BPOA Article Library
The McConnell Report • June 1, 2009
WHAT ABOUT THAT RENT BOARD?
The elected members of the Berkeley rent board have raised registration fees to $194 per unit. This is a 14% increase over the current fee of $170 per unit that will increase revenues to the rent board by some $444,000.
Strangely, this increase comes at a time when seemingly every other government body in the United States of America is cutting back. Why would they do this, you ask? Because they can! Or, at least, they can as long as landlords and Berkeley voters let them.
Since landlords are paying so much for the rent board’s services, I thought it might be interesting to do a little comparison of Bay Area rent control agencies. Here are a few of the points I found interesting.
Berkeley’s fees are extraordinary - The Berkeley rent board regulates 18,500 rental units. It has a budget of $3.6 million per year that is financed by registration fees that are charged on a per unit basis. The July 1, 2009 fee is $194 per unit.
By comparison, the Oakland Rent Arbitration Board regulates approximately 66,000 rental units. It has a budget of $1.9 million per year that is also based on registration fees that are charged on a per unit basis. The fee for July 1, 2009 is $30 per unit.
What explains the difference? Why does it cost Berkeley $194 to regulate a rental unit but it only cost Oakland $30? Could it be that Oakland is just a softy agency that does not know how to control rents?
I do not think that is the case. San Francisco, which has never been accused of being a softy on landlords, also charges registration fees to finance the operations of its rent board. It regulates 180,000 units and has a budget of $5.2 million. It charges $29 per unit.
Berkeley tenants do not share the pain - The Berkeley City Charter provides that “registration fees shall not be passed on to tenants in the form of rent increases except with the express prior approval of the Board.” (City Charter, Article XVII Section 123 (3)). In case you are wondering, the rent board has not given prior approval to pass on the fees.
This too is different from Oakland and San Francisco. Both of those cities split the registration fees equally between landlords and tenants which means that Oakland landlords pay $15 per year and SF landlords pay $14.50
It was not always this way - When the rent control law was first adopted, the rent program was a part of the city government. The Board was appointed by the City Council and staff was under the direction of the City Manager. Back then, Berkeley’s program was like every other rent program in the Bay Area and its budget was in line with budgets of other cities.
All of that began to change when the City Charter was amended to create an elected board with unchecked power to administer the law, hire and fire staff, adopt regulations, and finance the costs of operations by charging registration fees. Today, the Berkeley Rent Board is made up entirely of tenants without any representation by landlords. This is a major departure from Oakland and San Francisco rent control. Both of those cities have landlord representatives on their boards.
So, to get back to my original point, Berkeley rent regulators raise fees because they can. Right now, as members of an elected Board, with no one to hold them accountable, they do what they damn well please. They hire staff, create new positions, and start new programs with questionable relevance to their mission. If costs go up, so what; they just charge landlords and say they are protecting tenants.
How else do you explain the fact that Berkeley landlords pay $194 per unit for regulation while Oakland landlords pay $15 and San Francisco landlords pay $14.50? (Economies of scale are no answer. Berkeley’s budget is nearly twice that of Oakland’s and Oakland regulates 47,500 more units)
Another Interesting Point
While researching this article, I noticed another interesting difference between Berkeley and Oakland that sheds light on how and why landlords are treated so unfairly in Berkeley. Take a look at the purpose clauses of the Ordinances in the two cities
The stated purpose of the Berkeley Rent Stabilization Ordinance is:
“to regulate residential rent increases in the city of Berkeley and to protect tenants from unwarranted rent increases and arbitrary, discriminatory, or retaliatory evictions, in order to help maintain the diversity of the Berkeley community and to ensure compliance with legal obligations relating to the rental of housing. This legislation is designed to address the City of Berkeley's housing crisis, preserve the public peace, health and safety, and advance the housing policies of the city with regard to low and fixed income persons, minorities, students, handicapped, and the aged.” (Berkeley Municipal Code (BMC) Section 13.76.030)
By comparison, the stated purposes of the Oakland Residential Rent Adjustment Ordinance as set forth in Oakland Municipal Code (OMC) Section 8.22.010 includes:
C. . . . providing relief to residential tenants in Oakland by limiting rent increases for existing tenants; encouraging rehabilitation of rental units, encouraging investment in new residential rental property in the city; . . . and allowing efficient rental property owners the opportunity for both a fair return on their property and rental income sufficient to cover the increasing cost of repairs, maintenance, insurance, employee services, additional amenities, and other costs of operation.
D. The City Council also wishes to foster better relations between rental property owners and tenants and to reduce the cost and adversarial nature of rent adjustment proceedings under This (sic) chapter. For these reasons, This (sic) chapter includes options for rental property owners and tenants to mediate rent disputes that would otherwise be subject to a hearing process, and to mediate some evictions
I find it striking that the purpose clause of the Berkeley Ordinance refers only to the protection of tenants. It makes no reference to landlords. The Oakland law, on the other hand, clearly states that its purposes include “encouraging investment,” and “to foster better relations between rental property owners and tenants and to reduce the cost and adversarial relations between rental property owners and tenants.” Perhaps that helps explain why fees are kept in check in Oakland and split evenly between landlords and tenants.
Of course, all of this could be changed. Berkeley voters created the rent law and the elected rent board. They have the power to change this and bring the board back into the city government where the City Council could appoint a balanced board and the city manager could oversee a more objective and balanced professional staff that would ensure fair treatment for landlords.
I believe the good people of Berkley could make a change. Under the right circumstances, it could happen . . . someday.
Greg McConnell is the principal consultant at The McConnell Group, a consulting and advocacy firm that specializes in housing issues and advises apartment and housing associations, property management companies, and individual owners throughout California. For more information about The McConnell Group please visit www.themcconnellgroup.com.
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