Grand Jury criticizes Berkeley Rent Stabilization Board

Berkeley voters passed a rent stabilization law in 1980, and the law now covers 19,000 rental units in the city. Photo: Tracey Taylor

A highly critical report by the Alameda County Grand Jury has found that the Berkeley Rent Stabilization Board is a “self-sustaining bureaucracy that operates without effective oversight and accountability.”

This rent board pays Jay Kelekian, its director, $183,000 a year to oversee a $4 million budget and manage just 21 employees – which is more than the city Berkeley pays its director of public works, who oversees 326 employees and has a $90 million annual budget, according to the report.

“The executive director makes an exorbitant salary that comprises nearly 5% of the entire budget of the agency,” according to the report. “The Grand Jury finds this unacceptable and concludes the board needs to reprioritize services and to reduce costs, not only in its administration but in services to the citizens of Berkeley.”

The rent board also pays its board members an “excessive” $500 a month and provides health benefits, according to the report. BRSB also spends $50,000 a year on a Sacramento lobbyist.


The Berkeley Rent Stabilization Board is able to pay its administrators so handsomely because it imposes some of the highest rental registration fees in the state, according to the report. Berkeley assesses landlords $194 per rental unit, compared to Oakland’s assessment of $30 per unit, and San Francisco’s $25 per unit assessment. While Santa Monica assesses landlords $156 per rental unit, it also permits landlords to recoup those costs from tenants by levying a $13 monthly fee. Berkeley, in contrast, does not allow landlords to recoup their costs, according to the report. Property owners can only assess tenants $4 a month for a total of $48.

A comparison of Berkeley managers’ salaries shows that the Rent Board Director oversees a smaller budget and staff than other directors. Source: Grand Jury report (see note at bottom of story about this chart)

“The Grand Jury was struck by the lack of controls over the increase in the registration fee,” read the report. “The landlords pay the fee for services primarily benefiting tenants. This allows the BRSB to maintain its operations with minimal external controls.”

The report said a fairer way to finance rent control would be to allow for a larger pass-through of registration fees to tenants.

Officials at the Rent Stabilization Board strongly disagreed with the Grand Jury report and said it was more of an opinion of what Berkeley’s rent control laws should be, rather than what voters put in place in 1980. Officials also said that the complaints investigated by the grand jury are eerily similar to those outlined in a June 2011 letter sent to the Berkeley City Auditor by Sid Lakireddy on behalf of the Berkeley Property Owners Association. The BPOA has opposed Berkeley’s rent control laws since the 1970s.

“We would have welcomed a critical, fact-based analysis of the Rent Board’s charge under the City Charter: the administration of the Rent Stabilization and Eviction for Good Cause Ordinance,” Lisa Stephens, the chair of the board wrote in a rebuttal letter. “Unfortunately, this Grand Jury missed such an opportunity. Instead, it has issued a report that ignored significant evidences substantiating the effective enforcement and reasonableness of the administration of Berkeley’s rent and eviction laws, choosing to mask a disagreement about what type of rent control law Berkeley should have under the guise of criticism of administrative issues. Even more troubling for a report from a public body is the reliance on inaccuracies, innuendo and “perceived” problems, to give a veneer of plausibility to its conclusions.”

Stephens’ letter points out that the Rent Stabilization Board is accountable – to voters. It is also transparent since its meetings are broadcast. Berkeley’s rental registration fees are in line with those in cities that have a similar rent control laws, like Santa Monica, East Palo Alto and West Hollywood, she said. And, contrary to the grand jury report, Berkeley landlords can pass on their assessment fees and have raised rents accordingly, said Stephens.

She also said that the $183,000 salary paid to the executive director is similar to that paid in other cities and that the $500 monthly stipend paid to board members has not increased in more than 25 years.

Comparable rent registration fees, 2011, by city. Source: Grand Jury report

Berkeley voters passed a rent stabilization law to regulate residential rent increases in 1980, and the law now covers 19,000 rental units in the city. In 1982, residents voted to make the Rent Stabilization Board an independent entity not responsible to the city council, according to the report. Nine board members serve four-year terms on the board and regulate rents and evictions on the apartments constructed before 1980. The city of Berkeley processes the Rent Stabilization Board’s payroll and processes its hiring through its Human Resources Department, but has very little other oversight.

The grand jury report also criticizes the Rent Stabilization Board for imposing overly punitive fines. If a landlord is even one day late in paying his or her assessment, there is a 100% fine, which is much higher than other city-imposed fines, according to the report. When hotels do not pay their transient occupancy tax, they are levied a 10% fine, according to the report.

The report also suggests that the Rent Stabilization Board is overstaffed for its size and relies too heavily on hiring local lawyers rather than consulting with the City Attorney. Berkeley has 19,000 rental units compared to Oakland’s 58,000 units and San Francisco’s 170,000 units. Attorneys in 2010 filed claims in small claims court against 140 properties and filed liens against 40 properties, according to the report. Some attorneys on the payroll are even doing non-legal work.

“We found that some attorneys were being used to do jobs not requiring legal training. In addition to having a staff supervisor, there is an “attorney of the day” assigned to the BRSB. The Grand Jury learned the current workload does not justify the number of lawyers, exacerbated by the BRSR’s justification that the attorney of the day’s job is to advise other staff to not give legal advice. Additionally, the number of hearings has declined over the years, causing the Grand Jury to question if there is a better use of public funds in this staffing situation.”

The report suggests the BRSB ask the city of Berkeley’s Human Resources Department to do an audit to determine appropriate staffing levels.

Stephens said in her rebuttal letter that the BRSB staff size has decreased ever since the state passage of vacancy decontrol. At one time there were 36 employees, but now the level hovers around 19-21 employees, she said.

“Due to the foreclosure crisis and the increased incentive that vacancy decontrol created to evict long-term tenants, the need for the Rent Program’s services has increased,” wrote Stephens. “We receive over 10,000 client contacts a year.”

The report also details some other concerns, such as the way in which the BRSB hires new employees based on friendship rather than qualifications. It also suggested that the board could make do with fewer employees.

The Alameda County Grand Jury report on the BRSB begins on page 63.
The rebuttal issued by the BRSB is here.

Note: This chart in this story titled “Berkeley Manager’s Salaries” has been changed from its original post. The first chart included inaccurate numbers about the size of the annual Berkeley Public Library Budget, claiming it was $128 million instead of $19 million. The chart now in the story has been cropped to remove that inaccurate information, which was included in the Grand Jury report.

Related:
Screening fee protection for renters proposed [04.26.11]

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