The language for San Francisco Supervisor David Chiu’s proposed law which would lift the outright ban on short-term rentals in San Francisco but establish a new set of rules by which hosts and “Hosting Platforms,” such as Airbnb, would have to adhere or be subject to a penalty of up to $1,000 a day has been drafted and filed.

As expected, the proposed ordinance would allow residents who occupy their unit as a permanent residence for at least 275 days a year to offer it as a short-term rental for the other 90 days, as long as it’s registered with the city, occupancy taxes are paid, and insurance is maintained.

Hosting Platforms would be responsible for notifying hosts as to the applicable restrictions and requirements for registration as well as for collecting and remitting Transient Occupancy Taxes.  Failure to provide notice would subject Hosting Platforms to a fine of up to $1,000 a day per violation as well.

The new law wouldn’t apply to single-family homes and would not supersede the terms of an existing lease or homeowners association (i.e., illegally subletting would still be grounds for eviction).  In addition, tenants of rent-controlled units which aren’t prohibited from subletting their unit would not be allowed to collect any more money than is being paid to their landlord in rent.

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Comments from “Plugged-In” Readers

  1. Posted by lol

    I am pretty certain some people will find loopholes.

    Someone could perfectly combine short term (<30 days) and longer term stays. If an owner leases the place 275 days long term and 90 days short term, will he still be within the law?

    People will adjust their behavior, and at least they are trying to give this activity a legal framework. That's a very good thing in itself. But these new rules will do nothing to address the current problem: landlords do not want long term leases because of over-reaching rules.

    The city is micro-managing this, and so far no-one has found a way to stop the ongoing train wreck that is San Francisco's housing situation. Time to rethink rent control.

    • Posted by Wonkster

      I am certain that you view the solution to pretty much every issue in San Francisco as “time to rethink rent control.” Even without rent control Airbnb would still be a controversial issue.

      • Posted by lol

        Aside from the fact that SF is a very desirable place to live, rent control and prop 13 are the 2 multiplying factors making us the most expensive city for both rents and purchase.

        Prop 13 keeps granny in her house. Her 4BR house, all by herself. And she can’t move because of the tax shock if she buys somewhere else.

        Rent control keeps people in the apartment they started to rent 20 years ago. They could have moved up, moved out, bought a place, but rent control is such a good deal you’re staying put.

        Hogging housing constrains supply. It makes everything else more expensive. It also encourages behavior, expectations, belief. If you pay $1 for what the new schmuck pays $4 it could mean you’re less a rube that another guy. This in turns becomes arrogance that is seen all around SF.

        Yes these rules shape people. And the result is not always pretty. Time to level the field and make everyone equal.

        • Posted by Jake

          If granny is over 55 she can transfer the base year value of her original residence to her new place as long as it qualifies under props 60 and 90 (passed in the 1980s).

          Otherwise, I certainly agree that both rent control and prop 13 shape behaviors in ways that distort the market and only get moreso with time.

          • Posted by san FronziScheme (formerly known as lol)

            I recall 2 neighbors in Noe who moved to Lake Merritt into a condo. They bought a condo for a fraction of what they got, but end up paying more than double the tax. They delayed this move as long as possible.

          • Posted by Jake

            Alameda county accepts tax base transfers from other counties (SF does not). There are other restrictions, but if they are over 55 and the market value of the new property is less than the old one, then they should check it out. Also you can only use it one time and they have to file a claim for it.

    • Posted by S

      Just out of curiosity, when did you buy your building(s) in SF? Was it prior to 1979? Assuming your buildings are subject to rent control and you bought here after rent control was enacted, why not buy a building exempt from the ordinance? To me, rent control may have it’s issues but it’s part of “the cost of doing business” in SF.

      • Posted by lol

        Looked for one, couldn’t find one. For 50 pre-1979 buildings for sale you have one post-1979. 2 reasons: 1 – many post-1979 multi-unit buildings are pretty large and inaccessible to the individual buyer. 2 – whoever owns a post-1979 building has a cash cow since they can charge market rent.

        Yes the reality of rent control is built into the price, at least it was when I bought in 2010. My original intent has never been to be on the regular rent controlled market and I have managed pretty well so far, still within the law.

        But a stupid rule is still a stupid rule even if you took it into account in your business plan.

        • Posted by formidable doer of the nasty

          Nobody could predict how high the price of rent control would eventually become. As is the case with many other laws (and constitutional amendments) rent control was a product of its time and is now outdated. The people clinging to the idea that SF rent control is too perfect to change are no better than the gun nuts insisting on their right to buy AR-15s without background checks.

          • Posted by lol

            My back of the envelope calculation: 60% tenants in SF, in roughly 200,000 units, paying 50% less than market rent on average, with an average market rent of 2700 overall. This amounts to roughly $3B / year in uncollected rent. This has a huge economical impact on landlords.

