A report card on the Rent Stabilization Ordinance

How well is the Rent Stabilization Ordinance  passed by Council last February working?

If you want opinions, we refer you to the videos of the last two Council meetings, where speakers on and off the dais weighed in on that subject.

But if you allow us to pose the question more precisely, the Merry-Go-Round can give you data, put together at our request by Community Development Director Debbie Potter and Housing Authority Rent & Community Programs Director Claudia Young, that suggests a fact-based answer.

And that’s what we intend to do today.

But, before we do, we want to extend our sympathies to the members of the Alameda Renters Coalition for what happened to them at last Tuesday’s Council meeting:  Take it from a veteran of the golf wars, folks.  You got sand-bagged.  And you’re being set up to lose even though you win.

One of the items on the agenda was for Council to decide whether to place the Rent Stabilization Ordinance on the ballot as an amendment to the City Charter.  When this idea was floated at the previous meeting, Councilwoman Marilyn Ezzy Ashcraft argued, and Councilman Jim Oddie concurred, that such a move would rob Council of the flexibility to fix any unforeseen flaws in the law without submitting the revised version to a vote of the people.

This was surely a legitimate point – indeed, we made it ourselves – and virtually all of the speakers from ARC came to the meeting prepared to offer other reasons why voters should not be asked to write the Ordinance into the Charter.

But then City staff changed the game.

When the item was called, City Manager Jill Keimach announced that staff was now recommending that Council place the Rent Stabilization Ordinance on the ballot not as a Charter amendment but simply as an ordinance.

Oh, and there were a couple of conditions that a Council-sponsored ballot measure would need to contain:  first, even if the measure were  passed by the voters themselves, Council could amend or repeal the Ordinance on its own without going back to the electorate; second, even if the voters also passed a related initiative (like the one sponsored by the renters’ coalition), the Ordinance would prevail if it got one more vote than the competing measure.

The staff report published before the meeting did not mention this option, and, when Mayor Trish Spencer asked to see the proposed language, Ms. Keimach responded that it hadn’t been written yet.

Council members spent the next half hour trying to get Ms. Keimach to explain exactly what staff was recommending and why.  She turned the microphone over to Assistant City Attorney Michael Roush, who proceeded to bungle the legal question about a conflict between two competing ballot measures.  (For our part, we’re not convinced that a Council-sponsored ordinance, regardless of how many votes it gets, can nullify a citizen-sponsored Charter amendment passed by the voters at the same election.  If we were sitting on Council, we’d want to get an opinion from outside counsel specializing in elections law.)

And then it was time for public comment.

Not having had the opportunity to review, or even read, staff’s recommendation, the best the speakers from ARC could do was to express their incredulity.  After looking in the direction of Ms. Keimach and City Attorney Janet Kern to confirm that she really had heard the recommendation correctly, ARC’s Catherine Pauling quickly sketched out a scenario in which renters ended up with no relief even though the voters passed the ARC initiative.

She was right to be concerned.  By accepting staff’s recommendation, Council could gum up the works sufficiently so that rent control might never become the law in Alameda.

Before Tuesday (or, rather, before August 8, when staff will present Council with the actual language of a Council-sponsored ballot measure), ARC was able to offer voters a clear and simple choice:  Here’s our initiative; it caps rent increases and bans no-cause evictions; vote for it or against it as you see fit.

Now, at a minimum, voters will be asked to decide between two measures, both of which purportedly have “tenant protection” as their goal.  The renters’ initiative will be titled, “A Proposed City of Alameda Charter Amendment to Establish Rent Control, a Rent Control Board, and Regulate Termination of Tenancies.”  (The grammar ain’t ours, we assure you).  Suppose the ballot measure containing the City ordinance is titled something like, “A City of Alameda Ordinance to Establish Rent Stabilization, a Strengthened Rent Review Advisory Committee, and Regulate Termination of Tenancies.”  That would be totally accurate – and totally confusing.

And we haven’t even gotten to the possibility that the initiative proposed by a landlords’ group also will qualify for the November ballot, so voters will face a third option.  (Maybe this initiative could get a clearer, if cruder, title:  “A Proposed City of Alameda Charter Amendment That Would Torpedo The Other Two Ballot Measures.”   At least that way, voters would get a heads-up about what they were voting for.)

At Tuesday’s meeting, Councilwoman Ashcraft expressed her confidence that “voters are smart; they can make an informed choice,” and Councilman Oddie declared his own “faith in the voters and their ability to not be confused.”  (Hint to Mr. Oddie: You ought to check the history books – or at least Wikipedia – before you quote Harold Laski again.  Laski indeed championed the “clash of ideas.”  But a good Hillary Clinton Democrat might find a lot of his other political views rather, well, extreme.)

Tell you what, Marilyn and Jim:  We’ll assign you the task of going around and explaining to voters that, if they want rent control, they should vote for Measure A but not Measure B or C; and if they don’t want rent control or anything like it, they should vote for Measure C but not Measure A or B; and if they want to keep the status quo they should vote for Measure B but not Measure A or C.

May the side with the least befuddled voters win.

Now to the data.

