The Land Is Too Valuable For People To Live Here
By Mark H. Levine, Ph.D.
*In 1970, Justin Herman, Executive Director of the San Francisco Redevelopment Agency, argued for building the Yerba Buena Center, in the South of Market area speaking of the value of the land and how it should not be left to the low-income population working and living there. With Herman’s backing of hotelier Ben Swig’s 1954 "San Francisco Property" they ultimately drove out over 4000 low-income residents and over 700 small businesses.
He said it then and others are saying it today as all of San Francisco has become "too valuable" for those who have worked, lived and raised families here to be able to stay.
I am a 52-year old native Californian. I spent the first 22 years of my life in Los Angeles, left the state for six years in the early 70s for graduate school and a university teaching position and then returned to California in 1976. Instead of going south, however, my return to the state brought me to northern California, first to Oakland and then, in 1978, across the San Francisco/Oakland Bay to San Francisco.
Twenty years ago, in April of 1980, I moved to 857 Hayes St., San Francisco, where I reside to this day. My now-28-year old son was largely raised there, living there from the time he was 8 until he went off to college at the age of 17.
Let me back up bit for those of you who are not familiar with San Francisco and the terrible problem that low- and middle-income people are facing here in terms of housing. Two-thirds of the approximately 750,000 residents of the approximately 54-square mile city/county of San Francisco are renters. The majority of those renters -- anyone living in an apartment building before 1979 -- live with certain "rent control" protections. This is not like New York City where rents can never be raised or can only be raised to pay for capital improvement or where family members can inherit the rights to a rent-controlled apartment or where they have "vacancy rent control" which limits the amount that rent can be increased even on an apartment that is vacant. San Francisco’s rent control law allows for an annual "cost of living" increase ranging from 0-7% per cent per year that a landlord simply needs to notify the tenant of 30 days before it goes into effect.
As fictitious capital has amassed from the Silicon Valley on up and as San Francisco became increasingly promoted as the number one tourist destination city in the country (if not the world) many landlords began to recognize that they could make a lot more money if they weren’t restricted by the rent control laws, particularly in units occupied by longer term tenants with the lowest rents. The fact that these tenants were often elderly, disabled or ill and frequently low-income was of little to no concern for the landlords. So repeated efforts have been mounted to eliminate the rent control ordinance while that the same time trying to come up with other ways to get around it.
Over two decades ago many landlords began "condominiumizing" their apartment buildings, i.e. selling off individual units which would then either be inhabited by their owners or potentially rented out by their new owners after the prior tenancy and hence controlled rent level had been broken.
In 1979, one year after I moved to San Francisco and one year before I moved into my current residence, in an effort to stem the rising tide of this process, The County Board of Supervisors of "The City" (as it is referred to by residents of the greater Bay Area including those who live in the larger city of San Jose) passed an ordinance restricting condominium conversion. They limited the number of rental units that could be converted to condominiums to 200 units a year and established a lottery process to determine which buildings would be authorized to do so within any given year.
The next step in the battle saw owners taking advantage of a provision in the rent control ordinance that allowed for landlords to evict tenants in their apartment units if they (the landlord) or a member of their immediate family wanted to move in. If the landlord lived there for six months, rent control would be canceled for all units in the building.
Many a speculator would find a young couple just starting out and make them a partner for eight or nine months, let them move in at a low rent, break the rent control for the entire building and then move out, simultaneously giving up their stake in the property.
When the City eliminated this provision to break rent control in 1994, many landlords continued to make use of the "owner-move-in" (OMI) provision with a different twist. First they would evict a tenant in one unit and they (or a stand in) would move in breaking rent control for that unit. Then they would decide that unit was not big enough for them and they wanted a second, a third and so on. They could live there for a while and then rent it out. In 1998, the City put an end to this farce and limited OMI evictions to only one unit.
Meanwhile, property prices have continued to climb as young dot.commers exercise their stock options after their company’s IPO (Initial Public Offering) greatly inflates the stock prices -- (see NASDAQ) -- and have a ballooning net worth on paper against which loans can be gotten and $600,000-$1 million dollar "fixer uppers" can be bought. In the 10 weeks since the year 2000 began, housing costs in San Francisco have increased 15%!
Those on the road to making a profit regardless what the cost to someone else did not allow this latest roadblock in their journey to deter them. Rather, they simply took a detour down another path to the same destination.
In 1986 the legislature of the State of California passed a law to help landlords in their pursuit called the "Ellis Act." The Ellis Act said that if a landlord decided, for whatever reason, they no longer wanted to be in the landlord business they could remove a piece of property from the rental market. They would file a notice with the City’s Rent Stabilization Board and notify the tenant that this was happening and would give the tenant a 60-day notice. The tenant would then move out and if they didn’t then the landlord would pursue legal means to evict them. (Unlike other means to evict, many local judges have ruled that it is the right of a landlord to decide to remove his property from the rental market and then proceed to do so and, therefore, they have ruled that there is NO defense against an Ellis eviction including charging that the landlord is retaliating against them for demanding the repair of building violations, etc.)
