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Rent Control

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Rent Control: Left and Right Economists Finally Agree on Something… and Other Major Points

Time and again we have gone to bat to raise awareness about the awful—and unintentional—effects of rent and price control as well as removing extremely important laws in place. In theory, as in many cases, enacting help in that way for the public sounds like a good thing with little downside—that is to those who have no experience or training on the economic and other side effects. And when we repeal laws meant to counteract some of the major downsides that quickly pop up, such as Costa-Hawkins which allows vacancy decontrol (allows a landlord to rent vacancies at Market Rent) and prevents cities from adding other housing types into their rent controlled ordinances, it has even more harsh downsides for the entire community—not just the landlords who have worked very hard to pay for and operate their businesses, as well as to provide necessary housing for the general public.

Published in the Econ Journal Watch, Volume 6, Number 1, dated January 2009, is a very interesting piece culminating from a study completed by several economists—from both the right and left in politics—on policies concerning rent control and its effects on the local economies. In the Journal, the economists actually agree with one another in that a “preponderance of evidence of the literature points toward the conclusion that rent control introduces inefficiencies in housing markets.” This is not just for the landlords, but also for the residents who live there. Along with that last statement, they also clarify that, “the literature on the whole does not sustain any plausible redemption in terms of redistribution. The literature on the whole may be fairly said to show that rent control is bad, yet… about 140+ jurisdictions persist in some form of the intervention.” Even more alarming, they begin their assessment saying, “Rent control is usually introduced to economics students as a price ceiling and an unambiguous (‘clear-cut’) source of inefficiency.” Whoa! When I first learned of this, that really made my ears perk up; why aren’t more people paying attention to this? That’s like the case with being allowed to put MSG in foods—scientists feed it to rats as their genuine protocol to fatten them up and speed the decline of their health to study diseases! So, in both cases, we know it’s extraordinarily the wrong thing to do, and here we continue pressing it on? It sure can leave one scratching their head in breathtaking bewilderment.

Here are some other major points included in an article published just back in January of this year about a study done in San Francisco titled, “How Rent Control Can Exacerbate Inequality.” In their introduction they pointed out that these laws are “not all they’re cracked up to be” and their study concluded the following:

• …landlords were 10 percent more likely to convert their building into condos if it became rent controlled. The rental supply in San Francisco dropped by 6 percent following the expansion of rent control.

• Rents throughout the city increased by 5.1 percent as a result—researchers calculated total cost to tenants from rent hikes to be $2.9 billion, nearly half of which was paid by residents who moved to San Francisco following the establishment of rent control.

• Given the negative repercussions of rent control policies, the researchers argued that other approaches to affordable housing that don’t inherently punish landlords might be more effective, such as creating a tax credit for rent.

Some of that is worth restating: Because these laws were put into place, they actually had an opposite effect and drove prices up. Here, in our communities, we are doing what we can to keep prices down—we are looking for the lowest priced ven dors—apartment suppliers, like stores/outlets, to specialized skilled wor kers such as plumbers/electricians—while at the same time not sacrificing the quality of work. This is not an easy task. With inflation constantly on the rise coming out of Washington, no price controls on taxes and fees, no insurance control, no paint control, no pipe control, no light fixture control, and rising utility prices—how does that justify keeping only one sector down and forcing them to pay the inflating prices of these other necessities while none of the above men tioned must keep their prices down for anyone? Where’s the equality?

Housing Affordability

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White House Toolkit Points to Local Barriers to Affordability Crisis

In September the Obama Administration weighed in on one of the seminal issues impacting local communities and one with which our industry finds itself struggling again—housing afford ability.

What might surprise you is that the message from the White House was not directed at property owners. The Housing Development Toolkit (avail able on the whitehouse.gov website) opens with this: Over the past three decades, local barriers to housing development have intensified. The accumulation of such barriers—including zoning, other land use regulations, and lengthy development approval processes—has reduced the ability of many housing markets to respond to growing demand.

The toolkit discusses in specific detail the costs that these barriers impose on local households, the economies and even the environment as well as their role in exacerbating gentrification and income inequality. This is a welcome message from the Administration.

