Questions and answers on rent control measures: Voters in San Mateo, Burlingame weigh complicated initiatives

“I think the reality is this will prevent some landlords from gouging their tenants and making a ton of money off the housing crisis. And that means there’s a very narrow class of special interests whose profits are threatened by this measure,” said attorney Daniel Saver, who helped draft the measures. “They’re using scare tactics and misinformation to try and fool voters. This is about protecting our community, they’re out there to protect their own profits.”

Opponents on the other hand, contend evidence from other rent-controlled cities highlights it as a flawed policy that will benefit few, while burdening landlords and costing the cities that are forced to implement the proposed rules.

“The inflexibility of the ballot measure could be very costly. … [and] this measure empowers five unelected individuals,” said Josh Howard, senior vice president with the California Apartment Association. “Construction of new housing is critical to solving our housing crisis and the [state] legislative analyst even says that rent control policies likely discourage new construction. So why should we put in place public policies that could very well undermine the long-term goal, and that is providing more housing.”

Ultimately, the more than 20 pages each of Burlingame’s Measure R and San Mateo’s Measure Q are legal documents that require a critical eye to truly digest. And as with most laws, interpretations can be argued leaving much up for debate. So while both sides have their views, certain claims pronounced as facts are questionable or subject to interpretation.

For example, insinuating the measures will set up a “rent control tax” is not exactly true. Based on state law and the definition of a tax, these measures would do no such thing. Instead, they set up a fee paid by landlords that would be set aside for the purpose of implementing the proposed regulations.

The following analysis over key aspects of the measures was compiled by the Daily Journal after numerous interviews with legal experts, San Mateo City Attorney Shawn Mason, Howard and Saver; through editorial endorsement meetings with advocates on both sides; and a detailed review of the ballot language, campaign material as well as an independent city-commissioned analysis of Measure Q.

Would the measures have ongoing costs to taxpayers?

To reiterate, neither measure creates a tax for average residents; instead they would establish an annual fee paid by landlords. The fees would fund the rental housing commission, which in San Mateo is estimated to cost up to $2.5 million a year to operate.

However, the cities will be required to advance funds for the commission’s initial startup costs — this could come from their general funds, which are in part supported by taxpayers. But, each city has the right to demand the commission repay the loans and recuperate all costs. Therefore, taxpayers aren’t required to support ongoing costs and the city can be fully reimbursed.

The commission would be empowered to set the fees, thereby having an authority over landlords. However, it would not inherently have an ongoing “blank check” power to demand further funding from the city or taxpayers.

Per the ballot language, the commission can simply “request and receive” additional support, but it is arguably at the council’s discretion whether to offer further funding.

Furthermore, the commission members are appointed by the city councils — which are elected to represent the voters.

The councils can also request that its staff time — such as employees in the City Attorney, Finance, Human Resources and Information Technology departments — be reimbursed with the landlord-paid fees. Therefore, it will be up to the city councils whether to let the commission affect its budget or services.

Will it be harder to evict problem tenants?

Depending on what type of existing laws landlords chose to use when evicting problem tenants, things may not significantly change. But determining the veracity requires a dive into the nitty-gritty details of the current versus the proposed regulations.

First, it depends on what kind of problem tenant. Are they simply breaking their lease, or are they engaged in illegal activity?

Under both current law and the proposed measures, a tenant who doesn’t pay rent or isn’t abiding by the terms of their lease, such as having a prohibited pet, must be given a three-day notice and opportunity to remedy their violations.

Under current law, tenants who are a nuisance or engaged in illegal activity must be given a three-day notice eviction notice, and do not deserve an opportunity to correct their violation. If measures Q and R were to pass, it would require the landlord provide a “written notice to cease” which must provide a “reasonable period of time to cure the alleged violation.”

Whether the written notice to cease requirement would be satisfied if the measures pass with existing law’s three-day notice, is up for debate. Furthermore, if the measures pass, landlords must give problem tenants an opportunity to correct their violation — which existing law does not guarantee, but could in practice just be the three days depending on the severity of the violation.

But in general, the court proceedings involved in taking a problem tenant to court for a quicker eviction under the three-day notice would not change.

Currently, if a tenant fails to vacate and court proceedings are initiated, the landlord must provide evidence, which may already include asking neighbors or property managers to testify. The measure would not change these state court rules.

Under current law, landlords wanting to avoid the burden of proof can simply evict problem tenants with either a month or two month notice. However, if the measures are approved, landlords could no longer evict problem tenants through a 30- or 60-day notice, which in court only requires evidence that notice was served. Yet there is a question whether landlords currently allow bad tenants to continue disturbing neighbors for more than a month.