Ms. Young prepares a monthly report on the results of the “rent program” created by the Rent Stabilization Ordinance, and, at the July 5 Council meeting, Ms. Potter presented a slide offering a “snapshot” of those results to date.  This information is quite useful, but we asked Ms. Potter and Ms. Young to dig deeper into the data to enable us to answer a couple of specific questions:

  • Since the Rent Stabilization Ordinance was passed, what levels of rent increases have gone into effect?
  • How often have landlords succeeded in getting the rent increase they asked for?
  • What role has the RRAC played in these outcomes?

They kindly obliged and, in a day’s time, prepared for us a case-by-case summary of all of the cases triggered by the filing of a notice of rent increase since the Ordinance took effect on March 31.  (You can view and download the summary by clicking on the link in the “Sources” below.)  We then analyzed the data to come up with the answers to our questions.

All told, landlords have filed 44 notices of rent increases greater than five percent since March 31.  Four cases were “withdrawn,” and in four others the “tenant vacated” the premises after the notice was served.  (It might be instructive to explore the latter four cases further, since they might shed light on whether, as the tenant advocates contend, renters are choosing to move out when the rent increase is too high to bear).

Of the remaining 36 cases, here are the results:

Percentage rent increase Number of cases
0-5% 5
5.1-10% 25
10+% 6

This chart provides the “big picture.”  If your definition of “excessive” is a rent increase of more than 10 percent – and 10 percent is the figure Councilman Tony Daysog often throws out – the chart shows that such “excessive” rent increases still are occurring under the Rent Stabilization Ordinance.  But, most of the time, the rent increase has fallen below the 10 percent threshold.

To us, the second question is the more interesting one:  Are the landlords who filed notices of rent increase getting what they want – or something less?

The summary prepared by Ms. Potter and Ms. Cooper enables us to compare the percentage increases sought by the landlord with the percentage increases actually going into effect.  But before we present the results we want to discuss one aspect of the data that stuck out.

Of the 36 cases that went through the RRAC process, roughly half appeared to involve just two large apartment buildings – 2465 Shoreline Drive and 2445 Shoreline Drive.  For both buildings the landlord offered the tenant a choice:  in the former case, between a 12-month lease and month-to-month tenancy; in the latter, between a 12-month lease, a 6-month lease, and month-to-month tenancy.  The rent increase sought for the shorter tenancies was greater than that sought for the longer ones.

In itself, this disparity in the offers for the same unit may not be surprising:  one could see how a landlord who wanted a stable tenant base would give a tenant a lower rate for a longer term as a way to induce her to stay in the building.  But in the cases involving these two buildings, the month-to-month rent increase often was far greater than the 12-month rent increase.  To cite the starkest examples, for 2465 Shoreline, one tenant would face a 39.6% increase for a month-to-month tenancy – but she could get a 12-month lease with an 8 percent increase; for 2445 Shoreline, one tenant would pay 46.7 percent higher rent if she stayed month-to-month – but she could sign a 12-month lease with a 10 percent increase.

This kind of pricing structure suggests to us a deliberate strategy of putting the arm on tenants either to sign a 12-month lease – or to move out.  Indeed, the summary shows that the “tenant vacated” in four cases involving 2445 Shoreline, and two others were “withdrawn.”

What would be the point of such a strategy?  Based on his public statements, including the comments he posted in response to our last column, we can guess what ARC’s Monty Heying would say:  the landlord is trying to get the tenant to sign a 12-month lease so that it can take advantage of the “fixed lease loophole” to avoid paying relocation benefits when the term is up.  You don’t have to be a conspiracy theorist to acknowledge that Mr. Heying may be on to something.

Now for the comparison between rent increases sought and rent increases going into effect:

Percentage rent
increase sought
Total
number
of cases
Number resulting in
0-5% increase
Number resulting in
5.1-10% increase 
Number resulting in
10+% increase 
5.1%-10% 13 2 11 0
10+% 7 1 1 5
MTM: 10+%
12-month:     5.1-10%*
16 2 13 1

*  The total includes three cases in which the rent increase for the 12-month lease was exactly 5.0%.

This chart shows that, generally speaking, landlords have been able to get what they wanted.  Indeed, the “success rate” is about 80 percent.  But there were exceptions.  So we decided to take a closer look at the five cases in which the landlord sought a rent increase of 5.1 percent or more and ended up with 0-5 percent.  Three of those cases were resolved by “private agreement” – and therefore we can provide no further details – but two went through a full-blown RRAC hearing, both on July 6.

In one of those cases, the landlord of a one-bedroom unit in a duplex raised rent by $98 (7.8 percent) and the RRAC recommended a 4 percent increase for six months, with another 3.5 percent thereafter.  Both parties accepted the recommendation.

The other case was more dramatic.  There, the landlord of a two-bedroom unit in a duplex notified the tenant  that he was raising the rent by $980 a month (60.5 percent) and filed the notice required by the Rent Stabilization Ordinance.  His papers stated that he had spent $51,000 on repairs in the last three years and intended to spend another $45,000 on the property.  The tenant responded that she was a disabled person living on a fixed income and “the rent increase would seriously impact my health and ability to stay in my home.”  She said the maximum reasonable rent increase was $31 per month.

We weren’t there when the RRAC heard the case, and the audio and minutes are not yet available, so we don’t know the evidence and arguments presented by the parties.  But we do know from Ms. Potter’s and Ms. Cooper’s summary that the RRAC recommended a rent increase of $81 (5 percent), and both parties accepted the recommendation.  If one wanted to brag about the RRAC exercising its newly enhanced power to prevent an  “extraordinary” – we tried to pick a neutral word – rent increase, we suppose this case might be the poster child.

