Thursday, March 30, 2017

Richmond Rent Control

Tenants love it, landlords grudgingly go along with it

Seadawn Thomas is photographed at her apartment in Richmond, Calif., on Tuesday, March 28, 2017. Thomas received a $400 rent increase in October after a new landlord took over, but the rent increase was in violation of the city’s rent control law, which says rents can only be increased by 3 percent each year. Thomas worked with the city and was able to stay in her apartment. (Jane Tyska/Bay Area News Group)

RICHMOND — When Seadawn Thomas received a $400 rent increase on her one-bedroom apartment last fall, she knew she couldn’t afford it despite holding down two jobs — one as a caretaker for the elderly and another in retail.

In the past, Thomas, who is 49, would have had to move or leave the Bay Area altogether. But because of Richmond’s new rent control laws that prevent landlords from increasing rents by more than 3 percent each year or evicting residents without a valid reason, Thomas was able to challenge the rent increase and stay in her home.

“The program has been a godsend,” said Thomas. “They got in touch with the landlords and just made the whole process a lot less stressful.”

Three months after Richmond’s rent control law went into effect, the city’s new rent program office has received nearly 2,000 inquiries from tenants and landlords. Last week, a five-person rent board was established to hear grievances from both sides.

For tenants in a city where the 2015 census found that nearly half the residents spend 35 percent or more of their income on rent, the program is a major victory. Not surprisingly, many landlords are less than enthusiastic about it and say it makes it difficult to afford repairs or turn a profit.

Take Thomas’s landlord, Kashi Serchan. After buying the eight-unit building last fall, Serchan spent $50,000 to upgrade the apartments. But with the average one-bedroom unit renting for just $850 a month, far below what is considered market rate for the neighborhood, and not able to raise rents significantly, he quickly realized the math was not in his favor.

“I’m not even breaking even,” said Serchan, who owns two other properties in Berkeley and El Cerrito, as well as several Indian restaurants. “I’m not trying to rip off people and want to be fair and not kick anyone out. But how can I make any money if I am only allowed to raise rents by $18 a year?”

As a result, Serchan has suspended plans to install a new washer and dryer in the building, forcing residents to use a nearby laundromat. He’s also considering appealing the rent ceiling to the city’s new rent board, a right all landlords have if they believe they are not making a reasonable rate of return on their property.

Despite tension between some tenants and landlords caused by a spike in rents and a spate of evictions last year as landlords scrambled to adjust to the coming law, many city leaders praise the program, which was won after a bitter fight that lasted more than two years.

“We passed a version (of rent control) in 2015 that was much more fair to landlords, but instead of working with us, the landlords chose to go to war with the city and they lost,” said Councilman Jael Myrick. “They made their bed and now they’re lying in it. If they are disappointed in what they got, it’s their fault.”

The rent control provision applies to about 10,000 units in the city. It excludes all housing built after Feb. 1, 1995, and single-family homes and condominiums. It also includes tenant protections that are rare in most American cities, requiring landlords to list a valid reason to evict a tenant, such as not paying rent, creating a nuisance or committing a crime, before taking action.

One of the more controversial aspects of the law is a relocation fee, which runs upward of $16,000, that landlords are required to pay tenants if the building is sold or becomes owner-occupied.

And as landlords and tenants learn about the new law, there have already been gaps in compliance.

 (Jane Tyska/Bay Area News Group)  

At The Cove, an apartment complex in the Marina Bay neighborhood, residents received notices from the management last fall that they could either purchase their units or move out within 60 days, according to Paige Roosa, a management analyst with the rent program. The letter failed to mention that residents had a right to a displacement fee, she said.

It was only at the end of February that management finally sent another letter notifying residents that they had a right to stay in the apartments for up to four months or as long as a year in the case of seniors and the disabled, and that they qualified for a displacement fee.

Oz Erickson, chairman of the Emerald Fund, a development company that owns The Cove, disputes that the complex did not give proper notification, and said all residents received “information about all the rights that have been given by the city.”

“The relocation allowance was an unexpected huge expense for us and it doesn’t seem fair that someone can live here for a year and then get the equivalent of eight months rent,” Erickson said, adding that his company has yet to turn a profit on the complex despite owning it more than 10 years. “But it’s the law and we’re complying with it.”

Next up for the rent program is hiring an executive director and getting all eligible units registered, said City Manager Bill Lindsay. The cost of the program, which has been estimated between $1 million and $2 million, will be financed by fees paid by landlords.

“Whether one agrees or disagrees with rent control, our goal is to have an efficient program,” Lindsay said. “Everyone benefits from that.”

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