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AB 1506 DEFEATED! It was the Biggest Threat to Small Property Owners Since Rent Control Itself! – by Noni Richen

Posted on 01. Feb, 2018 by in all, Magazine Articles

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[Editor’s Note:  Great news for the multifamily housing industry! Last month, Assembly Bill 1506, to repeal the Costa-Hawkins Rental Housing Act of 1995 was defeated!  At the Housing and Community Development Committee meeting, (a five member committee) – two of the members were in favor, two were against, and member, Ed Chau, abstained; therefore, preventing the Bill from moving forward to the General Assembly.]

Menacing political clouds were forming over the future of rental property in San Francisco (and throughout California) with the hearing of AB 1506, the Costa-Hawkins Rental Housing Act repeal bill in the State Assembly – as well as the recent filing of preliminary forms for a ballot initiative should it not pass. SPOSFI fought back.

Over 100 property owners traveled to Sacramento to comment at an informational hearing staged by AB 1506’s sponsors. Assembly members Bloom, Bonta, and Chiu, had alerted tenant activists in advance, but somehow forgot to invite us. Thank you to the many of you who responded on very short notice.

The possibility of rent control, including vacancy controls on new construction, would have definitely discouraged any market-rate developer from sponsoring new homes in the numbers we need to overcome the state’s current housing shortage. Between 1980 and 2010, California added on average, only about half the units each year needed to house our expanding population. Now we need to add about 180,000 units annually, but are building well below half that number.

In addition, the elimination of Redevelopment Agencies halted much of the use of property tax dollars to fund affordable housing. The idea of placing further draconian limits on returns from market-rate housing means only one thing: IT AIN’T GONNA GET BUILT!

In her newsletter to constituents, District 1 Supervisor Sandra Fewer lamented that the Costa-Hawkins Act had decreased the number of rent-controlled units and increased the rents on the remaining units. She has it backwards: the number of rentals has decreased because of rent control, as housing providers sell their units for condos or TICs, or take them off the market for their own use.

Our members, many of whom are the very working-class people the Supervisor claims to protect, need the rental income in order to maintain their property as well as make a reasonable return on their investment. It’s noteworthy that in 2016, Ms. Fewer and her husband earned $336,908 plus benefits, not including additional income from their rental property. With income like theirs, they may not be concerned about a few dollars of rental income, more or less, but many of our members are hardworking clerical workers, teachers, room cleaners, and social workers. We are not being “greedy” by trying to earn enough to maintain ourselves and our rental properties.

You may have read recently about the “notorious landlady” hit with a $3.5 million civil penalty for setting up phony OMI evictions. Such illegal behavior helps paint us all with the same shameful brush, which we do not deserve. She was wrong to flout the law, got caught, and is paying dearly for her poor judgment. But frankly, I’m leery about the motives of the judge, who tripled the original penalty. I wonder if he would do the same if a renter were being sued for defrauding his landlord by claiming his cheap rent-controlled apartment as his home when he actually lived elsewhere and used the apartment as a crash pad and source of his own rental income by acting as landlord to his “roommates.”

We worked through December, although we had no members’ meeting or newsletter that month.

Thanks to everyone who worked on our causes and supported us with their annual contributions (dues). The fight against AB 1506 was a critically important one.

 

Noni Richen is President of the Small Property Owners of San Francisco Institute (SPOSFI) News.  For more information on becoming a member of SPOSFI or to send a tax-deductible donation, please visit their website at www.smallprop.org or call (415) 647-2419.