        • Posted by S

          Thank you for answering – I suspected as much :) but you’re basically conceding that you bought a rent controlled building at a reduced price only to wiggle your way out of it to maximize profit. I don’t mean to judge – you’re following the rules. I’m just saying that obviously the rules are not working. In my opinion, a landlord simply shouldn’t be able to effectively remove units from the housing market (airBnb).

          In a perfect world we wouldn’t need all these rules…

          • Posted by san FronziScheme (formerly known as lol)

            Of course I am trying to get ahead. Why would I risk my family’s future with rent controlled tenants if I have a legal alternative? Yes RC places are cheaper and that’s the whole point as you noticed. Would anyone blame me for wanting to protect my family’s assets? I support 2 relatives in addition to my own family and cushy rent controlled whiners will never understand why I am doing what I am doing. Until they get Ellised, maybe. Emphasis on maybe.

            Finally, you want to prevent units to be removed from the housing market through airbnb? You understand actual people sleep in monthly rentals, right? This is housing, pure and simple. SF’s overprotective view of how the market should function creates a whole range of problems. It takes 1 year, 5 years, 30 years, but it always blows up in the face of the (rent) control-freaks.

  2. Posted by SFHelmut

    The loophole will be in the enforcement. Pretty language is great, but will the city take action against people who do not follow the rules?

    It is against the rules to pour concrete over your driveway. Take a stroll in the Sunset or Richmond and see how well that law is working.

  3. Posted by DanRH

    First, I’m 100% in favor of working something out. I think AirBnB and VRBO have a place in SF. But I also live in SF and I know from experience what it’s like to live next door to a VRBO unit (it was awful). So I’m in favor of what Chiu is trying to do.

    Second, I’d like it to be less than 90 days – I think that is too much to live next too. And I think if you want this to pass, you lower that to 30 days so that you appeal to those voters that were starting to be in favor of a complete ban. You *need* those votes because there is a *ton* of fear / uncertainty / doubt going on and when that is out there, folks will just vote to what they understand…ie, a full ban.

    Third, I don’t understand the “The new law wouldn’t apply to single-family homes”. Does that mean that they are subject to the existing law (ie, not supposed to rent for less than 30 days)? Or does Chiu’s proposal lift the outright ban on short term rentals and thus SFH’s can just do whatever they want now? Reason I ask is that many units on VRBO / AirBnB are the (illegal) in-laws of a SFH (so the city sees the place as a SFH).

  4. Posted by lol

    DanRH,

    Who told you that “folks will just vote to what they understand…ie, a full ban.”?

    That’s pretty offensive. Using this logic we should just design all-or-nothing laws because they’re easier to understand.

    I agree that there is a lot of “fear / uncertainty / doubt” among tenants today. But most of it has to do with the surreal situation of the rental market in SF today: tons of tenants are paying a fraction of current market rents, while the unlucky few who have to hunt for a place have to face 1) a trickle supply due to landlords keeping property from the regular market AND sticky tenants who are stalling the normal turnover and 2) extremely high prices that include some “rent control premium” that landlords will take into account.

    Rent controlled tenants know they have a sword hanging over their heads mainly because of the very sweet deal they have today. They enjoy the cheap prices, but they themselves created a situation where they will be kicked out of SF when the landlord decides to get out of the rental business because of the low rent.

    • Posted by End the Gilded Age

      You make me laugh out loud LOL!

      The “surreal” situation of the rental market is as much about City Hall-induced market distortions and NIMBYistic restraints on building affordable housing (i.e. that is priced to reflect the local median income) because pro-real estate minion, Mr. Lee, pimps SF to bubble tech sectors without considering the economic impact on the SF majority who voted him into office (i.e. existing average wage renters/tax payers).

      Abandoning rent control would only result in every rental unit coming up to artificially inflated “market” rents (thanks to SF pro-land holder bias) where the only winners would be the landholding gentry. Time to end the very sweet deal that SF landlords (minority) have had over renters (majority) for the past two decades thanks to market- distorting City Hall lackeys Brown, Newsom and Lee.

  5. Posted by poor.ass.millionaire

    A loophole I see is that a tenant who only rents out rooms or their LR can do so year round, as they are staying in their unit over 275 days.

    And I think the resistance to any short term/vaca rentals is mostly from homeowners and some tenants that don’t want their neighborhood degraded. Opportunist tenants who want to profit from their unit will at least be stifled by two things: most leases restrict subleasing, and tenant isn’t “supposed” to charge mire than the RC rent amount. I’m sure some schmucks will still violate these, but I hope most LL will be diligent in enforcement. Plus, can’t citizens, etc. call out violators? These rentals are supposed to be registered, and any unhappy neighbor can monitor and ask for enforcement, I assume. That will hopefully help keep violators in check.

