Sid Lakireddy

Sid Lakireddy is the current President of BPOA, a position he has held since 2011 after first joining the Board of Directors in 2005. He has been active in the Berkeley real estate market for over 15 years, including owning and operating a property management company, and continues to work in the rael estate market of his childhood home, California's central valley. He is a licensed California real estate broker, and a licensed, non-practicing California attorney.

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News & Opinion from BPOA


President's Report

Registration Fees

 This message is about a problem which may not seem to be BPOA's problem, but is a glaring issue which is being studiously ignored by our representatives.  We have written earlier about Berkeley Measure AA on the last ballot.   It appears that no one (except Nancy Freidberg, who was roundly ignored, to my chagrin) understood the extent of this Measure.

 Measure AA is a classic regressive measure which will affect those with the fewest resources. It was snuck in under the table.  The Berkeley City Council members who signed off on it apparently also did not realize that:

1. Home Owners would have to pay $15-$20,000 to move in to their own houses.

2. In-law units in owner occupied houses, built after 1980, are now under rent control.

 Most Berkeley residents are in favor of fair and equitable rent control (because they wrongly believe that such a thing is effective and/or possible).   How do they feel about a regressive program like this? It violates the privacy of their homes and takes away their flexibility and freedom in deciding how to use their own space.

 Berkeley may have many wealthy home owners who have no interest in renting any part of their house. However, there are many others who rely on rental income for help in paying taxes and mortgage, or who are living on a fixed income.   Berkeley home owners with the fewest resources are the ones who will be hurt.  

The damage will be wider than that.  In-law unit, are a great source of affordable housing.

It is clear from talking to people who have in-law units that anyone who can, will take their unit off the rental market. Workers, students and visiting scholars will loss these convenient and relatively cheap accommodations.  The variety and interest of the city will also suffer.   This is a blow to the smallest owners.   

We hope that some member of the City Council will take this on and demand that Measure AA 

controls on single family homes be reversed.  This is a grab for money and power by the Rent Board staff and should not be implemented.

Please call your Council person, and let them know that you are opposed to this and that it is destructive to home ownership in Berkeley

 

 

04/27/2015

Hiring Practices

 A few years back, along with many other BPOA members, I went before the Berkeley City Council and opposed the creation of a deputy director position for the Rent Stabilization Board. We even went so far as to say in public that the job is simply being created so Steve Barton can retire with a higher pension.

At the time our assertion was refuted and we were told that there would be a fair hiring process. But at the end of the day, Steve Barton was hired. The reason proffered for the necessity of the position was so that there would be continuity in the administration of the program should something happen to the executive director and to properly assure a transition. The fact that a twenty-person organization requires a Vice President is dubious.

At the end of the day, it appears that the position actually was created simply to help out friends. The reason why I say this is the following:

Steve Barton retired last year. I am told that interviews were conducted to fill his position. In the end staff recommended that the Director of Housing and Community Services for the City of Berkeley, Drew King, be hired for the position and he was ultimately hired towards the end of last year. Curiously, they also split the position into a 80% job and gave the other 20% of the job to a hearing examiner.

Whoever heard of splitting a position between two people and assigning them disproportionate percentages? It probably is done in certain administrative circles for fancy accounting but in real life who really does this? Is someone actually apportioning work and making sure that one only does 20% of the duties and the other does 80% of the duties?

In addition I was surprised that the hire did not occur from within the rent board to another cohort or friend of staff. But now I know why. Mr. King’s appointment was more than likely intended to simply be temporary.

Unfortunately Mr. King is ill and was so prior to his hiring and that was a fact widely known. Of course during a hiring process you cannot consider one’s health unless it would hamper that person’s ability to discharge the duties of the job. So the question becomes how sick was Mr. King prior to the hiring and how much of this was known at the time of his hiring.