Technically, the measures prohibit “no-cause evictions,” but would allow “evictions for cause” and “no-fault evictions.” Essentially, problem tenants can still be evicted and landlords wishing to move in or demolish the property may evict law-abiding tenants. No-fault evictions would involve providing a 30-, 60- or 120-day notice depending on the circumstances.

Did the California Legislative Analyst’s Office take a stance on measures Q and R?

No. Campaign material paid for by the California Apartment Association used the state logo and some believe it appears to suggest the state’s LAO opined on measures Q and R. The independent state office stressed it does not take positions on any local measure nor get involved in campaigns.

A complaint against CAA was filed with the Fair Political Practices Commission, however, the FPPC recently announced the law doesn’t cover campaign mailers and determined nothing illegal occurred.

Earlier this year, the LAO issued a report focused on California’s housing shortage and how to support low-income earners. The report did argue it could be problematic to expand rent control policies. However, it primarily suggested encouraging more private housing developments, and noted increasing voucher programs or funding below-market rate units are costly challenges.

Would the measure help or harm tenants?

The proposed protections, particularly rent control, only assist tenants once they’re residing in a protected unit. While some suggest landlords would seek to increase rents for new tenants to account for rent-controlled apartments, others note property owners can only charge what the regional market will bear.

It is true there is no means test to qualify for rent control, so whether a tenant makes minimum wage or a six-figure salary, they’d qualify for the same protections.

Per the state’s Costa-Hawkins Rental Housing Act, only multi-family buildings constructed before Feb. 1, 1995, can be subject to rent control. In San Mateo, that accounts for about 11,769 households.

The measures would, however, help more in both cities avoid being evicted without cause — as proponents note has happened throughout the region with entire buildings being vacated.

In San Mateo, the measure would not apply to any single-family homes and condominiums, owner-occupied duplexes or secondary units, rentals operated by a nonprofit or any new buildings constructed if and after the measure passes. Essentially, in San Mateo, none of the proposed tenant protections would affect any building constructed in the future or any building under construction that has not received a certificate of occupancy by the time of the measure’s passage.

However, in Burlingame, just cause eviction could still apply to any new construction and single-family homes or condominiums that aren’t also occupied by the owner.

Will rent control lead to a decline in the quality of the housing stock?

In the short term, most likely not; but it’s possible in the long term.

The state has laws regarding the health and safety of rental housing. In fact, proponents argue the measures would incentivize landlords to keep their properties up to code or face potentially being required to lower rents.

The measures also allow landlords to receive a fair return on their investments and recoup certain capital improvement costs by petitioning the commission for additional rent increases.

However, landlords can only pass on costs that are related to keeping the property up to code; landlords would not be allowed to pass on the price of improvements that don’t relate to meeting health and safety codes. This means owners may not be incentivized to make improvements beyond what is required by law and over time, may avoid substantial capital investments on their properties, particularly on tenant-occupied units.

But once a tenant moves out, the landlord would be able to improve the unit and pass on the costs to a new resident through setting a new, higher base rent.

Is the rental housing commission accountable to voters?

Similar to other city commissions — such as the Parks and Recreation, Planning or Public Works commissions — the rental housing commission would be appointed by the city councils, who represent the voters.

However, the housing commissions do have some autonomy by being set up to make many decisions without council approval — such as determining the price of the fee, hiring its own staff or deciding whether to initiate a legal action related to enforcing the measures.

Both measures also set up a relocation assistance program through which landlords may have to pay tenants who are forced to move. In Burlingame, Measure R requires relocation include three months of market-rate rent for a similar apartment and empowers the housing commission to determine further regulations. In San Mateo, the City Council would format the relocation assistance ordinance.

In both cases, the commission would be accountable to upholding the regulations should voters so choose.

BOX:

Measures in brief

• Both measures Q and R would tie annual rent increases to the consumer price index, but no more than 4 percent a year. San Mateo landlords would be allowed to roll over two years for an up to 8 percent increase.

• Evictions without cause are prohibited. Those who fail to abide by the terms of the lease or are a nuisance could still be evicted, as well as if a landlord wishes to move in, or if the building is taken off the rental market or slated to be demolished.

• A rental housing commission comprised of city council-appointed members would be formed to oversee implementation, set annual rent increases and consider disputes. The commissions would also set an annual fee charged to landlords per rental unit to pay for costs.

• Per state law, rent control would only apply to multi-family properties constructed before Feb. 1, 1995.

• In San Mateo, the rules would not apply to single-family homes or condominiums, owner-occupied duplexes or secondary units, or new construction.