Californians Battle Skyrocketing Rents

Wednesday, July 12, 2017
Sasha Abramsky
Capital and Main

Nearly a decade after the housing market’s collapse, California’s real estate market has bounced back — and then some. The median price for a two-bedroom rental in San Francisco, depending on what report is used, ranges from roughly $3,000 a month to well over $4,000. The median home-sale price in the state, says the California Association of Realtors, is over $536,000.

In regions with particularly buoyant markets – Silicon Valley, the greater Bay Area, Los Angeles, Orange County, San Diego and other, mainly coastal areas – increasing numbers of people are finding themselves utterly priced out of their communities. Investors have flocked to cities such as San Francisco and Oakland to purchase homes that they know they can rent out for a fortune. And in tourist destinations this problem has been exacerbated by Airbnb – tenants are willing to pay ever-higher rents, knowing that they can, in turn, recoup their money by simply subletting their apartments, by the day, to tourists. San Francisco’s Office of Short Term Rentals has estimated that there are over 8,000 apartments in the city being listed on Airbnb, many of them without the required permits and licenses.

Even historically lower income communities, such as Richmond in the East Bay, are seeing a spillover effect from San Francisco. Last year, the two-bedroom apartment rented at $978 a month by Angela Flores, a 44-year-old, Spanish-speaking resident, and her husband, three young children and mother, was bought by a new owner. The new landlord immediately announced he would raise their rent to $1,335. To pay the difference, Angela’s family, which is reliant on the slim earnings her husband brings in from working construction jobs, had to pare back other spending to the bone – the 6-year-old boy had to quit his soccer league; the 10-year-old daughter her dance lessons.

Because of the state’s red-hot housing market, renters like Flores and her husband are now particularly vulnerable – either to evictions implemented by landlords who want to vacate their rent-controlled properties and then raise the rent on new tenants; or, if they are not evicted and live in non-rent controlled apartments, to rapidly increasing rents that they struggle to pay. (A great number of cities have no rent controls, and because of a statewide measure passed in 1995 known as Costa-Hawkins, even those that do cannot legally rent-control any unit built after 1995.) Many, particularly undocumented residents who fear deportation if they complain, live in increasingly squalid slum conditions, excluded by rising rents from decent housing.

“There’s been the perfect storm,” explains Berkeley Rent Board Commissioner Leah Simon-Weisberg. “First off, the foreclosure crisis pushed [homeowners] back into the rental market. It’s made rentals the most lucrative way of making money for big investment firms. [Second,] in California all of our redevelopment money was gutted – so there’s been no movement regarding affordable housing. And all the economic growth has been focused in a few places.”

“A lot of advocates saw [the cost-of-rent] crisis coming down the pipeline, post-foreclosure crisis,” argues Aimee Inglis, associate director of the statewide tenants’ advocacy group Tenants Together. With a glut of foreclosed properties on the market, speculators moved in, she explains; and with large numbers of onetime homeowners who, having lost their homes, were now renters again, the conditions were ripe for rents to spiral upwards.

Faced with housing prices that are simply unaffordable for working class – and even for many middle class – families, cities are having to finally tackle the issue of rent controls and protections. “You can’t keep good people in the community,” Simon-Weisberg says. “Teachers are having to leave – we’ve reached the crisis point. Everybody is stressed about housing. It’s not working for anybody.”

Over the past year, this crisis has reached a head. Unable to repeal the statewide Costa-Hawkins law through Assembly Bill 1506 because of concerted opposition from real estate organizations, proponents have shelved their legislation until next year. Another measure, Assembly Bill 1505, is, however, still alive: If it passes, it would allow cities to opt out of Costa-Hawkins in limited circumstances. In city after city, meanwhile, activists have pushed for local measures that both expand rent-control provisions and also enforce “Just Cause” laws that ensure that landlords can’t raise rents by evicting tenants without legitimate reasons. Because of the restrictions that Costa-Hawkins imposes, legislators are limited to calling for controls for large multi-family developments built prior to 1995.

