for decades, potentially saving 100s of 1000s of Dollars.

    The landlord cries uncle, does an Ellis. The city says that’s unfair to the tenant and asks the landlord to compensate the tenant.

    Nothing wrong with that, absolutely nothing /sarcasm

  5. Posted by MDG399

    The Soviet Union died in 1990 or so…This thinking should as well

    • Posted by Alai

      Hey, socialism is extremely popular in America (at least when it comes to parking). Government mandates, price controls, shortages…

      • Posted by NoeNeighbor

        Parking? Get over it. Or do you not walk on sidewalks, use a bike lane, go to a park or take public transportation.

        • Posted by The Milkshake of Despair

          There’s a big difference between subsidized public open and connected throughways which are required for a functioning society and storage places for personal property which is not.

      • Posted by chuco35

        Also Homeowners Associations. There ain’t nothing more communist than homeowners pitching in for the common good based on their ability (value of their home). And there ain’t nothing more Stalinist than a HOA board.

  6. Posted by gribble

    It is time for landlords of rent controlled properties to get together and agree that that San Francisco Rent Control law has been changed so many times unilaterally by San Francisco that the original leases signed by renters should be declared null and void. The lease owners sign with tenants gets to be changed over and over again to your net loss and you have absolutely no recourse?

    This is getting beyond ridiculous.

    • Posted by JR "Bob" Dobbs

      Well, that would be a criminal violation of the federal antitrust laws. So I would not recommend this course of action.

      Moreover, it would not matter if a landlord (unilaterally or with an agreement by other landlords) “declared” that a lease is null and void. That would have no effect at all on the legal enforceability of the lease.

      Landlords could lawfully band together and lobby for changes to the rent control laws. Good luck with that.

      • Posted by gribble

        Point being we signed a lease that has had the laws governing it changed multiple times over the past few decades – every single change to the detriment of owners. Banding together above of course meant going through lawful channels.

        Just so damn happy our family decided to Ellis our rental building three years ago. Six more units off the market and with the continued idiocy of the Supes it is looking more and more like a permanent decision to never rent again.

      • Posted by Sierrajeff

        There’s nothing criminal about a class action lawsuit.

      • Posted by Hitman

        The right to exercise due process is not a criminal violation of anti-trust. It might not be a winning argument but it is hardly anti-trust.

        • Posted by JR "Bob" Dobbs

          Nor did I suggest it would be.

          But a group of landlords getting together and agreeing to void the leases of their tenants (in order to charge more)? Yes, that is a violation of the antitrust laws. (Section 1 of the Sherman Act, and Section 16726 of California’s Cartwright Act, to be specific). You can do pretty much anything you want on your own in this regard. But agreeing (i.e. conspiring) with others to act in concert is illegal. Lots of people get sent to prison for it. There are exceptions, like getting together to lobby for changes in the law, as I mentioned above. “But I felt my due process rights were being violated” would not be a valid defense.

          I advise clients every day on these issues. This is not a well-understood area for most people. You wouldn’t believe what even some very sophisticated companies think they can do.

          • Posted by Hitman

            How would a group of landlords “void” leases without filing an action in court? How would my declaration that a lease is void allow me to evict a tenant? Are you saying that the mere declaration is void somehow allows me to recover right of possession or a leasehold estate. Are you saying that I cannot agree to jointly sue a 3rd party with another person?

            I advise clients everyday too. I see some of the things you write and I question your credentials. You speak half-truths like someone who read a headline or title but not the book.

          • Posted by Hitman

            Then again, it is the M.O. of the typical lawyer who advises (but has no skin in the game) to scare his clients into inaction and run the bill. These are the primary beneficiaries of the Ordinance, no matter what it says. Exactly the reason I have grown tired of the SFAA and their “meetings” which turn out to be little more than advertising and fishing opportunities for lawyers to catch new suckers.

          • Posted by anon

            “How would a group of landlords “void” leases without filing an action in court? ”

            Prior to tenant protection laws, landlords did just ignore leases and throw people out. Correctly counting on the fact that a family scrambling for a new place to live would have neither the time nor the money to mount a lawsuit.

          • Posted by Hitman

            “Throwing someone out” is forcible detainer per CCP 1159.

          • Posted by JR "Bob" Dobbs

            I admit that I have no skin in the game of this hypothetical and incomplete scenario! But note that I have “run the bill” to exactly $0 for this particular issue – you get what you pay for.

        • Posted by Can't Think of Cool Name

          @Hitman, I’m not an attorney, but what about landlords starting a PAC? Thought being how many landlords have also been on the BoS since the inception of rent control? If this is such an issue, why can’t they band together [legally, if possible] and act – in this case finding, campaigning for, and electing BoS candidates with a background as landlords to balance out the discussion?

  7. Posted by Fishchum

    “require evicted tenants to submit a sworn statement of their intent to use the relocation payments solely for housing or other relocation costs”

    Oh, I’m sure The City will be absolutely diligent in their monitoring of this to make sure the tenant actually uses the $50K for housing purposes. I have absolute faith SF’s bureaucrats will make sure every penny is spent on housing.

    • Posted by JR "Bob" Dobbs

      Yes, that is beyond asinine. And, without a fairly ironclad enforcement mechanism, this would not cure the problem the District Court found. Assuming the court of appeal upholds the earlier District Court decision, this one should also get struck down.

      • Posted by SFrentier

        But wait! It gets even better. Relocation payments usage includes catch all phrase “or any cost[s] that were incurred to mitigate adverse impacts on the tenant of the eviction.” So said tenant moves elsewhere, claims their new job pays less, and can use the money for whatever the hell they want. Nice.

        • Posted by EcceMorons

          Since the $$$ can be used for ANY costs incurred to “mitigate impacts”, what would prevent a tenant from saying that the impact was “stress”, so he needed to spend the $$ on massages or marijuana, or whatever else he uses to relieve “stress”?

  8. Posted by Mystery Realtor

    What’s going to happen is that one of these suits will go all the way to the Supreme Court Given their current make-up very well may declare rent control in non-emergencies (ie war time) an unconstitutional taking. You say it can’t or won’t happen–well they said the same thing about campaign fiance and we got Citizens United.

    • Posted by EcceMorons

      You know what would be hilariously ironic? If rent control was found to be a taking, and landlords could sue the city for all lost rents – actual market value of their rents minus actual rent received for as long as they had owned their building. Because the City would suddenly be the one making the argument – “Hey, if there had been NO rent control all that time, all of the market rents would have been much lower, because rent control distorts the market and causes less supply since below-market tenants tend to stay so you don’t get normal turnover.” They’d be forced to rationally argue that rent control drives up rents to everyone else. LOL

  9. Posted by Denis

    This was answered in another thread on the topic, but refresh my memory… How exactly would the taxes work on something like this? It seems like it could be really problematic

    • Posted by JR "Bob" Dobbs

      Taxable income to the tenant. A deductible business expense for the landlord. The landlord would need to (and would want to) prepare a 1099 for the tenant.

  10. Posted by Dixon Hill

    To all you landlords complaining about rent control in San Francisco…why did you buy here? There are lots of rental markets in the Bay Area without rent control. Why didn’t you invest there (or buy one of numerous non-RC buildings in San Francisco)?

    Were you unaware of the existence of rent control when you bought? Or is the surging rental market and the accompanying *opportunity* cost causing you to rethink that decision (and blame the “greedy” tenants)?

    In hindsight, would a non-RC have worked out better for you? And if so, is that the fault of the protected tenants?

    • Posted by Fishchum

      Bear in mind the laws have changed numerous times over the years with regards to rent control, so it’s a difficult question to answer. For example (someone correct me if I’m wrong) up until 1996 I think 2 unit (or was it 4?) unit buildings were exempt from rent control. Then presto, the law changes and your building now falls under rent control. Hardly a case of “the landlord should have known what he was buying”.

    • Posted by gribble

      Some of us bought before rent control was passed as a ‘temporary measure.’ Since that time the law has been changed multiple times without a citywide vote. Just about every single change has been to the detriment of the landlord. Landlords that are being forced out of the business are being singled out as greedy, terrible people and punished financially for just trying to do what makes financial sense to them and their families. 40K+units sitting out there unrented because landlords don’t want to be permanently tied down with tenants as the laws governing the tenancy change ten times in one year.

      If people in this city were serious at all about finding more units to rent they would look at serious changes to rent control that would actually encourage landlords to rent, not the other way around.

    • Posted by Pfffttt

      @Dixon: I get the distinct impression you must be a tenant.

      • Posted by Dixon Hill

        @pfffttt: You would be incorrect in that impression. I have never been a tenant in San Francisco. I just have a problem with the constant beating-up on tenants (and their advocates) that takes place in these comments. I have friends with RC apartments in the city.

        • Posted by SFrentier

          Well gee wiz Dixon, I have a problem with constant whiner tenants complaining when they get Ellis evicted, or owner move in evicted. Dem’s the rules! Don’t like them, don’t rent in SF!

          • Posted by Dixon Hill

            I have no problem with the rules. Landlords have the right to use their property in any way that the law permits. A lot of LLs who comment here seem to have a problem with the rules (rent control).

          • Posted by SFrentier

            Really? I’d say ALOT more tenants have problems with the rules than landlords do. Less than 150 Ellis evictions last year and you’ve got Leno and Campos running around like crying babies!

            And BTW I’m a landlord and I love rent control! Smart landlords know how to work with it and make bank. The more asinine restrictions, the higher the marginal rent is for any vacancies. Any SF landlord with half a wit knows not to rent to loser-lifers, non profit types, artists, blue collars, or anyone over 40 (unless wealthy). Yup, it’s mostly airbnb, visiting foreigners, young techies on the move and other well to do’s get rentals in the city.

            Soooo…how do you like ‘dem apples?

        • Posted by Dixon Hill

          And by the way pfffttt–Why would you assume that I can only see things from the point of view of a group of people that includes me as a member?

    • Posted by JR "Bob" Dobbs

      This is a very valid point. True that those who bought before 1979, or even before 1994 (2-4 unit bldgs) have a pretty strong right to cry “unfair” (although property rights and contract laws are always subject to change – so even their claims are not all that compelling). But anyone who bought in the last 20 years is really just trying to get a windfall – not a lot of sympathy from me. The SF voters want rent control, and we live in a democracy.

      • Posted by Hitman

        If you owned before 1979, it would be a miracle if you still have your property after multiple financial crises and the burden of rent control. Some of us became lawyers to fight back – now we seek revenge on tenant scum.

      • Posted by nardle

        Yes to this.
        This is also different side of same coin.
        Landlord bought house with no rent control and wants to be compensated when rent control added. Sounds fair.
        Tenant paid rent to rent control apartment and wants to be compensated when rent control taken off. Sounds fair.

      • Posted by Dixon Hill

        Anyone who bought before RC and had it imposed on them got a raw deal and I do have sympathy for them. At this point, it’s hard to feel too much sympathy, though, as there have been several market cycles and several opportunities to sell at big gains to pre-1979 or pre-1994 prices.
        I would be very interested to know what percentage of the RC housing stock is *still* owned by people who were blind-sided in this way.

        • Posted by kbbl

          A friend of mine owns such a house — owner-occupied 2-unit in upper haight inherited from relatives.

          My guess is that most such buildings get exceptional benefits from Prop 13, so it’s a bucket of madness in almost every direction.

      • Posted by San FronziScheme

        There are new rules coming every couple of months. Each trying to reduce rental freedom on the landlord side. This argument of “why did you buy, yadayadayada” is the stalest piece of argument in SF right now.