Which leads to our last slice of the data:  the role of the RRAC itself.

The case-by-case summary prepared by Ms. Young and Ms. Potter showed that 30 of the 36 cases had been resolved by “private agreement.”  The other six were heard by the RRAC.  In two of them, the parties reached an agreement after presenting their case; in the other four, the RRAC made a recommendation.  The chart below (which includes the two cases we’ve just discussed) displays the results:

Percentage rent increase sought Percentage rent increase agreed to
at hearing
Percentage rent
increase recommended
by RRAC
13.9% 9.3%
12–month:    9.7%
6-month:    22.6%
MTM:          41.9%
6.45%
60.5% 5%
10% 6.5%
10% 5.8%
7.8% 4% (first six months)
additional 3.5% thereafter

This chart shows that, in every case heard by the RRAC, the landlord got a lower rent increase than it sought.  All of the landlords accepted the RRAC recommendation; the tenant appealed the 5.8 percent increase.  If one was looking for evidence that the newly empowered RRAC is forcing landlords to scale back rent increases, this chart might help make the case.

For our part, we don’t want to push the data too far.  The summary prepared for us by Ms. Potter and Ms. Cooper shows what happened but not why.  Maybe the cases resolved by “private agreement” include situations in which, as the tenant advocates argue, renters were too intimidated to confront their landlord before the RRAC.  We just don’t know.

By the same token, the data doesn’t show what might have happened had the City not adopted the Ordinance.  Maybe there are landlords who intended to raise rents by more than five percent but abandoned their plans once they found out they’d have to go through the RRAC process to get their way.  Again, we simply don’t know.

Finally, the data, of course, covers only three months.  But by the time voters go to the polls to decide the fate of the renters’ initiative in November, six months worth of data will be available.  We encourage Ms. Potter and Ms. Cooper to update their case-by-case summary on a monthly basis.  Maybe they’d even be willing to prepare the kind of charts we’ve created for this column.

We realize that the effectiveness of the Rent Stabilization Ordinance in protecting tenants from “excessive” rent increases is not the only factor to consider in deciding whether to vote for or against the rent control initiative.  But it surely is a relevant one.  If the ARC initiative is a sledgehammer, the Ordinance is a stiletto.  It should make a difference how well the stiletto is hitting its mark.

Sources:

Monthly rent program reports: Rent+Program+Monthly+Report+-+April+2016Rent+Program+Monthly+Report+-+May+2016Rent+Program+Monthly+Report+June+2016

July 5, 2016 staff presentation: 2016-07-05 staff presentation

Case-by-case summary: Q1 RRAC Case Summary

About Robert Sullwold

Partner, Sullwold & Hughes Specializes in investment litigation
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35 Responses to A report card on the Rent Stabilization Ordinance

  1. dave says:

    Maybe there are landlords who intended to raise rents by more than five percent but abandoned their plans once they found out they’d have to go through the RRAC process to get their way.

    —–

    If anecdotes in one person’s network qualify as evidence, this may indicate a trend. I am personally aware of a few cases just like this.

  2. MP says:

    I hope the ARC measure is defeated. As to the risk of confusing, or tricking voters into thinking they are voting for rent control by voting for the City Council’s ordinance, I don’t agree, but that is somewhat a matter of definition. Under state law (Costa-Hawkins), the City’s ordinance is rent control. So is the ARC’s initiative, only in more draconian form. (Some commentators, viewing it through a different framework, claim that neither is rent control, which according to them exists only if rents are frozen, with no increases). I also think most people can make the distinction between stricter rent control (plus an independent rent board with power to spend on legislative lobbyists, etc. without oversight from the City), and less strict rent control overseen by the City.

    As to the risk of voters being generally confused about the topic of rent control and the competing versions of it (all of them taking up pages and pages of code), that is inevitable to some extent.

    For example, I am still not so sure about the extent to which people understand – and renters in particular – whether they would even be covered by the rent control provisions in the ARC’s ballot measure, and this is a point that goes back to the distinction, at least for purposes of state law, between “rent control” and “not rent control”. The ARC consistently touts the fact that a slim majority of Alameda residents are renters as a reason why their measure should be supported or enacted. What the ARC will merely acknowledge – but will not tout – is that their rent control measures do not cover all Alameda renters. About 25% of rental units were classified as single family homes in the rent study commissioned by the City. Those single-family house rentals would not be covered by the rent control provisions of the ARC measure because of state law. Newer apartments (built after 1995) – which are not included in that 25% figure — would also not be covered by rent control. I’m not sure how the study classified condo units (as multi-family or single family); if they were classified as multifamily, then the percentage of rental units not covered by rent control would be that much higher. Like the ARC initiative, the rent control provisions of the City ordinance (i.e. a hearing officers power to compel a landlord to accept a lower rent than noticed) would also not cover these units. But the City ordinance does continue the right to a non-binding hearing in front of the RRAC for renters of these units. The ARC initiative appears to do away with the RRAC altogether by superseding any City ordinance covering rents. (A part of the preamble suggests that the RRAC ordinance would be voided only if it directly conflicts with the ARC initiative).

