Lily's Diary
by Lily
May 2
As the 25th anniversary of rent control approaches, I am reminded of another benchmark more personally onerous: the 10th birthday of the passage of Proposition I, which stripped the exemption from rent control for small property owners like me. I don’t like to be reminded that it only lost by 1,100 votes. I’m deeply ashamed because at the time I thought the measure was only about the amount of rent you charged and, since all my rents were market rate, I didn’t see the big deal. Sure, I put a “No on I” sign in my window, but only because I had a friend who belonged to the San Francisco Apartment Association. I was one of those property owners who simply didn’t have a clue. I didn’t realize that the issue was not so much the city gaining control over our rents, as our loss of control over tenants. For those of us living in our buildings, the issue really was the theft of the most basic rights of home ownership. The fact that we were entering a twilight zone where an eviction almost always involves a costly legal battle just never occurred to me. Uninformed owners like me were the real reason Prop. I passed, not because of the newspaper strike that was happening at the time.
May 10
When my neighbor Robert had his upper flat vacant for six months and found himself eating into his vacation fund to come up with mortgage payments, he took what I consider to be a drastic step. He furnished the unit and advertised it as a short-term rental. I say drastic because it necessitates an outlay for furniture, requires constant advertising, frequent cleaning and walk-throughs each time the unit changes hands. But most of all, it makes him vulnerable to a tenant who refuses to move out, which is the right of anyone in a pre-1979 building who has stayed over 31 days. Robert has embraced his new business whole-heartedly and has found ingenious places to advertise where he will attract, if not the most qualified, certainly the snootiest renters. He seems to like the whole glamour of the thing, having taken on the persona of a hotelier rather than a downtrodden landlord. My view: too great a risk and too much work. By the way, he tells me that with a furnished rental, you can ask for a security deposit equivalent to three times the monthly rent.
May 14
I was having a quick dinner at Chevy’s with my pal Maggie the other night before a lecture at Herbst, and she asked why we property owners don’t have something on the ballot every election that incrementally loosens the stranglehold of the Rent Ordinance? She cited the recent lowering of interest rates on security deposits as an excellent start. As we talked, and the margaritas clarified our thinking, we agreed that raising the annual rent increases to the CPI would be another small move in the right direction. I suggested that by exempting owner-occupiers over 65 from just-cause evictions (but not price control), there could be another amendment that might get the sympathy of fair-minded voters. This could work if they knew how many seniors were living in fear of hostile tenants and how many more had withdrawn their units from the market. Emboldened, Maggie suggested that the means testing of tenants, a measure now enforced in New York City, just might pass at the ballot box. If the annual income cutoff would be set high enough (say $150,000), then almost anyone could view it as fat-cat welfare. Clearly we were on a roll. Said I, “Let’s forget about the lecture and have another margarita.”
May 23
I admit that when people start talking about the Ellis Act, my eyes glaze over. Why would I want to go out of the rental business when it is my major source of income? Well, that was before I met Darrell at City Hall last week. He was sitting next to me at the Land Use Committee one Monday afternoon, and we started talking. He said he had just Ellised his four-unit building. I said, “Why would you want to do that? Sure, those long-term tenants with their below-market rents would be gone, but you’d be high and dry income-wise.” He looked at me with the exaggerated kindness one offers an exceptionally slow-witted child. “You don’t rent, you sell. Ellis is an endgame. As soon as the final paper is signed, you put the units on the market as tenancies-in-common. People buy them, wait three years and then get into the lottery. The building is eventually condoed and everybody’s happy.” Then I remembered why I hadn’t considered it before. Ellising can have troubling ethical considerations. Tenants have to relocate. Sure, low-income tenants are entitled to $4,500 and an extra $3,000 if they’re over 65 or disabled, but they are forced to move. This is why professional tenant advocates hate it. Not only do they lose a rent-controlled apartment, the city gains another homeowner. Another challenge is finding buyers who trust one another enough to share a single mortgage. Said Darrell, “I just let my realtor handle it. After all, she gets the commission on selling all four units, so she has ample incentive to play matchmaker.”
The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of the SFAA or the San Francisco Apartment Magazine. Lily’s Diary is written by a longtime rental property owner who reserves the right to remain anonymous on the grounds that her tenants might gang up on her. Comments, corrections or ideas are welcome at lilysdiary@aol.com. Copyright © 2004.