If they knew that he was sick and probably did not intend to work much longer and hired him regardless, that is just unethical. I think the Rent Board needs to be reminded that they have a fiduciary duty to the citizens of Berkeley and using the post of deputy director to simply help out friends is not proper. Furthermore, if this is a legitimate and humanitarian manner to treat an unfortunately ill city employee, the funding should be borne by all Berkeley taxpayers and come from the general fund; not borne only by Berkeley property owners by using Rent Board funds, the only source of which is registration fees.

From what I am told, which I am not a 100% sure about, is that Mr. King never did go to work at the Rent Board but was out on sick leave from day one. Now he is moving to Florida. So if the rent board continues to pay him, knowing he is not in the area, and hired him knowing that this was going to occur, this is just wrong.

But it also possibly explains why they needed to split the position to begin with. The other unanswered question is what was the purpose of hiring Mr. King if it wasn’t to actually perform the job? Was the purpose to help boost his pension?

If that is the reason, the City of Berkeley is walking a fine line—that would be the second abuse of this position and it risks getting in trouble with Calpers, the state pension administrator. Calpers does not look at such abuses sympathetically. In fact they sometimes fine governments for abuses of the sort.

You would think that after the scathing report by the NAACP that Berkeley would pay more attention to the HR practices being utilized. The NAACP made it clear that the HR practices are not acceptable and need reform; this is a perfect example of that.

It is not too late for the City Council to now invalidate the position, and in fact it should—before it gets the whole city in trouble. Now would be a good time to do this since there will be a vacancy in the job again soon.

04/02/2015

Where Does the Money Go, Part 2

I received several comments and communications in response to last month’s message in the newsletter. The general sentiment was basically astonishment at the size of the Rent Board’s budget when compared to their duties and tasks.

One major question that remains unanswered is the source of their extra revenue. The number of rent controlled units has not increased since at least 1999; therefor the number of units that pay the rent registration fees has not increased. The fee itself has not increased in years and these fees are the Board’s sole source of income. So, where is the extra approximately $700,000 in revenue coming from?

One answer that might be proffered is that the Rent Board legally went after the fraternities and sororities that rent out rooms over the summer and negotiated that they pay a reduced registration fees. However, there is no way that those fees add up to anywhere close to the $700,000. The only other known source of income is from the City of Berkeley for services provided. I think someone should look into how much other City departments are being billed for Rent Board staff services.

When I provided the tables last month comparing budgets against the number of rent controlled apartments, I did not provide information on Santa Monica simply because it is not in our immediate geographic location. Usually, in legal or market analysis geographic area matters and is a strong consideration when trying to make fair comparisons. However, the Berkeley Rent Board does say Santa Monica has a similar proactive Rent Stabilization program, whereas other programs are not as proactive.

I recently had an opportunity to visit Santa Monica. I love Berkeley and I think it is a great place, but I am sorry, Berkeley should not be compared to Santa Monica. It may have a proactive electorate and be considered a very progressive town but that is where the comparisons should stop. That town really encourages development of property. You almost need a hard hat to walk through that Santa Monica. If the Rent Board there is as anti-development and powerful in City policy making as they are here, there is no way Santa Monica would have made so much progress .

The Berkeley Rent Board spent much of the last couple of years making the point that if the rent controlled housing stock is diminished for the sake of constructing new market rate housing, the developer must create new rent controlled units within the development—in addition to the affordable housing unit requirements. Talk about deliberately limiting development potential.

I am not saying development everywhere is a good thing, but I do think smart planning makes a lot of sense. However—smart planning should not mean diminishing the number of development opportunities by limiting the number of development sites or by creating onerous hurdles for housing projects. This just contributes to a shortage of housing.

Meanwhile a pro-development attitude in Santa Monica has allowed much construction, and 36% of all newly created units are still affordable housing that create good opportunities for moderate-income households.

Of course the owners of rent controlled properties should cheer on such policy making since they are only helping to raise the rents.

