Opinion: The consequences of repealing Costa Hawkins

Assembly Bill AB 1506 ( which has been withdrawn) was sponsored by Assembly persons from Santa Monica. This article was written before it was withdrawn but I thought the information would be useful to those interested in the effects of rent control without Costa Hawkins.

This bill proposes to repeal Costa Hawkins (Vacancy decontrol/recontrol) bill passed 20 years ago.  In the interest of full disclosure I owned rental units in Berkeley in the 1970s, lived under Berkeley rent control for 30 years, and had numerous interactions with the Berkeley Rent Stabilization Board during the course of those 30 years.

At the inception of rent control in  1980, a typical one-bedroom apartment rented for $300 per month. That same apartment with a sitting tenant now has a rent of $915 per month. It would be substantially lower were it not for the Searle decision in 1990 which allowed a prospective increase of 28% to compensate for the Rent Board not allowing sufficient annual general adjustments (AGAs) in prior years. The decision did NOT compensate owners for losses incurred prior to the decision. It merely put a stop to future losses through inadequate AGAs passed by the Board.

The Berkeley Rent Board and the staff are all dedicated tenant supporters and anti-owner. The executive director and deputy director recently told the Berkeley City council that landlords have
gotten a WINDFALL and that the business license tax should be more than doubled. The Council
agreed and put an initiative on the ballot which passed. The owners have, in fact, been able to
increase rents when they have a vacancy.

What the Rent Board  didn’t tell the the Berkeley Council was that the 1980 $12 registration fee is now $254 and the Board wants to raise it further. THAT IS THE TRUE WINDFALL!!!

The burdened salary of the Executive Director/Deputy Director/Board Attorney is over $800,000 annually and that it takes the registration fee from 3250 units to pay those salaries. The Board rents facilities for its 23 employees  at a cost of $236,000 annually. This requires the registration fee from almost another 1,000 units to pay the rent for the Board.

The Board has for years rented the building formerly occupied by Merrill Lynch stock brokerage firm. The Board currently has approximately 300 square feet per employee, when in the private sector 120 square feet is common and 200 square feet is considered luxurious.

The extravagance is compounded by the fact that the City of Berkeley has thousands of square feet of office space in its administration building and in the current city hall to which the Board could relocate rent free.

The Alameda grand jury wrote a damning report about the Rent Board operations several years ago and the Board blew it off and changed nothing.

With 70% tenants in the city, the Board has nothing to fear as they feel confident that they will continue to have tenant support come election time.

Berkeley has thousands of small rental units which are in 50- to 100-year-old buildings. The infrastructure of these buildings need to be upgraded to maintain the housing stock and owners are not going to be able to do that on $900 rents.

A sitting tenant in Berkeley has saved at least $300,000 in rent payments since the inception of rent control. When they are carried out of the unit they will leave the owner with a unit that will need new plumbing/electrical/kitchen and bath upgrades to say nothing about replacing windows and heaters, refinishing floors, sheet rocking ceilings and walls and repainting. From an owners viewpoint it is  as if the tenant ate the seed corn. Try retrofitting the apartment on $900 a month rent.

Ted Edlin, who has lived in Berkeley for more than 50 years, was formerly president of the Council of Neighborhood Associations, vice-president of NEBA, chair of the Housing Advisory Commission, and a member of the Fire Commission, now known as the Disaster and Fire Safety Commission.