Tim Cates: Tenants versus Tenants


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Tenants and tenant advocates believe rent control is good.  In general, rent control is good for tenants in rent controlled units and bad for tenants in non-rent controlled units.  In the City of Richmond there are approximately 9,912 rent controlled units (40%) and approximately 14,617 non-rent controlled units (60%).  So why would the majority of tenants want rent control in the City of Richmond?

Tenants in rent controlled units (40% of available rental units) will benefit from rent control due to their rent increases being limited to consumer price index (CPI) adjustments and with the assumption they stay in their tenancy.  Tenants in non-rent controlled units (60% of available rental units) will see their rents increase much more than without rent control.  

The RPA and Tenants Together promote rent control as being good for all tenants.  This is simply not true . . . tenants should be in different camps when it comes to rent control.  They have been misinformed by their advocates and tenants in non-rent controlled units are effectively being sacrificed in the process.  I have been a practicing CPA for more than 30 years and it is disheartening to see the RPA driven City Council pass an important ordinance without disclosing the ramifications to tenants in non-rent controlled units.  

There is a petition for referendum available in the City of Richmond to have voters decide whether rent control and Just Cause for eviction is what they want.  Tenants in non-rent controlled units should think about what they want instead of blindly following the RPA and Tenants Together.  

 

By: Tim Cates, Certified Public Accountant

Photo: City of Richmond

Showing 12 reactions

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  • commented 2015-09-04 22:24:19 -0700
    Frank,

    You are confusing two very different things. For those in society who cannot fend for themselves and need support, the society as a whole should provide support. I fully agree with that. The problem with rent control is that it provides a limited number of people a windfall regardless of their economic circumstances, while imposing an additional cost burden on even more people who don’t have the good fortune to currently reside in rent controlled units, and places all of that burden on a small group of property owners regardless of their ability to pay. Not only that but it produces a powerful signal to those who might otherwise invest in improving and expanding housing in the city that they are unwelcome and that their potential returns on investment will be limited by government action. If someone governing a city called you a “dirty dog” “evil” landlord, would you be inclined to invest there?

    We need to expand housing opportunities, need take care of folks who legitimately cannot take care of themselves. Rent control won’t do either. It will make matters worse.
  • commented 2015-09-04 21:57:54 -0700
    rent control is terrible as long as we continue to treat housing as an investment opportunity rather than a human need, but golly captain fourth grade economics, isn’t everything in life an investment opportunity? to gain a private profit? for the good of humanity? and if you can’t afford housing, you can be homeless, or drop dead. it’s in the constitution. or the bible. or the fourth grade economics text. right?
  • commented 2015-09-03 17:09:41 -0700
    Socialism is warm and fuzzy, but when it comes to analysis, mostly just fuzzy. Stan has it right.
  • commented 2015-09-03 16:46:46 -0700
    Well, a reasonable person could buy the 25,000 positively affected tenants then.
    By the same token and math calculations one would have to conclude that over 40,000 tenants of equal economic status would be negatively impacted by rent control, by reasons cited earlier.
    Still, this does not meet the test of weighing, which Zach refers to, to justify the injustice.
    Of course the landlords, some elderly and not rich by any standards, would be negatively impacted too, but who in the world would count these greedy, unholy creatures into the “weighing” of right and wrong by Zach’s standards.
    Anyway, congratulations to the citizens of Richmond for repealing this oppressive and ineffective ordinance, and for NOT joining the list of failures like San Francisco and Berkeley.
  • commented 2015-09-02 23:51:14 -0700
    Zack’s comment about 25,000 people being affected needs some clarification. While there are in the neighborhood of 25,000 rental units in Richmond, only about 9,500 will be covered by this rent control ordinance. How many people live in each of these 9,500 units is truly unknown but an average occupancy of 2.5 persons per unit is not an unreasonable guesstimate. That’s how he can claim that 25,000 people might be affected.