Going back to my original point about comparing Berkeley’s Rent Board and its Santa Monica counterpart: Santa Monica’s registration fee is $156 per unit (now it is $176 after a recent ballot measure) versus Berkeley’s $194 per unit. Their annual budget is $4.7 million versus Berkeley’s approximately $4.3 million and it manages about 26,500 units compared to Berkeley with 18,000 units under the program. In addition, the entire registration fee is passed through to the tenant in Santa Monica. However, due to a recent ballot measure in Santa Monica any increase in the registration fee will only result in half of the increase being passed through.

Whether it be half of the registration fee or the whole registration fee being passed through, there is something very smart in making sure the registration fee is paid for by the tenants and making sure that they know it. This way the rent board is answerable to the tenants as well as the property owners for their budget, not just the property owners as is the case in Berkeley.

Arguably Berkeley tenants do, in effect pay for the registration fees, in that their rents cover the fee—but when it is transparent as it is in Santa Monica, the government agency becomes more accountable.

In sum, my take away from my visit to Santa Monica is that Berkeley should not look south for examples of enlightened development policies. Santa Monica has a thriving economy with Google and many other large companies located there. It is driving its economy with new development, actively encourages this new development, and at the same time creates more affordable housing for moderate income households. And by being development-friendly, it substantially increases revenue at the same time.

Economic development in Santa Monica is amazing.

03/08/2015

Where Does the Money Go?

As I stated in a previous newsletter BPOA has been busy reviewing old Berkeley Rent Stabilization Board agendas and other materials. As part of that effort, we took a look at the some of the recent budgets of the Rent Board.

Before you read on, please take a deep breath and promise yourself you will not give yourself a coronary. The last time I looked at the budget carefully (a few years ago) I believe the it was around $3,800,000. The Rent Board manages 21,000 units so, at $194 per unit, that should simply result in a budget of a tad over $4,000,000. However, of those 21,000 rent controlled units, many belong to non-profits or are Section 8 and managed by Berkeley Housing Authority, or are owner occupied and, for one reason or another, exempt from the registration fee. The figure previously used at budget meetings was that approximately 18,000 units pay a registration fee, which should mean that their revenue is a little under $3,500,000...So, where is the other $700,000 coming from? Is this other source of income a reliable one that can be depended on moving forward?

Now, without raising the registration fees, the budget is $4,245,000. We know the Rent Board lends out staff to other City of Berkeley departments and then collects for time spent on other City issues. So, does this mean the City is paying the rent board an additional $700,000 for services? The only other known source of revenue is registration fees, which should be $3,600,000 even on the high side. Is it fair that the Rent Board is now using our tax money on top of our registration fees to fund its activities?

This extra $700,000 in the Rent Board’s budget equates to approximately 4.5 full time employees. The Rent Board currently employs 21.5 employees. The amount the rent board spends on the employees is $3,432,400. So that means that average employee is costing the Rent Board $159,646 including benefits.

But that is the average employee. The median household income in Alameda County in 2011 was $67,558 and that number is lower when just looking at the statistical area comprised of Berkeley, Oakland and San Leandro.

In addition, the Rent Board is giving away grants to the tune of $290,000 this year. This is the money that presumably goes to the Eviction Defense Center and the East Bay Community Law Center. Then there is $145,000 which is spent on public outreach. This presumably covers the fancy newsletters and brochures that are being mailed out on a regular basis.

The Rent Board also pays $225,000 per year in rent. What happens to this budget when the rent goes up? Can the Rent Board rely on their other sources of income?

For operational costs and counseling, mediation and hearings—which I presume includes law library subscriptions, copy paper, copy machines etc.—the Rent Board spends $102,600. The last item is Capital Improvement Projects, which until a few years ago was approximately $200,000 per year and was spent on their new rent registration tracking system; it is now $50,000. So what happened to that extra $150,000? Where did it go?