    • Posted by parklife

      DH,

      You state “In hindsight, would a non-RC have worked out better for you? And if so, is that the fault of the protected tenants?”. But isn’t this the same as saying, “In hindsight, wouldn’t scraping together enough money twenty years ago to buy a home have worked out better for you? And if so, is that the fault of your landlord?”

      There really is little difference. We can all look back and wish that we had done things differently. But there seems to be a prevailing feeling that while landlords should have known better, tenants should be protected from their mistakes (i.e. expecting their tenancy to last forever when the Ellis Act has been on the books for some time).

      • Posted by Dixon Hill

        Parklife–It isn’t the same at all. Anyone who purchased a building subsequent to rent control (or rented a unit in a RC building) knew more-or-less what to expect.
        Regarding any subsequent changes to the law that might have been to the detriment of property owners, it has been well known for decades that San Francisco is a bastion of progressive politics. Anyone choosing to live here or invest in rental property should not be surprised by that.
        I don’t have a problem with property owners availing themselves of legal rights wrt their property. However, these comments frequently denigrate the legal rights of tenants and paint them to be greedy leeches who haven’t earned the right to live in San Francisco.
        As to your point that some renters might have been better off purchasing 20 years ago, many (not all) rent because they are not in a position to purchase and will never be in a position to purchase. Not a matter of *wishing* they had done differently; the option did not exist.
        This daily business of constantly going after some of the less fortunate members of our community, and complaining that they are interfering with our accumulation of greater wealth, is sort of ugly.

        • Posted by parklife

          DH,

          I agree with you that some comments may appear to be over the top. However, I would hope that you would similarly agree that the tenant activists and their supporters are guilty of the same thing with respect to their characterization of landlords. In my opinion most landlord’s hostility is focused not so much at tenants, but at the pandering politicians who refuse to address any sort of broad based assistance to low income tenants, but instead wish to force politically powerless small landlords to shoulder the entire affordable housing burden. Meanwhile, politically connected developers and landlords are reaping a windfall on their newly built rentals.

          I will disagree with you on the subject of the ability to rent vs own. With some exceptions, the ability to purchase one’s home has been available to many Americans for quite some time. Can that home be located in SF, perhaps not, but there are locations even within the Bay Area that are much more affordable. It takes some (in many cases, quite a bit) of sacrifice but it could, and can be done.

          • Posted by San FronziScheme

            Hostility attributed to tenants is actually hostility that is coming from tenant activists. For instance evictionfeesf will show up at the doorstep of your domicile and start a public shaming, even though you only tried to exercise your constitutional right. That’s purely revolting and one of the main reasons why no regular tenant will ever set foot in my place as long as there is rent control.

          • Posted by Hitman

            EvictionFree will show up at your kids soccer game and protest you. They are the lowest of the low and most are Chico & Humbold Communists Party Organizers. They will also mask themselves and riot in Oakland.

    • Posted by San FronziScheme

      For every tenant there has to be a landlord. And that landlord needs to be respected as a provider of a valuable service, just like your BART employee or any other thing you need on a daily basis. But the way things are set-up, and with the 60% tenant population calling all the shots in the tenant-landlord relationship, tenants are actually imposing a loss of revenue to landlords. And by doing so they are destroying the paradise they created for themselves.

      The proof? San Francisco is now THE MOST EXPENSIVE RENTAL MARKET IN AMERICA. This comes from demand, yes, but mostly from supply issues. Sticky tenants + fed-up landlords = low supply.

      Now you could categorize my comment in the “whiner” category. Someone who has no choice and vents his frustration. But I have actually acted to protect myself from rent control.

      What I own in SF used to be rent controlled 6 years ago. Now it’s on airbnb as corporate rental (30+ days) which is perfectly legal, and my tenants could perfectly ask for a lease. But I am relatively well protected against rent control since no-one in his right mind would want to make a permanent lease at the airbnb price. I also adjust prices every couple of months based on what the market will bear.

      Since my place has been on airbnb, I have raised the rent 3 times, by a total of 30%.

      I will go back to the normal rental market ONLY when rent control is repealed, which is likely the Fifth of Never.

      I have pondered all other options, but this is the only way I can protect myself and my family.

      • Posted by Amewsed

        Evolve or be left behind. I like the idea of non-sticky tenants and a shortened lease period. Not difficult to furnish the place. Plus, there are minimal airbnb units in my rental neighborhood but the demand should be there. Fortunately I have a few months to decide what I want to do but I like having options.

      • Posted by anon

        “And that landlord needs to be respected as a provider of a valuable service”

        And for that valuable service, they get the rent they agreed to.
        The landlord didn’t create the jobs boom driving up rents, so why do they deserve a piece of that?

        And if you’re saying that high rents are due to rent control, that makes these high rents a mirage for most. By your logic, repealing rent control would lower rents so landlords wouldn’t get to collect these high rents anyway.

        • Posted by San FronziScheme

          Yes they get “A” rent. But they often do not get market rent, because the market rules are cancelled by self-serving laws.

          Now I know very well that these are the laws in SF and that they have to be respected. But that doesn’t make them sensible in terms of long term stability. Say that one day the city demands that all SF gas stations to only charge 1970 gas prices. Gas prices did not follow inflation, and by far, because they are the result of supply and demand. And they are not really the fault of the seller of the product, but the lack of vision by politicians that created the extra demand without finding a way to provide more supply/alternatives.

          Why would a product have to stay at the old price when all the costs of the supplier are increasing by more than the rate of inflation? Your contractor will not work for 1979 wages…

          Yes repealing rent control would lower market rents, I think that’s the consensus here. Previously frozen rents would increase, and market rents would go down. But on average rents would go up because landlords would now have an incentive to upgrade their place to capture better rent.

          • Posted by Jake

            Repealing rent control would increase rent for both rent controlled and non rent controlled units. This has been explained many times by me and by others on this site. Just three weeks ago on SS I explained this in some detail and provided links to studies that explain why and how. You were on that thread.

            For anyone interested in actual understanding instead of “consensus” nonsense, the best study to start with is “Housing Market Spillovers: Evidence from the End of Rent Control in Cambridge, Massachusetts” by Autor, Palmer, and Pathak. If you google that you can find a few versions of their academic paper as well as links to most of the related literature and some blog level interpretations by other economists.

          • Posted by San FronziScheme

            What happened in Cambridge, MS would happen in SF, I agree. But we might not agree on the effects on Market Rent. Yes landlords would upgrade their property, but this would affect mostly landlords that had deferred maintenance, overwhelmingly previously rent controlled units. This would result in an EXTRA increase in rent – for the previously rent controlled units – which is a given. It would also increase average rent.

            But for today’s asking rent? Not so sure.

            Let’s say guy #1 a non-rent-controlled 3/2 for rent at 5700 today. Rent control is repealed and all the extra 3/2s on the market make average prices go to, say 4500. Since he was collecting market rent before, he maintained it and did the proper upgrades. He has no incentive to make anything else.

            Now let’s take a guy #2 who has a rent controlled 3/2 for which he collected 2000. He now can ask 4000 but his rent will be lower because he has some delayed maintenance. If he does some improvements he can ask 4500 like guy #1 does.

            As I keep saying again and again when the fallacious argument of “increasing market rent” is given, YES average rents will go up, and NO asking rents will not go up, because they depend on the overall financial ability of the renter pool to pay this rent.

            Everyone who wanted to pay high rent in SF and could afford it has already moved in, by definition. The people being priced in will be the middle-range that can afford 4500 but 5700.

            Now, 10, 20 years down the line, that all depends on economical parameters that are yet unknown.

        • Posted by Hitman

          Or, if they cannot get a fair deal, they just leave their homes vacant and elect not to participate while rents skyrocket.

    • Posted by EcceMorons

      Dixon Hill – I bought a 4 unit building in SF (in 1992) because it was to be my home, and I could always rent out the other 3 units for market value, since 2-4 unit buildings were exempt from rent control. I based my purchase price and my negative cash flow on the expected rising rents.

      Then the law changed 2 years later and put me under rent control.

      So to answer your question, YES, had I been psychic and known that the law would change, I’d have been MUCH better off buying something else which was exempt from rent control (but wait, I DID buy something which was exempt from rent control).

      Your later argument that “well, SF is a progressive city – you should have been aware that it would change the laws and put you under rent control is just lame. It’s the same point some people have made that the Jews who failed to leave Germany when Hitler was rising to power really have no one to blame but themselves. They should have seen what was coming….

      • Posted by San FronziScheme

        Godwin’s Law. That’s it. Everyone pack up. Nothing else to see here.

        • Posted by EcceMorons

          Ok, so we’ll switch the analogy from 1930’s German Jews to 1980’s Cambodian college professors. Better?

          • Posted by Jake

            Sadly, there weren’t many college professors left in Cambodia after the Khmer Rouge, who were driven out in 1979 by the Vietnamese.

            SF had a huge property value boom that started soon after your property was put under rent control. You’ve had a long time to take a windfall profit and get out from under the burden of rent control.

            As such, your whining is hilarious, your analogies less so.

          • Posted by San FronziScheme

            In 1980 the Vietnamese has already “liberated” Cambodia. More like first half 1970s

          • Posted by San FronziScheme (formerly known as lol)

            Jake, then I guess your suggestion to prospective landlord is to speculate, since this is the only profit that is allowed by the polutburo and their minion tenants.

          • Posted by Jake

            Every investor estimates/speculates cashflow and capital return. If you don’t like the risk/return profile, there are other investments. Others on SS have suggested strategies to hedge the risk of getting longterm below market rents due to rent-control, such as spreading the risk across more units and time.

            Plenty of SF investors make positive cashflow on residential rental properties, including rent-controlled properties. For example, Sangiacomo is famous for buying SF rental property, never selling any of it, and becoming very rich. Not that I would wish anyone else to follow everything he has done for profit, but there is abundant profit in SF rental property.

            All this complaining is like saying no one wants to own these places because the profit is too predictable. It would be more hilarious if it wasn’t so monotonous.

            In the 30+ years since SF got rent control, the cycles have had a brief downturn after setting record highs. During the downturns rents might drop ~20% and vacancies go up ~10% for a few years. How about Las Vegas?

        • Posted by Dixon Hill

          Yes. Rent control = Hitler.

          • Posted by EcceMorons

            I didn’t say that, or even imply that – I just pointed out the fallacy of your logic by using a hyperbolic analogy (“people are at fault for failing to predict future events that can’t necessarily be foreseen”). I notice you prefer to twist the comment, rather than respond to the point. Telling, on several levels….

      • Posted by JR "Bob" Dobbs

        I understand the rhetorical point.

        But how much has this building appreciated since 1992? 400%? How much have your property taxes gone up – maybe 30%? How much has your rental income gone up – more than 100% if you have the same tenants, several times that if (as expected) you’ve had some turnover). You see why San Francisco landlords really don’t get a whole lot of sympathy – except from other SF landlords?

        Not holding anything against you – I bought my first place just a few years after you did. Just pointing out that the zeitgest is not completely unfounded. Long-time landlords really don’t have a very compelling tale of woe.

        • Posted by SFrentier

          I agree, many SF landlords have learned how to work with RC (see my comment above) and have done well financially. Personally I’m not complaining. I’m more relishing the irony and hilarity of idiot activists and Board of Supervisors attempts to restrict landlords, while the result is making marginal rents even higher. Plus it’s highly entertaining 🙂 Being an SF landlord is an all in, full on, highly strategic blood sport. Fun to win, and better than any video game. You get bonus points when you have accumulated enough wealth to be able to buy a post 1979 non RC building- now that’s fun!