  6. Posted by DanRH

    @lol – let me clarify a bit for you.
    - no one ‘told’ me that..it’s my observance. If you look at the comments from the previous post on SS, “Behind The Ballot Measure To Restrict Airbnb’s Business In SF”, you’ll see a lot of folks starting to lean toward an outright ban.
    - Also, I found it very interesting how quickly and easily the folks behind the outright ban ballot measure were able to get the numbers they’ll need. I think this group is going to have an easy time convincing non-decided voters on this issue. It’s easier for a random voter to understand “do you want to live next to a hotel? heck no! Then vote for this ban!”, than to sit and understand the message from Chiu, ie, “Hey, let’s allow these but on a specific basis with these criteria”. I hope I am wrong.
    - AirBnB and VRBO should aggressively figure out what is the easiest / quickest way to allow for the share-economy to work in SF, even if it means some big restrictions. Otherwise, they’ll completely lose.

  7. […] Supervisor Chiu moves forward with a proposed amendment to regulate short-term rentals in San Francisco, a much more onerous ballot measure designed to greatly limit the “illegal […]

  8. Posted by lol

    DanRH,

    If you looked at SS comments for guidance to understand what the opinion of the people is, you’d repeal both prop 13 and rent control, every new building would have 40 stories except in a 4 block radius from where futurist lives, etc… lol!

    I know at least 2 rent controlled tenants who do airbnb on a regular basis, and have heard their moral rationalizations as nauseam. I do not know if the tenant majority would vote to permanently limit THEIR ability to monetize their entitlement. Greed has no limits: not only you will fight to keep being subsidized by landlords, but the day you need cash you want to be able to be a landlord yourself even if this immoral, illegal and just plain revolting. Rent control tenants will use the communist lingo to defend their entitlement, but the minute they can profit, they become good old capitalists…

    Airbnb and VRBO are in 1000s of cities. Only a few have limitations like the ones added by NYC or SF. Cities are reacting too little too late, imho. These rentals were illegal 4 years ago, as they are today, then what would cause this phenomenon from going on unchecked? Yes neighbors could call out each other. But more often than not most complains could come from landlords using this law as an opportunity to kick out a rent controlled tenant.

    As always, every new restriction that tries to address the side effects of other restrictions end up backfiring. Then they’ll add new restrictions until the system is so entangled that it crumbles under its own weight.

  9. Posted by poor.ass.millionaire

    Question for all you peeps: if vaca type rentals are outright banned in SF, do you think that will increase or decrease overall rents? My rationale says, many LL’s will have to stop offering flats short term, and will have to go back to long term renting, thus increasing the pool of available apartments. But I’m open to other perspectives.

    • Posted by Wonkster

      That makes sense to me. But I know that the anti-rent control folks will disagree because your point seems to be that there would be more available apartments without repealing rent control, which for them, simply does not compute.

      • Posted by lol

        I think there will be an effect. Any new supply will affect prices. Of course it depends on the quality of that supply.

        Another factor: if you have a backlog of candidates with similar means and therefore an upper limit in what they can pay, then they could absorb new supply at close to the older market rate. In short, if you have 1000 people who can pay 3500 for 100 units, and you add another 100 units in the same segment, then the price could perfectly stay in the same range.

    • Posted by Rob

      I think the effect would be negligible because there’s more than one factor causing the high rents, and there’s such a big shortage of housing overall.

  10. Posted by Rob

    The majority of San Francisco buildings were built before 1979, so while the idea of buying new is good, it’s not very realistic for the average investor due to supply as well as cost. While rent control may be “the cost of doing business”, I think the point is that the existing laws as well as laws coming down the pipeline aren’t doing much to help the problems. In my opinion, current SF rent control creates a market of extremes – tenants who fight tooth and nail to keep rents way too low and landlords who react to the laws by seeking the maximum dollar amount on every unit. There’s a culture of extreme greed on both ends that’s getting worse and worse. The solution is not to remove rent control entirely, but the current regulations have destroyed most of the middle ground. In reality, the majority of landlords could rent their units for less, and the majority of rent controlled tenants can actually afford more than they are paying, but there’s no current incentive to do so.

    • Posted by S

      all SFH’s are exempt from rent control. This includes condos, even if built before 1979. There are plenty of non-rent controlled units to choose from. Investors benefit from rent control because rental income is a factor in the sales price of multi-unit buildings (aside from two unit buildings exempt from the condo conversion lottery). Yes property in SF is expensive but having low rents and protected tenants in a building does have an adverse effect in it’s value.

      While I agree that rent control in SF is not perfect and we don’t completely understand it’s implications, I just really don’t see the point of buying a multi-unit building subject to rent control, then whining about it after the fact.

      • Posted by lol

        Someone has to buy it. Someone has to pay the bills to maintain it and repair it.

        The supply of nice guys ready to buy a building to lose money from day 1 is VERY liimited.

        Therefore the only people who will accept to purchase a building with subsidized rent-controlled tenants are people with an angle.

        Speculators did not create this situation, but the rent control tenant lobby.

  11. Posted by jill

    im definitely in favor of a a ban on any lease less than 90 days. Put those units back into the housing stock or sell them.

