News

Rent-cap law prompts calls for tenant protections in Palo Alto

City Council to consider 'urgency ordinance' to prevent evictions without 'just cause' before AB 1482 kicks in next year

With a new state law set to take effect on Jan. 1 that caps allowable rent increases, the Palo Alto City Council is preparing to pass an emergency ordinance Monday that would ban landlords from evicting tenants without just cause before the law kicks in.

The goal of the local ordinance is to offer expanded protections to "long-term, lower-income tenants" in situations where the landlord wants to evict them to raise rents and attract wealthier tenants, according to a memo from Council members Tom DuBois and Lydia Kou, who authored the proposal.

The memo responds to Assembly Bill 1482, legislation from Assemblyman David Chiu, D-San Francisco, which was signed by Gov. Gavin Newsom on Oct. 8. Also known as the Tenant Protection Act of 2019, the law caps annual rent increases at 5%, plus inflation, for buildings 15 years and older and bans landlords from evicting tenants who have lived in their apartments for a year or more without "just cause."

DuBois told the Weekly that the proposal was inspired by reports he's been getting from renters about significant rent increases and evictions. Multiple groups of tenants have contacted him to discuss the issue since the bill passed. Some have been reporting rent hikes of 25% or more, he said.

Since the law passed, there has been "an escalation of harassment by landlords in order to encourage tenants to move out voluntarily," the memo states. Tenants have also complained of "increases in costs of parking, lock services and other bundled amenities," according to the memo.

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"While landlords may properly evict tenants for cause under the provision of state law, landlords should not be able to evict tenants in good standing without cause simply to avoid the limitation on rent gouging afforded to renters under the new law," the memo states. "Hence, it is imperative for the city of Palo Alto to issue an emergency ordinance to keep people housed and provide a sense of stability."

The ordinance would direct the city attorney to report on a temporary moratorium on no-fault evictions and direct city staff to inform residents of their rights, along with other actions.

Among the groups that have approached council members are tenants of Hohbach Realty, which owns several apartment buildings near the California Avenue business district. Over the summer, the company informed residents that it would be raising rates by 25%. After protests, the company scaled back the increase to 7%, according to leases and emails reviewed by the Weekly, as well as interviews with tenants.

The tenants, who withheld their names for fear of retribution, alleged in their Oct. 30 letter to the council that the company attempted to raise rents in anticipation of the state legislation, which would cap rent increases. They criticized the company for what they called a "cavalier attitude of 'if you don't like it, get out.'"

"Living is becoming untenable with uncapped rent raises while basic treatment and living standards are being neglected," the tenants' letter states.

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But AB 1482 does contain a "retroactive" clause intended to prevent last-minute rent hikes by landlords.

The provision rolls back rent hikes imposed after March 15, 2019 to the 5% plus inflation level. Many residents aren't aware of that, DuBois said.

"As long as the eviction hasn't been completed, they don't have to pay the increase that they are being asked to pay," DuBois told the Weekly. "The important thing is that people don't just move out."

Marcus Wood, property manager at Hohbach Realty, vehemently denied the allegations in the tenants' letter and told the Weekly that the company remains committed to keeping its rents below market rate. The company's founder, Harold Hohbach, who died in December 2018, refrained from raising rents in the last five years of his life, Wood said. As a result, many apartments remain well below market rate.

In late August and September, the company considered 25% increases for some of the units that were "significantly below market rate," Wood said, while still keeping them below market rate.

After the company issued the notifications of a 25% increase in August and September, it realized AB 1482 was pending, Wood said.

"When we realized that is happening, we withdrew it. In other words, it didn't happen," Wood said.

The tenants argued that the company's email notification of a 25% increase did not mention the pending legislation or the "rollback provision" that would invalidate the increases that go beyond the level permitted by AB 1482. As a result, some tenants opted to leave before the rents were rescinded, one current tenant told the Weekly.

DuBois' and Kou's memo states that escalating real estate values, along with deregulation of zoning, provides "an incentive to landlords to evict long-term, lower-income tenants, in order to raise rents and attract wealthier tenants."

Kou said one goal of the proposed ordinance is to educate tenants about the new legislation. She said she has seen numerous emails from lawyers who have been educating landlords on how to move ahead with evictions, in light of AB 1482. She has not, however, seen any handouts geared toward informing tenants about their rights under the new law.

"I think that's one-sided," Kou told the Weekly. "I just want to make sure that our current residents are not being harassed or abused or made to leave."

She said she is particularly concerned about tenants who have children enrolled in Palo Alto schools and whose lives could become destabilized by evictions.

Palo Alto isn't the only city wrestling with the issue. The Menlo Park City Council approved on Tuesday night on an urgency ordinance that would make the provisions of AB 1482 apply immediately. That proposal was similarly prompted by reports from tenants about no-fault evictions.

Los Angeles last month passed an emergency moratorium on evictions until Dec. 31. That law, like the one Palo Alto is considering, is intended to serve as a stop-gap measure until the state law takes effect.

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Rent-cap law prompts calls for tenant protections in Palo Alto

City Council to consider 'urgency ordinance' to prevent evictions without 'just cause' before AB 1482 kicks in next year

by / Palo Alto Weekly

Uploaded: Wed, Nov 13, 2019, 2:55 pm

With a new state law set to take effect on Jan. 1 that caps allowable rent increases, the Palo Alto City Council is preparing to pass an emergency ordinance Monday that would ban landlords from evicting tenants without just cause before the law kicks in.

The goal of the local ordinance is to offer expanded protections to "long-term, lower-income tenants" in situations where the landlord wants to evict them to raise rents and attract wealthier tenants, according to a memo from Council members Tom DuBois and Lydia Kou, who authored the proposal.