    There is also the separate question of whether the more draconian form of rent control under the ARC initiative would put upward pressure on non-covered rental units.

    The summary results of RRAC proceedings under the ordinance does not distinguish between the results for units covered by Costa Hawkins, if any, and those not covered (such as the Shoreline apartments). Might be interesting to know if the option to push the matter to a hearing officer made any difference in outcomes.

    • The “Rent Program Regulatory Fee Study” presented to Council on June 21 contained updated numbers on “exempt” and “non-exempt” rental units. It showed a total of 2,703 single-family homes (including condos) and multi-family units built after 1995 and a total of 13,037 multi-family units built before 1995.

    • Following up on your inquiry about how many cases involved units covered by Costa-Hawkins:

      The case-by-case summary has a column called “Case Type.”

      The cases called “Binding” refer to cases involving “non-exempt” units – i.e., units in multi-family buildings built before 1995. The cases called “Nonbinding” refer to cases involving “exempt” units – i.e., single-family homes and units in multi-family buildings built after 1995.

      Of the 44 cases, 13 involved “nonbinding”/”exempt” units. But four of these fell into the hybrid category where the landlord offered a 12-month lease at an increase of 5 per cent or less and a MTM tenancy at an increase of more than 10 per cent, and the summary notes that, “The case may be binding if the tenant was heard by RRAC for the above 5% offer.”

      One of the 13 cases was withdrawn; the other 12 were resolved by “private agreement”; none went through a RRAC hearing. One resulted in a rent increase of 0-5%; nine in a rent increase of 5.1-10%, and two in a rent increase of above 10%.

      • MP says:

        Thank you. Any opinion on what happens to the RRAC if the ARC initiative prevails? Does it survive as a forum for rent-control exempt cases, are the ordinances setting it up superseded (even for exempt units)? Would additional action have to be taken to reestablish the RRAC as a second body alongside the Rent Control Board?

    • David says:

      @MP Without re-reading the ARC initiative to see if it speaks to the RRAC, I would expect the RRAC disappears in favor of the elected rent control board the ARC measure calls for.

  3. David says:

    >>Maybe there are landlords who intended to raise rents by more than five percent but abandoned their plans

    And this will be impossible to document. Hence, only the cases that are documented through the RRAC will be known, and used to justify a need for more stringent measures.

  4. nyborn2013 says:

    If I were a landlord, I would ask for a higher rate increase %, knowing that through negotiations, I’d have to accept a lower amount. Thus, I would get what I REALLY wanted and would look like I was good community landlord by working with the RRAC. The strategy is used a lot by contractors. Ask for $5,000 for a painting project, know that you will accept $4,000 if the home owner negotiates. I would like to see data on what landlord costs are to manage a unit or a building of multiple units. Given the rise in all cost of living expenses, are the landlords that want more than 5% really out of line for asking for a higher rate?

    BTW. Another excellent blog on your part Robert.

    • dave says:

      Increasing costs have a lot to do with what a landlord WANTS to charge, but markets decide what he CAN charge.

      When rents were flat and slightly declining from approx 2000 thru 2011, costs still rose but there wasn’t sufficient demand for landlords to get the increases they doubtless preferred.

      In recent years rents have increased because demand has, not because costs have.

      • David says:

        Indeed, I’ve spoken to landlords who, during the recession, say they gave lower rents and other concessions to tenants who threatened to move out.

  5. MP says:

    I don’t really agree with the sand bagging point. The City has always had the power to place a measure on the ballot. The majority of councilmembers that would be required to do so received more votes, in elections (i.e. a final choice), than the number of signatures collected by the ARC over a several month period to merely place something on the ballot. That ability to put a measure on the ballot is one of the things that voters, in elections, were granting those councilmembers.

    Did the council break an off-record deal with the ARC not to put anything on the ballot? (If there was such a deal, what in the world did the ARC give or threaten in return?) What I remember is the council, through many late hours and contested meetings, finally coming to a compromise solution, and the ARC immediately seeking to undermine the compromise with their extreme measure. While I have issues with the City ordinance, it’s encouraging to see councilmembers willing to offend or lose votes from supporters of the extreme. More is not always better. It can be a lot worse, as in the case of ARC measure.

    I’m not sure if putting the City ordinance on the ballot is the effective way of defeating the extreme measure, but I would hardly call it sand bagging.

  6. Steve Gerstle says:

    Why would the council put the ordinance on the ballot when they have already passed the ordinance? Do they plan on doing this for all controversial issues? Why even have a council vote on the matter and not just submit the proposal directly to voters?

    The council is making a big mistake. Their proposal seems to have few supporters outside of city hall; they do not seem to have made any friends passing the ordinance. Tenants seem very organized and were able to get their measure on the ballot; that is not an easy task and takes a lot of commitment and organization. I can see the council’s ordinance becoming a referendum on the council and city government in general. I would not want to be an incumbent running for council with this on the ballot. Have they thought this through?

    Question: If the council measure loses, is it automatically repealed or could the council decide to ignore the vote and keep the ordinance regardless? Has anything like this happened before?

    • dave says:

      I don’t speak for council but I’ll take a guess at it:

      They rightly believe that any rent control should be an ordinance that is easily adjusted or revoked if conditions warrant rather than a ballot initiative that is de facto permanent. A permanent ballot initiative locks in terms that will likely be deleterious to housing supply & conditions in the future.