Once the building was off the market, whether it was empty or not, the landlord would then sell the units in the building as condominiums, usually by selling interest in the building where owners buy a share of the building but are really buying one of the units. In the case of a three unit building, for example, the landlord could sell the units to three different people. Each "buys" 1/3 of the building which gives them actual ownership of one of the three units. This arrangement enable the units to be sold as condos, but these sales are not regulated by the condo conversion law.
Now, back to my story. I live on the third floor of a three-floor/flat Victorian almost at the top of the Hayes St. hill which has been made famous by the San Francisco Examiner’s annual "Bay-to-Breakers" race. My residence is just outside what is known in tourist guide books and real estate ads as "the Hot Hayes Valley" where the clientele of fashionably hip dress stores and trendy restaurants walk side-by-side with countless numbers of homeless people seeking a little help to try to get by from one day to the next. Real estate maps actually say my building is the Alamo Square neighborhood as it is west of the Hayes Valley/Alamo Square dividing line at Webster St. and only 1 and 1/2 blocks east of Alamo Square Park and that famous San Francisco postcard image of the "Painted ladies" that faces the park and which stand against the backdrop of the San Francisco skyline.
Although I have lived in my apartment for 20 years and have paid my rent in full and on time for every month of my tenancy, I am now faced with the possibility of being evicted because my landlord has filed, under the statewide "Ellis Act," to remove the three flats in my building from the housing market.
There is a lie being spread by some sources and among certain circles that as a result of the rent control laws in San Francisco, we have a situation of landlords subsidizing their tenants. This is one of the arguments that is used by those making money through Ellis evictions and the subsequent formations of "tenancies-in-common" to get support for their actions from the uninformed and unsuspecting public, while hiding their true motivation.
Let us take my own situation as an example. My landlord purchased the building that I lived in 30 years ago for the sum of $26,000. At the time that I moved in, 10 years later, my rent was $450 a month. Over the years he has raised it consistent with the allowable level under the Rent Stabilization Board guidelines. Sometimes he raised it annually at the time it was allowed and other times he would "bank" the allowable increase and raise it at a later time. Over those twenty years, my rent has increased nearly $300 and is now $745.50.
During the 20 years of my tenancy, I paid somewhere between $125,000-150,000 in total rent. My landlord made very few repairs. He did put a new roof on about 15 years ago but that was only after losing a legal battle against me that started because the roof leaked so badly that water was coming into every room in my flat, destroyed possessions and caused health problems for my family. He did repair the back porch that had been cited for building code violations. There were some plumbing repairs to stop leaks and he did put in a heater not too long after I moved in but there was not much more.
In 1998 he repaired a ceiling in one of the rooms in my flat that was ruined from years of a leaking roof (beginning in the early 1980s). Periodically before it was repaired, pieces of the ceiling would simply fall and at the time he finally repaired it there was no plaster on almost 1/2 of the ceiling which was down to the lath. This was 13 years after he finally replaced the roof. He has repaired none of the other ceilings which have major cracks in them and in 20 years the only painting he did was of that one new ceiling. I personally replaced one ceiling and painted most of the rooms and the hallway myself.
At the present time, my landlord’s property tax payment is $600 a year, something that he gets paid with one month’s rent payment from me.
So with a low tax payment and few repairs, the majority of the rent I paid him went to pay for the cost of the building. One way of saying it is that I paid for the building 5 to 6 times over. Now keep in mind, my landlord had the building and was collecting rent, for a full 10 years before I ever showed up and during most of my tenancy both of the other two flats were occupied and they were occupied by tenants who moved in after I did and subsequently paid higher rents than I did.
As a result, we can easily see that between all of the tenants in the three units over the past 30 years, we have collectively paid the expenses on the building, the taxes, the water and whatever repairs were made many times over and we bought the building for our landlord.
Oh yeah, this building that my landlord paid $26,000 for and that we, his tenants, paid for over and over again, he is now planning on selling the individual units in the building under a tenants-in-common arrangement for $400,000 a piece. That is $1.2 million dollars for the building! His stated plan is to move into one unit -- despite having a home in the east bay -- and to sell the various flats over a several year period to allow him to take advantage of tax laws that will enable him to avoid tax on the first $250,000 (as a single individual) of income he makes if he has lived in the building for two of the previous five years. Quite an investment; quite a profit. If you were to look into it, I am certain that you would find that my story is not unique and, in fact, is probably representative of the vast majority of the 2/3 of the City’s population who are renters.
So you see, this is not about helping landlords who are suffering at the hands of their tenants as some political figures and others who seek their cut of the profits at the expense of poor and working people suggest. It is simply about the greedy taking from the needy...all of us who need a decent place to live at a price we can afford. Because as Mr. Herman said 30 years ago, "This land is too valuable to permit poor people [or working people] to park on it."