The memo responds to Assembly Bill 1482, legislation from Assemblyman David Chiu, D-San Francisco, which was signed by Gov. Gavin Newsom on Oct. 8. Also known as the Tenant Protection Act of 2019, the law caps annual rent increases at 5%, plus inflation, for buildings 15 years and older and bans landlords from evicting tenants who have lived in their apartments for a year or more without "just cause."

DuBois told the Weekly that the proposal was inspired by reports he's been getting from renters about significant rent increases and evictions. Multiple groups of tenants have contacted him to discuss the issue since the bill passed. Some have been reporting rent hikes of 25% or more, he said.

Since the law passed, there has been "an escalation of harassment by landlords in order to encourage tenants to move out voluntarily," the memo states. Tenants have also complained of "increases in costs of parking, lock services and other bundled amenities," according to the memo.

"While landlords may properly evict tenants for cause under the provision of state law, landlords should not be able to evict tenants in good standing without cause simply to avoid the limitation on rent gouging afforded to renters under the new law," the memo states. "Hence, it is imperative for the city of Palo Alto to issue an emergency ordinance to keep people housed and provide a sense of stability."

The ordinance would direct the city attorney to report on a temporary moratorium on no-fault evictions and direct city staff to inform residents of their rights, along with other actions.

Among the groups that have approached council members are tenants of Hohbach Realty, which owns several apartment buildings near the California Avenue business district. Over the summer, the company informed residents that it would be raising rates by 25%. After protests, the company scaled back the increase to 7%, according to leases and emails reviewed by the Weekly, as well as interviews with tenants.

The tenants, who withheld their names for fear of retribution, alleged in their Oct. 30 letter to the council that the company attempted to raise rents in anticipation of the state legislation, which would cap rent increases. They criticized the company for what they called a "cavalier attitude of 'if you don't like it, get out.'"

"Living is becoming untenable with uncapped rent raises while basic treatment and living standards are being neglected," the tenants' letter states.

But AB 1482 does contain a "retroactive" clause intended to prevent last-minute rent hikes by landlords.

The provision rolls back rent hikes imposed after March 15, 2019 to the 5% plus inflation level. Many residents aren't aware of that, DuBois said.

"As long as the eviction hasn't been completed, they don't have to pay the increase that they are being asked to pay," DuBois told the Weekly. "The important thing is that people don't just move out."

Marcus Wood, property manager at Hohbach Realty, vehemently denied the allegations in the tenants' letter and told the Weekly that the company remains committed to keeping its rents below market rate. The company's founder, Harold Hohbach, who died in December 2018, refrained from raising rents in the last five years of his life, Wood said. As a result, many apartments remain well below market rate.

In late August and September, the company considered 25% increases for some of the units that were "significantly below market rate," Wood said, while still keeping them below market rate.

After the company issued the notifications of a 25% increase in August and September, it realized AB 1482 was pending, Wood said.

"When we realized that is happening, we withdrew it. In other words, it didn't happen," Wood said.

The tenants argued that the company's email notification of a 25% increase did not mention the pending legislation or the "rollback provision" that would invalidate the increases that go beyond the level permitted by AB 1482. As a result, some tenants opted to leave before the rents were rescinded, one current tenant told the Weekly.

DuBois' and Kou's memo states that escalating real estate values, along with deregulation of zoning, provides "an incentive to landlords to evict long-term, lower-income tenants, in order to raise rents and attract wealthier tenants."

Kou said one goal of the proposed ordinance is to educate tenants about the new legislation. She said she has seen numerous emails from lawyers who have been educating landlords on how to move ahead with evictions, in light of AB 1482. She has not, however, seen any handouts geared toward informing tenants about their rights under the new law.

"I think that's one-sided," Kou told the Weekly. "I just want to make sure that our current residents are not being harassed or abused or made to leave."

She said she is particularly concerned about tenants who have children enrolled in Palo Alto schools and whose lives could become destabilized by evictions.

Palo Alto isn't the only city wrestling with the issue. The Menlo Park City Council approved on Tuesday night on an urgency ordinance that would make the provisions of AB 1482 apply immediately. That proposal was similarly prompted by reports from tenants about no-fault evictions.

Los Angeles last month passed an emergency moratorium on evictions until Dec. 31. That law, like the one Palo Alto is considering, is intended to serve as a stop-gap measure until the state law takes effect.

Comments

Robert
Old Palo Alto
on Nov 13, 2019 at 3:07 pm
Robert, Old Palo Alto
on Nov 13, 2019 at 3:07 pm
10 people like this

"After the company issued the notifications of a 25% increase in August and September, it realized AB 1482 was pending, Wood said."

Hard to believe. Apartment complexes and real estate management companies, have ongoing retained legal counsel (because of the ongoing day to day legal issues in renting out apartments) which keeps them apprised of changes in applicable law, current and pending. Claiming that one is surprised re a particular law or possible legislation, among that particular group, stretches the reasonable imagination.


Citizen
Community Center
on Nov 14, 2019 at 8:24 am
Citizen, Community Center
on Nov 14, 2019 at 8:24 am
48 people like this

Stop taking people's property. Rent control laws place an unreasonable burden on private property to serve a governmental.purpose. If government wants to achieve a public policy goal, and use private property to do so, government should fund it.


george drysdale
Professorville
on Nov 14, 2019 at 10:27 am
george drysdale, Professorville
on Nov 14, 2019 at 10:27 am
14 people like this

Economics 101 a dream come true. I've finally got enough money through the San Jose Property Rights Initiative to really fund a solidly professional study on rent control in California. There's a difference between collecting data with college kids and professional white collar crime investigators, appraisers, etc. to develop all the data points. I'll be contacting Paul Krugman in a little while to talk about his ten year old study of rent control in San Francicso. Things have really grown rank in San Francisco since then. No more bored kids in basic econ classes with all the retrograde behavior of California's governance. Is California turning into Argentina?