As many of you are experiencing firsthand, the issue of housing affordability increasingly dominates local news and policymaker debates. Beyond the statistics, low- and moderate-income families struggle to find housing that meets their needs at a price they can afford. This is an issue in the usual suspect markets on the coasts, but also in places like Austin, Texas; Nashville, Tennessee; and Colorado Springs, Colorado.

While this current crisis is not breaking news, the scale and scope of the problem seem greater than in previous cycles as does the intensity of the advocacy efforts by tenant-rights’ organizations.

Last month a few NAA affiliate offices and events were picketed by protesters and, in one case, an Association Executive was personally the target of an advocacy campaign. The White House efforts could not come at a better time.

What many advocates seem unwilling to acknowledge is that the seeds for our current crisis were sown long ago in local land development and use policies. As the Housing Development Toolkit notes, when the recovery from the 2008 recession began, many communities were not positioned to take advantage:

In a growing number of metropolitan areas, the returning health of the housing market and vibrant job growth haven’t led to resurgent construction industries and expanding housing options for working families, due to state and local rules inhibiting new housing development that have proliferated in recent decades.

There is also of course the added complicating factor of stagnant wages. No- or low-wage growth is hard enough in markets where demand is “normal.” It is downright dangerous in the growing list of markets where exorbitant development costs and red-hot demand accelerate rent increases.

The toolkit goes on to describe a number of excellent policy options available to local governments to streamline the development process and increase apartment housing supply. Nearly all are positioned as incentives to development and even mandatory inclusionary zoning is described in both mandatory and voluntary terms but the toolkit’s recommendation tilts more towards voluntary incentive for IZ like density bonuses or streamlined approval processes. Rent control is not on the list of policy recommendations.

While not on the list of policy recommendations, the toolkit does make a case of sorts for source-of income protection for Section 8 voucher holders, characterizing a property owner’s choice not to participate in the Section 8 program as “discrimination.” We will continue to respectfully disagree with the Administration on this and stand in support of the freedom of a private owner to take on the responsibilities, and burdens, that come with accepting Section 8 vouchers. NAA has been a vocal, aggressive champion of this program for decades, including its voluntary nature.

Also missing from the toolkit is a strategy for fighting NIMBYism (Not in My Back Yard) that pervades in so many jurisdictions. Truth-be-told, many of the hurdles put in the place of apartment development were put there by NIMBYists who would sacrifice anything to prevent more supply of apartments. More and more local governments, with help from private sector employers, non-profit organizations and others, are standing up to these forces. Those efforts must be replicated around the nation if we are ever to make a dent in this affordability challenge.

Nothing in the toolkit is earth-shattering; however, the focus and emphasis it places on local governments and their central role in the affordability crisis are extremely important. Our hope is that local governments listen and future Administrations make the same commitment.

Make sure to mark your calendars for the 2017 NAA Capitol Conference and Lobby Day on March 7-8, 2017. Our goal is to create another record-breaking event, bringing in more advocates to reach all 535 members of Congress. Registration opens in early November.

Greg can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

 

 

 

February 2018

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I want to begin this month by thanking our members for all the phone calls, emails and questions regarding our ongoing effort to fight the battle of Rent Control and repealing Costa-Hawkins.

We the People


Three words that, with your calls and testimony, translated into the defeat of AB1506. Your voices were heard!

Thank You

But the fight is not over and we continue to need your attention as we move into 2018. Here are some Top Tips for what and how you need to be involved this year to support our Association and the multi - family industry:

