Renters aren't the only ones feeling the pain in this down economy! By Noni Richen, SPOSFI President
As I undertake the task of writing this month’s editorial, I am filled with a sense of déjà vu. Clearly, I need to comment on Supervisor Daly’s latest proposals dictating how we may operate our rental businesses. But as I formulate the words, I am troubled by the realization that it’s an editorial that’s been written all too many times before by each successive SPOSFI President; only the details change. Tenant Times, the newsletter of the Tenants Union, (SFTU) recently announced certain “tenant relief” goals.
Lo and behold, one week later, Supervisor Daly introduces legislation that fulfills SFTU’s fondest wishes. See the article at right for a detailed review of this onerous legislation. Once again, Mr. Daly paints renters as a persecuted class worthy of protection, and landlords as greedy profiteers deserving of punishment.
Means testing: a new bureaucracy?
In reviewing these proposals, one facet is particularly noteworthy: SFTU advocates basing rents on tenant income: that is, rents should never exceed 30% of income. Well, we have our own proposal based on this concept, means testing: when a tenant’s income reaches a certain threshold, the rental unit in which he or she resides is removed from rent control restrictions. For example, if a tenant household’s annual income reaches $150,000—entirely reasonable for a professional working couple—their unit would no longer be subject to rent control. New York City has means testing based on income and also has a rent-level threshold that removes a rental from controls.
Would means testing require a new bureaucracy to keep track of tenant incomes and rents? Sure, but no more than that required by Daly’s proposal, or for that matter, our current Rent Ordinance. Would means testing give tenants an incentive to cheat by concealing income? Of course, but so would Daly’s proposal. Keeping track of rents for 174,000 rent-controlled apartments means creating another bureaucracy that may or may not succeed in collecting accurate and honest data, but so would Daly’s proposal. What we’re saying, quite simply, is this: If you advocate basing maximum allowable rent on income—and to do this, income verification would be required—then it also follows that you should accept basing qualification for rent control on “maximum allowable income.” If property owners are being asked (forced) to accept rent control as a political fact of life in San Francisco, rent control with means testing is the least we have a right to expect in return.
If an honest public discussion of means testing ever occurs before the Board of Supervisors—and we’re not holding our breath—it would be fascinating to see how Mr. Daly and his fellow rent-control zealots manage to defend rent subsidies for high-income people, particularly when those subsidies come out of the pocket of people who earn less than they do. Or is it really all just about political power?
In the next two months, we will attempt to meet with all 11 Supervisors, to poll each one about his/her support for legislation to allow means testing in San Francisco. We will tell them (again) that rent control has made ownership of rental housing so onerous that thousands of us prefer not to re-rent our units after they become vacant. We will provide the Supervisors with quotes from self-styled “tenant advocates” that betray the true reason these zealots poison our businesses and undermine our city’s economic vitality: they exploit tenants as pawns to further their political agenda. Never mind that their actions result in an actual decrease in the number of available rental units, increasing the cost of all rentals and forcing tenants to live in apartments they’ve outgrown because they dare not move, while almost halting new construction of rental units. We will report the results of our meetings in this newsletter. Then we’ll know exactly which Supervisors stand up for fairness and equity, and which ones think it’s perfectly okay for even elderly small property owners on fixed incomes to subsidize high-income tenants; we’ll also know why.
The faltering economy has affected us all. Many of our working members have taken pay cuts or even lost their jobs. Many are retirees, who depend on income from savings and investments, and have seen their nest eggs dwindle. Many tenants are hurting too, and when possible, we work with them to arrange payments and renegotiate leases.
Our operating expenses are increasing due to mandates beyond our control: new housing and building codes, increased insurance and utility rates, and proposed new taxes, some borne by property owners alone. Yet, unlike all other small businesses, we are unable to pass along these costs or share them with the very population that imposes them on us. Restaurants, faced with new healthcare expenses for employees, impose surcharges; other businesses raise their prices when faced with increased overhead; no one prohibits them from doing what they must do to stay in business. All we are asking is to be treated similarly. That’s why we plan to put forth two fair and basic proposals to the Board of Supervisors: give us means testing and annual rent increase allowances equal to 100% of the Bay Area cost of living index.
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