Berkeley landlord coalition raises money to seek greater political influence

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A group of Berkeley property owners is seeking at least $500,000 annually to fund a coalition for landlord rights.

Landlords announced this month the search for an executive director to head the Berkeley Rental Housing Coalition, which aims to promote landlords’ representation through a political action committee and legal defense fund, among other measures.

“We really should have a seat at the table,” said the coalition’s interim executive director Michael St. John, a former city Rent Stabilization Board member and co-founder of a property management consulting business in Berkeley. “Property owners are in the position to help the city to craft regulations.”

St. John and other members of the coalition, which contains 11 organizers, have accused the rent board of being biased in favor of tenants. The coalition’s goals include contesting the recently raised registration fee — property owners must now pay $213 annually per any residential unit they own that was built before 1980 — and lobbying state policies.

According to members of the rent board, however, most landlords already receive fair returns on their units and have access to services geared toward property owners. Lower registration fees would result in less money going toward the rent board, which, according to rent board commissioner Katherine Harr, is already short of what it needs to fund necessary services.

“It is unfortunate (landlords) feel victimized,” said rent board commissioner James Chang. “They utilize the rent board’s program.”

The coalition’s formation follows a decades-old debate over the role of the city’s rent board. Voters in Berkeley established rent control with a local ordinance passed in 1980 because of a shortage of affordable housing. Since then, the nine-member elected board has existed to protect tenants from unwarranted evictions and unnecessary rent increases.

On the current board, eight commissioners were elected from a tenant-backed pro-rent control slate and one from a landlord-backed slate, Tenants United for Fairness, or TUFF. TUFF did not run anyone in the 2014 election, and all five open seats went to uncontested pro-tenant candidates.

Rising rents and raising rent ceilings

The burden of rent control on landlords lessened in 1995 with the passage of a state law that allows landlords to raise rent prices on rent-controlled units when a new tenant moves in, a process known as vacancy decontrol.

Still, landlords say they are confronted with a number of policies that cut into their income.

According to a 2013 rent board report, rent is high enough that most landlords should receive fair returns. There have been about 95,000 instances of vacancy decontrol reported since 1999, and there are about 19,000 registered units in Berkeley, suggesting about five turnovers per unit, according to rent board data.

Median rent has risen from about $700 in 1999 to about $1,200 in 2012 — a rise of about 50 percent when adjusted for inflation, the report said.

But rent board commissioner Judy Hunt, who was elected from the TUFF slate, said that controlled increases in rent have not kept pace with increased maintenance costs, such as the prices of water and plumbing.

St. John criticized the city for lacking the economic support for large capital improvements, such as mandated seismic retrofitting. While many other cities allow landlords to pass on the expenses of capital improvements to tenants, in Berkeley, landlords have to pay, no matter how much it costs, St. John said.

But landlords can file petitions to raise their rent ceiling “to provide a fair return on expenditures for capital improvements,” according to the rent board’s policies. The rent adjustment will not take effect, however, until the landlords submit documentation of the completion and cost of the improvement to the board.

Hunt said many property owners are “older adults who live on retirement incomes” and who can’t afford to complete capital improvements without first raising their rents. Dave Blake, a former rent board commissioner and Berkeley landlord, said many struggling landlords merely made bad investment decisions and should not pass on the expense to tenants.

Rent board commissioner Alejandro Soto-Vigil said the city may allow landlords an extension if they can prove they cannot afford the expense of a capital improvement.

“At the end of the day, we want safe apartments,” Soto-Vigil said.

Landlord lobbying

According to St. John, the coalition’s new executive director will represent the landlord’s’ interests at various city meetings and bring back information to the coalition’s members.

“While the Rent Board uses our money to undermine our rights, the BRHC will use its funds to fight for our rights, bringing balance to matters that have been far out of balance for far too long,” said an announcement sent by the group, seeking applications for an executive director.

The coalition had received two applications as of last week, St. John said.