    • Posted by lol

      There’s a traditional market of corporate furnished rentals in SF. This is where I found my sweet spot: people relocate to SF, their companies will pay for 1 or 2 months of rent in temporary housing until the person finds permanent rental. This is how I got into SF 8 years ago.

      Do you want to send newcomers into hotels? Do you want to impose a minimum of 90 days, making their move much harder to manage?

      The problem with theories like these is that despite the good intentions there are often real life consequences. This is typical of the way of thinking of the out-of-touch San Franciscan activist: restrict, then think.

      • Posted by Spencer

        There are extended stay hotels and corporate apts for that

        • Posted by san FronziScheme (formerly known as lol)

          True, but there are way too few in SF. There’s a big need for living like the locals. It is especially important for relocations where you come to a strange city and you’ll sign a lease that will lock you for 12 months. Extended stay hotels cannot provide this level of immersion.

  12. Posted by oscar

    Just wondering what the “Single Family Home” means. Anyone know if a condo would fit into this definition? I just wonder if that would be exempt.

  13. Posted by Brahma (incensed renter)

    While I agree that rent control in SF is not perfect and we don’t completely understand it’s implications, I just really don’t see the point of buying a multi-unit building subject to rent control, then whining about it after the fact.

    S, you actually know the answer, because you touched on it earlier in your own comment.

    The fact is that buildings subject to rent control and occupied by actual tenants have their selling price depressed by a certain factor, because the income stream generated by the rents is lower than it otherwise would be in the absence of rent control.

    I think the landlords who buy a building with the full knowledge that the units therein are subject to rent control and then whine “about it after the fact” aren’t just sharing their buyer’s remorse.

    Assuming they don’t plan on evicting the current tenants and putting the units in AirBnB (which everyone admits is going on to some degree) and going into the illegal hotel business, I’m guessing they figure that if they whine about rent control enough, they’ll get a Cambridge, MA-style rent control repeal going in one way or another.

    If rent control were repealed in S.F., it’s true that there are so many interdependencies that the impact on housing/rental unit prices is not as straightforward as the “it’s simple Econ 101!” crowd would have you think. But one thing that everyone agrees would happen is that existing buildings that are subject to rent control would skyrocket in (resale) value overnight, because the potential income stream generated by the rents would skyrocket in value overnight. Those landlords who bought older buildings beforehand would get a windfall upwards of 40 or 50% or more depending on when they sold their formerly rent-controlled buildings.

    Normally, generating a windfall like that just due to a regulatory/legislative change would inspire the local government to raise property taxes on such buildings to reduce the ill-gotten capital gain, but of course due to Prop. 13, no such tax would be possible.

    So buying a building subject to rent control and then arguing, after the fact, for rent control’s end is the same as the landlord saying they should win the California lottery. Wishful thinking, and not even entertaining after the umpteenth comment saying the same thing.

    • Posted by san FronziScheme (formerly known as lol)

      All very valid points. Yes I do see my own personal long term interest when I criticize rent control. I would love to have an easier and safer income stream from my property even if I have to collect less. “Easier” because renting furnished by the month is more work than regular rentals. “Safer” because Rent Control is too risky over the longer term. I could accept 20 to 25% less rent than today if I could be given the rights that all other American landlords are enjoying.

      • Posted by heynonnynonny

        Outside Cambridge, where in America do they recognize the “right” to buy a property at a discount due to rent control, and then reap a six-figure windfall by getting the law changed?

        • Posted by san FronziScheme (formerly known as lol)

          Your post is the very definition of “wagging the dog”. Rent control was NOT designed to make property less valuable. Lower valuations were a side-effect of rent control. I agree that buying property subject to rent control CAN lead to appreciation in the case of a change in laws. But the same could be said of property purchased before rent control was voted into law and sold after for a discount. The books would be simply balance, with winners and losers, or should I say risk-takers and unlucky sellers.

    • Posted by formidable doer of the nasty

      As if the only choices are (a) keep it as is, and (b) repeal. The problem with SF rent control is not that rent increases are controlled, it’s HOW they’re controlled. Max. 60% of CPI is insane and even back in the 70s when inflation was higher they should have realized what a horrible mess they were creating. Forget the CPI, allow increases up to, say, 12% subject to a notification period of 1 month per percentage point followed by a 6- or 9-month post-increase freeze where no new notifications can be made.

      This way, rents can slowly adapt to a market equilibrium over multiple years in a controlled manner and tenants are still protected from the kind of sudden extreme rent increases that are disruptive to their lives. If you’re told that your rent will go up 10% in 10 months, you have ample time to either adjust your financial situation or make other arrangements.

  14. Posted by Brahma (incensed renter)

    …the same could be said of property purchased before rent control was voted into law and sold after for a discount. The books would be simply balance, with winners and losers, or should I say risk-takers and unlucky sellers.

    This is the kinda thing that happens when you reason using logical deduction from first principles in the absence of either practical realities or historical context.

