As renters find their political voice, the term "rent control" makes its grand entrance into the civic conversation.
Thursday, May 31, 2001
Boxed In: Nora Fairgarden of Marina and her husband Randy have lived in a rent-controlled environment. After five years in the Peninsula''s housing market, they''re ready to do so again.
Nora and Randy Fairgarden came to the Monterey Peninsula in search of a better life. In December of 1996, the young couple moved here from Southern California to start a family, breathe clean air and become part of a community they could call home.
Finding jobs was the easy part. Randy''s company transferred him to a retail store in Carmel, where he''s the manager. Nora was forced to take a pay cut, but nevertheless found a good job as a recruiter for Pebble Beach Company.
Finding a home was bit tougher. The Fairgardens'' search for decent and affordable housing evolved into an ongoing trial that persisted for the next four and a half years.
In Beverly Hills, where a city rent control ordinance limits annual rent increases, they had paid $850 a month for a large one-bedroom apartment. Even though their landlord was allowed to increase their rent annually, in eight years of tenancy he only raised it once.
When they first moved north, the Fairgardens settled for a 600-square-foot granny unit in Pacific Grove for $900 a month. When their daughter was born in December of 1997, they looked around for a larger space. By that time, rents on the south end of the Peninsula had risen beyond their reach. So in June of 1998, the threesome moved into a three-bedroom, two-and-a-half bath townhouse in Marina for $1,050.
Over the last three years, the Fairgardens have seen their rent ascend to the point that, after daycare, car payments and other basic necessities, the family can barely afford to live there. In 1999, the rent went up to $1,100, and in 2000 it jumped to $1,300--still not a bad deal for a three-bedroom place. Nevertheless, Randy was forced to take on a second full-time job.
To add insult to injury, their landlord has failed to keep up his end of the bargain. When they moved in, they were told maintenance and gardening were included in the rent. Neither has materialized. In fact, the property owner charges them repairs--a clogged garbage disposal set them back $35. Now, two of their three toilets are broken, and they''re not about to call the landlord to fix them, much less ask him to repair broken playground equipment or landscape the barren yard.
Fearing more charges and rent increases, "My husband and I basically just shut up," Nora Fairgarden says, "and of course, we''ve never asked for maintenance again. You just don''t even go there."
The couple had hoped to move out and leave the overflowing toilets and empty promises in their wake. But their hopes for a new home have withered in the harsh economic climate. One cinder-block house they looked at in Monterey had a concrete floor throughout, the bathroom was partially unfinished, and the kitchen appliances were in disrepair. The landlords were asking $1,100 a month, but showed no interest in fixing up the place. Another potential landlord, in a blatant violation of state and federal housing laws, immediately turned them down over the phone when she heard they had a 3-year-old daughter.
For now, the Fairgardens have resigned to stay put, but they''re not lying down. Nora Fairgarden has started to organize the tenants in their building. Three of her neighbors have signed on so far. Once a tenants'' association is formed, she plans to write down a list of complaints and take it to her landlord. "If he''s totally unreasonable, you can bet I''m copying it to the papers," she says.
And she won''t stop with her building. Ultimately, if things don''t get better, Fairgarden says she would think about pursuing a rent control system in Marina that would implement caps on annual rent increases, something that she took for granted living in Beverly Hills.
"You start small, make that work, and you encourage other people to do the same, and then come together as a body," she says. "We all have to band together. I can''t imagine we''re the only ones thinking about this."
The Birth of A Movement
Until late last year, there were no tenant organizations to speak of on the Peninsula. Then last November, the Buena Vista Land Company announced an unprecedented 22 percent rent increase, sparking the tenants of its four apartment complexes in Monterey and Pacific Grove, collectively known as the Olympias, to organize. After some negotiation, Buena Vista acquiesced and temporarily dropped the increase to 12 percent, but not before the Buena Vista Land Company Tenants Association was born, and along with it a fledgling movement of tenant activism.
Right now, there is no organized movement toward rent control locally, but people are talking about it. While neophyte tenant advocates find their political footing, talk of rent control has begun to grow from a few scattered whispers into a collective murmur.
"I''m not saying that [rent control] is definitely where we''re going, but it''s been under serious discussion," says Sam Lipsky, an Olympia tenant in Monterey who has emerged as the unofficial spokesman for renters'' rights.
"I''ve talked to many people who do want it," says Jeanie Ruprecht, another Olympia tenant in Monterey. "If things don''t improve, it''s certainly something that we should rally together and do."
The Buena Vista Land Company may have birthed a movement of tenant advocacy, but property owners doling out similarly dramatic rent increases have slapped it on the behind and made it howl. Lipsky says over the past six months, he''s fielded calls from tenants who have endured rent hikes up to 40 percent in a single year.
"It''s a like a wildfire spreading, these massive rent increases," he says. "There doesn''t seem to be any rhyme or reason for these large increases, other than ''everybody''s doing it, and I can get it.''"