      WRT to their rent control ordinance in particular, they rightly view it as less extreme, more fair and less deleterious to housing supply & condition. The ARC initiative is extreme and could well be permanent.

      Since it seems that the ARC stands a very good chance of winning (my guess is that it wins 59-41, what’s your wager?) council feels that their only option for a less extreme rent control scheme — one that was created through compromise instead of blunt force — is a competing ballot initiative. If our rent control scam, er scheme, must be permanent, then the council’s version is a less damaging way to do it.

    • David says:

      >>Why would the council put the ordinance on the ballot when they have already passed the ordinance?

      Councilmembers and the Mayor have been very clear about this – they want the public to know that there is something in place already vis-a-vis stabilizing rents. They want the public to have a clear choice between what council approved in March and what ARC is proposing. This has been clearly stated.

      >>Why even have a council vote on the matter and not just submit the proposal directly to voters?

      The council ordinance was done by council late last year through February into early March. At that time, there was no ARC ballot measure.

      After ARC got their ballot measure approved, then it prompted council to put their own ordinance on the ballot, for reasons already enumerated above.

      >>The council is making a big mistake. Their proposal seems to have few supporters outside of city hall; they do not seem to have made any friends passing the ordinance.

      Really? Some 7000+ people signed a “no rent control” ballot measure. Many people in this forum have voiced antipathy towards the ARC petition and support for council’s ordinance. Many others who support council surely don’t openly voice support for fear of being shouted down by ARC – “greedy landlords!” etc.

    • MP says:

      Steve, you questioned what would happen if both the ARC and the Council backed measures fail at the polls. In that case, the City rent control ordinance would remain on the books. My understanding is that it would take a majority vote an a referendum calling for the repeal of a city ordinance in order to effect such a repeal at the polls. My very bold prediction is that the Council backed measure, when finalized, is not going to seek repeal of the City rent control ordinance.

  7. Steve Gerstle says:

    And if both measures pass, then what happens? Let’s say that the council measure gets 100 more votes than the ARC measure. The ARC measure is a charter amendment while the council’s measure is an ordinance. Let’s say that the new council decides to repeal or significantly change the ordinance, then does the charter amendment kick in? Or, does the charter amendment trump the ordinance regardless of which gets more votes? This could get messy. The voters could vote for both and end up with nothing depending on who is on the city council. What would have happened if the ordinance had been on the June ballot and passed and the charter amendment was on the November ballot and passed? Would it matter then which one had received more votes? Since the council passed ordinance is currently in effect, wouldn’t the charter amendment trump it regardless of which receives more votes in November? Seems to me like the council is making the mess even worse by intervening in the election.

    • David says:

      Steve – it was (mostly) clear in the council discussion. If both measures pass, and the council ordinance gets more votes than the ARC measure, the council ordinance supersedes. That was the word the city attorneys used – “supersede.”

      Video of the council meeting is available online.

      • Steve Gerstle says:

        Our city attorney needs to talk with their city attorney.
        “In the event that both measures receive enough votes to pass, the citizen-backed charter amendment would supersede the council-backed measure, according to the city attorney.”
        http://www.mv-voice.com/news/2016/07/15/council-backs-competing-rent-control-measure

        I can think of a whole bunch of interesting scenarios here.

      • David says:

        “Our city attorney needs to talk with their city attorney.”

        Steve – it depends on the language in the measure. Alameda city staff discussed using explicit language that would have that measure supersede the ARC measure.

        By voting for the city’s measure, voters would be voting for that measure to override the other one.

        Again, the video is posted online, so you can watch the discussion.

    • MP says:

      What they discussed at the meeting was a provision in the Council measure that if both measures pass (50%+1), then the measure with more votes prevails. Whether you call the city measure an ordinance or a Charter amendment, in the event both measures “pass”, having the measure with more votes prevail over the other seems a simple enough idea.

      Maybe there is election law that favors a charter amendment (and all of its rigidity) in this circumstance, even if it receives fewer votes than another measure on the same ballot measure governing precisely the same subject that is called an “ordinance”, but you would think smart people could figure a way to avoid that result. If that is how state election law works, why doesn’t the City Council put in its ballot measure a provision amending the Charter stating that the City Council has authority in this field, but without committing the City, forever – i.e. until the next Charter amendment — to all the particulars of the current ordinance. (That is, basically, the way things are now. You might say that, given this is basically the current law, you don’t need to have it on the ballot. On the other hand, you could say that it gives voters a clearer choice between Council authority on the one hand – with its track record – and an abandonment of Council authority (plus draconian provisions), on the other). The City could even include something like what they were considering at the last meeting to the effect that the current Ordinance shall continue in effect for a certain period before it can be changed.

      For all the discussion about a potential Council-sponsored ballot measure allowing (too much or too little) flexibility in the future for the Council to respond to conditions, as opposed to having this occur only at the ballot box, the ARC measure itself allows for a great deal of legislating in the form of future regulations imposed by a Rent Control Board that could put in place without a vote of residents. I prefer adjustments to be made by the City Council rather than a Rent Control Board that appears, by design, to favor tenant voices over property owner voices by imposing vague, additional eligibility standards on would-be landlord representatives, and none on tenant representatives. The argument that the Council’s measure supposedly has little support from “either side” in this debate is itself an argument in its favor.