    I still disagree with the Robin Hood approach of stealing from the “rich” to give to the “poor” but Zack deserves the opportunity to state his case—which he did. It’s then up to us whether we accept his arguments or reject them.
  • commented 2015-08-30 21:34:36 -0700
    Zach is a very nice guy, studying to be a unitarian minister (and I think he will do a great job in that role). He missed economics, however, and is caught up in the RPA socialist knee jerk reaction that anything that hurts owners of capital must be good, while ignoring the collateral damages that go along with it. Please look at the facts and make your decision accordingly. Rent control is clearly a windfall to tenants in controlled (or soon to be controlled) units, at least until they move, but it will cause real economic harm to every other tenant, including those who want to move to Richmond, as well as the people who provide rental housing in the community. It adds up to a negative, and should be rejected.
  • commented 2015-08-29 17:24:47 -0700
    I am a landlord, and I know my tenants will not benefit from rent control. The reason is that I don’t raise my rents very much (last time it was about 1.1%) each year and that was due to the jump in property taxes. If I have to pay $300 – 500/unit for the newly created bureaucracy each year, I will have to pass on every increase to my tenants which will cause larger increases every year in their rents. I have been absorbing much of the increases in the garbage, water, sewer rates and other necessary taxes for a civilized society. The bureaucracy fee is beyond the pale.
  • commented 2015-08-29 14:20:35 -0700
    Zach’s comments above while while maybe catchy are totally false.
    1. Approximately 9,000 units will see the benefits of rent control, that number will dwindle as tenants are forced to move by their circumstances. Over 20,000 of units will not be rent controlled, these tenants will see their rent increased more than it would have been without the rent control due to severely limited supply of available units. How is that for "weighing"that Zach’s mentioned? Is he weighing numbers of people who will benefit or his politically radical views?
    2. Huge number of section 8 tenants will lose their housing. It is happening already. How is that for “weighing”?
    3. The just cause eviction protection for any tenants not covered by rent control (more than 2/3) is in reality illusionary. Landlord could legally increase the rent to ANY amount and then evict for nonpayment of rent.
    The only beneficiary in this case would be the Rent Board collecting the fees to support their bureaucracy.
    4. I have no idea where Zach’s took his 25,000 from, as protected tenants number.
    5. Finally why RPA and it’s supporters are so afraid of giving a voice to people of Richmond in deciding if the rent control is good for their community. This is what this petition is all about.
    Maybe they are afraid that the…" Light will shine on them" as they are advancing their extreme leftist political agenda .
  • commented 2015-08-28 22:08:57 -0700
    Today’s West County Times quotes Tim Jones as saying he is getting calls everyday from landlords opting out of the Section 8 program. Rent control opponents, and Jones himself, warned that this would be one unintended consequence of rent control. There will be others. It has nothing to do with ‘evil’ landlords. As Jones states in the article they simply do not want to deal with the additional bureaucracy. In order to encourage landlords to participate in the program, Section 8 has long made a point of promising quick removal of troublesome tenants. But now with Just Cause requiring proofs and testimonies that you are never going to get in these kind of cases many will simply choose to opt out rather than take the risk. The good people working at Section 8 have long understood what the rent control crowd refuses to see. Remember all those nice landlords who testified to the City Council how they always charged the minimum rents? Another unintended consequence that you will soon see is that they will no longer set their rents low, but rather set them as high as they can. The reason again is not because they are evil. It is because rent control will create a new marketplace that will strongly encourage one to do so. Once a unit vacates you are not going to set a low rent that you may be stuck with for decades. You are going to go for the most you can get. That is because no one is going to want to deal with the rent board for increases. Again, too much bureaucracy. Best wishes to the fine folks at Section 8, and in finding new homes for those displaced by the rent control zealots. Zealots who in their blind zeal for victory over the ‘evil landlords’, recklessly ignored the repeated warnings of more experienced and well qualified people (City Manager, Mayor, Council members Bates and Pimple, Tim Jones, and a multitude of professionals) of the unintended consequences of their well intended but poorly considered actions.
  • commented 2015-08-28 21:13:39 -0700
    I oppose rent control and just cause because they don’t work. The evidence is all around us (Berkeley, Oakland, and San Francisco). I believe in sound, thoughtful, and fact based advocacy. But in the case of rent control and just cause the advocates and opponents were extremely misleading and deceitful. They did not inform or educate the tenants of the ramifications of their proposal or the fact that few would benefit and most would not. This action was irresponsible. Tenants should be angry.

    Furthermore, “just cause” is extremely problematic and costly for landlords/property owners. They must raise their rents to accommodate this part of the ordinance which affects every property in the city, along with the fees the city wants to charge them to operate. For those who did not raise their rents prior to the passage, it might be more cost efficient to sell, which means a lose of rental units in Richmond. Thanks RPA.

    Be careful what you ask for, because I am seeing an exodus of moderate and low income residents due to the actions of the RPA council members and their supporters.

    Everyone should read the ordinance carefully, and repeal it.
  • commented 2015-08-28 20:21:05 -0700
    While proponents claim to make it their business to SUPPORT rent control for all tenants, the fact is, they do not. I will give proponents the benefit of the doubt that they do, in fact, understand basic economics. By reducing the number of market rate units while maintaining the same demand, rents, in non rent controlled units, will rise. It’s a fact and not an opinion. Regarding just cause for eviction; the only tenants truly protected from displacement will be tenants that are a nuisance to the community. Peaceful and paying tenants are always welcome by landlords and would have no reason to be given notice; another fact and not an opinion. By claiming to be real advocates of all tenants and the community as a whole, admit this ordinance is flawed and only benefits a select few.
  • commented 2015-08-28 13:47:38 -0700
    While the opponents of rent control love to claim concern for tenants, the non-profit advocate groups that make it their business to represent tenants SUPPORT rent control and this ordinance. Just cause for eviction is a protection afforded to virtually all tenants under this ordinance. It is the state law Costa-Hawkins that heavily restricts rent control, including unlimited vacancy decontrol, that puts us into this position of weighing the effects on controlled and uncontrolled units. But this is clear: rents in Richmond are rising very rapidly and virtually all working-class families with children will be threatened with displacement unless we act swiftly. Rent control gives us the opportunity to give a significant number of residents, to the tune of 25,000, the protection of stability. A city is its people. They earned the dignity of that stability, let’s give it to them.
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