    In the case where a landlord sold after the imposition of rent control and had to sell at a discount, he WRITES OFF THE CAPITAL LOSS and reduces his capital gain on other properties or reduces his taxable income from other investments on a dollar-for-dollar basis (and this assumes that the seller is actually, like, paying taxes). So it’s easy to understand if S.F. voters weren’t filling the streets with tears in the 70′s, weeping for the poor, downtrodden landlord class being forced to carry the cross of “subsidization”.

    Contra lol’s assertions, S.F. voters understand capitalism, even if capitalists don’t want them to (so as to make it easier to get them to vote against their own interests).

    One other thing. Inflation was a hell of a lot higher then, and when Prop 13. passed Howard Jarvis went around promising tenants that their rents would stabilize as landlords shared the property tax abatement with tenants. That, needless to say, didn’t happen in the real world.

    • Posted by san FronziScheme (formerly known as lol)

      Brahma,

      Voters can vote for what they perceive as being their own interest. It doesn’t mean it will be in their own interest in the end. We could vote to tax all companies at 99% of profit to provide free housing for everyone. It would be in their direct instant interest, but it would disastrous very quickly.

      The same could be said of rent control and prop 13. This Frankenstein market has been aggravated by these self-serving laws. But who’s going to vote himself a rent increase? Heck, let’s add the nth mitigating restriction to try and limit the impact of the train wreck! What could go wrong with that? LOL!

  15. Posted by Brahma (incensed renter)

    The problem with SF rent control is not that rent increases are controlled, it’s HOW they’re controlled. Max. 60% of CPI is insane and even back in the 70s when inflation was higher they should have realized what a horrible mess they were creating. Forget the CPI, allow increases up to, say, 12% subject to a notification period of 1 month per percentage point followed by a 6- or 9-month post-increase freeze where no new notifications can be made.

    Please get SFAA to gather the funds from their members to get this put on the ballot as an initiative.

    I’d love to see how that would fly in the face of a sub 2% inflation rate and even lower average wage growth. And gentrification in S.F. is going along either just fine or at a catastrophic level (depending on your point of view) with rent control in place right now, regardless of the circumstances of it’s passage in the 1970s. Getting rid of it now would be adding a supercharger to an already overpowered engine.

    The time for your proposal would have been circa 2001-2002.

    • Posted by san FronziScheme (formerly known as lol)

      “Catastrophic” level? How many evictions again? So few that during protests you have 100 protesters for one actual recent evicted, lol.

      “Catastrophic” when you actually have many more buy-outs than evictions, which brings 10,000s to each person who has to commute a few more miles. That’s redistribution of wealth. That would be the opposite of a “Catastrophe”.

      You don’t know what a catastrophe looks like. I suggest you spend a few days in Detroit to see what suffering looks like.

    • Posted by formidable doer of the nasty

      You don’t get it (but we already knew that). The SF housing market is ridiculously distorted on both ends and therefore highly inefficient and unfair. That’s the problem that needs solving. Ellis Act evictions are only a symptom and they’re only going to get worse. Sucks for those people who are getting evicted, but most of them rode the gravy train of way-below-market rent for years while newcomers to the market were picking up the tab, so just think of it as payback.

  16. Posted by Brahma (incensed renter)

    From what I’ve read in 2013, Ellis evictions were up about 175 percent over the year before. But the facts aren’t going to matter to you; obviously you’re biased toward your selfish interest and you’d pooh pooh the numbers of people being displaced regardless of how high it is. Upton Sinclair once said “It is difficult to get a man to understand something, when his salary depends upon his not understanding it!”

    In addition, landlords like yourself welcome gentrification and displacement of existing longtime residents with relatively docile, highly-paid tech workers.

    That’s why I wrote “depending on your point of view”.

  17. Posted by san FronziScheme (formerly known as lol)

    And much lower than 6 years ago. But you know that already. You’re repeating the politburo talking points Brahma. Numbers can say many things. There is no Ellis epidemic. There is no catastrophe. A catastrophe is when people are converting housing into farmland. A catastrophe is when children go to bed without food.

    Someone receives 100K to free up a place he was paying next to nothing? I’d say it’s wealth distribution. That thing you should welcome.

    Nope, you just want the cheap rent to go on forever. Greedy greedy.

  18. Posted by san FronziScheme (formerly known as lol)

    To show your level of misinformation, Brahma, here is the number of ellis evictions in the past 20 years.

    Not that I am expecting any kind of honest answer…

  19. Posted by Jake

    For many of us that are concerned about the Ellis evictions it is more about the the qualities of some of the evictions than the total quantity of all of the evictions.

    We’ve all read about people being evicted for whom their eviction is catastrophic. Even if they are few, their plight carries huge political weight.

    The Ellis evictions themselves account for a very small quantity of the SF rent controlled stock. At the rate of Ellis evictions over the past 15 years featured in recent studies and news, it will take hundreds of years to convert all the rent controlled units via ellis.