Around Northern California in particular, groups like the Alliance of Californians for Community Empowerment (ACCE) have stepped up their fight for just-cause laws and to make landlords justify, before rent control boards, all rent increases above and beyond the rate of inflation. Housing activists throughout the state have also been pressuring cities and counties to require developers to include certain percentages of affordable housing units in their new developments.

“If the minimum wage is increased and landlords then gouge [tenants] with higher rents, what’s the point of the minimum wage increase?” asks Gabriel Haaland, the Service Employees International Union’s political coordinator for Alameda and Contra Costa counties. “It’s a working class issue.”

The step-by-step strategy is, explains Haaland, all about building momentum. “Having more cities have rent control makes it easier for us to have statewide efforts,” he explains.

Ultimately, that could result in the overhaul of Costa-Hawkins itself. “It’s a long-term campaign goal,” agrees Richmond City Councilmember and ACCE activist Melvin Willis.

Until this past November the city of Richmond had no renter protections. It wasn’t for lack of trying. Faced with a growing housing crisis, in July 2015 the city council had passed an ordinance. But it was successfully overturned following an expensive and protracted campaign by landlords who viewed it as an intolerable infringement on their business rights.

“Any controls on our property, we feel, is a violation of our property rights,” argues Dan Faller, founder and president of the Van Nuys-based Apartment Owners Association of California. “They’re forgetting the good that housing providers have done, and they’ve turned on us by proposing laws that limit what we can do with our property.”

Alex Creel, senior vice president for governmental affairs at the California Association of Realtors, concurs. “We see the problem as a lack of supply,” he says. “We’re just not building enough housing. We’re supposed to be building 180,000 units a year, and we’re building 80,000 to 100,000. Because of the NIMBY folks, environmental regulations [and] CEQA [the California Environmental Quality Act]. Frankly, we don’t see any role for local rent control. We think at best it is a Band-Aid.”

Many housing activists don’t entirely disagree. They, too, want more units built, but they also believe that rent controls are needed to stop realtors from simply catering to a high-income clientele, to global investors and others looking to park their funds in upscale coastal developments. “In San Diego, you have areas being gentrified, manicured for people who never lived there,” says 32-year-old tenants’ organizer Rafael Bautista. “In San Diego, we’re short 175,000 units. We need to enact rent controls and also catch up with the shortfall in supply.”

Confronted with a wall of well-funded opposition to state-level repeals or modifications of Costa-Hawkins, activists who don’t accept the premise that you have to take a wrecking ball to the state’s strict environmental protections in order to increase the affordable housing supply, have been taking the issue directly to the people. In Richmond, following the city council’s U-turn, SEIU and other organizations gathered signatures to put a measure on the ballot. It proved to be a winning strategy.

In the November 2016 election, by a nearly two-to-one margin, voters passed Measure L, which placed about 10,000 units in the city under rent control protections, with thousands of additional units now falling under just-cause rules. The law was similar to Oakland’s Measure JJ, which also passed overwhelmingly in November; it mandated that landlords have to petition Oakland’s rent board if they want to increase rents by more than the rate of inflation. At the same time, JJ expanded just-cause protections to an additional 12,000 rental units.

Tenants such as Angela Flores, who had faced rent increases in the months between the overturning of Richmond’s rent control ordinance and the passage of Measure L, were now legally entitled to a rent rollback to the pre-increase levels. Flores’ landlord initially refused to comply, so she consulted lawyers working with local tenants groups. When they sent him a letter telling him that he was obligated to reduce her rent, Flores claims, the landlord responded by taking away her parking access. From now on, she says he told her, he would charge her $150 a month for parking. When lawyers told him that, since the parking had originally come with the apartment, he couldn’t do that, he reportedly cornered his tenant and told her that, no matter how long it took him, he would make sure to eventually evict her. Because of the just-cause provisions of Measure L, however, Flores and the tenants groups who have worked on her behalf believe that she is somewhat protected from his wrath.