        • Posted by San FronziScheme

          Equity appreciation is the poor man’s excuse for the outsized undervaluation of the collected rent. It’s akin to saying “yes printer ink is expensive but those printers are so cheap”. That’s a salesman argument, not an economical one.

          A dollar lost is a dollar lost, even if your equity has gone up for a totally unrelated reason.

          Also, appreciation is only valid for people who want to sell. Your argument is similar to GWB saying people should be able to extract “their” money from “their” house. It was all paper equity that became vapor equity in just 3 years. What if a major earthquake hits you? You have this nice empty lot and no cash to rebuild and most likely no earthquake insurance. The “equity” argument will vanish and you’ll regret having subsidized a tenant for so long. As they say “one bird in hand…”.

    • Posted by NoeNeighbor

      Why isn’t reasonable for people to complain about stupid laws. Tennants complain about the Ellis Act even though it was in effect when they moved in. Sorry you make no sense.

    • Posted by Lula

      I’m a tenant in a RC flat, original owner came to SF via the US Navy and bought the building post WW2, so that he had a place to raise a family. No RC when he bought.

    • Posted by jim

      I bought a 4 unit in 1989 before the rules were changed.

  11. Posted by Sfarchitect

    And now we will take the city to court again, and again it will be deemed unconstitutional!

    What a waste of time: Politicians don’t want to deal with the real issue: just repeal rent control, or mean test it.

    The laws for landlords change every few months for the worst, tenants just don’t seem to understand this. No wonder there are 30,000 vacant units in SF not being rented out.

    • Posted by EcceMorons

      For politicians, the only “real issue” is their own re-election. Rent control might be bad public policy, and passing unconstitutional laws is a waste of money (the taxpayers’ money, not the politicians’ money), but they’re both great politics!

    • Posted by kbbl

      I hate to jump on a typo, but the thought of limiting RC only to nice people is a pretty happy daydream for me.

  12. Posted by Rome is Burning

    Editor’s note about where the payment is spent has another dimension – would a court accept the unstated assumption that the tenant’s loss should be calculated against San Francisco rents? Does a tenant have a divine right to live in the CCSF? In ordinary places, if the rent becomes too high, a tenant moves to a neighboring community.

    • Posted by Dixon Hill

      Yes, because San Francisco is where the tenant is living at the time that they are evicted.
      You could theoretically compensate the tenant for the cost of obtaining housing in a variety of places, including Turlock, Kansas City, or Calcutta.

  13. Posted by Pfffttt

    Oh, yeah, make them sign an agreement that they will use the $50K towards housing. That’s, like, so totally enforceable/policeable. SF supes and their “continue the handout” policies are a joke. The renters far outnumber the owners here, so we will keep seeing much of the same in perpetuity. Maybe I need to get out more, but I’ve never seen any city and its people so entitled. Pathetic. Really pathetic.

  14. Posted by Pfffttt

    It’s like making people swear to tell the truth under penalty of perjury. NO ONE lies under penalty of perjury–EVER. Lol.

  15. Posted by Hitman

    Now that the gang of 4 have placed a hard and “fair” price on Ellis Act evictions, nobody should cry foul if someone buys a building and is willing to pay that price. There is a price where I am willing to buy and building and Ellis so there should be no crying from the Eviction Free babies when some of us endeavor to do so.

  16. Posted by SFAgent

    I expect the number of Ellis Acts to INCREASE if this survives the eminent court challenge. Any owner that has a building full of long term tenants paying very low rent will be directly targeted as the capping at $50K/per is actually a financial INCENTIVE to clear out the building. The SF politicians fail to realize they cause more harm and their actions will directly target the very people they are trying to protect. Rather, the supes should give a POSTIVE INCENTIVE for owners to keep long term tenants. Here’s an idea, rather than penalize owners by capping rent increases at 60% of CPI, raise it to 80% of CPI so owners only lose 20 cents on every dollar for every year someone stays. Fixed income earners who have CPI adjustments would still benefit and be able to stay while owners may be less incentivized to target them by offering a little compensation. Further, any $50Krelocation payments should be directed into an escrow account so moving/rental/purchase expenses can be administered/documented by a third party for future validation/litigation purposes.

    • Posted by Hitman

      The only people these crazy laws don’t hurt are the super rich. That is why SF is getting gentrified – they are immune. Want to blame someone for gentrification? Blame the comrades!

    • Posted by Dixon Hill

      SFAgent–I like the first part of your suggestion. I’m not that familiar with the history of rent control but I suspect that capping of increases to a fraction of the CPI had to do with very high inflation during the 1970s, when the law was enacted. Inflation is very low now and you could even allow rent to increase at 100% of inflation and it would be favorable to RC tenants. As far as I’m concerned, there’s no rational argument that the annual increase should be less than the CPI…except for the fact that it’s the deal that owners and renters
      signed-up for.
      I also agree with your argument that this may increase the number of Ellis evictions. IMO, the $50K payment idea is a misguided effort to protect tenants because it quantifies an uncertainty regarding Ellis-ing a RC building.
      Don’t really agree with your escrow account idea. I’m not aware of any other instance requiring persons compensated for financial harm (in this case, the loss of the home which they may have lived in for many years) to spend the compensation in a specified way.

      • Posted by EcceMorons

        Dixon, I’m glad you think that there’s no rational argument that the annual increase should be less than the CPI – which makes you MUCH wiser than the main Administrative Law Judge at the SF Rent Board, who I got into a lengthy discussion with on this very topic – asking what would happen if hyperinflation ever hit, and the value of the dollar was cut in half. She was simply too stupid to understand what inflation is and said, “Well, why would it be fair for a tenant to have to pay more in rent if hyperinflation hit?”

        These are the people who rule us…..

        • Posted by San FronziScheme

          Now that would be a fun experiment: if hyperinflation starts to kick in, ask for the tenants salaries to be increased at 60% of inflation. They would get good at math in a NY minute.

        • Posted by Hitman

          The “judges” at the Rent Board might as well be advocates for tenants. That place is a kangaroo court. Nazis got a more fair hearing at Nuremberg.

          • Posted by San FronziScheme (formerly known as lol)

            You know “nazi” also triggers Godwin’s law, right?

          • Posted by EcceMorons

            Wait. Does Godwin’s law apply when the Nazis are the victims?

    • Posted by parklife

      All good ideas. I would add the following:

      Allow for simple, no fault, evictions of tenants PROVIDED the unit is re-rented at the same rate as before (i.e. vacancy control). One of the biggest fears of landlords is being stuck with a problem tenant. This is particularly true in buildings in which the owner resides. IMO, this would result in an immediate release to market of a large number of currently vacant units.

      • Posted by San FronziScheme

        evictions of tenants PROVIDED the unit is re-rented at the same rate as before

        Now the risk with that is having a friend of the landlord who would agree in advance to leave after one year (possibly with a payment). That is a giant loophole and people could make a living as bogus tenants.

  17. Posted by Amewsed

    I want to see the sh*t really hit the fan — repeal Prop. 13 but keep rent control. You will see the biggest turnover in property ownership in history as older homeowners on a fixed income will get hit with massive market value adjustments. Kiss the RC market in SF goodbye.

  18. Posted by formidable doer of the nasty

    I predict an increase in apartment building fires…

  19. Posted by EcceMorons

    Nah. $50k per unit isn’t enough to inspire arson. That would be NYC, with its vacancy control, and rent controlled units being passed to one’s heirs, etc. etc. The Mafia found this market to be very profitable, buying rent controlled buildings and doing really nasty stuff to get the tenants out.

    Another 2 or 3 laws like this one though, and we’ll be approaching that point….

  20. Posted by CP

    I don’t agree that the landlords are subsidizing the RC tenants. It’s actually the newcomers who are paying the price. People get stuck in the place they’ve rented a while ago, even if it does not suit their needs any more. This cuts down the supply, and drives the prices up, and now it’s even less likely that the “old” tenants will vacate the unit. This also creates a side effect: landlords have no incentive to properly maintain the RC units. In fact they are interested in making these properties as uncomfortable as possible (just being borderline legal).

    Let’s face it: SF is a very attractive place for people with money. And the rental market is severely distorted. Why is it fair for new renters to subsidize the old ones? IMHO it is not, but most new renters are probably not voters. But once they get into the RC trap, they start supporting the status quo.

    • Posted by JR "Bob" Dobbs

      +1 This is the biggest problem with rent control imho.

      Of course, this equally applies to prop 13 – no incentive to maintain a property or promote its highest and best use because your property taxes can’t go up. And new owners are subsidizing long-term owners.

      But neither is going anywhere. A fun debate, but if anyone actually loses a minute of sleep over it, you need to just get over it.

      • Posted by San FronziScheme

        if anyone actually loses a minute of sleep over it, you need to just get over it.

        But these rules were created precisely by people who didn’t like the current status quo and fought against what they saw as unfair, for instance like Howard Jarvis.

        Sometimes if you criticize a system long enough and provide valid arguments you can bring people out of their day-to-day coma and make them to want to change things (steps down from his desk, puts down the “unite” sign).

    • Posted by San FronziScheme

      Well, having some people paying more and others paying less for the same product can be seen from the outside as some buyers subsidizing the others, except it usually doesn’t work that way.

      There were 2 3-units buildings for sale on SVN that were on SS 3 years ago. Same owner. All very large places. None was paying even close to market rate (one paid less than $800 for a 3BR!). That owner saw nothing of the market rent and was the victim of rent control and for this landlord in particular, he was the one actually subsidizing the tenants. Now you could say that tenants paying market rate are actually overpaying the landlord in a way. But since other tenants were ready to pay that same price, it’s not really a subsidy since a tenant always has a choice (rent it or not). Whereas a rent controlled landlord with a lower than market rent HAS TO accept a lower rent, which can be considered a subsidy.

      • Posted by CP

        Yes, from an individual landlord’s point of view it can be correct. But if we take the market as the whole, we will find that the landlords as well as the tenants are in different positions due to this market distortion: some are benefiting from it, some are loosing. One can describe it as subsidies, but if you prefer a different word – I would not object.

        I think that without RC, the prices would go down. However the tenants and the landlords might be better off (on average!). Sadly some people would find out that they cannot afford this city, but I think they are in a loosing battle anyways. The landlords with new tenants would have to reduce the rents to keep their good customers, and the tenants will find out that the intent to move out would not cause a celebration on the landlord’s part.

        However I don’t think this is going to happen anytime soon.

        • Posted by NoeNeighbor

          Without RC, rents would probably go down as more supply hit the market, but the total amount of rent collected would probably go up. So yes landlords — as a class — are subsidizing people in rent-controlled apartments.

  21. Posted by SFLogic

    There seems to be this presumption that all tenants displaced are poor or low-income. There are thousands of tenants in SF that are earning well over $200,000 per year at extremely low rental rates.

    • Posted by SFrentier

      YES. More to the point, ANY tenant renting as recently as 3-4 years ago NOW has a great deal. That includes thousands of tech engineers, etc. ALL of them now have good deals, and are keeping their units, hence restricting the present supply.

      I’m telling you, having any rental units without RC is like printing money in this town 🙂

    • Posted by Jake

      I would appreciate it if you could provide a link to the source for this information. I haven’t been able to find it in the Census data. Is there a better source?

      • Posted by Fishchum

        Just anecdotal, but my wife and I are the classic example. Earning a bit north of $250K per year, we’ve had RC on our 1BDR in the Marina since 1994 – and we have some good friends who are in the same boat as we are. Married, middle age, no kids. Why should we move? We live well, travel, and we’ve been saving as much as we can for retirement. I won’t get into a debate over the ethics of it, but I’m smart enough to know that if we weren’t doing this with our unit, someone else would be.