George Drysdale Lord Protector of Palo Alto, Silicon Valley and indeed all of California


Econ 101
Registered user
Community Center
on Nov 14, 2019 at 11:50 am
Econ 101, Community Center
Registered user
on Nov 14, 2019 at 11:50 am
38 people like this

With rent control there is no reason to keep rents below market rate as you lose control to "catch up" at a later point. An unintended consequence is that all renter should expect a 5% plus inflation increase every year. The Hohbachs get no praise for having below market rates for many years and are now seen as villains.


long view
Registered user
South of Midtown
on Nov 14, 2019 at 1:04 pm
long view, South of Midtown
Registered user
on Nov 14, 2019 at 1:04 pm
9 people like this

The housing stability of AB 1482 is one I hope few tenants need - an ~8% increase in a year is still a lot. Meanwhile, apartments do turn over, and when they do, landlords continue to have full power to set the rent for new tenants. Housing investors also benefit from fixed rate mortgages and property taxes that rise only a max of 2% per year, per Prop 13. Charging rents that are somewhat below market in Palo Alto can still be extremely profitable.


Resident
Downtown North
on Nov 14, 2019 at 1:57 pm
Resident, Downtown North
on Nov 14, 2019 at 1:57 pm
10 people like this

Oh come on! AB 1482 kicks in January 1, 2020. If Landlords have raised the rents 25%, then in January the rents are rolled back regardless. Why does Palo Alto need to pass an emergency ordinance? Rent control is coming in. It's the homeowner's right to raise the rents or decide they will evict a tenant and no longer be in the rental business. Is this a communist country? Are small time landowners required to FOREVER and INDEFINITELY rent their units out for the sake of the city? If it has become financially impossible for the landlord, it's their right to evict a tenant before AB 1482 and no longer be in the rental business.

If the city of Palo Alto needs more affordable housing then the city needs to build it, not use small landowners like their homes are federal housing for the low income.

Any economics major knows that rent control does not work to deal with the lack of affordable housing. Landlords expenses are not capped at 5% a year. Expenses will continue to rise, while rents are now capped. This AB 1482 has ensured that landlords will ALWAYS raise the rent to the maximal 5% or whatever allowance every year, instead of not raising the rent (if the tenant is good or long term) because one can not "catch up" on better years.

So now... you've guaranteed landlords will ALWAYS raise the rent. Good going on that one.


Dishonest
Downtown North
on Nov 14, 2019 at 3:43 pm
Dishonest, Downtown North
on Nov 14, 2019 at 3:43 pm
17 people like this

Stupid politicians making the situation worse.


Resident
Downtown North
on Nov 14, 2019 at 7:39 pm
Resident, Downtown North
on Nov 14, 2019 at 7:39 pm
15 people like this

At some point - Palo Alto will become completely ridiculous. Instead of giving people freedom of choice.. they are forcing it like some militant state.
ALL electrical homes (that will be built new from 2020 --- oh except for the new apartments and new large complexes where the city has acquiesced to builders... just only affecting the single family home owner)

NOW rent control ordinance before AB 1482 kicks in to ensure low income housing is built on the backs of small landlords. Bet the city won't require large developments and developers from building affordable housing. Oh no. That would be too logical. Lets just penalize the small landlord who owns a multifamily.

This city is becoming more and more ridiculous by the second.
Let's get rid of all car lanes and make it bike lanes. The dictatorial method the way the city runs seamlessly lines up with getting rid of Churchll Avenue and getting rid of car traffic.

Soon we will be a communist state city. A few city folks voting and making all the decisions for their own interests or interests of the few. Forcing and pushing everyone to their whim.


Family Friendly
Old Palo Alto
on Nov 14, 2019 at 7:49 pm
Family Friendly, Old Palo Alto
on Nov 14, 2019 at 7:49 pm
8 people like this

As someone strongly opposed to rental properties displacing long-term residents owning their own homes and investing in their own community, I applaud this ridiculous wrong-headed new law.


House renter
Stanford
on Nov 14, 2019 at 8:22 pm
House renter, Stanford
on Nov 14, 2019 at 8:22 pm
9 people like this

FYI, the Hohbachs is NOT a small landlord, in case you guys don’t know. Gimme a break.


Palo Alto Native
College Terrace
on Nov 14, 2019 at 10:47 pm
Palo Alto Native, College Terrace
on Nov 14, 2019 at 10:47 pm
7 people like this

Wow. So many greedy Libertarian types have posted. I wager few of those are long term fellow Palo Altains. Aa a 60 year PA native, I have observed many changes in my sacred hometown. Love the rent stabilization law. Way overdue. Should be 5% raise every 3 years and applied for all rentals no matter when built. Also, each town should be required to offer Tiny Home Villages based on the population per city. Last, the solution to lack of housing is simple: freeze on business licenses. We have too much concentrated wealth. Spread out the High Tech industry to the poorest sections of California or the country. CEOs do not live in PA so they care not about the impact of jobs to housing ratio. They hide out in Portila Valley, Atherton, and Woodside. We can turn this around based on a mo growth leadership. Real Estate and Business tax greed has only reduced our collective quality of life in the form of traffic, air pollution, density of population, and inflated housing costs with a stressed out population. Gratified a movement to TX and other states by high techs is on the move. The more people who move out of Palo Alto and California for new jobs the better for our limited water and resources in general.


small-time landlord
Another Palo Alto neighborhood
on Nov 14, 2019 at 11:52 pm
small-time landlord, Another Palo Alto neighborhood
on Nov 14, 2019 at 11:52 pm
9 people like this

Prospective renters take note: small-time landlords who rent out their single family homes or condos are exempt from AB1482; it only applies to multi-unit residences.