Where would Flores go if she weren’t protected by these rules? “I don’t know,” she says bleakly. “We’d have to figure something out.”

An hour north of Richmond, a similar story unfolded in Santa Rosa, though with a different outcome. There, too, the city council passed a rent control measure, only to see a successful counterattack by landlords, the California Association of Realtors, and the Apartment Owners Association – which funded a campaign that garnered enough signatures to get the ordinance rescinded.

In response to the Apartment Owners Association campaign, advocates of rent protections, including the North Bay Labor Council and the Jobs With Justice campaign, took their message directly to the electorate. However, Measure C, which would have extended rent controls to roughly one-quarter of the city’s rental units, failed at the polls in June.

Similar fights are being are playing out across the region. Some have resulted in more rent protections – Mountain View, Pacifica and Union City are among the most recent to have passed such packages of reforms; others, like Burlingame and San Mateo, have seen landlord victories.

“People have always been told it’s not politically possible” to pass rent controls, says Tenants Together’s Aimee Inglis. “In Richmond it happened. There are a lot of cities that over the past year, because of what’s happened in the Bay Area, have shown increased interest. People feel like it is more politically possible now – and so they are pushing for it.”

In Berkeley, East Palo Alto and San Francisco, city councils and boards of supervisors have recently expanded existing rent control ordinances, seeking, finally, to get a handle on the spiraling costs of housing in those cities. Concord is considering a similar measure. Further south, tenants rights groups in Santa Barbara, Pasadena, Glendale, El Monte, San Diego and in Los Angeles County are pushing for the implementation of rent control and just-cause protections. In the city of Los Angeles a slew of affordable housing changes have already begun implementation over the past year.

Ultimately, the organizers hope that they can take all of this local momentum and build a movement to take down Costa-Hawkins. To that end, they have been paying surprise visits to Assembly members and state senators up and down California.

In April, 23 activists from ACCE, Tenants Together, SEIU and other groups carried out one such visit in Contra Costa County, occupying the officers of state Senator Steve Glazer, in downtown Antioch. With a harried-looking staffer standing in for the senator, the visitors stood on the thin, slightly mildewy carpeting, and rested against the Formica-topped tables, some casting glances at the four framed sunset photos of Antioch’s waterfront that hung on the walls. One after the other they recounted tales of the high cost of housing in the area.

Antioch is a sleepy little riverfront town northeast of San Francisco, its downtown streets lined with quaint mom-and-pop stores, antique shops, a few cafes, galleries and old saloons. It looks a million miles away from nearby high-tech hubs in Silicon Valley and the Bay Area. Yet, because of the vast upward pressures on real estate unleashed by the tech boom, it has also seen its real estate market soar in recent years. Nondescript three-bedroom tract houses in town now sell for close to half a million dollars. One-bedroom homes rent for upwards of $1,800 a month.

Senator Glazer, has, over the years, accepted considerable campaign contributions from landlords and their umbrella organizations; the renter organizers have been targeting politicians known to be cozy with the real estate lobby, to let them know that high rents are pushing lower-income families out of the market. They urged Glazer’s team to support a repeal of Costa-Hawkins.

“Part of the reason for lobbying senators is for us to really have a statewide rent control,” says Melvin Willis, one of the activists at Glazer’s office that day. “We are really pushing and working on legislators to see its importance.”

FAIR USE NOTICE. Tenants Together is not the author of this article and the posting of this document does not imply any endorsement of the content by Tenants Together. This document may contain copyrighted material the use of which may not have been specifically authorized by the copyright owner. Tenants Together is making this article available on our website in an effort to advance the understanding of tenant rights issues in California. We believe that this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the U.S. Copyright Law. If you wish to use this copyrighted material for purposes of your own that go beyond 'fair use,' you must obtain permission from the copyright owner.

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