    The real scandal is not that these evictions increase when real estate booms, but that our government doesn’t have a better way to care for the few that really get hurt. Whether it is adding to the thousands of gov’t controlled housing units in SF, or select targeting of more generous vouchers from higher eviction fees, or something else. There ought to be a better way than to preempt the right of the owners to ellis their property, which seems to the the intent of the legislation SF’s senators are pushing in Sacramento.

    • Posted by poor.ass.millionaire

      “our government doesn’t have a better way to care for the few that really get hurt.”

      Exactly. For all the time, money and effort the BOS spends on ridiculous ordinances (to placate the mass of RC tenants who don’t have to have it), they could easily set up a city fund to help the few who really need it. This fund can help the small number of truly evicted victims: those over 70, catastrophically I’ll (really ill, not BS), etc. Everyone else that gets evicted needs to put their big boy/girl underwear on and deal with life, like the rest of us.

      • Posted by san FronziScheme (formerly known as lol)

        Which is why I think a tax, either on rental income, or a sales tax, would be a good replacement to rent control. I believe in a fair redistribution system. Yes you make money, but your money is made thanks to a system that supports the viability of your business. Society needs to support business, but it also needs to maintain social cohesion. Every kid should have his chance, but if his housing conditions are bad he doesn’t have the same chances as the rest. I am a product of fair redistribution and I think I can give back. I am coin it with the relatives I support, but the system should make it fair and blind.

        Right now rent control helps people based on their time in their housing, not what they actually need. If you were an MBA student in a 2BR paying $700 in 1985, what gives you the right to keep the same unit and still only pay $1000 today? You’re probably making $200K+ and do not need this low price.

  20. Posted by san FronziScheme (formerly known as lol)

    An earlier back-of-the-envelope calculation I did about the effect of rent control on the landlord’s books puts it at somewhere in the range of $3B annually. Say they repealed rent control and instead created a 5% or 10% tax on rents to subsidize housing to whoever needs it. There would be less incentive to Ellis and there would be money for an actual social housing policy.

    But that won’t fly since the majority of rent controlled tenants DOES NOT NEED the cheap rent. They know they would be losing their entitlement and would get nothing in return.

    • Posted by poor.ass.millionaire

      “the majority of rent controlled tenants DOES NOT NEED the cheap rent.”

      That’s the crux of the issue.

  21. Posted by heynonnynonny

    The number of reported Ellis evictions is a lower bound, not the whole story. In every recent buyout that I know of, the Ellis threat played a starring role in negotiations. All the tenants decided to take the money rather than spite the owner, so none of the buyouts show up in Ellis statistics.

    • Posted by poor.ass.millionaire

      Yeah umm…but they extracted serious money from the owner. How is that bad for them exactly? Especially after they rode the cheap rent train for years? Then they get a fat lump sum of cash? Should they get a mint on their pillow too?

  22. Posted by san FronziScheme (formerly known as lol)

    Of course they don’t. It has always been that way. An Ellis eviction is the worst case scenario for everyone. The landlord loses full potential use, the tenant doesn’t get the full buy-out money. Nobody wants lose-lose.

    Of course now some dupes wants to impose punitive payouts for Ellis evictions, which will change the math for everyone.

  23. Posted by Jake

    Just curious how you know that “the majority of rent controlled tenants DOES NOT NEED the cheap rent.”

    According to the US Census for SF, median household income for renters is $55k and median rent is $1512/month. At 30% of $55k for rent that would be $1375/month.

    BTW, median household income for SF homeowners is $110k.

  24. Posted by san FronziScheme (formerly known as lol)

    Well, for one they could live in a cheaper area. Duh. Why would a 55K tenant need to live in Nob Hill? Or even SF for that matter?

    Why would that person be given the right to live in an above-average area for a below-average income? This is deeply unjust to any hard working successful person who cannot afford SF today.

    In the real world people live where they can afford. Or they adjust their incomes according to prices if they really need to. Like getting a better job. That’s a novel idea. Many rent controlled tenants have painted themselves into a corner through the complacency the gravy train would run forever.

    Feel free to flame me at the heartlessness of my thinking.

  25. Posted by Jake

    No need, seems like your thoughtless heart has inflamed you quite enough.

    I wouldn’t venture to judge the individual needs of my neighbors. Not without at least an introduction.

    Easy to see how the politics line up to keep rent control and prop 13 in place: too many people need/want the eggs. Sadly, not enough price constrained chickens to go around. Must build taller chicken coops.

    • Posted by formidable doer of the nasty

      “Thoughtless heart has inflamed”? Oh, barf!

      Demanding that everybody pays close to fair market value for the goods and services they purchase is not “judging their needs”, it’s called fairness. If someone making 55K a year wants to live in Nob Hill, of course they have that choice. But like everyone else they just have to pay a fair rent. I moved into a building on Russian Hill in 2003. My rent was more than 3x what my upstairs neighbor paid for an equivalent unit but with a better view. And when I moved out in 2007 the place was listed for almost 5x of the upstairs rent. If that’s your idea of fairness then you’re the one who needs the anti-inflammatory, thought-inducing heart medicine.