Me 2
Old Palo Alto
on Nov 15, 2019 at 10:25 am
Me 2, Old Palo Alto
on Nov 15, 2019 at 10:25 am
3 people like this

" Aa a 60 year PA native, I have observed many changes in my sacred hometown. ..."

Ah, the glory days of a mostly white Palo Alto. With a bowling alley.




Anon
Another Palo Alto neighborhood
on Nov 15, 2019 at 11:23 am
Anon, Another Palo Alto neighborhood
on Nov 15, 2019 at 11:23 am
5 people like this

Posted by Resident, a resident of Downtown North

>> Soon we will be a communist state city. A few city folks voting and making all the decisions for their own interests or interests of the few. Forcing and pushing everyone to their whim.

I generally think that rent control is usually a bad idea. I wish you would realize that your above post is actually not a rational argument against rent control, and, effectively, argues against any opinion that you might express on any subject.

If you have a rational argument against rent control, please state it.


george drysdale
Professorville
on Nov 16, 2019 at 10:36 am
george drysdale, Professorville
on Nov 16, 2019 at 10:36 am
15 people like this

The Soviet Union had thousands of accountants trying to determine the prices of things. With the free enterprise system the price includes hopefully all the relevant date in one number, the price. The more clearly the actual price is represented the faster the correction. No pain no gain. The press of course will dramatize things for the sake of people reading their articles. Nobody is starving. Indeed the opposite seems to be the case. Follow events in Mountain view about rent control and get a good laugh.

George Drysdale the tireless social studies teacher


Anon
Another Palo Alto neighborhood
on Nov 16, 2019 at 10:55 am
Anon, Another Palo Alto neighborhood
on Nov 16, 2019 at 10:55 am
9 people like this

Posted by Me 2, a resident of Old Palo Alto

>> " Aa a 60 year PA native, I have observed many changes in my sacred hometown. ..."

>> Ah, the glory days of a mostly white Palo Alto. With a bowling alley.

Bowling was never my cup of tea, but, it is a good example of the kind of low-intensity low-cost indoor recreation that gets crowded out by high-density new urbanism. I don't see the world through rose-colored glasses, but, yeah, some things get lost easily when the economy goes all upscale high-density high-intensity. Like, bowling alleys, ballrooms, roller-skating rinks, ice-skating rinks, and many other harmless entertainments kids, teens, and the less wealthy, for a Saturday night.


Resident
Downtown North
on Nov 17, 2019 at 3:18 pm
Resident, Downtown North
on Nov 17, 2019 at 3:18 pm
5 people like this

Posted by Anon, a resident of Another Palo Alto neighborhood

>>If you have a rational argument against rent control, please state it.

First, I don't have to prove anything to you.
Second, I already wrote: NOW rent control ordinance before AB 1482 kicks in to ensure low income housing is built on the backs of small landlords. Bet the city won't require large developments and developers from building affordable housing.

Who said I need to write a thesis against rent control? Get with the program. I'm writing to say that rent control is basically the state and city using small time landowners as a form of affordable housing, when really such housing should be provided by the state and city (not small time landowners). (Please read someone's post before attacking them with ridiculous demands to prove anything to you. Do you work for the city to get all huffy about my comments?)

But to state the obvious:
There are many reasons not to have rent control. How about the mere fact that expenses are never capped for landowners? Capping the rent means you will decrease the amount of rental housing stock as more and more landowners sell their properties. For anyone pre-emptively thinking it's a celebration for getting rid of small time landowners who may own 1 or 2 multifamily complexes in Palo Alto - this will most definitely reduce housing stock as once it gets sold, a developer may buy it up (which means it does not remain a multifamily but the land will become developed).

And here is another one against rent control. By enacting rent control, it forces the landlord to always raise the rent to the maximal allowable rent every single year, as landlords won't be able to not raise the rent one year, and then perhaps raise it on other years. So expect the rent to go up every single year (the maximally allowed amount) because expenses for the landlord will never stop, nor is it capped.

Yayyy rent control. Good job.
And I still stand behind my state: We have a communist state city. A few city folks (that's right - city of Palo Alto councillors) voting and making all the decisions for their own interests or interests of the few. Forcing and pushing everyone to their whim.


Resident
Downtown North
on Nov 17, 2019 at 3:22 pm
Resident, Downtown North
on Nov 17, 2019 at 3:22 pm
4 people like this

Truthfully - I think Anon - "a resident of Another Palo Alto neighborhood" is likely a troll - who is trolling this site.
He/She is attacking various posters - not really writing anything truly relevant to argue for or against rent control, but instead just insulting others' posts.

If it smells alike a troll, walks like a troll or talks like a troll.. .likely a troll.


Anon
Another Palo Alto neighborhood
on Nov 17, 2019 at 8:08 pm
Anon, Another Palo Alto neighborhood
on Nov 17, 2019 at 8:08 pm
7 people like this

Posted by Resident, a resident of Downtown North

>> And I still stand behind my state: We have a communist state city.

You seem to be unfamiliar with what life was/is like under communism.

Regarding rent control: generally a bad idea. But, not applicable in a communist state where the state owns the apartment, sets the rent, and sends you to a prison camp to be re-educated if you complain too loudly about the rent.

Solzhenitsyn's "Gulag Archipelago" is a primer for you: Web Link . (Not sure which Amazon version is the full unabridged 3 volume set).


H
Downtown North
on Nov 17, 2019 at 10:21 pm
H, Downtown North
on Nov 17, 2019 at 10:21 pm
2 people like this

Hope they pass this.


Anonymous with question
Downtown North
on Nov 18, 2019 at 1:15 am
Anonymous with question, Downtown North
on Nov 18, 2019 at 1:15 am
Like this comment

If someone more informed could chime in—do any of these new laws/ordinances protect tenants from "termination"? "Termination" is legally different from "eviction" and if I am reading the law correctly (perhaps I'm not), it seems like anyone can technically not be offered a lease renewal. And no reason has to be provided. A landlord can just simply choose not to continue the tenant-landlord, and that's that. Is this not correct?


