RENT CONTROL
What would Santa Cruz’s Measure M rent board look like, compared to others?
By Jessica A. York, Santa Cruz Sentinel
http://www.santacruzsentinel.com/article/NE/20180831/NEWS/180839945
AUGUST 9, 2018, SANTA CRUZ, CA >> Should rent control become a reality in Santa Cruz this winter, a newly created independent authority will be tasked with working out the kinks and questions related to the Nov. 6 ballot Measure M.
Members of the new rent board, initially appointed by the Santa Cruz City Council and reliant on city funding, would transition into elected officers with a budget funded by annual fees charged to landlords.
Measure M’s critics have called out the board’s operating expenses, in addition to litigation costs, as potential sources of escalating fiscal burden to the city.
As part of an ongoing series, the Sentinel is taking a closer look at the citizen initiative Measure M or “Santa Cruz Rent Control and Tenant Protection Act,” in order to fact check proponent and opponent assertions for some of the ballot measure’s most contentious aspects.
Lynn Renshaw, a leader of the Measure M opposition group Santa Cruz Together, asserted in a recent interview that the portion of Measure M that limits landlords from evicting tenants to a series of established “just causes” is unusual compared to other California cities with similar laws because it does not exempt property owners with a small number of rentals.
“If you take the number of single family homes times the median price, that’s $12 billion of dollars that’s being affected by this measure, because it affects every single family home in the city, so there will be real estate litigation,” Renshaw said. “I’m not talking about a lawsuit against Measure M, I’m talking about individual cases.”
City Attorney Tony Condotti, in an interview with the Sentinel, listed a series of areas that future litigation is “reasonably foreseeable.” He cited validity of the measure itself, board decisions related to landlord rent requests or the validity or amount of the rental housing fee, once established.
“The frequency, cost, and likely outcome of such potential litigation is unknown and will largely depend on future decisions made as the measure is being implemented,” Condotti said.
Condotti said as he interprets the ordinance, legal costs would be covered by fees paid by landlords.
Measure M proponents argue the rent board could help save landlords money otherwise spent in court.
“Many people mistakenly think that the mission of the Rent Board is only to protect renters, but it also offers protection for landlords, and provides a venue for landlords to address disputes with tenants without the need to file lengthy and costly court proceedings,” according to the Movement for Housing Justice’s website, santacruzrentcontrol.org. “In these cases, the Rent Board functions as a mediation agency and will seek redress for the landlord.”
‘WILL COST MILLIONS’
In its ballot argument rebuttal, Santa Cruz Together questions the idea that the rent board could be “self-sustaining,” because its revenue comes from landlord “taxes.”
“The Rent Board can also dip into Santa Cruz’s General Fund to cover millions in expenses — those are funds that should be for police, fire, roads, and parks,” the argument reads.
According to Measure M, Santa Cruz will be required to advance “all necessary funds to ensure the effective implementation of this Article,” until its funding structure is established. However, the city would be free to seek reimbursement of that seed money.
Once established, the board is expected to finance its “reasonable and necessary expenses” by charging landlords an annual rental housing fee that it sets. The caveat is that the board can turn to the city to request additional funding, if necessary.
The city of Richmond’s 2016 rent control ordinance served as a basic template for Measure M initiative authors, according to proponent group Movement for Housing Justice members.
While Richmond’s board is appointed rather than elected by voters, it also finances its budget by charging annual registration fees to landlords and is empowered to request funding “when and if necessary from any available source for its reasonable and necessary expenses.”
The city of Richmond also is directed to provide infrastructure support on an ongoing basis as it would with any other department, as with the Santa Cruz proposal. Also like Santa Cruz, Richmond City Council and the city manager do not have authority to oversee, supervise, or approve the budget, set in Richmond at $2.8 million for the 2018-2019 fiscal year.
Richmond Rental Program Deputy Director Paige Roosa said Friday that her program has not turned to the city of Richmond for additional financial assistance, to date, and in fact reimburses the city for shared use of administrative personnel from other departments. The rent program’s budget includes a $120,000 earmark for anticipated future litigation in the 2018-2019 fiscal year.
As for its landlords, Richmond has set its annual rental housing fee as a tier system, with governmentally stabilized unit owners paying $50, landlords of single family homes, condominiums and new construction paying $100 and the rest paying $207 a year. Owners of 20,000-some units are paying some level of the city’s rental housing fee, Roosa said.
Litigation filed by the California Apartment Association when Richmond and the city of Mountain View passed their new rent control ordinances was dismissed last year.
DECADES OF EXPERIENCE
Down the road from Richmond, Berkeley has had an elected rent board since 1982. In its 2018-2019 budget, the city’s rent board charges landlords a $250-per-unit annual fee to help fund the year’s nearly $5.2 million budget. Unlike in Santa Cruz and Richmond, Berkeley landlords are able to pass on nearly half of the fee to their tenants, above and beyond rent price restrictions. Certain low-income tenants are eligible for reimbursement for the landlord fee pass-through.
This year’s landlord fee represents about 1.15 percent of mean monthly rents charged in Berkeley, according to the board’s budget documents.