        • Posted by EcceMorons

          And why exactly won’t you get into a debate over the ethics of it? 🙂

          • Posted by anon

            If the landlord argument for doing an Ellis flip is simply that it’s legal and makes them money, what’s wrong with him doing something legal that makes him money?

            And ethically, what did the landlord do to create the tech jobs boom that’s making rent’s go crazy? If rent’s hadn’t boomed, the landlord would be in the same place he is in now. It’s just now he’s jealous since he sees some other landlord charging more. He knew a RC unit was a low risk low reward deal when he took it.

            It’s like I’d have an ethical issue with taxing away money from some Twitter guy simply because he “made too much money”, but if another guy chose to work at PGE and sees the Twitter guys making all this money it’s not like he’s paying the difference in compensation as a subsidy.

          • Posted by San FronziScheme

            anon, all very valid arguments. Except the guy doing the paint job on your rental building will not be asking $12/hour, neither will the plumber, roofer, electrician, etc… Every professional will charge you based on local incomes and equity.

            Of course, you could pay for it with an HELOC and use your equity for these improvements. But these are not always good business decisions.

          • Posted by anon

            But it’s hard to believe this is all just about costs rising for handymen and plumbers and all that. I agree with the people above that limiting the rent rise to CPI was just stupid. But like they said above, the big damage done with that was way back in the 70’s. Inflation has been tame to non-existent lately. Especially wage inflation for non-professional employees.

          • Posted by EcceMorons

            Anon – if one is debating whether or not an action is “ethical”, the fact that it’s “legal” has absolutely no relevance – for ANY example, whether you’re using landlord or tenant in your example.

            In the 2 examples you’ve used – a speculator buying a building, Ellising it, and flipping it – and a tenant who makes $250,000/year paying far below market rent to his landlord, I think one could make a case that there’s some degree of questionable ethics in both of those examples, even though both are legal.

          • Posted by San FronziScheme (formerly known as lol)

            Yes, wages have been stable but the type of work of newcomers has improved a lot these last 20 years. This needs to be taken into account otherwise you end up in a city with 2 classes.

        • Posted by Michael

          There is nothing ethically wrong with taking advantage of rent control – irrespective of your income – unless you’re not playing by the rules (not your primary residence, illegally subletting, etc.)

          It’s the same with prop 13.

          • Posted by EcceMorons

            I’d disagree. Since you said there is “NOTHING” ethically wrong, irrespective of income, I’ll use an extreme example, and you can tell me if there truly is nothing ethically wrong with it – if a billionaire is renting an apartment from a sick, disabled widow who can’t afford a decent nursing home, do you really think the billionaire is acting 100% ethically if he’s paying $500 when the widow could rent it for $4,000 if the billionaire moved out?

            Again, “legal” and “ethical” are two different animals….

          • Posted by anon

            The billionaire bankrupting and old landlady due to skyrocketing plumbing costs, would be an ethical issue, but it just seems like a pretty contrived example.

            All the stories in the paper seem to be of Mexican restaurant workers or old Chinese families getting kicked out.
            And all these “subsidy” numbers that people throw around are purely theoretical. If some guy is paying $1000 for a place, some tech people move into the area and now you tell him that there’s some $3000 theoretical rent he’s “paying” with a $2000 “subsidy”. Practically he’s renting the same place for the same price he was before. So it’s hard to see how there would be much ethical outrage over this virtual subsidy number that people calculate.

            As others have said, there might be some virtual subsidies and opportunity costs going on, but practically what happens is that newcomers just end up paying more.

            And having a bunch of richer new-comers come into an area and ending up paying more rent than existing poorer residents doesn’t seem like a huge ethical problem.

        • Posted by Zig

          My wife and I would still keep ours too if not for these damn kids. I have never lived in a building in SF without we’ll off tenants with way below market rents.

          Rent control is miserable for family formation but great if you never need more space

        • Posted by Anon94123

          @Fischum…renting the same 1br in the Marina since 1994?! Can I guess what your rent is? Would it be around $1,300 a month? I am only curious because I have a friend like yourself who has been renting the same apartment in the Marina since 1992, and he won’t tell me what he pays, but it must be pretty low.

          • Posted by Fishchum

            Close, but it’s a but north of that (and we don’t have parking). We have some good friends in the neighborhood who pay about the same as we do, and their unit (top floor, corner unit, views of Palace and peek-a-boo GG Bridge views from the kitchen, parking) is much nicer.

    • Posted by JR "Bob" Dobbs

      I don’t think there is any factual support for this assertion at all. Sounds like landlord lore.

      There are only about 40,000 total households in SF that earn $200k or more. Are there 1000s of tenants earning $200k — I’m sure. At “extremely low rental rates”? Doubtful. Is there some small number of tenants who fit this description? I’m sure there are. I’m not buying this urban legend unless someone can point me to some actual facts (in which case, I will gladly accept this point).

      • Posted by NoeNeighbor

        You won’t find data on this, because the City would be scared to collect it. Whatever the specifics are, it is pretty clear that many, many tenants in RC buildings are not poor by any definition.

      • Posted by SFrentier

        Okay….how about 3 tech bros renting a 3BR since say 2011. Each tech bro makes $100k so $300k for that household. Rent delta from 2011 to today for a 3 BR is at least $1000, maybe more. Stats schmatz- that’s going to be a sizable number of units in this city, and they are all well off tenants and they are all saving north of $1000 per month on their rent. *THIS* is da problem mon!

        • Posted by Jake

          Ah, clearly then the problem is your profits are not as excessive as your whining.
          Just to inject some reality into the make believe numbers being cast about, for SF per the 2013 Census ACS:
          – $61k median household income for renters
          – less than a third of renters have household income of $100k or more
          – nearly a third of renters have household income less than $35k
          – 20% of all households in SF are renters with household income less than $35k
          – more than a third of all SF households are renters with household income less than $75k
          If you want a system that enables “low income” and “middle class” people to live/rent in SF, then I think we have one. It may seem unfair that it also benefits a much smaller group of people with high incomes, but then so does prop 13 and many other laws.

          • Posted by Hitman

            Jake’s picture might be right for now but with a $50k bump to the landlord’s expenses, that ain’t gonna be the situation going forward. IF landlords decide to initiate new leases, there is a new expense to account for and they will pass in on to tenants. I am the owner of the property, so why would I want to eat $50k shoved down my throat by a bunch of Harvard jerks. If someone wants to live in MY property, they need fork over the ca$h because being a landlord is about PROFIT. You can philosophically disagree but I control the land. Look around – they ain’t making land in SF anymore and the price is escalating faster than the average man cope. If you got a rent control unit, you better save! If you are living paycheck to paycheck, your payout will be the last benefit from rent control you will ever get.

            Real estate prices are skyrocketing because of rent control. As Drake says: “The Real is on the rise, so -f- them other guys.”

          • Posted by anon

            Any demographic breakdowns for those numbers? Just anecdotally, my four apartment units are all rented college students (two studios with one student in each, two two bedrooms with two students). They all definitely have household income much lower than $35k, but insanely rich parents that actually pay the rent. Not really low income or middle class, in other words.

          • Posted by SFrentier

            I was talking about new people moving into SF, since 2011 in my above example. Newsflash jake: just about everyone that has come into this city for the last 5+ years has an above median income. i.e. Not too many poor and blur collar people recently moved to SF, unless they have family here, or a place provided by family, got some subsidized housing or joined the homeless on the streets.

            That’s what is relevant, not the “stats” you provide of the thousands of hanger ons that have low income and leach off RC apartments to stay here.
            And my point was, idiot, that all these new people that have food incomes now benefit from RC, when they don’t need it. And they now stay out because they are getting free savings. So that forces the current rent even higher.
            Don’t you get that? Are you that thick?

      • Posted by Hitman

        If you think that is landlord lore, you clearly don’t advise landlords in SF. This is a story I have seen a million times.

      • Posted by parklife

        “I don’t think there is any factual support for this assertion at all. Sounds like landlord lore.”

        The survey performed in 2000 indicated that almost 20% of rent controlled units were rented to those with household incomes greater than $100k (in year 2000 dollars). Since that time, the tenant activists and their allies have quashed any additional surveys since this does not aid their narrative.

        • Posted by Jake

          If it is the April 2002 survey at namelink (San Francisco Tenant Survey), then it did not crosstab income with rent paid, meaning it did not provide any evidence that ‘There are # of tenants in SF that are earning well over $X per year at extremely low rental rates.’ No evidence at all. Didn’t even try to identify that kind of information. Same limitation with the Census data, AFAIK.

          The 2002 survey did determine that the percentage of renters paying the highest rent rate in the survey ($2000+) was slightly greater for rent-controlled than for non rent-controlled.

          It also found market rate tenants had a longer tenure in their unit than rent-controlled. For example, it found that 53% of rent-controlled tenants had moved in the previous 5 years, but only 38% of market rate. It found that 15% of market-rate tenants had been in their units for 20 years or more, but only 10% of rent-controlled.

          These are just the opposite of what is most often claimed in comments on SS. As the report summary states:

          “While it might be expected that households would be less mobile in rent-controlled units due to the desire to keep lower rents, households in market rate units were actually less likely to have moved recently than those in either rent-controlled or subsidized/assisted units.”

          Unless there is some other survey or data, the so called landlord lore remains not only unsupported but counter-indicated by all the known data. A fiction to aid landlord narratives, but counter to fact.

          • Posted by SFrentier

            Sounds like a bullsh!t study to me made up by some pro RC clowns. Zero credibility. You’re just a shill for the Rent Control Industrial Complex.

          • Posted by Jake

            Once again SFrentier provides an excellent example of denialism, from wikipedia:

            “In human behavior, denialism is exhibited by individuals choosing to deny reality as a way to avoid dealing with an uncomfortable truth. Author Paul O’Shea remarks, “[It] is the refusal to accept an empirically verifiable reality. It is an essentially irrational action that withholds validation of a historical experience or event”.”

            FWIW, this survey was reviewed by the San Francisco Apartment Association. You can find their remarks on it on their website, along with their remarks on the survey of landlords (namelink) done at the same time by the same researchers. The surveys feed into the official San Francisco Affordable Housing Study commissioned by the Board of Supervisors.

            FYI, I don’t even like rent control and have posted many times on SS that it is a bad way to accomplish what good it does. Nevertheless, I am a trained scientist willing to follow the data where it leads and reluctant to draw strong conclusions without supporting data.

            With a little more intellectual honesty and bravery, you could do the same. All you have to lose is your blind ignorance and nasty attitude.

          • Posted by SFrentier

            No jake, I speak from experience and common sense knowing the rental market here. It’s not that complicated to understand. And, you still haven’t given a good rebuttal to my comments above, about the significant (read: market changing) impact new renters coming in over the past 5 years, and how they are gliding on cheap RC. You keep ignoring the marginal changes, which really dictate market rent.
            It’s you, with your idiot-geek “scientist” delusion that gets in the way of understanding reality.

          • Posted by anon

            “And, you still haven’t given a good rebuttal to my comments above, about the significant (read: market changing) impact new renters coming in over the past 5 years, and how they are gliding on cheap RC. ”

            But isn’t that the point. Rents have been high for a while now, it’s really hard to see that anyone getting rents from the past 5 years is under hardship.

            And longer term, highly paid tech bros seem like they’ll eventually move on and move out, change jobs get married and the like.

            Doesn’t seem like much of a scandal to have a bunch of tech bros paying 2012 rent’s.