      • Posted by Jake

        Never took any side on the fairness of any of this.

        People pay the rent they are offered or can negotiate, pay the property taxes according to their assessment. What’s fairness got to do with it other than that the laws apply equally.

        What’s a ‘fair’ rent anyway? And who has ‘rights’ to give here? If the people of California and San Francisco decide they want rent control and prop 13 in the mix, isn’t that their right? Don’t they get to decide what is ‘fair’ for their own community and their housing market?

        And they have decided, repeatedly. Rent control was voted on statewide as recently as 2008. Won by a million votes. Been upheld by the courts. Same with prop 13.

        Who are we to tell them otherwise? Great moral philosophers? Go ahead demand all you want.

        I may not like laws like prop 13 and rent control, but why rant about them?

        • Posted by san FronziScheme (formerly known as lol)

          But you do understand the real life implications of self-serving rules, right? The problem is SF is aging and preventing many of the young from moving in. We need a bit of fresh air because this is getting stale, between the older coots and the rich hipsters.

        • Posted by formidable doer of the nasty

          Then what are you doing in a debate forum at all? I mean, if it’s so futile to debate things that are F-ed up then there’s really no point.

          • Posted by san FronziScheme (formerly known as lol)

            exactly. If people felt that we are not worthy of changing the current rules we’d still use 2 century old laws.

          • Posted by Jake

            I’m trying to stay on topic and add more light than heat.

            The topic was Chiu’s legislation to regulate Airbnb. It has two provisions affecting rent controlled units that I think are reasonable. Neither would repeal or significant reform rent control. I also think the legislation could be worked into a practical law. Plenty there to discuss or debate.

            Besides, what’s the debate about rent control? It’s a crappy law with bad economics. I’ve linked to studies and articles that say that. Not much debate about it. Doesn’t seem to be much debate in the real world about changing it either, except about whether and how much to strengthen it.

            Like it or not it’s bound up historically and politically with another much more significant law over which there is more debate but even less political will to touch: prop 13. I think until the voters are willing to amend prop 13 they won’t be willing to unwind rent control. Anyone ready to slay that giant?

            But what do I know, maybe if you just shanghai enough website threads off their topic to say the same old things a ground swell will build to rid us of one or both of these unfair entitlements. Godspeed Don Quixote.

          • Posted by formidable doer of the nasty

            So after using language like “seems like your thoughtless heart has inflamed you quite enough”, calling people judgmental, and bringing up Prop 13 when that wasn’t the topic, you’re now suddenly trying to claim the high ground?
            You’re a troll. Over and out.

          • Posted by Jake

            Um, I wasn’t the first to bring up prop 13 in the comments on this blog entry. lol did paired with rent control before I had posted a comment. You can see for yourself above.

            As for a sentence of mine you seem upset about, it wasn’t meant to disparage lol. It was meant to show appreciation for lol’s invite to be flamed. I used word play riffing off of lol’s own words to signal my appreciation of what I thought was lol’s having self-flamed (inflamed) already – “no need…quite enough”. Sometimes I write poorly and a verbal wink comes across as a sneer. And maybe I misread lol’s meaning. Sorry.

            I’ll leave it up to you to judge whether standing up for the rights of people to chose their lifestyle and laws even when I disagree with their choices is more “judgmental” than demanding they live by your rules of fairness.

            Regardless, my primary objection to your position isn’t moral or philosophical, it’s practical. Quixote had the moral “high ground” and was a hero. I applaud your attempt to make things better and wish you godspeed, though I doubt your approach will net many votes.

            FTR, I wasn’t trolling you. I raised legitimate questions about your post. Questions you haven’t responded to, and that I offered in hopes that by considering them you/we might find better answers.

          • Posted by san FronziScheme (formerly known as lol)

            Jake, without rent control the supply side of airbnb apartments would be much smaller. Rent control is the second largest force behind the current housing crisis in SF, the first one being the demand from tech.

            You seem to have a lot of authority. Do you rent out your place on airbnb? Do you rent out a place? What’s your knowledge of the market, apart from what you read? I am all ears.

            I make more than 1/2 of my living off RE now. I call it the way I see it. If anything I should be in favor of both rent control and prop 13, since they keep my income high and my expenses low. But a bad law is a bad law.

            If you simply accept a bad law as a given that cannot be changed, then there is nothing much you can add to the debate.

          • Posted by Jake

            Chiu’s law seems like it could free a lot of value in rent-controlled units that are below market.

            If I understand the proposed law, the tenant would be limited in how much they can collect in a month, but not per day.

            Say a rent-controlled tenant pays $1500/month for a place that could rent for $100-150/day on AirBnb.