  1. Red Alerts – Call, email and respond as requested. This DOES make a difference!
  2. Calls to Action – This could be alerting you to an issue or important event where you can make a difference.
  3. Contribute to the PAC – This is how we support those elected officials who may be on important committees in Sacramento and local electeds within our territory.
  4. Contribute with unrestricted funds to AACSC Funds within this category may be used for postage, creating flyers, letters, sending email, etc.
  5. Stay alert – If you hear of something happening, we need to know so call us.
  6. Help us with our membership. We know that there are many owners who are not members, yet they are benefitting from all the work being done on their behalf. If you know someone who is not a member, please encourage them to join. We need all the voices and strength working together to fight these threats; i.e., Rent Control, Just Cause Eviction, Jury Trials…
  7. Attend our Membership Meetings and bring a friend.
  8. Attend AACSC Events – This is a great way to introduce non-members to the benefits that we offer.
  9. Educate – AACSC is the best place to learn and grow in the multifamily industry. Offering both classroom courses, National certifications and online classes for those who can’t leave the office.
  10. ASK US! If there is something we haven’t covered, call and let us know you want to be involved, we are always looking for those who want to be included.

A Fresh Page

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Wow — what a great, but fast year 2017 was! It is hard to believe all that has happened last year, and we expect even more, bigger and crazier things again for this great year we have ahead of us. Like my mentor once explained, starting the New Year (or even a new day) with a fresh page and a clean slate, people can put what we want on the pages of our futures, which gives us unique opportunities that other animals on this planet are not offered—a goose must fly south for the winter. Why? Because it’s a goose! If a tree doesn’t like where it lives, it cannot pack up and move. We, on the other hand, have been given the dignity of choice.


It is my hope that all of us have taken the time to reflect upon last year and then create a new and improved plan for this year—not just a wish list, but sound goals that are achievable, and at the same time will stretch and grow us. When we do this with our own lives, we can do it in our businesses, communities and beyond. A great way to learn how to better plan and execute new plans in our own lives and communities is to get involved with our AACSC Committees that are run by our all-volunteer Board of Directors. Not only is this a great way to get plugged into the community and to help others as well as to really learn how to “preserve, protect, and enhance” the rental housing industry in Southern California, but also a way to show you how a focused group of people come up with and execute great ideas! Luckily, we are not trees who are stuck somewhere in the snow year ‘round, stuck in a constant lightning storm—or even stuck as a restroom for a pack of wolves in a forest—we are all here by choice in beautiful SoCal and each of us has a responsibility to leave everything better than how we found it, and we do that by becoming part of a great team complete with leaders and mentors.

One great lesson I have learned about uniting on the same front and becoming a team, is that as neighbors — especially in this country—we always want to do what is best and what is right, but we tend to differ on how we define that or get there. I want to reassure everyone that things that will make ourselves, and our industry, businesses and region better are your ideas, your courage to stand up and respectfully say something if it doesn’t feel right, and your involvement in your community.

We need you and we need your voice, your help, and your ideas. Please reach out and let us know your interests — we have so much to choose from. From our local and state legislative committees, trade show and membership committees, to education, golf tournament fundraising, and Political Action committees—we have a little something for all interests. Pick one of interest to you and let’s partner up. Everyone here will be heard, respected, listened to, and given a chance.

As a great help to your training, remember that there is no better way to school yourself and your teams than to get into the top of the line classes that AACSC offers. The prices are right, and the info is priceless. Learn how to keep compliant of the law and still be able to care for your residents and properties.

Regularly check AACSC’s website and your email for announcements on the upcoming courses.

Before finishing up here, we want to thank all of our vendors who continue to sponsor our events and continue giving us the best workmanship in the business — we could not do it without you!

Thank you so much for giving me this opportunity to lead the AACSC—please, come work alongside us — we can really help each other a lot in 2018!

Cheers!

Pet Policy Gone Wild

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New “assistance animals” regulations proposed by the Fair Employment and Housing Council (FEHC) will likely cause heartburn in the rental housing community. The attempt to bring clarity in the murky area of service and support animal needs versus fraud is fraught with ambiguity. It is understandable why rental property owners are confused about the law, existing and proposed. Unless you’re a lawyer who regularly studies these issues, it is hard to know where one assistance animal law begins and another one ends. When does “reasonable accommodation” become unreasonable? Ultimately, rental property owners are scared of being sued and, therefore, often choose to allow support animals onto their property, even when they suspect fraud is being perpetrated on them.