          • Posted by SFrentier

            The point, anon, is that those tech bros restrict the market for newcomers, even though they do not need the rent subsidy. As a LL it doesn’t bother me, because I know how to manipulate the system to work in my favor. But as a point of fairness for all, RC is a total crock. And anyone trying to pretend that it does “some good” is a fool. Matter of fact, it causes more harm than good to most tenants. If RC was abolished, say, 5 years ago, all those tech bros would be brought up to market, and the new people coming in would not be forced to pay insane rents. So the overall rent level would be lower, and much more consistent for all.

          • Posted by Jake

            SFrentier, every year tens of thousands of new residents rent in SF, e.g. the most recent Census ACS (2013) estimated more than 51k people had moved to SF within the previous year and moved into rental housing. You couldn’t possibly know what you claim to know about all those renters and their rental contracts. It’s really not complicated to understand that you are deluding yourself about that.

            The professionals at the Census and other scientists you denigrate exist so we can understand better than the errant opinions of overconfident blowhards. Your entire life experience is less than the statistical noise of the conclusions being discussed. You should be able to understand that, yet you seem to have convinced yourself you know better because of your personal experience as a landlord. That opens you to easy ridicule.

            Your tactic of being obnoxious to compensate for when you lack reasons and facts is more worthy of an ill-tempered child than a formerly 49yo hipster. Your self-diagnosed “Master Of The Universe syndrome” is just a pathetic way for a middle age man to behave. All you have done is hurt yourself.
            __________________

            It is said that one day the Buddha was walking through a village. A very angry and rude young man came up and began insulting him, saying all kind of rude words.

            The Buddha was not upset by these insults. Instead he asked the young man, “Tell me, if you buy a gift for someone, and that person does not take it, to whom does the gift belong?”

            The young man was surprised to be asked such a strange question and answered, “It would belong to me, because I bought the gift.”

            The Buddha smiled and said, “That is correct. And it is exactly the same with your anger. If you become angry with me and I do not get insulted, then the anger falls back on you. You are then the only one who becomes unhappy, not me. All you have done is hurt yourself.”

          • Posted by SFrentier

            Okayyy..mr-“scientist”-turned-zen-village-idiot. 51k people move to SF every year. I guess I’m just an uneducated dumbass assuming that most of those, if they are renting out vacated apartments, are paying market rent. Yup, leap of faith there.
            My simple point is that RC privleges even those who moved here as recently as 3 years ago, as now they are now below market rent. And most of those who moved here have decent paying jobs, to pay for what was then market rent, and don’t need a subsidy. This phenomena significantly effects the marginal rent moving forward, causing warping market rent at any given time, and is especially pronounced in an economically expanding market like SF.

            Go ahead, refute that, you quasi academic peon.

          • Posted by San FronziScheme

            2002. Good times. Also know by its acronym BG (Before Gigli)

            Seriously, a newer and more objective source would help.

          • Posted by Jake

            SFS, yes, the data is stale. I’m as suspicious as anyone that SF doesn’t produce these surveys because they don’t want to face the issues they’d likely reveal. Almost everyone would be curious about the missing crosstab I mentioned above, except for the (ir)responsible politicians.

            poor.ass.faithbased.economist, admittedly, there’s not much to refute in your statements because there’s not much meaningful in them. You freely use intrinsically value-laden terms without ever placing useful values on them, such as “below”, “decent”, “significantly”, “warping”, and “pronounced”. Then you dare others to refute your vapid statements. Without quantifying these to some ranges, there is no way to judge if anon above is correct to dismiss your concerns.

            OK, if you want to be treated as more than a petulant clown, can you tell us how big are these “significantly effects” on “the marginal rent”? Are we talking less than $10/month in asking rent on average or 40-50% or what? A source other than your omniscience would be appreciated.

          • Posted by SFrentier

            OMG how stupid can you be? Of course there isn’t specific hard data out there on this! Who is going to collect it? The rent board? Or SFAA? And would it matter (who would trust who in this highly politicized issue?)
            That’s why you have to use deductive reasoning. This is not a hard science. I can tell you this- the overall rent increase in SF from say 3 years ago to today is easily 25-40% delta. It’s not frickin 5-10 percent, which you could argue is marginal. That’s why there is a problem, because it’s a lot! So who cares if it’s 28.7% or 39.3%. And it speaks exactly to the point I was making. You think my (astute) observation is not significant (because it can’t be quantified with a hard measured number) but as I said before “This phenomena significantly effects the marginal rent moving forward”. And yes, that is a big deal, and an ongoing problem with RC.
            Oh, and so much for your lessons in Buddhism, as your zen just went down the toilet with your name calling. Fail.
            Listen kid, don’t let your obsession with “hard data” (especially in its absence) run your life. You won’t get far.

          • Posted by Jake

            Um, hate to break it to you, but what you have presented is not deductive reasoning, not by any stretch or contortion of the concept. And don’t bother looking up some definition or quote from somewhere on this. I’ve built both inductive and deductive decision systems for a living that has taken me far enough to know you haven’t a clue.

            At best you have some muddled inferences drawn from the small pool of possibilities allowed by your inability to imagine any other explanation. You are hopelessly unable to quantify your key terms. That’s why you still can’t answer the core question you raised of ‘how much does rent-control currently affect the marginal rent’.

            This leaves your ‘what-if rent control was ended’ hypothesis hanging out in the realm of magical thinking. You are typing out your bias in your comments, not any insight. Yet you want us to trust your judgement on this highly politicized issue.

            Besides, I already know you are wrong about how rent control affects prices in SF. We’ve both written on that on SS. What you take as “common sense” on rent control is all too common naiveté.

            Thanks for the professional advice. Your act of compassionate condescension is a big step for you. Bravo.

            Your knowledge of Buddhism seems no better than your knowledge of economics or logic. One of the teachings is to engage others in whatever communication works for the audience in the moment. That’s why Zen masters will sometimes strike a person, meditation masters will sometimes yell at people, … And you have remained engaged, if not enlightened.

            If you meet a miss manners buddha on the path, kill him/her.

          • Posted by Amewsed

            I can confirm Jake’s thoughts on mediation. Having partcipated in hundreds of settlement conferences for the defense, I have long admired a settlement judge/mediator’s ability to listen to both sides of the case, inherently know the final settlement terms, then verbally assault, threaten, and insult each party separately to achieve those terms. The zen moment for both parties comes weeks after the mediation.

          • Posted by SFrentier

            Look, maybe a hit a nerve with you, but you are clearly not absorbing what I wrote and basically talking out of your ass. “Muddled inference from a small pool of possibilities?” When I said rents have gone up a lot (which I define as 25-40% in the last 3 years, depending on the neighborhood). Then I talked about how that further constricts the market, because all those people (most who have good jobs to afford the 2012 rents to begin with) are now saving lots of money due to RC. And that is on top of all the lower income folks who have been living in their RC apartments pre gentrification. Who cares if you can’t attribute specific numbers to each of these factors? The overall effect is the same, significantly higher rents, which any decent rent survey in SF shows. And my point was that RC not only helps poor, long term tenants, but also well off ones who moved here quite recently. Cumulatively these restrict the supply, causing marginal rents to shoot up. Only an ignoramus would argue against that, or try to claim that it is not a significant observation, because it isn’t derived out of some survey.
            Most of what you post on SS is pretty useless. Your quasi scientific self imposed importance is a joke, as you offer little of value here. I am not opposed to the use of data, when it’s relevant to an analysis. But I have little tolerance for data dork junkies like you that try and create neato conclusions from data sets that don’t really matter. Perhaps you’re uncomfortable with my seemingly lackadaisical approach, but my approach is based on keen perceptions and thinking outside the box, which have made me wealthy from SF RE and the hugely distorted housing market that we have. So keep huffing for your w2 income, cause a rentier you will never be.

          • Posted by Jake

            Of course I’ve understood what you wrote and what you meant. It almost couldn’t be more trivial:

            1) When market rate rents rise faster than the allowed rent-control increase, RC renters that stick around get a break and some of those RC renters with this break could afford to pay more. That much is baked into the RC law.
            2) You think that drives up asking rents and restricts supply, though you cannot say by how much for either.
            3) You also think that if RC were eliminated then within 5 years asking rents would be lower than otherwise and rentals would be more available than otherwise, though you cannot say by how much for either.
            4) You think this counts as “astute observation”.
            5) Your “observation” upsets you, especially if anyone doesn’t fawn over it.

            You are one of a herd of people on SS that have had similar “observations”. Probably not a week goes by on SS without someone sharing a similarly “astute observation.”

            This exchange has been to uncover what you had of substance for your post. Well, as a friend of mine said of ex-boyfriend, “it may be small, but it sure is skinny.” To me you will always be the guy that brought checkers to a chess match.

            At least I learned that when you have a weak hand and someone pushes you, instead of folding you double down by becoming more obnoxious. That’s your tell. Next time we should play poker.

          • Posted by SFrentier

            This is where we differ. You think that your attempt to quantify those specifics is somehow intellectual and represents a deeper analysis. I don’t really care about the specific numbers if they are not available. As I explained, those numbers would be construed as deeply political anyways, so most surveys would be challenged by the opposing party anyways. Usually leads to much to do about nothing.

            I may not have a specific number (no one does) for the overall rent differential (what neighborhood? What timeframe? Etc?), but I do know that It’s significant, and that’s what matters to me. I see that in my specific rental situation, and of course that’s what counts. I could give a rats ass how much my specific situation represents other prop owners or not.

            And furthermore, I can afford to be intellectually lackadaisical about the whole RC issue because: 1- almost every serious economic study on the issue regards it as a failed policy wrt social justice. I have long ago resolved the debate if RC is good policy or not. 2- I’m smart enough to actually benefit from it, so I more enjoy the irony of the matter. 3- I’m making plenty of money from my SF rentals, and I’ll do and say whatever I want. You don’t like it? Don’t f-ing read it.

            I can tell you that most of your posts have been obtuse dreck that lead nowhere. Did you even go to university? You sound like one of those angry little men, who went to some secondary college to get there degree, and need to prove yourself. Well, you certainly haven’t done it here and on this topic. Sorry, but RC is such a loser proposition, that I can afford to be analytically lazy about it- 1- because I can afford it, and 2- this lame system ironically benefits me. Understand, this is specifically by my choice. I’ll take that to the bank over your quasi intellectual masturbations any day!

          • Posted by anon

            Sorry, SFrentier. You’ve been pwned by Jake on this one. Give up while you’re not too far behind!

          • Posted by San FronziScheme

            anon,
            Sorry to break your bubble, but so far I see 2 posters debating based on data that is totally incomplete.

            But let’s look at why this data would be incomplete. 3 theories:

            1 – The city is so utterly incompetent it cannot cross reference census data
            2 – The city has a strong pro-landlord agenda and wants to hide the great successes of rent control
            3 – The city has a strong pro-tenant agenda and wants to hide the great failures of rent control

            I have to assume that people with access to the raw census data can do a pivot table on Excel. There goes theory #1

            Every new rule on housing in SF is anti-landlord. I do not think that City Hall and the Supes are closeted pro-landlord. There goes theory #2

            Theory #3 is the only one that holds water. Suppress the data and people will stay in their entrenched opinions, like Jake and SFRentier.

            The minute we see there are 100s or 1000s of wealthy renters abusing rent control, the debate will not be how to save control, but how fast to dismantle it and replace it with a means-tested subsidy system.

          • Posted by parklife

            @Fronzi,

            “The minute we see there are 100s or 1000s of wealthy renters abusing rent control, the debate will not be how to save control, but how fast to dismantle it and replace it with a means-tested subsidy system.”

