Daly introduces rule changes to aid struggling tenants

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By Rebecca Bowe

As the economic downturn deepens, millions in state and federal funds have been allocated to struggling homeowners who are falling behind on mortgage payments. Today, Supervisor Chris Daly will ask the Board of Supervisors to extend a life raft to another group of people who are worried about losing the roofs over their heads: tenants.

"Homeowners aren't the only ones struggling with the financial crisis. Most San Franciscans are renters,” Daly points out. “It's about time we do something to help tenants who are losing their homes. In this crisis, it is not appropriate for landlords to be raising rents that tenants can't afford."

Toward that end, Daly will introduce a “renters economic relief package” at today’s board meeting, which proposes several amendments to the city’s rent-control law. The three changes are designed to ease some of the pain for San Francisco renters, who face the pressure of rising rents even as the economy continues to slide. In 2009, the Board of Realtors projects a 7 percent rent increase for vacant units, a measure that's looked to as a barometer for how the rental market is behaving, according to Ted Gullicksen of the San Francisco Tenants Union.

The first rule change would suspend any new rent increases that would cause a tenant’s rent to exceed 33 percent of his or her income, by making it easier for a tenant to apply for hardship in order to prevent this level of rent increase.

The second would make it easier for tenants to add roommates in order to lessen each person’s share of the monthly payment, by bringing the occupancy limit into line with San Francisco housing code provisions rather than the arbitrary limits imposed by landlords.

Daly’s third proposal would tweak an existing law that allows landlords to "bank" annual rent increases, imposing them all at once, which can result in sudden rent increases of 20 percent or more. The new provision would limit these banked rent increases to no more than 8 percent in any one year.

Ted Gullicksen of the San Francisco Tenants Union voiced support for the proposed rule changes. "Tenants are having a very difficult time coping with declining income and the city's overly-inflated rents," he notes.

Comments

The bigger question is why are landlords keeping units off the market? But to resolve that question would require serious look at the housing market as a whole. Rather than the patch work of rules and regulations that exist in San Francisco.
Asking Landlords to pay a fee when they hold a unit off the market is just another idea to plug a hole caused by small thinking local politicians, and Landlords will find another way to maximize returns, which will then require another idea to fix the next issue.

Posted by Chris P on Mar. 04, 2009 @ 8:39 am

We need to charge a fee to landlords who keep units off of the market as well because that burdens the government further to provide more housing.

Speculation on housing as a casino got us into this depression and unwinding that mentality is what it is going to take to get us out of it.

-marc

Posted by marcos on Mar. 04, 2009 @ 5:47 am

This is so outrageous it's not even funny. I am struggling to make mortgage on my 2 unit building. If I have to lower my tenant's rent to 1/3 of his income (he is now making nothing because he is unemployed), I will have to go into foreclosure...we both end up on the street.

Posted by Teddy on Mar. 03, 2009 @ 4:34 pm

This is not a “renters economic relief package”

A relief package would be to subsidize rents in this city. This is demanding Landlords to forgo some of their income to benefit their tenants.

This will ‘cause more landlords to convert their properties to TICs as their income is reduced.

This will ‘cause less small family landlords to exist or enter the market (as their income is limited and alternative investments are more lucrative) and more larger corporate landlords who can afford litigation against their practices.

This will ‘cause landlords to only rent to the young who are more likely to move in a couple of years (rather than Families or Older people who look for long term housing).

This will ‘cause less reinvestment in properties as return on investment is limited.

This will ‘cause more resentment between landlords and tenants as long term tenants will be perceived as a hurdle to income (in other markets long term tenants are desired).

There is nothing in these rule changes to demand high income tenants who benefit from these resolutions to give back to the city in the form of taxes. This is just another cynical ploy to garner approval and popularity from a population of the city without thought to the long term consequences.

Posted by Chris P on Mar. 03, 2009 @ 3:27 pm

This is a stupid socialism that will destroy property. It is pure insanity to limit the rental value of apartments by government edict. Rent control destroys housing, just look at New York City for an example of this madness. Apartment owners seek the highest rents and tenants seek the lowest; let the market decide, not the whim of power seeking politicians playing to the masses.

Posted by Mike on Mar. 05, 2009 @ 8:41 am

"The three changes are designed to ease some of the pain for San Francisco renters, who will face a projected 7 percent increase in average monthly payments in 2009 even as the local economy continues to slide."

Get your facts straight. Allowable rent increases for 2009 as per the SF Rent Board is 2.2%. http://www.sfgov.org/site/rentboard_index.asp

Count on more Ellis Acts, OMI evictions, poorly maintained properties and foreclosures if this passes.

Posted by alison on Mar. 04, 2009 @ 4:20 pm

Rent Measures Don't Trigger Roll-backs - Protect Small Landlords From Hardship -

Teddy and all,

The legislation only limits future rent -increases- based on the 33% cap, it does not mandate any roll-backs to fit the cap. It also contains language which states that if the landlord were to experience even more serious hardship than the tenant because of the cap he or she can petition to waive the requirement.

You are hearing false arguments from big property owners who want to scare you into opposing the legislation.

Posted by Eric Brooks on May. 26, 2009 @ 10:30 am
RTM

Problem #1 – Caps Increases in Perpetuity -- Renters in San Francisco already have rent control, so I do not understand the need for additional protectionist measures. Furthermore, why should landlords subsidize poor financial decisions on the part of tenants. If a tenant signs a rent contact and their circumstances change (jobloss, etc.), I do not see the bank providing mortgage relief to the landlord. Unfortunately, the tenant needs to move to a unit that is in keeping with their financial means. There is a glut of rental property on the market which allows the tenant to find an option that is more affordable.

Problem #2 – Cap Increases in Perpetuity -- The yearly increase in rent is well below the appreciation of the property. Effectively, a tenant could forever limit the increase of their rent by signing a lease that was in excess of 33% of their take home pay.

Problem #3 — Roommates — Allowing additional roommates without the consent of the owner just perpetuates scamming the rent control ordinances. As an owner, I should be able to propose a limit to the number of people I want in my building. The tenant is entering into a legal contract agreeing to that limit. If their circumstances change and they want roommate — the tenant should move to a unit that will take that number of roommates. The landlord should not be forced to accept additional damage that comes from additional people in the unit.

Problem #4 — Verification — If this legislation were to pass — how would it be verified? Would the landlord or city need to review the tax returns of renters for income? Is the city going to do that? We are asking for additional oversight at a time when we a running a multi-million dollar deficit.

This economic downturn is difficult on everyone. I fail to see why renters that have the least amount of risk and the greatest amount of portability should receive financial relief to the disadvantage of those who are paying their mortgage. The banks are not offering to provide relief to the landlords. If a jobloss has forced a renter into a situation beyond what they can afford — they should move to a situation commensurate with their income. The landlord should not finance the renters’ life circumstances — just as a landlord does not ask the renter to finance their financial situation.

Posted by RTM on May. 25, 2009 @ 7:51 pm