      And as long as we are talking about legal issues with the various measures, those differential eligibility standards for tenant versus landlord representatives under the ARC measure seem to raise their own constitutional issues.

      • David says:

        Alameda city staff discussed using explicit language that would have that measure supersede the ARC measure.

        By voting for the city’s measure, voters would be voting for that measure to override the other one.

      • MP says:

        That’s right, but some, including the author (see below) have raised an additional, technical question under state election law as to whether adding that language — i.e., City measure governs if it receives more votes than the ARC initiative, in the event both pass with a majority — would be effective, given that the proposal is to put the City measure on the ballot as an ordinance, not as a Charter amendment. I don’t know the answer but, if it is a problem, the answer might be to include in the Council-sponsored ballot measure something amending the charter to say that the City Council has sole authority in this area. That would seem to avoid the legal question of whether or not “superseding” language in a Council-sponsored ballot measure (affirming a mere ordinance) is sufficient to overcome the ARC charter amendment (because it is a charter amendment), where the Council-backed measure receives more votes. (Hopefully, the Council will have an answer to that technical question before it votes at the next meeting).

        The City ballot measure could still reference the current City ordinance, but not write its provisions into the Charter, or it could provide that the ordinance in effect on election day shall remain in effect for a certain period of time before it could be amended. The latter idea — a provision that would prevent amendment to the current ordinance for a certain period of time — was discussed in the last Council meeting. Either way, flexibility would be preserved.

        “(For our part, we’re not convinced that a Council-sponsored ordinance, regardless of how many votes it gets, can nullify a citizen-sponsored Charter amendment passed by the voters at the same election. If we were sitting on Council, we’d want to get an opinion from outside counsel specializing in elections law.)”

      • David says:

        Armchair quarterbacking, without having been admitted to the bar, I would hazard a guess that voter approval trumps rock, paper AND scissors. i.e. if voters approve an ordinance that nullifies a charter amendment that received fewer votes, so be it.

        It is true that our host questioned this, but our host surfaced no statutes or case law to form the basis for shared concern among us gentle readers.

        If it should come to pass the ordinance receives more votes and “supersedes” a voter-approved ARC charter amendment with fewer votes, I’d bet that we’ll hear plenty about statutes and case law in the subsequent Tenants Together/ARC court filing.

    • carol says:

      Oh, that is eerie. Who is the Puppetmaster pulling strings of California city goverments? Some law firm which places city attorneys around the state, I’d guess.

  8. Paul S Foreman says:

    A REPORT CARD ON THE REPORT CARD-On the issue of placing the City Ordinance on the ballot, you do not even give lip service to my oral argument to Council in support of placing the Ordinance on the ballot. I had drafted a letter of support from the Alameda Citizens Task Force based on the Ordinance being placed on the ballot as a Charter Amendment, was prepared to support it by my oral argument, and was as surprised as anyone to learn of the change to an Initiative “confirming” the Ordinance and allowing amendment or repeal by Council. Therefore, I was at the same disadvantage as the ARC folks in needing to ad lib my statement.

    My argument was that the only fair way to present all three alternatives was to have them on one ballot, complete with pro and con arguments. When you suggest that this is confusing to voters, I ask; compared to what? Are you suggesting that having the ARC and Landlords Initiative on the ballot and the Ordinance off is both less confusing and fair to the voters? To me it is like having a baseball game where only one team is allowed on the field, while the other is relegated to dugout, with their only participation being catcalls from the bench.

    As for retaining the right to amend or repeal the Ordinance, preserving that right is the strongest argument for the Ordinance. Rent control is an extremely complicated law and can be seriously impacted by changes in the economy. More importantly, it is an entirely new concept for Alameda, and will no doubt need constant fine tuning, or even major overhaul. The ARC and Landlord’s Initiatives, once adopted, can only be changed by getting thousands of signatures and being approved by the voters; basically setting them in stone.

    It is ironic that a few weeks ago you were critical of those on Council who voted against defending the Ordinance by filing a ballot argument against the ARC Initiative. (As was I.) Yet, today you criticize them for trying to assure that the Ordinance gets fair consideration from the voters.

    Your data certainly gives indications that the Ordinance is working. Every case was resolved; the vast majority without a hearing. We must remember that the City Ordinance is an adversarial scheme. That is, that while there is mandatory review of increases above 5%, the Ordinance specifies that if the tenants to not attend the hearing no action will be taken to give rent relief. If a tenant does appear, the RRAC is a mediation program and tries to reconcile the views of the parties. Therefore many landlords “got what they wanted” because the tenants agreed to it, rather than avail themselves of arbitration. We don’t even know from the data if the tenants disagreed with the increases in the first place since these were mandatory reviews.

    There is some indication in the staff report that some tenants are shying away from contesting their increases. This is a weakness in an adversarial system, but as the system gets more time to settle that shyness may dissipate. If over time we see that too many tenants are fearful of contesting with their landlords we can consider ARC type rent control system which is regulatory more than adversarial (It makes decisions regardless of the tenant’s willingness to contest with his landlord.) However, is it unreasonable to try the less stringent City Ordinance before moving to a strict regulatory process?

  9. Question: What legal/statutory mechanisms have other cities used to enact rent stabilization/control and just cause eviction laws? Some created by voters, some by city councils?

