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Regulatory • May 7, 2007

Opposition to Proposed Registration Fee Increase


Dear Mr. Kelekian and Members of the Board 

The Berkeley Property Owners Association (BPOA) is an organization of rental housing providers in the City of Berkeley.  We try to represent and aid our membership of small investors to help them comply with a very difficult and highly political rent control system. 

This letter is sent to register BPOA's opposition to the proposed registration fee increase which is scheduled to be considered on May 7. 2007.  BPOA objects to this proposed action for procedural and substantive reasons. 

First and foremost, we object because we have not been given adequate time to evaluate the proposed action.  The FY 2008 Budget Overview, prepared by Mr. Kelekian, was not delivered to us until Friday May 4 after the close of business.  This is not the way government should announce major decisions that affect housing providers in the city of Berkeley.  It gives no time for full and fair consideration and review of a major decision on the direction that the BRSB should take in the next few years. 

The BRSB is authorized by the Charter of the City of Berkeley to “finance its reasonable and necessary expenses by charging landlords annual registration fees in amounts deemed reasonable by the Board.” (Article XVII, Section 123 (3).  However, this is not a “blank check” authorization to tax property owners and tenants in the city of Berkeley.  The Board's authority is limited by the City Charter to charging fees that are reasonable and necessary, and by a variety of California laws regarding taxation and the establishment of regulatory fess. 

As we review the Memorandum entitled FY 2008 Budget Overview that was prepared by Mr. Kelekian, we are startled by the cavalier manner in which the executive director acknowledges that the Board has not evaluated proper spending levels but has nevertheless encouraged the Board to raise fess and consider how to spend them at a later date.  This casts dark shadows on any decision that the Board may make. How can the fees be deemed reasonable and necessary if the Board has not decided how they are to be spent and how they are reasonably related to program functions. 

The Rent Board over the last several years has had less and less to do but somehow has needed more and more money to do it.  The original ordinance, still in force as modified, gave the Rent Board three major functions.

First the Board is charged with setting the Annual Rent Adjustment, an increase (or decrease) to be applied across the board to all controlled units.  The law has since been modified so that the AGA is now automatic, set at 2/3 of the CPI increase.  The Rent Board no longer oversees and deliberates on the annual adjustment to rent.  All that is necessary is for a staff member to look up the appropriate CPI index and make a simple calculation. 

Second, the Rent Board is charged with creating, monitoring and administering a process whereby landlords and tenants can file Individual Rent Adjustment petitions (IRA).  A decade ago there were hundreds of these a year.  The process was often long, involved and complicated.  Because of changes in the law, very few petitions are filed these days. 

The third major charge of the Berkeley Rent Stabilization Board is to maintain a registry of legal rents on a unit-by-unit basis.  For many years, the Board required annual submission of rents.  Later the Board only asked for changes to the registration form. However, in 1995, the State of California found the Berkeley law to be unfair, punitive and counterproductive.  It overrode Berkeley rent control law and instituted a system where the rent for voluntarily vacated units may be raised to market level (after which time it is recontrolled and subject anew to the process administered by the Rent Board).  Owners must now inform the Rent Board only of the rents for newly rented units.   And yet even this is totally unnecessary.  When owners were required to keep the rent the same between tenants, registration was clearly necessary to assure that they did so.  Now every sitting tenant knows his/her legal rent and the legal rent for every new tenant is the rent to which they agree, so they too know their legal base rent.  What purpose does registration serve? 

For those reasons, we strenuously object to the proposed expenditure of $175,000 on data base upgrades.  This wasteful process should be terminated, not upgraded. 

It is our strong believe that the passage of the proposed fee increase would be another sign that the Rent Board is out of control and should be brought within the city government.  A fair and effective system could be administered at a fraction of the money that is being wasted. 

Their current budget is $3,500,000.  While the City of Berkeley struggles to keep its budget intact, the Rent Board piles increases on one after another. 

In this letter of opposition we have not attempted to discuss several issues that we would take exception to in the FY 2007 Budget Analysis because we have not been given time to fully evaluate the document before tonight's meeting.  Nevertheless, for the reasons stated herein we strongly object to the adoption of a fee increase. 

Respectfully submitted,

  James Kilpatrick, President 


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