The total breakdown is as follows:

Then there is the question of reasonableness. Usually when looking at issues like this, a court or whomever asks what is common practice in the area. So let’s see how Berkeley Rent Board stacks up versus other agencies in the area.

From here I will let you draw your own conclusions but I think there are a lot of questions that should asked if you care about our City governance.
If you do care, the first step you should take is to attend the Berkeley Rent Board Commission meetings and let your voices be heard. With the exception of January, February and May the Rent Board meetings are held on the third Monday of every month at 7pm at 2134 Martin Luther King Jr. Way. Check with their website for cancellations before heading out:
http://www.ci.berkeley.ca.us/Rent_Stabilization_Board/Home/2015_Board_Meetings.aspx.

great years with BPOA. I am always amazed how, even though Nancy is not a multifamily property owner, she continues to champion our cause as much as anyone else.

Retiring City Council member Gordon Wozniak also received an award from BPOA. Gordon was a council member who, even when many times the Council would vote against BPOA’s position, he remained in the minority and voted our way. He will be deeply missed on the Council by BPOA and many others.

Michael St. John also received an award for his unrelenting work on behalf of BPOA. Michael knows the rent board and its regulations as well as anyone and has been representing property owners for almost 30 years now.

Ted Edlin also received an award. Ted is someone who is very in tune with City politics and yet doesn’t forget about BPOA, despite all of the other local issues he is involved with in the City of Berkeley. One of his main passions these days is to see that City of Berkeley balances its finances as opposed to just kicking the can down the road, a noble but tough cause to tackle.

Last but not least, the final award went to Kathy Snowden. Kathy has been a long serving board member of BPOA and has tireless energy. In addition, she knows just about everybody and so she is always busy keeping BPOA up to speed and in people’s consciousness.

After the award we moved on to having Mayor Tom Bates as our featured speaker. Tom gave a great talk in which he warned BPOA that we have a target on our back and in order to avoid being hit we need to organize and start to be consciously proactive. As an example, he felt it was time we form a PAC so we can more effectively participate in the political process. I think this is some advice we should take to heart. After all, Tom Bates definitely knows a thing or two about politics after doing it for 36 years.

02/03/2015

And The Award Goes To…

In case you missed the Annual BPOA Holiday Dinner, this year it was a great party. We had approximately 120 people attend. In addition, we handed out quite a few awards.

Nancy Friedberg, who is largely responsible for putting together this newsletter and running BPOA on a daily basis, received an award for completing ten great years with BPOA. I am always amazed how, even though Nancy is not a multifamily property owner, she continues to champion our cause as much as anyone else.

Retiring City Council member Gordon Wozniak also received an award from BPOA. Gordon was a council member who, even when many times the Council would vote against BPOA’s position, he remained in the minority and voted our way. He will be deeply missed on the Council by BPOA and many others.

Michael St. John also received an award for his unrelenting work on behalf of BPOA. Michael knows the rent board and its regulations as well as anyone and has been representing property owners for almost 30 years now.

Ted Edlin also received an award. Ted is someone who is very in tune with City politics and yet doesn’t forget about BPOA, despite all of the other local issues he is involved with in the City of Berkeley. One of his main passions these days is to see that City of Berkeley balances its finances as opposed to just kicking the can down the road, a noble but tough cause to tackle.

Last but not least, the final award went to Kathy Snowden. Kathy has been a long serving board member of BPOA and has tireless energy. In addition, she knows just about everybody and so she is always busy keeping BPOA up to speed and in people’s consciousness.

After the award we moved on to having Mayor Tom Bates as our featured speaker. Tom gave a great talk in which he warned BPOA that we have a target on our back and in order to avoid being hit we need to organize and start to be consciously proactive. As an example, he felt it was time we form a PAC so we can more effectively participate in the political process. I think this is some advice we should take to heart. After all, Tom Bates definitely knows a thing or two about politics after doing it for 36 years.

01/04/2015

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