Anonymous with question
Downtown North
on Nov 18, 2019 at 1:17 am
Anonymous with question, Downtown North
on Nov 18, 2019 at 1:17 am
2 people like this

choose not to continue the tenant-landlord relationship*


Anonymous with question
Downtown North
on Nov 18, 2019 at 1:40 am
Anonymous with question, Downtown North
on Nov 18, 2019 at 1:40 am
4 people like this

Answered my own question. Article might want to change word "eviction" to "termination" as they mean different things legally.


H
Downtown North
on Nov 18, 2019 at 2:17 am
H, Downtown North
on Nov 18, 2019 at 2:17 am
2 people like this

@Econ 101

"With rent control there is no reason to keep rents below market rate as you lose control to 'catch up' at a later point."

What about the non-economic reason of just being less greedy?


Marc
Midtown
on Nov 18, 2019 at 6:34 am
Marc, Midtown
on Nov 18, 2019 at 6:34 am
12 people like this

@H

"...What about the non-economic reason of just being less greedy?..."

Why is is NOT greedy when a single family homeowner sells their home at market price and raising the value of all properties in the area including those being rented but it IS greedy when a landlord raises the rent to be in line with the new value of the property?

Are you saying that landlords owe it to their tenants to provide them below market rent for the rest of their lives? The landlord bought the property as a business, that is their income. Are you willing to have your income level managed by the state?

Nothing is stopping you and similar minded people from pooling your personal funds and buying properties and renting them to people at below market rates. Put your own homes up as collateral, purchase some properties and let us know how that works out over the next 10 years.

Why is it all the people in favor of rent control want to do it to OTHER people's property?

/marc


MarketForces
Barron Park
on Nov 18, 2019 at 7:31 am
MarketForces, Barron Park
on Nov 18, 2019 at 7:31 am
20 people like this

I continue to be surprised by the enthusiasm for rent control in the Bay Area. As famous liberal nobel prize winning economist Paul Krugman said in the famously liberal New York Times in 2000:

"The analysis of rent control is among the best-understood issues in all of economics, and -- among economists, anyway -- one of the least controversial. In 1992 a poll of the American Economic Association found 93 percent of its members agreeing that ''a ceiling on rents reduces the quality and quantity of housing.'' Almost every freshman-level textbook contains a case study on rent control, using its known adverse side effects to illustrate the principles of supply and demand. Sky-high rents on uncontrolled apartments, because desperate renters have nowhere to go -- and the absence of new apartment construction, despite those high rents, because landlords fear that controls will be extended? Predictable. Bitter relations between tenants and landlords, with an arms race between ever-more ingenious strategies to force tenants out -- what yesterday's article oddly described as ''free-market horror stories'' -- and constantly proliferating regulations designed to block those strategies? Predictable."

We believe scientists about climate change and mock deniers.
We believe doctors about vaccines and mock deniers.

But here we are once again openly discussing adding more rent control regulation. How does this compute?


george drysdale
Professorville
on Nov 18, 2019 at 11:32 am
george drysdale, Professorville
on Nov 18, 2019 at 11:32 am
13 people like this

Excellent Market Forces. Yes, because Newsome and his Democratic party throwbacks rejecting the results of a recent initiative have placed their collective heads in a guillotine. Things move much faster now and with the internet you can have info at your fingertips. People forget. People have a limited attention span. Only 10% of the population can give a good definition of "liberal" and "conservative". However, most people in California still live in owner occupied housing. All social studies teachers are against rent control (basic econ classes). The fun is about to begin.

George Drysdale social studies teacher and initiator


CrescentParkAnon.
Crescent Park
on Nov 19, 2019 at 3:23 am
CrescentParkAnon., Crescent Park
on Nov 19, 2019 at 3:23 am
4 people like this

> There are many reasons not to have rent control. How about the mere fact that expenses are never capped for landowners?

Not usually an issue where rent control is considered or implemented, as no actual landlords are losing money. That is a totally dishonest comment, as are most of the condescending arguments supposedly based on economics on hears about rent control or minimum wages, or whatever.

The term "economic argument" these days is simply a replacement for a declarative sentence with some simple economic terms in it whose basic gist is landlords and employers always do the right thing.


CrescentParkAnon.
Crescent Park
on Nov 19, 2019 at 3:32 am
CrescentParkAnon., Crescent Park
on Nov 19, 2019 at 3:32 am
1 person likes this

> ''a ceiling on rents reduces the quality and quantity of housing.''

Except that in the circumstances there rent controls are considered or implemented
the market forces are not working anyway, and quality and quantity are two minor
measurements that may not always be the most important metrics about a thing.

So, essentially you have price gouging, which rises to being the major issue for the
major of people, hurting their families, their future economy, ... lots of other criteria,
lots of other social damages ... whereas you have a economic theory that you just
assume fits all situations.

In a situation like Paradise where everyone is burned out of their home, what is the
force that is incentivizing people to build a large quantity of quality housing? It is
not going to happen overnight, and it was never going to happen by paying usurious
rates to landlords.


MarketForces
Barron Park
on Nov 19, 2019 at 7:28 am
MarketForces, Barron Park
on Nov 19, 2019 at 7:28 am
5 people like this

We remind people that the weather is not the climate. A fierce blizzard in the North East can happen in the same year as recurring 100 year floods in the tropics.

We remind people that anecdotal stories of vaccine effects do not convey their population level effects. That herd immunity is a positive effect.

Similarly, rent control, or price controls in general, have well understood intended and unintended consequences in markets. Market participants, both current and prospective respond. It is easy to consider the effects on existing supply and existing renters. After all they are right there. We can all see rents going up and tenants paying more.