    Comment: If the city-sponsored measure is the top vote-getter and enacted by voters, but the city council, with as few as three votes, have the power to go beyond “responding to changing conditions” and eviscerate or drastically depart from the voters’ intent and the language they voted for, then the city’s measure is more akin to an advisory vote – “we advise you to continue on with what you already enacted at a council meeting. But if you (elected officials) decide – for whatever reasons – to get rid of the ordinance, or turn it into Frankenrentcontrol, please don’t go through the rigmarole of putting it back on the ballot.”

  10. MP says:

    Answer to the first set of questions is, yes, both methods have been used.

    I think I understand the comment, and would respond by saying, yes, a vote for the Council –backed measure would be a vote to leave the matter in the hands of the City Council. Perhaps it would also express a preference for the actions the Council has already taken to implement rent controls (which, if including moratorium, goes back to Nov 2015), at least as compared with the ARC proposal. Voting for the ARC measure would not only permanently take the matter out of the hands of the City Council and give it to an autonomous board, but would also permanently impose, in my opinion, draconian price controls. Btw, if that happens, don’t bother going through the rigmarole of seeking significant adjustments, no matter the unintended consequences, except through another election campaign.

    But maybe delegating all authority in this field to an autonomous body is, in itself, a good idea. After all, we have an independent school board with the power to raise taxes, just like the proposed Rent Control Board under the ARC initiative (the distinction between “fees” and taxes matters in certain contexts, here I am talking more generally about raising and spending money). Maybe we should do the same with the Planning Board, create separate elected Police and Fire Boards, an elected Park and Rec Board, an elected Golf Course Commission (and for those with a real secessionist or federalist streak, separate 18 hole and 9 hole Commissions), Roads and Bridges Board, Street Light Board, Library Board, Street Faire and Special Events Street Closure Board, Bicycle Lane Board, Environmental and Wildlife Preservation Board, etc. Each could be elected and each would have the power to raise taxes to fund operations. You could even give each of these boards a charter locking them into some specific policies, but also giving the boards the ability to issue additional, ancillary regulations where they see fit. You wouldn’t need a City Council or Mayor anymore except to issue ceremonial proclamations or declare emergencies, but that too could be assigned to the board closest to the particular issue. In this way, those with the most interest, the smartest, and with the most knowledge about policy and funding, in each area of Alameda governance could run things in each of those areas as they see fit, without interference and free of corrupt political influence. Right?

  11. wordist45 says:

    (Just released to local news media along with documents for fact-checking)

    A $3.7 Million Lie

    Alameda’s city management publicizes on its web site a politically motivated and grossly overstated $4.3 million estimate of the operating budget for Measure M1’s Charter Amendment. Councilmember Jim Oddie published a commentary in both local newspapers emphasizing this fraudulent $4.3 million, and the realty opposition echoed the cry in TV commercials. Photos of the mayor and Member Oddie appear in campaign mailers declaring M1’s $3.7 million cost as “Too Expensive,” including a fraudulent four-page piece purporting to be from the Legislative Analyst Office, for which the LAO denies responsibility. Everywhere signs tout the fraudulent $3.7 million purported “cost of Measure M1.”

    We have a right to our own opinion, but not our own facts.

    The source of the $3.7 million is the City’s consultant, SCI, who was contracted to conduct a fee study for the City’s new rent program, (NOT for the Alameda Renter Coalition’s charter amendment, Measure M1.) To arrive at $4.3 million for M1, City management simply tacked-on another $600,000 for the special election for M1’s Rent Board. The $600K is a one-time start-up cost, and including this one-time expense in the annual operating budget is a deliberate distortion designed to frighten voters.

    The $3.7 million itself is grossly overstated, and the $4.3 million borders on fraud. Both exaggerated amounts are designed to mislead voters so that Measure M1’s Charter Amendment will fail.

    I obtained and analyzed SCI’s supporting materials and found that the $3.7 million for M1 was nowhere to be found in their written report. None of the detailed analysis performed on the City’s ordinance was performed for the $3.7 million. None! SCI’s analysis for the ordinance was thorough and competent, but the $3.7 million for M1 was at best an ill-intentioned guess.
    A consultant who wants to live well keeps the client happy. The City of Berkeley has the highest per-unit program fee in California. For M1, SCI merely used the City of Berkeley’s fee of $234 multiplied by Alameda’s 14,899 rental units, then padded their number for some vague undefined legal costs to create their fantastic 3.7. SCI made no attempt to explain why their 3.7 million for Measure M1 was double the $1.8 million budget developed by Alameda Renter Coalition (“ARC”.)

    ARC used $120/unit, a reasonable fee compared with West Hollywood’s $120/unit, or Oakland’s $30/unit, or Los Angeles’ $24.48. Why did SRI choose the highest program fee in California? Because SRI knew City Management was hostile to rent control and wanted a high number to make M1 look bad compared to the City’s $2 million for their Measure L1.

    I’m retired CPA and financial executive. I smelled a rat at the Council meeting when the SCI consultant presented. I was struck by his lack of documentation for the huge M1 estimate–no charts or graphs and zero analysis. He merely referred to costs in other cities and something vague about legal costs. The follow-up from the dais was pitiful. No councilmember asked why the consultant’s number was $2 million more than ARC’s estimate and almost twice their own estimate for the City’s ordinance, a cumbersome law far more complex than M1, coverings 36% more activity by attempting to regulate units that are exempt from rent control by state or federal law.