But owners have very important, reasonable and necessary reasons for having a no-pets policy. Animals can be dangerous, spread disease, interfere with the quiet enjoyment of others, and damage property. An owner’s right to keep animals off a property, unless to accommodate a person with a real need, therefore, must be protected. Unfortunately, current laws, including future laws under this Proposal, fail to protect owners from those fraudulently gaining access for their animals to rental properties.

Rental housing owners and managers support and understand the need for providing reasonable accommodations to those who legitimately need an emotional support animal, as these animals (or “comfort animals”) can provide a therapeutic benefit to those with a mental or psychiatric disability.

We also recognize that service and support animal fraud is rampant and easily perpetrated under our current laws and regulations. More and more individuals are pretending their pets are legitimate service or emotional support animals when, in fact, the person has no legitimate need for the animal or the animal itself is not legitimately a service or support animal. Ultimately, that is the main concern we have expressed in regard to FEHC’s Proposal: the proposed regulations do little to protect rental property owners from fraudulent requests for support animals.

Support and service animal fraud is widespread in our society. Fake assistance animals are everywhere. Multiple news reports suggest that it is more than a few bad apples that are perpetrating the fraud. Rental property owners should not be forced to accommodate people who are perpetrating fraud on them, nor should laws and regulations facilitate such fraud. Unfortunately, this Proposal does just that, because it contains few, if any, effective anti-abuse mechanisms to prevent people from gaming the system.

People requesting a reasonable accommodation for a support animal should have a legitimate disability that requires them to have a support animal. They should have a real diagnosis and prescription for a support animal by a real medical or mental health professional with expertise to give an opinion about the disability at issue and the need for a service or support animal. The disability diagnosis and need for a support animal should also be current. Any one with a real disability and a real need for a sup port animal should have this kind of documentation. Without these standards, there are no standards. Anyone could self-diagnose, tell their friends or “peer support group” they have a disability and a need for a support animal, and then use that friend or group as a source to verify their disability. Alternatively, a person who was diagnosed with a disability five years ago, and who might not currently have a disability or need for an accommodation, could use that stale prescription to game the system. We are sure that this is not the way the law is supposed to work.
We submitted, on behalf of the Association, detailed comments on the FEHC’s Assistance Animal Proposal, including a number of ways the Proposal is deficient in preventing fraud and subject to abusive conduct:

  • Diagnosis or assessment by a licensed medical or mental health professional is not required.
  • The need for a support animal is not required to be a current need.
  • The person verifying a person’s disability or need for an accommodation does not need to be a medical or mental health professional or need to have specific training or education about support animals.
  • When an owner knows about a disability but not the need for an accommodation, the owners should still be able to request reliable information describing the needed accommodation and the nexus between disability and accommodation.

A meaningful review of a requested accommodation should allow rental property owners to make reasonable requests for certain reliable documents from reliable sources that are specifically defined. The following is a list of provisions that should be contained within the regulation to prevent fraud and abuse, and to ensure that reasonable accommodations are provided to those with legitimate needs:

  • Owners should be able to require disability and need for accommodation verification documents to come from a licensed medical or mental health professional.
  • The documentation should describe the nature, severity and duration of the disability.
  • The disability, need for the accommodation, and verifying documentation should be current (i.e., not more than one year old), and on letterhead from a mental health professional.
  • The medical or mental health professionals must have expertise to give an opinion about the person’s medical condition and the need for the accommodation.
  • Owners should be able to request new verification documents if the previous “doctor’s note” was not described as permanent.
  • The person seeking the accommodation must be under the current care of the prescribing medical or mental health professional.
  • Verification from a “letter mill” should be prohibited entirely.

Our comment letter to FEHC on assistive animals high lighted all the ways in which the Proposal represents an unbalanced approach to addressing the issue of assistive animals in rental housing. We discussed the failure of the Proposal to consider the quiet enjoyment of other tenants, nuisance issues, the safety and health of other tenants, pet fraud, and the need for rental housing providers to be able to establish reasonable rules for tenants who are provided a reasonable accommodation. In short, the needs of property owners and other tenants are not properly accounted for or taken into consideration, and the Proposal should be amended to better reflect the realities of landlord tenant relationships and the respective needs of each group.

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