What is much harder to see and equally important are the effects on prospective supply and prospective tenants. Rent control policies favor existing tenants over prospective tenants - over time leading a deeply inequitable distribution of benefits. In any locale with long standing rent control laws, you discover vast pools of prosperous old time tenants while actual working poor cannot find affordable housing. In the news we only read of the truly horrific stories of the elderly or handicapped being forced out. You never read about rent control distortions - and they exist in large numbers - where the benefits are positive - where families earning 1%er incomes are living in rent controlled properties for decades. Both sides reflect market failures. --> After a period of time, prospective tenants who would actually benefit the most from rent control will *not* find housing. It will all be taken up immediately and then held for as long as possible.

Similarly, rent/price controls, strongly dissuade *new* housing supply from being developed. Unless an investor can foresee a predictable market based return for his investment, it will not happen. Rent control *limits* new supply. This pushes *up* rents.

As Krugman points effects of price controls are well studied and well understood and not controversial. Any Econ 101 textbook will cover price controls. Any number of online courses, youtube videos will explain it.

There is no vast conspiracy to harm tenants.

There is no vast conspiracy between landlords to raise rents.

Markets find equilibrium between supply and demand at a market clearing price. When you step on the scales to generate an outcome, you distort the market its effects of consumers and suppliers. Both intended and unintended consequences matter.

This is great opportunity to learn.


Anon
Another Palo Alto neighborhood
on Nov 19, 2019 at 8:24 am
Anon, Another Palo Alto neighborhood
on Nov 19, 2019 at 8:24 am
Like this comment

Posted by MarketForces, a resident of Barron Park

>> What is much harder to see and equally important are the effects on prospective supply and prospective tenants. Rent control policies favor existing tenants over prospective tenants - over time leading a deeply inequitable distribution of benefits. [...] vast pools of prosperous old time tenants while actual working poor cannot find affordable housing. In the news we only read of the truly horrific stories of the elderly or handicapped being forced out. You never read about rent control distortions

Well-stated! I've been curious about something, though. Could a side-effect of rent control be that employers move more jobs to neighboring areas, e.g. Tracy, in order to attract new employees who can't find adequate affordable housing in the rent-controlled area?


george drysdale
Professorville
on Nov 19, 2019 at 9:13 am
george drysdale, Professorville
on Nov 19, 2019 at 9:13 am
12 people like this

The San Jose Property Rights Initiative has really put the San Jose government on the spot. San Jose is now too well educated to accept rent controls and San Jose has ridiculous rent controls. You can't have a welfare state with open borders. This describes the situation in San Jose. Who will win the contest? With investors abandoning the production of apartment houses in California even the Democrats will get the message.

George Drysdale initiator and educator


H
Downtown North
on Nov 19, 2019 at 9:40 pm
H, Downtown North
on Nov 19, 2019 at 9:40 pm
Like this comment

@Marc

"Why is is NOT greedy when a single family homeowner sells their home at market price and raising the value of all properties in the area including those being rented but it IS greedy when a landlord raises the rent to be in line with the new value of the property?"

Interesting that you conjecture from my single statement that I would think this about a completely unrelated scenario. And in fact, yes, I this this, too, is greedy. So you are wrong.

"Are you willing to have your income level managed by the state?"

Yes. So you are wrong again.

Not sure who you think I am or what my thoughts are, but if you really want to talk, we can.


H
Downtown North
on Nov 19, 2019 at 9:44 pm
H, Downtown North
on Nov 19, 2019 at 9:44 pm
5 people like this

@Marc

Also, I am a renter who does not work in tech or any other high paying industry. I do not own property. I do not make 6 figures. I do not want to make 6 figures. I just want to be able to live in the rental that I have lived in for the past decade+ without worrying about termination or drastic raises in rent that would force me to uproot my life.


Marc
Midtown
on Nov 19, 2019 at 10:11 pm
Marc, Midtown
on Nov 19, 2019 at 10:11 pm
7 people like this

@H

"...I just want to be able to live in the rental that I have lived in for the past decade+ without worrying about termination or drastic raises in rent that would force me to uproot my life..."

So somehow because you have lived here for the past decade+ your landlord (and society) "owes" you the privilege of living where you do regardless of any social or economic changes that have taken place? Does being a renter somehow convey some "ownership" on the property? Some magic right that supersedes the property owner?

The value of property here has increased. Property sells for more and the rents are higher than they were a decade+ ago. But for some reason you are "owed" the right to be insulated from that economic reality just because you have lived here?

I've lived here for almost 30 years. I'd like to be insulated from all the increases in food, vehicles, health care, gas and all the other things in life that I have to spend money on. I want to make the income that I make now but I want all the things I have to spend money on to cost what they did the day that I moved here. :^)

/marc



too late
Another Palo Alto neighborhood
on Nov 19, 2019 at 10:55 pm
too late, Another Palo Alto neighborhood
on Nov 19, 2019 at 10:55 pm
7 people like this

I agree with Econ101 and others that rent control is ill-advised as it will undoubtedly lead to a shortage of rentals and (hence) increased rent for the available rentals. However, we are beyond that point as AB 1482 will soon be CA law. The only question now being considered is whether or not landlords can choose not to renew the leases of their current tenants who are paying well below market-rate rents before AB 1482 becomes law.


CrescentParkAnon.
Crescent Park
on Nov 20, 2019 at 3:27 am
CrescentParkAnon., Crescent Park
on Nov 20, 2019 at 3:27 am
7 people like this

>> rent control is ill-advised as it will undoubtedly lead to a shortage of rentals

The rentier class is something that always develops throughout history as inequality
and capital investments outpace earning capital. It keeps finding ways to pull more
money out of workers and shift the burden of taxes onto them as well.

