New Rent Regulations Just Keep on Coming

Will San Francisco supervisors ever learn?

By David Fix
Small Property Owners of San Francisco

If you think new regulations for rental units are coming faster and faster, you are right. To understand where we are today, you have to go back to the beginning. In 1979, inflation was very high—11%, rising to 13% in 1980. The original rent ordinance was passed in 1979 as a temporary measure for six months—a modest attempt to guard against runaway inflation. The ordinance was extended every six months until it was made permanent in 1982.

The original ordinance only covered buildings built before the effective date of the ordinance because the Board of Supervisors understood that no one would build rental housing if it would be subject to rent control. Since then, the state legislature passed laws that prevent rent control on newly built rental housing.

Gradually at first, but with increasing frequency, the rent ordinance has been expanded to be ever more restrictive and to be used for political purposes. Since 1979, 82 amendments to the rent ordinance have been made. During the first ten years, the amendments were not substantive, passed either to clarify provisions or to extend the rent ordinance for an additional six months. All told, in the first 21 years there were a total of 53 amendments, an average of 2.5 amendments per year. Some of the amendments even benefited the property owner.

The pace and the scope of the amendments really picked up in 2000, with the election of the current Board of Supervisors. In the last six years there have been 29 amendments, an average of five amendments per year—twice the rate in the first 21 years of the ordinance. In the year 2006, there were seven amendments, the highest number for any year since the adoption of the rent ordinance. And, as we all know, none of these was to help the property owner.

I doubt that any other business in the city has had as many regulations imposed upon it in the same period of time. Is it any wonder that more and more property owners are choosing to leave their units vacant,make use of the Ellis Act to get out of the business, or sell off units as TICs. The number of regulations restricting owners’ rights to control their property has exploded during the past six years; the number of TICs has also exploded during this period. It seems pretty obvious that there is a correlation. Maybe one of these years the Supervisors will see the connection and pass laws that will encourage small property owners to stay in business rather than getting out of it; pass laws where both parties are considered, not just one; and take the politics out of housing policy.

Some of the most significant amendments to the San Francisco rent ordinance

1982: the rent ordinance is made permanent

1991: a 25% ownership interest is required to perform an owner-move-in (OMI) eviction

1992: the removal of the 4% minimum annual rent increase allowed

1994: the elimination of the exemption for small owner-occupied buildings

1997: the limitation on OMI evictions in the case of senior or disabled tenants

1998: the limitation to one OMI eviction allowed in a building and other restrictions on OMIs

the loss of our right to prohibit subletting

the increase in the relocation payment required under the Ellis Act for low-income tenants to more than the state-mandated amount

the change in the interest rate on security deposits

the limitation of capital improvement passthrough increases

the limitation on rent increases allowed for increased operating and maintenance costs, and also
the loss of our right to determine how many people may occupy a unit;

extending the relocation payment required under the Ellis Act for all tenants to more than the state-mandated amount

the requirement for “just cause” for removal of a housing service; and also, the increase in the relocation payments required for an OMI or relative move-in eviction. In addition, limitations were imposed on the condo conversion process so that certain types of evictions result in making it more difficult or impossible to condo-convert a building.

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