            You mean like we have done with Prop 13 when it has been noted that many wealthy property owners benefit? There are powerful constituencies protecting the status quo on both Prop 13 and RC and as much as both are detrimental to the evolution of SF, they are both likely to remain untouched. The best that can be hoped is that some tinkering around the edges can alleviate the most egregious aspects of each. And I’m not confident that anything productive will be done on either Prop 13 or RC in my lifetime.

          • Posted by JR "Bob" Dobbs

            Or like our tax system, which benefits the wealthy, particularly wealthy property owners?

            Let’s accept the premise that some day there will be a lot of wealthy tenants taking advantage of rent control. That will make it MORE difficult to end. Wealthy people tend to fight for what they have, and they have the means to do it. Imho, this is a false premise, but if I’m wrong that will be even worse for the landlords seeking to change anything.

          • Posted by anon

            I’m the 3days ago anon, not the 1 hour ago one.
            But I think the gap here is more one of opinion than one of fact.
            Say a wealthy person moves into a rent controlled apartment today, and given current rents it would be hard for a poor person to move into SF at today’s rents. Technically you could point to that and say that it’s a rich person “taking advantage of rent control”. But both parties should be fully aware of the nature of rent control and the landlord can set the rent at whatever he sees fit. And like I said above it seems very unlikely that rich professional tech bro types will end up staying forever in a rent controlled apartment. And I’d guess that people like rentier/fronzi would actively try to seek out wealthy/won’t stay long types.
            So Jake’s data can be true without there being any real widespread outrage.

            As far as the whole anti-intellectual/anti-numerate thing. It seems that it’s the people in the “subsidy” camp that are always throwing out theoretical rents they think they should be collecting and calculating the billions of dollars in “subsidies” they claim are being paid. I think that the burden of being convincing is on those throwing out those numbers. And if you throw out there that you have this violent hatred of math/logical analysis and are basically just making up some numbers it’s just hard to see how that helps convince anyone of anything.

          • Posted by San FronziScheme

            anon (the last one),

            The tenants I seek out are people who can pay what I want. It usually fits other criteria like respectful, relatively quiet, very honest and such. But sometimes going for the good qualifying tenant is not good enough. A neighbor of mine did corporate airbnb 3 years ago. His guest renewed up to 4 months, then asked to officialize the rental as permanent. Now prices have gained 30% and he is ironically stuck into a trap rent control situation!

            Also, you are grasping at straws when you claim we have no basis at claiming that rent control creates Billions in subsidies. One one end you probably (or one anon does) say stopping rent control would cause rents to go up across the board and this would lead to a mass exodus of priced-out tenants. On the other end you say there’s no subsidy, or too minimal to matter. Did I hear “cognitive dissonance?” Or maybe it’s self-preservation and throwing all sorts of theories to get one more year of cheap rent.

          • Posted by anon

            That isn’t really what I’m saying.

            What I’ve been saying is that if there is any “subsidy”, it’s doesn’t provide any tangible benefit or change to quality of life. If some tech bro moves into the mission and starts paying $10k for a 1br, calculating a $9k “subsidy” for a Mexican line cook paying $1k doesn’t correlate at all to any changes in his quality of life. And I think this in-tangibility explains a lot of the lack of moral/ethical/political outrage.

            Even with no tangible benefit, there could be some ecno-theroretical basis for calculating a subsidy. But if you’re going into the theoretical realm, I’m much more convinced by someone like Jake who pulls up real data and tries to do some logical analysis of it. If you’re trying for a theoretical argument it just seems weird to go ranting against science, math and logic and some weird conspiracy theory about the city suppressing data.

          • Posted by San FronziScheme

            anon, this doesn’t make sense. This “9K” subsidy changes his life tremendously. He doesn’t have to move to Stockton and get a lower paying job.

            Also the “lack of public outrage”? If that were true you would not spend any time dismissing the issue again and again on SS.

            Let’s not forget that this subsidy has three types of victims:
            1 – Landlords who are a tiny minority and who will prefer hard action over lobbying
            2 – Market rate tenants, who know something’s broken in the 7×7’s rental system, but are pretty well off and are not used with whining. At least not as much as RC tenants…
            3 – The middle class that WOULD love to move to SF, but cannot afford it. They will never vote in SF and you’ll never see them picket a rent controlled building with posts saying “Free up some space! Stop hogging! Leave some for us!”

            Simply because victims are not heard doesn’t mean the deeds are not done.

        • Posted by anon

          “This “9K” subsidy changes his life tremendously. He doesn’t have to move to Stockton and get a lower paying job.”

          I’m talking an actual tangible change, between his life before vs after someone else decided to pay $10k rent. And you’re talking a difference between current actual reality and some alternate reality that you’ve made up.

          And I’m not saying that there’s no value in looking at “What if” alternate realities. Just that people are always going to be biased towards actual reality. And once you’re dealing with the theoretical world, that’s when data, academic studies and analytic thinking become really important.

          • Posted by San FronziScheme

            I am glad my “alternate reality” is actually making me more more money, both in paycheck on my regular job AND extra rent.

            This virtual blue collar worker has seen everything change around him. SF is safer, cleaner, there are better jobs, and it’s one of the most desirable places to live in America today in terms of lifestyle. All of these are not virtual, but tangible changes. And paying less than market rate to still be allowed to live through this change from the inside is what some people would almost kill for.

            This makes a point that I often make on SS: some rent controlled tenants are so out of touch with the real world, they think the very very good deal they have today is not actually real, and that pressure to get them to stop hogging valuable space is purely “evil capitalism and greed”.

            Nope, anon. Wake and smell the rising tide of rents. You are obsolete, to quote “Kid Charlemagne”. It was true already 40 years ago. Times change. They always do.

          • Posted by pity the lords of the land

            San Francisco has been one of the most desirable places to live in America in terms of lifestyle as long as people have used the word lifestyle, maybe longer.

            I didn’t realize php programming had sunk to the level of blue collar work. I guess I live in an alternate reality.

          • Posted by San FronziScheme

            Pity, anon mentioned a “mexican line cook” in his hypothesis, hyperbolically put in parallel with a “tech bro”. If your php can be actually toasted and served with crema, you would qualify for both. But mowing php I don’t think it’s digest enough to even compete with refried beans.

          • Posted by SFrentier

            Fonzi is correct, the value of the SF rental effects the line worker guy too.
            Here’s an anecdotal for you: when I moved to the mish years ago, Latinos would ask, why do you want to live in this (crappy, dangerous) place? (Isn’t Noe valley a more appropriate up and coming hood for you? This was mid 90’s mind you) The kids of my mission neighbors high tailed it out of here 20 years ago to ‘move up’ to Daly City, San Jose, el Cerritos, etc. But NOW they are coming back- their folks, now grandparents, have large places with inlaws, cottages, etc. The overall gentrification has made the mission safer, and certainly perceived as a much more desireable neighborhood. So yes, the $1k paying line cook now lives in an uber (pun intended) cool neighborhood. If that doesn’t matter to him, he can certainly move elsewhere, but oddly I don’t see him or others of his ilk doing so.
            It’s not too complicated: people tend to leave loser hoods, if they can. Stay in good hoods, and certainly stay in good hoods if they are getting a free ride via rent subsidy.

          • Posted by SFrentier

            Oh and by the way, 3 day go anon, I am not opposed to the use of data. What I have little tolerance for is the use of bad, or irrelevant data, something that townie jake is wont to doing. As I said before, the reason there is not good data on SF RC, is because of its political nature. Each side will discredit the other, and there really isn’t a neutral party on a local level. Plus comprehensive data collection is expensive. I’ve seen crap biased data coming out of typical leftie sources like that eviction free SF org SFTU, or worse, from two bit fogies like 48 hills (clown who used to edit the thankfully dead bay guardian.)

            So jake, in his infinite wisdom proffers 13 (!) year old data. Or this:

            “Just to inject some reality into the make believe numbers being cast about, for SF per the 2013 Census ACS:
            – $61k median household income for renters
            – less than a third of renters have household income of $100k or more
            – nearly a third of renters have household income less than $35k
            – 20% of all households in SF are renters with household income less than $35k
            – more than a third of all SF households are renters with household income less than $75k”

            Basically broad based data that can be argued any which way. And it also includes lazy mistake…which is it, 1/3 or 20% for under $35k earners?
            The way I interpret this data is: great! About 1/3 of renters make over $100k. And guess what? The proportion of high earners moving into the city has dramatically risen in the last several years. Which, again, has a significant effect on marginal rents. Where’s the proof? Let some data monkey like jake find real stats, and I’ll be happy to look at it. But even in the absence of specific data to me it’s obvious, and positively effects my investments. Which is why I pay attention to all the soft info/anecdotal/socio-economic local stratum/micro-macro urban cultural trends etc. That’s where I derive most of my info value. It’s messy to assimilate, but that’s the value, understanding these disprate elements.

          • Posted by pity the lords of the land

            right now I am enjoying some java, french roast and brewed with desire the San Francisco way. I like mine not too bitter, with just a hint of irony.

            Most US companies classify their programmers as “professionals” and exempt from the Fair Labor Standards Act (no overtime pay, etc). The lords of labor exploit line cooks and gardeners by even more devious methods. Workers of the world unite, you have nothing but your bugs (parasitic rent-seekers) to lose.

          • Posted by SFrentier

            Ha! I just exploited a gardner literally 10 minutes ago…he’s pulling out an old (unsuccessful) lemon tree to put in a new Meyers lemon one. $50. And, I get to save on lemon cost in the future too :). Of course I give him my rental business as well, so he cuts me a deal on my yard. He just did the weeds on another place. $100. But he’s fast, worked hard but only for about 2 hours. I win, he wins, see? Win-win. Glad he has RC, as I needs me my cheap labor nearby :). Gotta love SF.

          • Posted by Jake

            Truly a Sisyphean task to clean up all the little droppings from SFrentair. But since he’s made multiple misrepresentations of what I wrote, why not. Here we go again.

            First, SFrentair, as to your discovery of what you think is my “lazy mistake.” The mistake is yours. According to the 2013 Census ACS for SF, both of the following are true:

            – nearly a third of renters have household income less than $35k
            – 20% of all households in SF are renters with household income less than $35k

            Ask yourself what percentage of SF households are renters? Try about 3/5. And 1/3 of 3/5 is 1/5. Math so hard it burns. Try as I might, dummy down the data into simple fractions as much as I can, I still can’t make it idiot proof.

            Second, the 13-year-old data was introduced by parklife, but (s)he had the date and the details of the data incorrect. I merely corrected both, as anyone can see above. So, thanks for doing your best to take things I wrote out of context and misrepresent them in a lame attempt to discredit me.

            I think your performance on this thread has ably demonstrated why you pay attention to “soft info” instead of hard facts. Same reason a baby is feed soft food instead of firmer. Kind of an aptitude thing.

            I may have been unfair before. You are more like the guy that brought a tic tac toe set to a go tournament. Sorry to have overestimated you. Won’t happen again. Promise.

            What has happened again, dear readers, is a further clarification of how much of his self-styled moniker “uneducated dumbass” applies to SFrentair (formerly poor.ass.millionaire (formerly 49yo hipster)). As a veteran and profligate keyboard commando, he’s clearly not silent, so the “dumb” part doesn’t apply. The rest does imho.
            _______________

            SFS, you should know perfectly well that I am not “entrenched” in my opinions. I have been and remain very open to whatever you or anyone else wants to offer. That’s why I was willing to wade through so much foul language from SFrentair, just to see if he had something new. Some time ago, you and I even came to overlapping estimates/wags of the amounts of capital locked up by RC. As I wrote above, I am willing to follow the data. And I reference my sources.