I love all the know-it-all comments about how rent control ultimately will make
less housing units and higher prices. What the heck do you people think is happening
right now, and for the last 20 years?

It's probably not to inaccurate to say that most if not all of the comments against rent
controls are from landlords and based on selfish interest, not on any financial theory
or worry for the broader market.

If capitalism and the markets were working we would not have this situation.

The markets fail only a fool keeps saying they will correct or they are the solution ... that
is either a fool or a landlord.

There is a really great book I am reading now called The Great Leveler: Violence and the
History of Inequality from the Stone Age to the Twenty-First Century, Princeton:
Princeton University Press, 2017, ISBN 978-0-691-16502-8 by Walter Scheidel. This
book is truly brilliant.

It basically says the fundamental pattern of modern societies is for inequality to grow
and grow until things fall apart, usually in war and violence - and it is these times and
after that are the only times inequality declines because of the general preference
financial elites have economically and politically in society. There is no such thing as
Obama just said the other day - evolutionary change - it is an illusion, change from within
- it has never happened.

There is a new religion being pushed on all of us, it is extreme libertarian capitalism,
that is money does whatever it wants without consequence, that is called natural,
that is called capitalism, but it is really just an institutionalization of elitist and racist
exploitation.

So, until there is an actual fair restacking of the system in America as there was in most
of the rest of the West after WWII anything that militates against the ability of workers
and average people to afford the basics in life while some people stash hundreds of millions
off-shore and work to break the system, I am not going to get too much upset over rent
control that will do a lot of good for a lot of people even though it may not solve the problem
in the conventional market sense ... BECAUSE THOSE PROBLEMS WERE NOT BEING SOLVED
ANYWAY, AND IN FACT WERE ALL GETTING WORSE AND HURTING LOTS OF PEOPLE.


A resident
Downtown North
on Nov 20, 2019 at 7:59 am
A resident, Downtown North
on Nov 20, 2019 at 7:59 am
14 people like this

Measure-V was passed in Mountain View for rent control. The simpletons applauded the new law, whereas many others said it would backfire, including yours truly. Measure-V targeted small mom/pop operations as they are the ones with properties built before 1997. Most mom/pop operations unlike the corporate rental business aren't trying to squeeze the last cent out. Result: Mountain view has lost 100s of rental units as mom/pop operations have sold their properties due to the limit on what can be recouped for major upgrades. The properties have been torn down and condos/town homes have been built. Mountain View city council is now struggling with what to do.
To address the housing issue what is needed is high speed transport in/out of expensive areas like Silicon Valley. Individuals can own homes in more affordable areas, hop on a train for an hour and go to a well paying job.


george drysdale
Professorville
on Nov 21, 2019 at 12:02 pm
george drysdale, Professorville
on Nov 21, 2019 at 12:02 pm
11 people like this

Demography dictates. Supply and demand again. If you can't afford to live in the most expensive area in America (Paris is even worse) move like any sensible person (which has happened as the middle class abandons California). Mathematically speaking it's impossible to live in a place like Palo Alto at around $750,000 a new apartment unit without a huge subsidy but from where, the tooth fairy. Politicians want to be Mr. or Mrs. nice person and shy away from telling the truth fearing of offending the oppressed. The trend line is that what non-profits and mainly tax credited "affordable housing" is now going to the disabled, period. However, look at San Jose (rent control on the internet) the labor unions and the legendary "people of color" want hand outs for their lack of ability to pay market rates. A mathematically impossible circumstance.

Geroge Drysdale econ (studies really with history being most relevant) teacher and initiator


steve majors
Community Center
on Nov 23, 2019 at 8:51 am
steve majors, Community Center
on Nov 23, 2019 at 8:51 am
3 people like this

I am a landlord in California. I already sold one house rental due to the new state rent control law and I am looking to sell all of mine as this new rent control law is very difficult to deal with. Instead of reinvesting my money in to new and better housing for Californians, I am moving my money out of state to places that are more investor friendly. The states will get new, better and cheaper housing. So much for improving the housing situation of Californians with the new law. Other landlords I have talk with are all thinking the same thing.


merry
Registered user
Palo Alto Hills
on Nov 23, 2019 at 10:09 am
merry, Palo Alto Hills
Registered user
on Nov 23, 2019 at 10:09 am
7 people like this

Sadly the politicians have no problem with OPM (other peoples money). So it’s too late. The law is in place. All this talking maybe interesting but the train has left the station.


Anon
Another Palo Alto neighborhood
on Nov 23, 2019 at 11:39 am
Anon, Another Palo Alto neighborhood
on Nov 23, 2019 at 11:39 am
6 people like this

Posted by steve majors, a resident of Community Center

>> I am moving my money out of state to places that are more investor friendly. The states will get new, better and cheaper housing.

Northern Alabama is a great housing market right now: Web Link



george drysdale
Professorville
on Nov 23, 2019 at 11:40 am
george drysdale, Professorville
on Nov 23, 2019 at 11:40 am
5 people like this

Rent is going to blow up in Silicon Valley. What historical analogy shall we use. The double envelopment at Cannae, the rebellious south with San Francisco being Richmond Virginia? Bonsai charge against machine gunners? Doesn't Newsome if you modified the hairdues bear a striking resemblance to Jefferson Davis? The San Jose Property Initiative is thinking of providing a 50k award for the best war game: The annihilation of rent control in California. Baby eaters: the Democratic party cretins with their leader vs. the social study teachers with it's long range artillery. The double envelopment.

