Summary
Twenty-five years after their passage, it is proposed that Berkeley's rent control laws are due for a makeover. Several major reforms have been proposed, all of which share the goal of transforming city-wide rent control into a program that targets tenants who are truly in need. These include:
- Replacing the current system with direct rent subsidies for tenants, based on need.
- Replacing the current system with a program of tax incentives for landlords who limit rent increases for certain classes of tenants.
- Leaving the current system in place, but limiting the kinds of apartments and tenants it applies to.
Is it time for reform?
Analysis
(Note: this issue involves only rent controls, and not eviction controls, which protect tenants from eviction unless the landlord have a specific legal justification.)
In 1979, the City of Berkeley declared a "housing crisis" and enacted its first rent control laws. The current system was put in place in 1982, and is administered by an elected Rent Board and a 21-person staff with an annual budget of approximately $3 million.
The original law provided a means by which the law could be suspended in the event vacancy rates exceeded 5%. No vacancy survey has been done, however, though most would agree that vacancies are at or above five per cent today.
The original ordinance also limited all residential rent increases, and applied to nearly all tenants citywide But subsequent changes in state law altered the way Berkeley rent control actually works. Today, perhaps one quarter of Berkeley apartments still have "original" rents that have been controlled since 1982. The remainder are either uncontrolled (for example, all construction since 1982), or have had at least one adjustment to a market-rate rent since 1999 (after which they are re-controlled). Adjusted for inflation, market rate rents have not changed appreciably since 2001.
Thus, the date on which a tenant moves in is the single most important factor determining whether (and how much) that tenant benefits from rent control.
Is it time to re-evaluate Berkeley's rent control laws? Unlike previous Kitchen Democracy issues, proponents do not advance a single comprehensive scheme. Instead they ask for
- an impartial survey of vacancy rates and prevailing rents, and
- a reformed system which would be based on actual need rather than on the date the tenant moved into his/her unit.
Precise details of how to accomplish the above would depend on the results of the impartial survey and the full public debate which would follow. Among the mechanisms which might then be considered are
- Gradually replace the current "need-blind" price-control system with one that provides direct financial subsidies to lower-income renters who don't qualify for the federal Section 8 program. The subsidies would allow lower-income renters to "bridge the gap" and participate fully in the private housing market.
- Replace the current system of mandatory price controls with one that rewards landlords (e.g., with tax incentives) who agree to below market rents for certain categories of renters. Unlike the subsidy program, this system might use criteria other than just financial need. For example, it could be applied to seniors, or public school teachers, or any other group that the City wants to protect with stabilized rents.
- Maintain the current system, but only for tenants with demonstrable need. Shift resources saved by this smaller program away from the Rent Board apparatus and into direct-subsidy housing programs for tenants who are now "missing out" on rent control's protections.
Supporters of the status quo hail Berkeley's rent control ordinance as the single largest affordable housing program in the city. They assert that suggestions for "reform" are nothing but a disguised effort to repeat rent control in its entirety. They further argue that "need-based" programs invade renter's financial privacy, and unnecessarily stigmatize those who would benefit.
Pros and Cons: Our current choice
We read every comment. When we find a particularly compelling one, pro or con, we post it here.
We encourage you to read all the comments on the comments page. But if you only have a couple minutes, we thought you would like to read the two we find most compelling.
Don't forget to check back in a few days. Our favorites can change as more Kitchen Democracy citizens submit even more persuasive arguments.