Earlier this month, the Hotel Employees and Restaurant Employees Union (HERE) released the results of a survey indicating that workers in the hospitality industry--the second largest employer in Monterey County--saw their rents go up by an average of 13 percent in the last year. And more than half of the surveyed workers say they''re considering moving away from the area. The housing crisis, which affects relatively low-paid service workers as much or more than any other group on the Peninsula, has prompted HERE to get involved.
"The housing crisis is such a high priority, we are considering all means, including rent control," says HERE representative Mark Weller. He says the union would not spearhead the movement, but might act in a supporting role.
And the newly formed Coalition of Minority Organizations (COMO) Committee on the Housing Crisis is batting around the idea of rent control as well. "My view is that, at this stage, there isn''t necessarily the impetus from the community to push this issue [of affordable housing] forward. We''ve skirted around it," says Bill Melendez, chair of the COMO committee.
Now, Melendez says, it''s time to stop skirting and start looking for concrete solutions, and rent control could be part of the answer.
Tenant advocates have little hope that any area city councils would implement rent control. It would more likely be put before the voters of the individual cities. "If it came to pass," Lipsky says, "it would have to be through a ballot initiative, a grassroots effort, and that''s something people are seriously looking at right now."
And rent control could win at the polls. According to 1990 Census figures (2000 housing data for individual cities has not yet been released), renters outnumber homeowners on the Peninsula and in Salinas. In Monterey, current estimates show that more than 60 percent of the households are renters; likewise, in Pacific Grove and Salinas, more than half rent. Renting households in Seaside and Marina hovered around 60 percent in 1990, although those figures have shifted with the closure of Fort Ord. One thing''s for sure: The renting masses far outnumber the landlords.
If rent control does materialize, tenants say the property owners have nobody but themselves to blame. "If there is a movement towards rent control, it''s only something they''ve put on themselves," says Lipsky. "The landlords are pushing tenants towards this. That''s the bottom line."
For their part, leaders in the world of property ownership have attempted to stave off rent control. A meeting in January hosted by the Monterey County Association of Realtors and the local chapter of the California Apartment Association attracted about 200 landlords to the Monterey Hilton, where property manager Jan Leasure and other speakers tried to coax them into softening the blow for their tenants. Some of Leasure''s suggestions included only upping rents once a year, using the Consumer Price Index as a guide for rent increases, and giving tenants 60 days'' notice of increases rather than the required 30 days.
Tom Bannon of the Apartment Association''s state office acknowledges that, to some extent, the fate of rent control does lie with the landlords. "There''s nothing wrong with making a profit," he says. However, he warns, "You don''t want to become greedy. Hogs get slaughtered."
After the January meeting, the Realtors released a much-anticipated but ultimately flaccid set of voluntary guidelines that did little more than instruct landlords to follow the law and be ethical. The Apartment Association followed with a more promising set of guidelines that spoke directly to the question of rent increases, setting voluntary limits for annual rent increases (see sidebar, pg. 12).
"As a general rule, the industry has been pretty effective in terms of policing itself. Some of those [offending] owners have been reeled in, for lack of a better word," Bannon says. "I think to a large extent you are always going to have a few bad apples, just like you''re going to have a few bad tenant apples."
But frustrated tenants, working two jobs to cover the rent or facing the possibility of having to leave the area altogether, say the landlords'' efforts to self-regulate may be too little, too late. Voluntary guidelines, while admirable, won''t ensure reasonable rents. Besides, renters, for the most part, have been left out of the official problem-solving process, and they''re starting to realize they need to take the initiative.
"We''ve come to an awareness that something needs to be done," says Pacific Grove renter Kay Star, "and many alternatives will be coming up in the next few months, because this is not going to go away."
Truth and Consequences
Rent control is far from a novel concept. Rent control was introduced in New York City during World War II. In California, the combination of an inflated economy and deflated hopes spurred a stampede toward rent control during the late ''70s and early ''80s. When Proposition 13 was headed to the ballot in 1978, anti-tax activist Howard Jarvis promised renters they would reap the benefits, that landlords would pass on property tax savings to them. That never happened. Instead, inflation pushed rents up.
Between 1978 and 1985, various permutations of rent control passed, either by initiative or ordinance, in Los Angeles, San Francisco, Oakland, San Jose, Santa Monica, Palm Springs, West Hollywood, Berkeley, Beverly Hills, East Palo Alto, Thousand Oaks and Hayward, putting more than half the state''s renting population under some form of rent control. Regulations range from Berkeley''s system, where an elected board decides the amount annual rent increases, to systems like that of Los Angeles and San Jose, where allowable annual rent hikes mirror the inflation rate. San Diego was the only major coastal California city to buck rent control, rejecting it by referendum in 1985. In 1996, the state Legislature balanced the scales by passing the Costa-Hawkins Act, which gutted rent control. The act implemented "vacancy decontrol," allowing landlords to adjust rents to market rate after a tenant vacates a unit. The law also exempts from rent regulation single-deeded units, such as single-family homes, townhomes and condominiums, and all rental units built after 1995.