Sid Lakireddy, the president of the Berkeley Property Owners Association, said the new landlord coalition hopes to go to court to address problems faced by property owners.

St. John described the rent board as having a “huge budget and a lot of employees,” saying he doesn’t think such resources are necessary.

Berkeley’s rent board programs are funded largely by annual registration fees, which will increase from $194 to $213 in the next fiscal year — a significantly higher fee than that of San Francisco and Oakland. A rent board report said that compared with those cities’ boards, Berkeley’s board takes on more “active enforcement.”

According to the report, Berkeley’s board conducts outreach to tenants and property owners, as opposed to being complaint driven. Santa Monica’s rent board, which uses a similar approach, also has a relatively high registration fee of $174.96 per unit.

Coalition members also criticized the allocation of 7 percent of the rent board’s budget to lobbying in Sacramento and want funds for counter-lobbying. St. John called the rent board’s use of this money “inappropriate.”

The debate about the fiscal responsibility of Berkeley’s rent board dates back to 2012, when an Alameda County Superior Court grand jury report criticized the Berkeley rent board’s lack of oversight. In its response, the board clarified that it has had a lobbyist since 1984 to represent its interests in the state Legislature, including during a period when many board members were supported by landlords.

According to Councilmember Kriss Worthington, the city has already responded to landlord lobbying.

“The City Council has listened closely to landlord lobbyists in spite of their outrageously high rents,” Worthington said. “And we have modified certain policies based on their advocacy.”

Vying for voters

Because the new coalition includes the establishment of a PAC, some commissioners have expressed concern that there will be more money involved in future local elections.

“(The Berkeley Rental Housing Coalition) are a very deceptive group. When I see that name, it can be pro-landlord or -tenant,” Soto-Vigil said. “It’s similar to the coalition they ran in 2012, Tenants United for Fairness.”

In 2012, TUFF raised more than $45,000 for mailers to support the candidates in the slate. The city’s Fair Campaign Practices Commission later fined the the TUFF slate mailer organization $4,000 for not creating a committee to file campaign contribution statements and for allegedly receiving funding from prohibited sources.

Tracy Condon, executive director of Santa Monica’s rent board, said rent control issues were more political before vacancy decontrol began, particularly when a coalition of pro-tenant activists pushed to implement rent control in the city. She noted that anti-rent-control law might be unlikely to pass when a majority of the voters are tenants.

“It depends on the money they have. They can run candidates,” UC Berkeley assistant adjunct professor public policy Larry Rosenthal said about the new coalition’s potential influence. “A group of landlords that are organized well will have substantial influence.”

He called it unusual to see in a city of Berkeley’s size a similar coalition of “great impact and duration.” More common, Rosenthal said, are coalitions dedicated to influencing specific proposals and elections.

Lakireddy emphasized, though, that the coalition was not formed only for the next election, as it aims to have a broader influence.

Harr said the landlords’ PAC may not have as much of an effect in Berkeley based solely on its financial influence because the city values tenants’ rights. She referenced that in the last election, the millions of dollars poured into opposing a soda tax didn’t stop the measure from passing.

“The people decide,” Harr said. “The rent board is answerable to the voters.”

Contact Yuka Koshino at [email protected] and follow her on Twitter @YukaKoshino.

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  • SF2OAK

    the top chart is so telling- really what are the salaries of the rent board – $3.4 million in salaries that landlords pay for basically a pro tenant organization. No seats at the table for landlords who pay high fees, taxes in berkeley and cannot pass things through and the complaint of the rent board is low quality housing. Let owners make more and improve the housing stock. What has been the increase in the cost of water/garbage (which is a city owned entity)/ building services during this time. the increase in a rental unit for this year was 1.5%

  • Yoni Mayeri

    It’s about time, let the landlords get a voice and a fair return on their investments. It will show up in properties that are maintained at a higher level instead of being neglected because they can’t afford to refurbish things as they wear down.

  • So Kali

    Berkeley landlord coalition demands right to dry rot!