Robert and Simona
Kitchen Democracy
Is it time to reform Berkeley's rent control laws?
| Yes | No |
|---|---|
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No law should continue for nearly thirty years without re-examination. This is especially true of rent control, which was passed as an emergency measure and which provides by its own terms for suspension or modification if there were no longer a “housing crisis”. But rent control has insinuated itself into the fiber of the City’s politics and culture. Politicians won’t touch the issue because 60% of the population are now renters who have been told that rents would skyrocket without City controls. The home-owning minority doesn’t discuss it because they have been told that rent control is critical to Berkeley’s “affordable housing” program. There is no rental housing crisis in Berkeley. Vacancy rates are high, and rents in the uncontrolled market have been stable since early 2000. Nor does rent control have direct impact on “affordable housing”. On the contrary the system has become totally arbitrary: it subsidizes some who need no help, and leaves others stranded who do need assistance. For example: 1. In 1979 the rental housing vacancy rate was less than 3% and rents were increasing faster than inflation. The Ordinance was based on this “crisis”, and on its face says that if vacancy rates increased to 5%, the City might suspend or repeal the law.. But no vacancy survey has been done, even though most would agree that vacancy rates in recent years have equaled or exceeded five per cent. 2. The original law did not allow rents to be increased even when a unit changed hands. The result was deteriorating buildings, and landlords without any motivation to improve their properties. In 1996, the state legislature allowed for “vacancy decontrol” of rents, to be phased in between 1996 and 1999. The result in Berkeley was a brief period of increasing rents, as units with sub-market rents changed hands at market rates. By the Spring of 2000, however, things had stabilized. Adjusted for inflation, market rents in Berkeley are no higher today than in early 2000. 3. About 19,000 units are subject to rent control (the remainder of the City’s housing stock is accounted for by single family residences and by several thousand units built since 1979). Three quarters of these controlled units have changed hands since 1999, which means that they are at unregulated market rates. The remaining 25% is rented at rates that were originally set in the late 1970’s. Basically, the exceptions have swallowed the rule: the Rent Board and its staff spend $3,000,000 enforcing a complex, divisive law which helps a lucky few who moved into their apartments a long time ago. Many of these people could afford market rates, while more recent arrivals who do need help have no recourse. What to do? It’s hard to be precise, because the City refuses to conduct an impartial vacancy and rent survey of pre-1980 and post 1980 housing stock. This should be done. If, as we suspect, vacancies are high and market rents are stable, the law should be modified to allow submarket rents to be raised over a reasonable period of time for tenants with no demonstrable need. There should be a new program which protects tenants who need, regardless of when they moved in. Such a program could take the form of property tax breaks for landlords who agree to hold rents at sub-market levels over a long period of time. Or the $3,000,000 spent by the Rent Board each could be redirected to verifiably needy families. Under this approach, 500 such families could be provided with $500 per month in rental assistance. Or a thousand families could receive $250/month in help. That’s real help to real people, and not simply more money to the bureaucrats, which is the form that civic action too often takes in Berkeley. Who would be helped by changing the law? The most obvious are renters who need assistance but get none under the status quo. We need to remember that the federal Section 8 housing program is under severe attack in Berkeley, and the City’s “Affordable Housing Trust Fund” is virtually bankrupt. Another group is the landlords of older, smaller buildings where rents were set in the 1970’s and have not become vacant in recent years. These are often persons near (or beyond) retirement age who depend on rental income to survive and who cannot afford to maintain and improve their properties when rents are kept artificially low. The greatest benefit would be to the City, its neighborhoods and to homeowners. Nearly half of Berkeley property is owned by UC, or by “non-profit” corporations, and is off the tax rolls entirely. The rest is single family residences and rental properties. But the value of rental properties is depressed by the existence of Berkeley’s unique version of rent control. This leaves the bulk of the tax burden on individual homeowners. One City study recently showed that if only a part of Berkeley’s rental property stock were revalued to market rates, more than $200,000,000 in new revenues would come to the City over the next ten years. David Wilson |
Vacancy rates are regularly surveyed by the Rent Stabilization Board. Our current system works well and should be preserved. Landlords receive a fair return and benefit from stable long term tenancies. Rent control allows tenants to be long term Berkeley residents staying in one neighborhood and contribute to the fabric of our community. Otherwise, most tenants are forced to continue to be transitory. WENDY ALFSEN |