Most California cities with rent control allow an annual increase consistent with the Consumer Price Index, which measures inflation (currently about 3 percent). Some are more strict. For instance, San Francisco landlords can only increase by 60 percent of the CPI. And in Berkeley''s system, considered one of the most politically fraught, increases are prescribed by an elected rent board, which, except for a brief period in the early ''90s, has historically been controlled by renter interests. Over the years, the board has allowed only paltry rent increases, and in one year none at all. The board approved a $10 increase this year and $6 last year.
"Rent control has become the third rail of Berkeley politics," says Robert Cabrera, president of the Berkeley Property Owners Association. "Landlords have become the whipping boy for so much of what goes on in Berkeley, you never feel like part of the community."
Is rent control the answer to Monterey County''s housing crisis? At best, objective observers say it''s a mixed bag. "It''s something that I think is oversold by both sides," says Michael Teitz, professor emeritus at UC Berkeley and director of research for the Public Policy Institute of California. "Landlords tend to present it as being the end of the world. Tenants tend to present it as solving the housing problem. Neither is correct."
One of the strongest arguments against rent control is that it can actually work against affordable housing, shrinking the rental housing supply by discouraging development of new apartments and prompting landlords to get out of the business, which in turn tightens the market and can squeeze out lower-income tenants looking for housing. Rent control critics point to Berkeley, where Census data shows that between 1980 and 1990, the city lost 3,926 rental units, 14 percent of its rental stock--a factoid landlords attribute to rent control.
"The bottom line is, owners always have one foot in their investment and one foot in thinking, ''how do I get rid of this thing?''" Cabrera says. "It''s not a stable situation."
Landlords argue that rent control also forces them to defer repairs and upkeep to make up for future lost rent, resulting in poorly maintained units. Moreover, even the talk of rent control can spur landlords to jack up rents.
"It''s kind of a chicken-and-egg thing," says Steve Romberg, president of the local Apartment Association and author of the more promising set of voluntary rent guidelines. "Some owners, out of anticipation or fear, will say, ''if my rents are going to be frozen, I want them frozen at market rate.''"
But locally, tenants aren''t buying those arguments. First of all, it seems implausible that rent control would chill apartment construction on the Peninsula, because it''s not happening now anyway. The combination of a frozen water supply, neighborhood disdain for high-density development and the high cost of land have already reduced apartment construction to next to zilch. Profit-minded developers are more apt to pave over far-flung fields with pricey vacation homes or ranchettes than build rental units. And the lack of supply is part of the reason rents soared in the first place.
As for deferred maintenance, "That argument is clearly bogus," Lipsky says. "Right now, many, many of the tenants we''ve heard from are living in deteriorated units, and their rent is going up 15, 20, 25 and 30 percent."
Moreover, some side effects can be controlled with regulation. To protect tenants, many cities have passed strong maintenance regulations and anti-eviction laws alongside rent control. An initiative could also roll back rents to a previous date to counteract rent hikes slapped on renters in anticipation of rent control.
In the final analysis, "It won''t solve the housing problem, because it can''t," Teitz says--but it can help ease the pain of a housing market spinning out of control.
"I tend to see rent control, in the context of a market-based society, as most effective as a way of restraining surges in rent," he says. "that it kind of protects people that are in place from being battered too much, and it gives them some breathing room."
Rate Speech: After seeing his and his neighbors'' rents go up by 22 percent, Sam Lipsky emerged as an outspoken advocate for tenants'' rights. He''d like to see rent increases tied to the Consumer Price Index.
A Last Resort
And a little breathing room is all anybody really expects. Luckily for local landlords, tenants who are contemplating rent control do so with caution.
Before anyone starts gathering signatures for a ballot initiative, activists would like to see some other steps implemented. Lipsky suggests a system like the one in Montgomery County, Maryland, where laws require landlords to supply tenants with the Consumer Price Index report alongside rent increase notices. He''d also like to see the establishment of an official housing office that could offer binding mediation in tenant-landlord disputes.
"Obviously that''s a step away from mandated rent control," Lipsky says, "but at least it''s coming from an official organization."
And Kay Star wants to develop a Web site to unify renters and supply information about tenant rights.
Should it come to rent control, tenants understand the need for rent increases, that landlords have property taxes to pay and capital improvements to make, and that they are suffering under the weight of the power crisis. Most everyone who is talking rent control envisions allowing annual rent increases at the CPI level or even a few percentage points higher.
"It''s not meant to be punitive," Nora Fairgarden says. "I''m just asking for what''s reasonable."
People on both sides of the rent control question acknowledge that it''s an emotional issue and that a rent control battle could tear the communities apart, irreparably damaging tenant-landlord relationships. And that''s something nobody wants.
"I hate to see something come from people who are angry and it''s not well thought-out and, in the long run, it does more damage," Star says. "I want to see the landlords'' needs met, and I want to see the renters'' needs met. We should be working together. We''re neighbors."