            “Well when events change, I change my mind. What do you do?” — Paul Samuelson

          • Posted by SFrentier

            The 20% of all residents is irrelevant, as we’re focused on renters. Why even quote that?
            The soft data is way more relevant than the minimal/old/irrelevant/biased data most can reproduce here. Just what would you expect to find? That RC does not distort the rental market? That it distorts it “less” than what I/others think? Who cares? How will that effect you or anyone else? I just showed you that I can take your data set and come to a different, more accurate, conclusion wrt what percent making over $100k means to the marginal rent rate. In addition, this is a fools pursuit, because any data will by definition be biased by the sample location. What happens in the sunset will be different that the mission. Studios will differ from 2br. Nicer units will differ from crappy ones. So yes, when you produce a spreadsheet that takes all these factors into account, then I will be impressed. But taking half assed data from here and there can easily be manipulated to suit your end game. In the meantime I will augment incomplete data with all the soft data I want to further my business, laughing all the way to the bank. But go on, quasi scientist. And, you still haven’t answered my question if you even went to college, probably a middling one at best…

          • Posted by SFrentier

            …and we’ll see who the “uneducated dumbass” is.

          • Posted by San FronziScheme

            Jake, FYI you’re talking to the old uber-bear SFS who became bullish in 2010 and has gone back to his old SFS self waiting for the next downturn. I know how to change my opinion if conditions change, but rent control used to be a problem 10 year ago, 5 years ago, and is getting to ridiculous proportions today. And you will notice that with every worsening of the situation / crazy overreach from our dear leaders, I become more vocal. The rent controlled crowd is more and more irrational and disingenuous, and… self-serving.

          • Posted by Truth

            self serving, Eh?
            And how many years did you spend as a rent controlled tenant?

          • Posted by San FronziScheme

            2 years rent controlled. After 2 years I was already underpaying compared with market rate by 20+%.
            Prior to that I was renting a house in NV, not under rent control.

            But I did the math: either stagnate and get locked into a gold-plated cage or expand and prosper. It was 2010, which helped.

          • Posted by SFrentier

            What exactly are we arguing here, jake? Let’s close in on the argument. I, and others, are saying that RC distorts the rental market (marginal rents are higher due due to RC; they would be lower without it.). And we’re saying that the last 5 years have had an especially pronounced effect. Do you disagree? Where’s your data, recap it here now.

            From all I’ve seen there are no specific, UNBIASED studies that have been carried out recently in SF that seriously look at this question. But I do recall past studies that have been done in other locales that speak to this. so what exactly is the issue? That we overstate the effect? That SF specific and current studies don’t exist to quantify the effect? Where we stand by our conclusions, based on lots of anecdotal info and most importantly where current rents are (high) and how quickly that happened in the last few years. If you want to argue that current high rents are not linked to RC, good luck with that.

      • Posted by Zig

        Until 12 months ago my wife and I made more than 200k in a rent controlled place and I am positive another very long term renter couple in the place did too

        • Posted by San FronziScheme

          My old NB neighbors are deep into their 30s and live in the place they started to rent after college. He’s a manager at a software company. She’s into design (I’m not gonna say too much, she’s relatively well known in her niche). Together they pull 350 to 400K but still pay less than 1400 in rent. A guy moved upstairs from them 5 years ago, paying 3200. 5 years ago!

          • Posted by Amewsed

            I guess your NB neighbors don’t really care about having kids or moving up in the world ie. buying or remodeling anything in their lifetimes. It is funny when I meet people I only need to know a few pieces of information to assess their life goals or financial acumen. Yes, they keep their expenses low ie. renting cheaply but both of them sold their sense of ambition or desire for financial gain beyond their present jobs. They can’t leverage equity from homes to gain any solid footing in the investment world.

            It is the same mentality with most Section 8 tenants. “Hahaha – I got free money from the government since my rents are heavily subsidized. There is no incentive for me to save up, work hard, or invest my free money, (and forfeit my free ride for life.)”

          • Posted by SFrentier

            With educated, well paid tenants it’s not usually black/white like that. I can see this couple milking RC for say 15 years. Then they got on with life and buy their own place, move out of the area as a lifestyle change, or worse, keep it as a pied-à-terre and buy a home in the burbs. Either way, they milk RC and fleece their LL for well over a decade. Low income tenants usually are more limited options and tend to become lifers. As a LL you clearly want to avoid both scenarios, but with rents having increased so much over the past 5 years, unforch more and more well paid folks see the free money in milking RC.

          • Posted by moto mayhem

            I have a single 45 yo friend living in the heart of pacific heights paying $1600 for a 3 bdr 2bath, with large private deck. there is another guy in his building paying under a grand. They are both in software sales and making well over $250K /yr. the friend owns a 4 bdroom home in Tahoe. why would they ever give this up?

          • Posted by Amewsed

            Good points. I guess my socio-economic background shapes my vision of the world. I have known well-educated professionals my whole life ie. physicians and lawyers, not tech folks w/large incomes. I have also known janitors and gardeners who worked hard and saved up. Nearly all have always bought their primary homes (which is a stepping stone to acquiring subsequent rental properties) or strive to do so before they reached their forties.

            Would I ever buy a vacation home in Tahoe? No, because it isn’t my thing. I don’t mix business with pleasure. I rather spend $$$$ to stay in iconic international places without the tether of ownership. To each their own.

  22. Posted by San FronziScheme (formerly known as lol)

    San Francisco Tops Forbes’ 2015 List Of Worst Cities For Renters

    We did it, San Francisco, we did it! I feel so proud right now!

    • Posted by Hitman

      How many times does SF need to be recognized for highest rents in the nation before the public realizes that “rent control” accomplishes the exact opposite?

      • Posted by San FronziScheme

        Quick, the situation is untenable. We must do something! How about we punish landlords and reward rent controlled tenants! That will balance the market.

  23. Posted by soccermom

    Here is the text that passed the sub committee. Interesting point on obligation for tenants to keep receipts:

    “For each expenditure of relocation payment, tenant shall maintain any invoices, receipts. or other documented proof of the expenditure for a period of at least three years after the date the tenant vacates the tenant’s unit. During this three-year period the tenant shall provide the landlord a copy of such proof of expenditure within 10 business days of receipt of a written request from the landlord. The landlord may request copies of a tenant’s proof of expenditure not more than twice in a 12-month period. No more than three years after the tenant has vacated the unit, the tenant shall reimburse the landlord for any portion of the relocation payment paid to the tenant that the tenant cannot [sic] demostrate was used for Relocation Costs.”

    Still seems like BS. Landlord has to fork over all of the money and then the tenant has to supply receipts? How difficult would it be to fabricate some expenses? How could a landlord prove conclusively that something was not a relocation expense? Crappy crafting.

    Even with these changes the law fails to meet demonstrate a nexus between the Ellis Eviction and the high rents faced by the broad public and this new version will also be overturned. Seems like the city board of supervisors should be doling out these relocation payments. After all, haven’t they caused the high rents through price-distorting policies? How about David Campos commits his salary to the cause?

  24. Posted by Greg

    I’m a landlord/property manager. I manage properties in rent controlled SF and outside of SF in non-rent controlled areas. At this point I don’t think it’s realistic to repeal rent control, nor do I think it will solve the problem of unaffordable rents. IMO, the entire culture of SF landlord tenant interactions has shifted over the last 20+ years. The extreme restrictions of the SF rent control laws has created a culture of extreme rents (both up and down). More importantly, the way that tenants and landlords interact is TOTALLY unhealthy, and different from how it works outside the city. Although I’m more a proponent of means testing (cause it makes the most logical sense to me in terms of fairness), I think that simply allowing a more reasonable annual increase would go a long way to normalizing the culture up here.

    Owning property is a business, so the numbers do matter. But under normal circumstances it’s a business where most owners would want to be in it long term. There are plenty of owners outside SF who are more than happy to stabilize rents once they hit their initial cash flow goals. Why? Because being a residential owner is a pain in the ass, so at a certain point it becomes more important to have great long term tenants than to keep chasing the highest rents. In SF, long term owners feel the need to always be greedy when a vacancy opens up, because they don’t know when they’ll get the chance again.

    I’ll make one last point, which is that even if you think about the short term people (the flippers), who are using the ellis act and exiting as quick as possible, where do you think the profits end up eventually? Back in real estate, and usually in long term investments probably NOT in SF. That in itself showcases a really backwards environment. Cause as much as property management can be a pain in the ass, dealing with contractors and construction and permitting is a FAR BIGGER pain in the ass, but it’s become the more attractive option to investors here in SF because of the existing system.

    • Posted by SFrentier

      Yeah but there are plenty of apartment bldg investors in SF. All the bldgs up for sale get multiple offers, all cash, ridiculously low initial returns, etc. Those owners have deep pockets and know they will wait it out, get tenancy turnover, pimp out the unit, and make bank with the new rent. It’s blue chip investing with those who are already well off. Beginners and newbies- furgetaboutit.

      • Posted by Greg

        True, the long term investors in SF need to have deep pockets. I’m not sure I’d agree that they always make bank considering the time it takes to reach productive cash-flow. Yes, anyone who bought and held the last few years is pretty happy on resale, but I think most wealthy investors buy in SF cause they see it as a long term low risk market. They don’t need the additional cash-flow and they can offset other income with their losses, until the building turns cash-flow positive. But like you said, and like many other people have commented, going long term in SF favors a specific class of investor. The people with less money need to flip unless they put themselves at financial risk holding onto a negative cash-flow building. It also still goes to my point that even the super rich investors are still going to max out those rents and then some when the units turn, because that’s what the SF market encourages. And they’re gonna rent to young unmarried professionals who aren’t likely to stay more than a couple years so they can avoid as much tenant/RC hassle as possible.

        • Posted by SFrentier

          Yeah I agree. I was referring to appreciation wrt making bank. Harder to do that with cash flow, unless you get lucky (or are extremely talented with tenant buy outs, like moí) and magically most of your loser-lifer-long-termers vacate.

    • Posted by JimmyJoe

      This is a good point. I own properties outside of San Francisco and my goal is to keep my tenants (my customers) as happy as I possibly can so they will stay for a long time. The units are not rent controlled and I keep them a little lower than market to keep long term tenants. The cap rate value is probably 5.5%, but rents are rising and I will churn higher over time as people move out.

      I also recently bought a rent-controlled building in San Francisco that is in shabby shape. Leases date from ’95 to ’05. The previous owners (elderly Cantonese) never put a dime into it. I am interested in the building being a safe place for people to live, but beyond that I really don’t care whether my tenants are happy or not. I want them to move out so I can fix up the apartments and realize a more sensible market rate for the space. I can’t rehab the apartments while they are living there, and I sure won’t pay to move them out so I can re-rent them the units in better shape at the same low rate. So they will continue to have safe but shabby circumstances. The tenants are clearly willing to keep the trade (lower rents for lower quality) but I would not treat my market rate tenants outside the city the same way. The cap rate on this building is probably 3.5%.

      Does it make sense for me to wait around for people to move out when, if the building is empty and I have the opportunity to rehab the entire place convert it to TIC’s, each unit will be worth 3X what I paid? It doesn’t. So I won’t wait. Elllis.

      I must be a terrible person(!), yet I am gladly willing to run my other business like a “regular landlord” (long-term stability view) and treat my tenants like customers when I know I can reasonably raise rents and get paid for the money I reinvest in my buildings.

      • Posted by Hitman

        JimmyJoe – Under the ordinance, the optimal solution for you is to fix things like foundation, plumbing, roof etc. that benefit you. You can still pass through those things to tenants. Leave the grubbiness around so they will want to leave. Don’t make the mistake of making anything nice on the surface.