Berkeley has about 20,000 rent-controlled units, according to Berkeley Rent Stabilization Board Executive Director Jay Kelekian. Excluding loss of revenue from temporary exemptions, the board is expecting to bring in slightly less than $5 million in landlord fees in the coming year, with about $135,000 in supplemental revenue provided by late fees and Berkeley city reimbursements for services the agency provides beyond its prescribed duties. Portions of condominium conversion and short-term rental application fees, for example, go to the rent board, Kelekian said.
Kelekian said all rent control related costs are represented in the budget.
“We do not use any general fund revenue to administer or enforce the Rent Ordinance, we charge a separate fee,” Kelekian said.
ENFORCEMENT VIGOR
The cost to operate a rent control board, according to the 2012 report “Rent Stabilization And Eviction For Good Cause In The 21st Century,” issued by Berkeley’s rent board has much to do with how active the body is in proactively enforcing its founding laws.
Berkeley’s active enforcement style calls for a staff equivalent of more than 22 full-time workers, with a legal division of three and a half full-time positions. Revenue collected from landlords pays for both the rent board and its staff members’ salaries and benefits, plus other operating expenses.
According to the U.S. Census Bureau 2012-2016 American Community Survey estimates, renters take up 53 percent of the city of Santa Cruz’s occupied housing. Of Santa Cruz’s nearly 10,000 overall rental units — as of 2016 — the city of Santa Cruz estimates from 5,100 to 5,400 likely will qualify for rent control under Measure M.
About the Author
Santa Cruz Together raises $60,000 to fight rent control
By Jondi Gumz, Santa Cruz Sentinel
http://www.santacruzsentinel.com/government-and-politics/20180801/santa-cruz-together-raises-60000-to-fight-rent-control
AUGUST 1, 2018, SANTA CRUZ >> Santa Cruz Together, a group formed to fight stricter rent control rules on the Nov. 6 ballot in the city of Santa Cruz, has raised nearly $60,000 from 120 mostly local donors, according to the latest campaign finance reports. The sum is double the $30,000 raised by tenant advocates who wrote the 33-page measure going to voters but it is dwarfed by the more than $383,000 raised by an opponent group sponsored by the California Apartment Association.
Thus far, rent control opponents have raised 15 times the money raised by tenant advocates. The Movement for Housing Justice submitted the measure to limit rent increases and restrict evictions after Zillow reported rents in the city rose 46 percent in four years and tenants shared stories of evictions disrupting lives. Opponents agree there is a housing crisis but say the restrictions will make the housing shortage worse. Santa Cruz Together qualified as a campaign committee in April and submitted campaign finance reports covering April 1 through June 30, spending $10,500, with a balance of $49,000.
The most common occupation of donors was “retired,” listed by 50 individuals. Thirteen real estate agents, eight property managers and seven real estate companies made donations as did a voice teacher, an art therapist, a farm owner and a marriage and family therapist. The largest donor was Karon Inc., of Santa Cruz, which sells homes and manages rental properties and made donations in April and June totaling $9,995.
Chelsea Wagner, retired in Santa Cruz, gave $5,000. Walt and Dorothy Eller of the Walt Eller Co., a Santa Cruz company with residential properties for lease, contributed $4,000. Real estate investor Ken Carlson of Santa Cruz gave $2,500. Santa Cruz resident Lynn Renshaw, a leader in Santa Cruz Together, gave $1,310, and Dan Coughlin of Santa Cruz, a co-leader of Santa Cruz Together, gave $1,005.
Peter Cook of Lighthouse Realty, another leader in Santa Cruz Together gave $1,000 in April. In July, he urged rental property owners to give $400 per unit to fight the rent control measure and said he had a check for $4,800 for the 12 rental units he owns in the Beach Flats neighborhood, a sum that is not included in the latest finance reports. State law requires Form 497 to be filed by local campaign committees receiving contributions of $1,000 or more in the 90 days before an election, which would be Aug. 8.Dan and Jean Sullivan, Santa Cruz retirees, gave $1,200. The $1,000 donors included John and Linda Burroughs of Santa Cruz. He’s the chairman of Lighthouse Bank and a retired financial adviser and she’s retiring from her real estate career. Other $1,000 donors in Santa Cruz were: Hollie Locatelli, a bookkeeper, Robert Falconer, retired, and Virginia Coe, retired.
Santa Cruz residents giving $500 each were: Janel Garvin, market researcher at Evan Data Corp.; Michele Replogle, agent with David Lyng Real Estate; Jerald Spodick, broker with Jerry Spodick Real Estate; Marisa Stout, Stout Rental Property manager; and Russell Weisz, retired. Locust St LLC in Santa Cruz also gave $500. Street addresses are redacted from the campaign report, and a search of the Secrtary of State’s website did not turn up information on the limited liability company.
The $500 donors from outside Santa Cruz included: Rossana Bruni, Soquel, property manager, Distinct Properties; Mark and Trish Schwenne, Aptos, property managers; Rick Moe, Soquel, housing developer; Zack Fusari, Los Gatos, general contractor; Lowell Bookman, Soquel, investor; and R&K Proeprties, Scotts Valley.
The biggest campaign expense was $2,370 to Sentinel Printers of Santa Cruz for campaign literature, $1,530 to Blue Heron Design of Santa Cruz for web page services, and postage, $1,294 to Costco and $1,150 to the U.S Postal Service.
Full article: http://www.santacruzsentinel.com/government-and-politics/20180801/santa-cruz-together-raises-60000-to-fight-rent-control
Santa Cruz Real Estate News 