    The $3.7 million cannot be justified, and the play it is getting from City management and the realty opposition is highly suspicious. Our City management has perjured itself in a material and highly visible manner. How can we now believe anything they say? Consider this when you are filling out your ballot.

  12. MJane says:

    Let’s see – perhaps the estimated cost by the City is higher than you/ARC claim it will be because, for example:
    1) Measure M1 goes to great length to ensure that the rent board is entirely autonomous and independent from the City Council, City Manager and City Attorney and thus operates without any oversight.
    2) “The City Council and the City Manager shall have no authority to oversee, supervise, or approve” the rent board’s budget.
    3) The Rent Board “may, in its sole discretion, and without approval of City Council, retain private attorneys”.
    4) “At any meeting after the adoption of the budget, the Board may amend or supplement the budget by the affirmative votes of at least three members”. Meaning, after the show of a “public hearing” the budget can be changed at any time.
    5) ” The Board shall have the sole and final authority to employ attorneys, LEGISLATIVE LOBBYISTS, and other professionals…”
    6) Santa Monica, with a population much closer to Alameda than Oakland’s, permits the fee to increase from $175 per unit per year to $288 per year in the future. If you multiply that by your number of 14,899 rental units in Alameda, that comes out to $2.6 to $4.2 MILLION per year for Alameda’s rent board. By not even mentioning the high fees some other rent boards collect, it looks as though YOU are selecting the “facts” you wish to use to support YOUR position.
    7) Maybe the estimate for Alameda “merely used” Berkeley’s fee of $234 per unit because their rent control ordinance is similar to M1? In fact, some of the most egregious wording in M1 is exactly the same as Berkeley’s.
    8) Since M1 does not explicitly spell out that any portion of the “Rental Housing fee” can be passed to tenants, there will be no pressure from tenants to keep the cost down. It’ll be just another way to stick it to the landlords, getting them to pay for something that hurts their business in many ways – increased legal fees and paperwork, reduced income, elimination of property rights, etc.

    M1 could have eliminated cost as an issue completely but instead left the cost open-ended intentionally. M1 could have contained some restrictions on the amount it will cost if the authors were as certain as you are that $1.8 MILLION is correct Why didn’t M1 establish a “base cost” from the numbers you quoted for West Hollywood, Oakland, LA, etc. and then limit the annual increases the rent board can charge to landlords to 65% of the CPI? If you are so certain that 65% of CPI is good enough for the landlords, why isn’t it good enough for the rent board?

    The way M1 is written looks and smells like an open checkbook for a rent board without any oversight or budgetary controls, which is precisely what it is.

  13. Paul S Foreman says:

    In addition to MJane’s excellent analysis, I would add the following. The Housing Authority and the RRAC have resolved 123 cases in six months. None of these cases went to a binding hearing before a Hearing Examiner The City’s consultant estimates that each binding hearing will cost from $2000 to $8000, with an average of $4000. I don’t know how accurate those number are, but I do know that qualified Hearing Examiners make hundreds of dollars per hour. If M-1 had been in effect for those six months all 123 cases would have gone to a binding hearing. Even if we low ball the cost at $2000 per hearing, the cost is $246,000,000 which computes to close to $500,000 for one year. Also, with a much lower threshold for a binding hearing of 1.7% it is reasonable to assume that their will be a greater number of increase requests filed than under L-1.

    The City’s estimated cost of 1.9M annually for L-1 may be high or low, as may the 3.7M estimate for M-1. Nobody really knows. However one thing is very clear M-1 will cost much more than L-1. Also, M-1’s refusal to let part of the cost be shared by the tenant will only serve to increase the subsidization of current tenants by new tenants as landlords tack those costs on to initial uncontrolled rents.

    This is not to say that cost should be the determinative issue, but it is a factor that must be considered.

  14. RJS says:

    Paul and MJane seem to have a handle on this – as it is pretty well known that while the absolute value can be argued, the administration of M1 will be higher than L1 (the existing ordinance). In villifying the City Council, what Monty Heying (wordist45) fails to mention is that the City Council did not outright agree with the $1.95M estimate for L1 done by both the city staff and SCI. Instead, they wisely decided to initially fund the ordinance from the general fund, and then see what the actual cost was after 9 months – which will be in January. Necessarily, any cost estimate is just that – and difficult to really nail.
    Which is also why SCI used real costs per unit from Berkeley – which is a very similar program to M1, but has been in actual operation in a nearby city (with modifications) since 1980. They have seen what they had to do to implement their measure – and charge accordingly. The fact that it is ‘the most expensive’ rent control program in California is immaterial. It is the closest thing we have to compare to – and is a mature and nearby program, with similar ‘renter protection’ features as the M1 proposition.
    As Paul points out, it is likely to cost even more – as there is substantially less turnover in Alameda as Berkeley where their 40,000 students account for about 1/3 of the total population. The high rate of rental turnover there means that landlords can ‘reset’ rental rates frequently, and therebyecover their costs. Alameda landlords cannot, so you can expect a higher percentage of petitions for relief in Alameda.
    I think that, on balance, the $4.3M cost estimate for M1 is OK.

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