        • Posted by JimmyJoe

          Any project is easier if you make all of the mess and clean it all up in one go. One big contract is more appealing to a contractor than a bunch of small projects along the way. Conclusion – a vacant building is much easier to work on and improve in a cost efficient way than a full one. There is no point in waiting out people through attrition when the TIC value is 3X the basis. Ellis is faster and more predictable.

          • Posted by Hitman

            I totally agree. I only gave you that scenario under the assumption you had some hesitancy to Ellis. It is always better to Ellis. It can even make sense when you have a tenant just a few years into the lease. The best part about Ellis is that you create your own demand.

        • Posted by SFrentier

          You know what, you’re both right. It depends if you want to keep the bldg long term as a rental, than go the cap ex way. And DEFINITLY, don’t do [anything] inside the units with regards to surfaces. DON’T agree to let the tenants pay for their own improvements…keep the nasty carpet just the way it is, the walls crappy as they are. Make that clear.

          If you want to get rid of the bldg, then Ellis and clear it out. It’s definitly much easier working in a vacant bldg, and then you can do everything right for your impending TIC sales.

  25. Posted by modernedwardian

    small property owner and landlord here. own in sf (2unit) and elsewhere (3unit), both rent control cities. both buildings bought to live in – when jobs and relationship led to a move west.

    our model: buy empty and gut remodel or OMI eviction of lowest paying tenant with gut remodel. maximize legally passed through maintenance costs (roofs/foundation, heat/plumbing/electrical infrastructure) and government generated tax increases. these costs lead to eventual moves which allow further remodeling.

    our remodeled units rent at market – or perhaps even premium to market – as rent control results in so many crappy units with seriously deferred maintenance issues.

    the result is a rent controlled building at market prices, with tenants who make serious money and have upward mobility. our montreal building is rented to relocating europeans, technology incomes and university professors. here its relocating europeans, technology incomes, university professors, and trustifarians.

    i have no idea why a unit costing over $4000/month requires rent control but i’m happy to cash the checks and pay my mortgage.

    i also have enough empty space in sf to add another unit or to expand an existing unit to more size then i need. i’ll be expanding as opposed to adding as sf law would penalize my investment (by removing my path to condo conversion) if i put in a 3rd unit or converted and in-law.
    these laws just result in work arounds.

    • Posted by JR "Bob" Dobbs

      modernedwardian, total tangent. Do all Montreal leases still end on April 30? Coming up. How in the world do the logistics of moving everyone at once work?

      • Posted by modernedwardian

        90+% end last day of June (Moving Day). movers charge triple and come from hundreds of miles away. the streets are clogged. truckloads are dumped on the sidewalk so movers can get to the next job. all worsened by quebecers owning and moving appliances between rentals. some try to coordinate moving times which then fails. it looks like everyone is trying to get out of the city with their belongings before the zombie apocalypse.

        • Posted by JR "Bob" Dobbs

          Merci. Friend of my daughter is enrolling at McGill next year and told me this. I didn’t believe her!

          I was off by a couple of months. That is a seriously crazy system . . .

          • Posted by modernedwardian

            you were actually right on the day, pre-1973, when it switched from April/May to June/July. July 1 is the actual move which is also Canada Day. most quebecers celebrate June 24th (St Jean Baptiste Day) and are more apathetic about Canada Day.

        • Posted by Amewsed

          Wow, thanks for sharing this interesting albeit odd ritual. Why buy and own appliances when you are renting? You must find our SF rental market hilariously dysfunctional.

          • Posted by San FronziScheme

            In France you move all the appliances as well. Except when you move into a place that has built-in stuff, which is more common today. If that happens, you’re stuck with old appliances to unload. So ridiculous.

  26. Posted by Doug B

    Would a City ballot measure that enacted means testing (e.g. tenant under 65 years of age that makes more than 80% median income OR has net assets more than $X OR owns residential property has rent controls cancelled for the remaining time of his lease, permitting rent hike to market) pass?

    I can imagine a “throw out the rich bastards keeping RC units from those who need them” campaign, but not sure how it would turn out in the end.

    • Posted by Greg

      I’m a skeptic, even though I think it’s the right move. It’s a politically toxic agenda, as you can tell from even the comments here. Plus most of the folks who vote are renters, and people tend to vote selfishly (all people, renters and landlords). On the other side, I don’t think even owners would be able to get unified behind means testing, cause a lot of them would rather just abolish rent control altogether. Our political process in SF (IMO) is no different than most others around the country, and that means it favors extremes, all or nothing type measures to get people behind it.

      I’ve often thought a meaningful (though probably unpopular) compromise would be something like “we’ll get rid of the Ellis act, if you lighten up on rent control”, but the logistical problem is that Ellis is state and RC is local. That’s really the only reason owners still have the Ellis Act to fall back on.

    • Posted by JR "Bob" Dobbs

      The campaign slogans for the “no” vote would be pretty effective – I’d estimate a 65-35 no vote on this:

      Vote NO on the Make Teachers Homeless initiative

      Vote NO on the Throw the Middle Class Out of SF initiative

      Vote NO on the Evict Police, Firefighters and Nurses initiative

      etc.

      Means testing would be an expensive, bureaucratic nightmare to implement, and it would not do much in any event. I’d vote against it for these reasons.

      • Posted by Doug B

        I’m not sure it would be that hard to implement… just make the tenant “apply” each year for it, by signing a statement on penalty of perjury/eviction that they qualify. If the landlord suspects otherwise, it’s on them to sue.

        I’ll grant you those No slogans might be effective, unless you bumped up the percentages or values to make it clearly not “middle class” in most voter’s minds. And then it doesn’t apply to that big a percentage of units. Still, on principle, might feel good anyhow.

      • Posted by SFCitizen

        I think a well crafted rent subsidy bill could be passed in the City. Something like Paris has. Phase it in over a five year time frame. Let everyone share the responsibility of providing rent subsidies for low and middle income residents.

        • Posted by San FronziScheme

          Yes it would be the most practical solution, but the real source of the issue is that cities were not really structured to have so much wealth coming in. It is an anomaly and SF is very lucky in a way. But our middle class often cannot compete and rent control is kept artificially alive because of that. The issue is that wage inflation only applies to certain jobs. At some point we’ll have to help the rest catch-up.

        • Posted by Medalist

          NY rent destabilizes households with over $200k income. It used to be $100k. If they can implement it for a population 10x ours, I’m sure we can.

          • Posted by San FronziScheme

            Yes, but that would mean looking under the hood of the Rent Control beast. And nobody at City Hall wants to do that, because there’s no way you can shut it back in once you see the ridiculousness of it all.

      • Posted by San FronziScheme

        I am going to say something totally out-of-character, but the reason the middle class is being priced out is because it is taken for granted and abused by their employers.

        Just increase the minimum pay for teachers, police, firefighter and all other people you want to keep in SF. I am [not] talking about management which sucks the funds out of the city through those fat paychecks, but the rank-and-file workers who bring so much, get verbal respect but that we are paying so little.

        This was the way it worked before. If you have to raise taxes, so be it, and do it on businesses that collect the most receivables.

        And if the businesses do not want to pay more taxes, well, that is the cost of bringing all those well paying jobs. Some companies will leave, but others that were priced out will come back, and their employees with it. This would help relieve some pressure on all fronts.

        But the middle class is melting away, and all we can find are idiotic solutions like rent control and such which only delay the inevitable.

        • Posted by SFrentier

          I agree with some of this, namely that middle class jobs are getting financially squeezed from several directions:
          corporations- unless there is high demand (like medical technicians), private firms will pay as little as they can. In the defense of the corps, they have to compete with cheaper labor out of country, as well as automation options. This puts the pressure on the less than stellar jobs, which often require specialized training. Of course traditional unions have been so inefficient and self serving that their role protecting average blue collar jobs has not bridged any gaps, but are mostly a power grab. This is a tough issue to solve WRT global workforce competition, automation, retraining/education and gov intervention.
          Gov, quai gov jobs- like fire fighters, teachers, etc. Their management overheard and Union involvement have sapped a lot of money. Some of these alternative/private schools are interesting, but we have yet to see a new system that can be implemented nationally. The amount of Gov spending is the force that that keeps these jobs going.
          The bright star on the horizon is that more people can utilize easily turned on/off jobs like Uber driving, etc., to supplement their incomes, or work extra when they need it. This and other sites where you can easily market your trade skills for projects can bring extra dollars. But unless you find a skilled job that has demand, you will always be subject to wage stagnation.

          • Posted by San FronziScheme

            Yes, you are correct that global wage arbitrage has an influence. But competition from other states is also a factor. If your job can be done for 1/3 of the cost in Oklahoma or Alabama, AND they can find the qualified manpower and business conditions, your company is likely to make the switch.

            The debate is always about “it costs so much here normal people cannot stay – let’s make housing cheaper”. But what was happening 40 or 50 years ago is that employees would be paid more, because when housing eats 40% of your income, housing cost inflation is inflation and salaries should follow.

          • Posted by SFrentier

            Employers are doing that, helping with housing costs, but only for the better positions. Middle income earners are pretty much priced out of the city and much of the peninsula. So it’s either subsidized housing pgrms for the lucky few, or the middle class will continue to dwindle. The tech economy, plus a limited housing supply, plus a desirable geographic location are a trifecta of factors. We better get used to it, lest we want more gov housing intervention. And as that NYC article expresses, America since the 80’s is not too keen on that approach.

  27. Posted by anon

    “Plus most of the folks who vote are renters, and people tend to vote selfishly (all people, renters and landlords). ”

    I don’t know, just saw this in the times the other day: Why Americans Don’t want to soak the Rich.

    Skimmed it, probably should go back and read the whole thing carefully. But basically people seem to be drifting away from redistribution even as income inequality is getting bigger. And people’s opinions on when/how much to redistribute are dependent on many factors not just their own self interest.

    I commend Jake for his command of the data, but I think that also circumstances matter for peoples opinions and their votes. And as I’ve been saying above I think what’s actually happening, with some landlords getting 2012 tech rent windfalls and wishing they had 2015 tech rent windfalls (And nearly all landlords getting equity appreciation windfalls), is going to be perceived very differently than an actual subsidy of increased taxes and paying out welfare.

    And as a side point, you’d think that buildings under rent control would sell for a discount. So a side effect of removing rent control would be of delivering yet another windfall to anyone who bought a rent controlled building recently.

    It’s just really hard to see a compelling “yes” case given the above.

  28. Posted by BayviewSF

    SF is comparable to Manhattan; the whole SF Bay Area is comparable to NYC. It is perfectly fine for SF workers to live in East Bay. It is perfectly fine for SF residents to move to East Bay. Commute from east bay is shorter than commenting from Queens to Manhattan.

  29. Posted by soccermom

    So, this new relocation payment legislation was signed off by Mayor Lee and is now officially law, from what I can tell. There will no doubt be a litigated challenge to the law for a number of reasons (retroactive, arbitrary, etc.) but what better objection would there be to the notion of the current state of the “housing crisis” resulting from laws, actions taken by the same body of legislators (BOS) to limit housing?

    How could any judge not agree that the brutal rental market conditions are in fact the work of a board of supervisors that wants to outlaw the construction of new housing? They are stoking demand for units to be taken off market and for the attendant rise in “relocation costs.”

    What folly!

  30. Posted by Ohlone Californio

    Struck down, like we know it would be.

    I wonder how much city money was wasted on this grandstand maneuver by David Campos? Is there ever a way to find those sort of things out?

Add a Comment

Your email address will not be published. Required fields are marked *

Recent Articles