            Max of 90 days AirBnb per year would generate $9000-13500, which is 50-75% of the rent paid to the landlord.

            3 weekends a month hosting could pay half the rent.

            Doesn’t take a cynic to imagine a landlord going along with it for a consideration and SF not auditing it.

            Adding a few words to the law limiting the daily rate to 1/30th of the monthly rent would make it much less attractive.

            __________

            I don’t rent on AirBnb currently, but it’s become something to consider when evaluating properties.

            FWIW, since they were first passed I’ve been sure prop 13 and rent control were such bad laws that they would be revised once people felt the effects. But as Reagan famously said “we are the change.”

            And I’m still waiting for Godot.

  26. Posted by Hitman

    Jake needs to make more money instead of looking for handouts by landlords – I grow tired of the weaklings – buck up!

    • Posted by san FronziScheme (formerly known as lol)

      I don’t agree. A society takes all sorts. But hard work and perseverance should be rewarded, going against the system should have risks, and people should have equal opportunity. Want to be an artist? Be ready to starve. want to make money? Be ready to spend many hours.

    • Posted by Jake

      I’m a long time home owner enjoying my low property taxes.

      But thanks for your concern and tips are appreciated. Cash only.

      • Posted by san FronziScheme (formerly known as lol)

        How do you like the poor shape of our public schools? Enjoy the prop 13 tax break, they cost our young dearly.

        Note: I also benefit from prop 13, but am still for its repeal.

        • Posted by Jake

          SFUSD could be better, much better. I have experience with it as a parent.

          As I already mentioned in a post below (which was supposed to be attached to one above, but ….) the prop 13 tax cuts hurt the schools and should be repealed.

          Not the only problem though. You should meet some of the excellent young teachers that leave because it is too expensive here, while mediocre teachers with tenure remain. It would be criminal if the laws were fairer.

  27. Posted by Jake

    Sure, these laws like most begot from ballot initiatives are crude and inflexible. The longer they go on the more obvious the misfit and the greater the cost to unwind.

    That’s why I would prefer SF pass some legislation to regulate Airbnb et al. Whatever the problems with Chiu’s bill, it will be easier to revise than ballot initiatives. If we don’t get a somewhat ok law, we may be stuck with something from a ballot initiative. Now is a good time to let your supervisor know what you like/dislike about this proposal.

    BTW, the main factor in the increase in average age of SF is the decline in the school age population (5-19 year-old). Back in 1980 it was nearly 20%, while by 2010 it was down to 11%. That’s a difference of about 70,000 people at current SF population. No other age group is as far from the CA average, which is 21% for 5-19 year-olds.

    Kind of hard to leave prop 13′s impact on school budgets out of the causes.

    If you want to reverse the aging of SF relative to CA, then improve the schools.

    If you want to see property appreciation in the family friendly southern and western parts of the city to match what we are seeing in the north east, then improve the schools.

  28. Posted by angus

    Couldn’t agree more. Too many here are focused purely on maximizing profits without realizing that it is the very diversity and cultural richness all engendered by civic minded programs like rent control that makes this such an enviable and vibrant market.

    People focused on maximizing market potential are usually late to the game not realizing what made the market in the first place. Sure people chase money and jobs, but jobs come from ideas and ideas, particularly in cities, come from rich cultural contexts. It is because “granny” and the working class can still hold on here, that SF barely maintains it’s soul. It is that soul that draws silicon valley to the city.

    Once working classes, the poets and artists are finally pushed out, corporate folk and all their brokers etc. will be left holding a fancy but very empty bag. Fortunately for them, they won’t even notice because they’ll be making money as if that’s all that ever mattered. Don’t worry money grubbers, the market will continue to come your way but, as is always the problem with greed, it will never be fast enough.

    Be careful what you wish for. The day the last artist leaves the city is the day it becomes utterly worthless as anything more than another vapid commercial beehive. Just then, these big corporate leaseholders and their well-healed employees will begin to wonder why they are spending so much on rents here if there’s so little to be offered culturally.

    • Posted by san FronziScheme (formerly known as lol)

      angus, your point sare very valid, but you are missing something pretty important. The generation that gives us this “diversity and cultural richness” is not being replaced! Today the only artists that can come to SF are kids playing with their trust funds.

      Looking at it, not from the prospective of money, but from the prospective of space, the older are hogging the most space, preventing the younger from moving in. A culture needs to be renewed. It needs fresh air. What I see with the established artist base is a lot of stale air. Living as artists, but not making a living as artists.

      Yes ending rent control would make living in SF all but impossible for many artists under the current conditions. But isn’t why there are communes? Take a 3BR, have 5 or 6 artists live in it. It would still be affordable. I have seen a 5BR with 2 artists and the rest used to store stuff. It’s still possible without rent control, you simply have to adjust the living space.

      Plus, this is why the word “artist” comes with the word “starving”. The minute they’re too comfy they start becoming institutional and therefore boring.

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