From the President

How Legal Challenges Can Make a Difference for You

by Marc Wilson

I still do not believe I am the president of the San Francisco Apartment Association. I feel favored, fortunate, perhaps even haughty. Talk about an elite club—SFAA is a club that actually mandates the ownership and/or management of residential rental housing as a condition of regular membership. No other club has such a high threshold for membership. Think about it. What does it take to join the Olympic Club, the Bohemian Club or the St. Francis Yacht Club? Can you play tennis? Are you a blue blood? Do you know your way around a sail boat? Can you fog a mirror? Then you are a member at last. Joining SFAA, on the other hand, is not about platitudes and promises. It is about commitment. It is not about who you know; it is about what you own. I know how committed each and every one of you is to the San Francisco housing industry because you have made the ultimate commitment. You have made the sacrifices inherent in the purchase and management of residential housing. You have put your heart and soul into this industry, and you are invested for the long haul. I am proud of your commitment to your personal financial security and that of your dependents, as well as your continued commitment to this industry.

Now, we need to get down to business. The specific and primary purposes for SFAA’s existence are:

to provide a wide range of services and activities to individuals operating in the rental housing industry; to address collectively our industry needs, interests and issues on a continuing basis;
to advocate and promote high professional standards and sound business practices in the best interests of the rental housing industry; and
to increase and improve the housing stock of San Francisco.

What does this really mean? It means that SFAA has three distinct charges: we need to educate, we need to litigate and we need to be politically relevant.
How do we educate? Are you using outdated rental agreements? Are you disregarding the use and enjoyment of the myriad SFAA’s excellent professional forms? Are you experiencing dysfunctional verbal communications with your tenants? Are you avoiding a timely and professional response to routine repair requests? Are you neglecting to recognize and rectify material breaches of your rental agreement in a timely and professional manner? Are you shirking any effort to keep separate and distinct correspondence files for each of your tenants? Are you failing to encourage your tenants to place all material communication in writing? If you are guilty of any of these transgressions, then SFAA has failed you.

Before I joined SFAA, I learned everything the hard way. A wise man once said: “Good judgment comes from experience, and experience comes from bad judgment.” You do not personally need to make every single mistake in order to learn this business. You can take charge of and participate in your education. You can read San Francisco Apartment Magazine from cover to cover. You can attend SFAA’s monthly meetings. You can submit your questions to our legal panel preceding every monthly meeting. You can sign up for and attend the multiple educational classes hosted by SFAA. You can make a personal commitment to acquire, read, understand and utilize the professional management forms available from our office. You can call me, the SFAA office or any of our other directors with your questions and comments. We are absolutely dedicated to your education as a property owner and manager. We want our members to be the most professional operators in the industry. Please take advantage of our services.

How do we litigate? We litigate by being able, ready and willing to bring legal challenges whenever faced with unfair legislation. Tenant friendly activists and politicians have successfully whittled your property rights to the constitutional bone. It is my strong belief that we have been remiss in our obligation to litigate. Most, if not all, of the unfair property legislation promulgated over the past 24 months would not, and in some cases has not, sustained legal scrutiny. That is the good news. The bad news is that SFAA’s legal fund now has a balance of $120,000. A good wedding costs $120,000. Believe me—we cannot have much of a party in Superior Court with $120,000. Litigation is extremely expensive and almost always uncertain. This means that you do not litigate unless you have the money. We do not have the money for one of two reasons: either our membership or the industry at large does not agree with the merits of litigation or they do not recognize the merits of litigation. We are now at a crossroads in the affirmation of property rights. All future anti-property-rights legislation will be absolutely targeted for legal defeat. We need to pour more resources into litigation.

How can you help? When you pay your yearly dues, check off the section regarding legal fund contributions and write a check. Respond to the fund-raising letters you receive from SFAA. We have almost 3,000 members. Two-hundred dollars per member per year would mean a yearly legal fund of $600,000. You need to show SFAA that you believe in the merits of litigation. You need to contribute to SFAA’s legal fund. Failure to contribute to and help grow the legal fund will send the wrong message to the managers of SFAA. Show us that litigation is important to you. We are willing and ready to litigate on your behalf. Help us achieve this goal.

How do we create and maintain political relevance? The sad fact is that 65% of the voters in this town make monthly rent payments. All tenants need to do, in order to achieve political relevance, is to vote. The remaining 35% of voters are owners. Most of these own their own homes, but they do not own additional rental property. I bet that you would be very surprised by the percentage of home owners who are ambivalent toward or even in favor of some sort of rent control. In San Francisco, there are roughly 12,362 residential buildings, with two or more units. If you subtract those owners who have buildings that are post-1979 construction (no rent control), those owners who own multiple properties and those owners who do not live in and, therefore, do not vote in San Francisco, you have plus or minus 6,000 voters left. If 70% of these people vote, then there are 4,300 votes spread across 11 supervisor districts in San Francisco. Are you getting the picture? We do not have any political relevance by simply voting. This is why San Francisco has the dubious distinction of electing such homespun political figures as Supervisors Chris Daly and Jake McGoldrick.

Our political relevance is steeped in our continued engagement with and education of local politicians. SFAA does an excellent job of raising the awareness of local politicians. History will reflect that rent control and its related legislation is a virtual case study in unintended consequences. Our job is to help facilitate the politicians’ understanding of the unintended consequences of their misguided legislation. Our job is to help Supervisor Matt Gonzalez understand the consequences of his roommate legislation. Gonzalez does not understand or, worse, he does not care, that his legislation is racist and anti-family. He does not understand that with the passage of his roommate legislation, property owners will quite naturally be less inclined to rent to those cultures that prefer to cohabitate with multiple generations. In addition, our charge is to make sure that Gonzalez understands the second unintended consequence of his legislation. He needs to understand that SFAA will litigate and that SFAA will prevail. Local politicians will not listen to us unless we contribute to their campaigns, and they will not listen to us if we are unable and unwilling to litigate. We cannot make political contributions and we cannot litigate if we do not have the money. Are you getting the picture? We need to stay relevant. We need to be effective. We need to further fund and grow both our legal and our political contribution funds.

Our next general meeting on Monday, January 24, at 6:30 p.m., is going to be informative and fun. David Wasserman, our first vice president, will coordinate a panel discussion with three well-known and respected tenant attorneys. Come and learn how to avoid litigation with your tenants. Learn what tenant attorneys look for with regard to questionable or illegal management practices. Learn about the mind-set of the opposition. Why not show up at 6:00 p.m. for the legal question-and-answer part of the evening.

I wish you a fun and prosperous 2005.

The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of SFAA or the San Francisco Apartment Magazine. Marc Wilson is the current president of SFAA. He has been managing and selling San Francisco apartment buildings for 20 years. He can be reached at 415-229-1275. Copyright © 2005 by the San Francisco Apartment Magazine. All rights reserved.