Geroge Drysdale in the kingdom of the one eyed the two eyed man is:


george drysdale
Professorville
on Dec 1, 2019 at 10:28 am
george drysdale, Professorville
on Dec 1, 2019 at 10:28 am
4 people like this

Like a giant meme the San Jose Property Rights Initiative is growing. Who would develop in California when the implications of the San Jose Property Rights Initiative sink in. I certainly would not lend for any project in San Jose until the San Jose Initiative is understood. Booting rent control out of San Jose would make a big lending difference. Well Fargo, Chase, etc. will wait and see. Rents go up on mobile homes in rent controlled mobile home spaces about 5% while rents throughout San Jose go up around 50%, such a deal which the mobile home owners cash in on this favor. If the information concerning rent control in San Francisco, Berkeley Los Angeles etc. were to be presented at this time rent controls would be voted out in disgust. Rent control is a racket. Newsome and the Democrats support a racket, therefore (a simple syllogism) they're racketeers!


Reader
Palo Alto Hills
on Dec 3, 2019 at 10:11 am
Reader, Palo Alto Hills
on Dec 3, 2019 at 10:11 am
2 people like this

The self-described economist who posts here reminds me of our narcissistic leader, full of name calling and unrealistic self praise.

"initiator and educator" he may be, but he can't spell the governor's name.


Anon
Another Palo Alto neighborhood
on Dec 3, 2019 at 2:03 pm
Anon, Another Palo Alto neighborhood
on Dec 3, 2019 at 2:03 pm
Like this comment

Posted by Reader, a resident of Palo Alto Hills

>> "initiator and educator" he may be, but he can't spell the governor's name.

Probably the only thing George and I will ever agree on: an aversion to Governor Winsome. I disagreed with a number of things that Brown II did, but, he was serious, and intended to fulfill the responsibilities of his office.


george drysdale
Professorville
on Dec 7, 2019 at 12:46 pm
george drysdale, Professorville
on Dec 7, 2019 at 12:46 pm
8 people like this

I normally have respect for leaders. But with the latest Stanford study rent control cost San Francisco 2.6 billion in damages. Multiply that throughout rent controlled California and you can see the enormous damage rent control has done to California. It is common knowledge rent control are bad. But, a cheap vote is as good as an expensive vote to the cynical governor and the smiling democrats.

George Drysdale educator


Anon
Another Palo Alto neighborhood
on Dec 7, 2019 at 1:23 pm
Anon, Another Palo Alto neighborhood
on Dec 7, 2019 at 1:23 pm
5 people like this

Posted by george drysdale, a resident of Professorville

>>It is common knowledge rent control are bad. But, a cheap vote is as good as an expensive vote to the cynical governor and the smiling democrats.

It is common knowledge that rent control is bad. It is also common knowledge that real-estate development and real-estate markets are very inefficient, frequently out of sync with each other, and don't serve the middle class-- that is to say, people somewhat near the *median* income-- very well. Many such people I know are frustrated by how much time and money and fossil fuel that they feel forced to spend on commuting. Instead of pretending that markets are perfect, let's see if there is anything we can -stop- doing that is making commuting, and, generally making transportation, worse. What are governments at various levels spending money on that increases reliance on long automobile commutes?


george drysdale
Professorville
on Dec 9, 2019 at 10:35 am
george drysdale, Professorville
on Dec 9, 2019 at 10:35 am
9 people like this

The land economist. Supply and demand. The market is very efficient. Those who can afford to live in the super popular "Silicon Valley" bid up the price of a limited quantity of usable land. Those who can't compete must commute. Is it worth it? The plan is to build many housing units but if you study the issue these will have to be secondary cities. Super chump Palo Alto fell for this with the Buena Vista boondoggle. Ventura is now going for a special designation of mobile home parks as "affordable houisng" thus destroying as did Palo Alto a highest and best use and a huge blow to their economy. The virginal look on the faces of Palo Alto city council as they designated the Buena Vista as "affordable housing" a 1940's style trailer park. Next act: Mountain View city government looks to break out of rent control in March, will Castro City strike back?


george drysdale
Professorville
on Dec 13, 2019 at 10:12 am
george drysdale, Professorville
on Dec 13, 2019 at 10:12 am
7 people like this

A conspiracy of the entitled incumbents. Like dumb Palo Alto Ventura county just voted to keep 25 mobile home parks as is. 25 Buena Vista like financial disasters. Mobile home parks are land banks perfect for the production of high density (cheaper) housing. The tenants pulled off another of these land heists in Oregon. Democrats have low I.Q.'s when it comes to (everything) economics. Oregon has an out since under state law unlike California the owners can build to the "highest and best use". Palo Alto city council: real men don't flunk economics.

George Drysdale land economist and initiator


Family Friendly
Old Palo Alto
on Dec 13, 2019 at 12:26 pm
Family Friendly, Old Palo Alto
on Dec 13, 2019 at 12:26 pm
5 people like this

How long are we stuck with Buena Vista? Can it be converted to actual BMR workforce housing someday?


george drysdale
Professorville
on Dec 14, 2019 at 11:51 am
george drysdale, Professorville
on Dec 14, 2019 at 11:51 am
4 people like this

Family friendly. Below market rate BMR workplace housing. The land is too expensive on the west side. Too much money for the very lucky very few who get BMR. The San Jose Property Rights Initiative is trying to get a good chunk of land in cheaper San Jose into high density housing. The demand: Boot rent control out lock stock and barrel. That's the only way you can get those scandalous rent controlled mobile home parks into development. California has a rotten foundation of rent controlled rentals. The number one lesson plan in economics in the making.

George Drysdale the tireless social studies teacher


Louise Turnbry
Ventura
on Dec 14, 2019 at 12:43 pm
Louise Turnbry, Ventura
on Dec 14, 2019 at 12:43 pm
3 people like this

Can’t we all just agree to disagree ?
It’s not that I think you’re wrong. I just don’t think you are right.
Bold proposals are what we need.
Novel concepts and a new way of looking at the world.
Let’s change it before it’s left by the wayside of human travails.
But not too hasty lest we make it worse.
Who can say who is the worse for that ? Not me.


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