President's Message

Rent Control

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Rent Control: Left and Right Economists Finally Agree on Something… and Other Major Points

Time and again we have gone to bat to raise awareness about the awful—and unintentional—effects of rent and price control as well as removing extremely important laws in place. In theory, as in many cases, enacting help in that way for the public sounds like a good thing with little downside—that is to those who have no experience or training on the economic and other side effects. And when we repeal laws meant to counteract some of the major downsides that quickly pop up, such as Costa-Hawkins which allows vacancy decontrol (allows a landlord to rent vacancies at Market Rent) and prevents cities from adding other housing types into their rent controlled ordinances, it has even more harsh downsides for the entire community—not just the landlords who have worked very hard to pay for and operate their businesses, as well as to provide necessary housing for the general public.

Published in the Econ Journal Watch, Volume 6, Number 1, dated January 2009, is a very interesting piece culminating from a study completed by several economists—from both the right and left in politics—on policies concerning rent control and its effects on the local economies. In the Journal, the economists actually agree with one another in that a “preponderance of evidence of the literature points toward the conclusion that rent control introduces inefficiencies in housing markets.” This is not just for the landlords, but also for the residents who live there. Along with that last statement, they also clarify that, “the literature on the whole does not sustain any plausible redemption in terms of redistribution. The literature on the whole may be fairly said to show that rent control is bad, yet… about 140+ jurisdictions persist in some form of the intervention.” Even more alarming, they begin their assessment saying, “Rent control is usually introduced to economics students as a price ceiling and an unambiguous (‘clear-cut’) source of inefficiency.” Whoa! When I first learned of this, that really made my ears perk up; why aren’t more people paying attention to this? That’s like the case with being allowed to put MSG in foods—scientists feed it to rats as their genuine protocol to fatten them up and speed the decline of their health to study diseases! So, in both cases, we know it’s extraordinarily the wrong thing to do, and here we continue pressing it on? It sure can leave one scratching their head in breathtaking bewilderment.

Here are some other major points included in an article published just back in January of this year about a study done in San Francisco titled, “How Rent Control Can Exacerbate Inequality.” In their introduction they pointed out that these laws are “not all they’re cracked up to be” and their study concluded the following:

• …landlords were 10 percent more likely to convert their building into condos if it became rent controlled. The rental supply in San Francisco dropped by 6 percent following the expansion of rent control.

• Rents throughout the city increased by 5.1 percent as a result—researchers calculated total cost to tenants from rent hikes to be $2.9 billion, nearly half of which was paid by residents who moved to San Francisco following the establishment of rent control.

• Given the negative repercussions of rent control policies, the researchers argued that other approaches to affordable housing that don’t inherently punish landlords might be more effective, such as creating a tax credit for rent.

Some of that is worth restating: Because these laws were put into place, they actually had an opposite effect and drove prices up. Here, in our communities, we are doing what we can to keep prices down—we are looking for the lowest priced ven dors—apartment suppliers, like stores/outlets, to specialized skilled wor kers such as plumbers/electricians—while at the same time not sacrificing the quality of work. This is not an easy task. With inflation constantly on the rise coming out of Washington, no price controls on taxes and fees, no insurance control, no paint control, no pipe control, no light fixture control, and rising utility prices—how does that justify keeping only one sector down and forcing them to pay the inflating prices of these other necessities while none of the above men tioned must keep their prices down for anyone? Where’s the equality?

A Fresh Page

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Wow — what a great, but fast year 2017 was! It is hard to believe all that has happened last year, and we expect even more, bigger and crazier things again for this great year we have ahead of us. Like my mentor once explained, starting the New Year (or even a new day) with a fresh page and a clean slate, people can put what we want on the pages of our futures, which gives us unique opportunities that other animals on this planet are not offered—a goose must fly south for the winter. Why? Because it’s a goose! If a tree doesn’t like where it lives, it cannot pack up and move. We, on the other hand, have been given the dignity of choice.


It is my hope that all of us have taken the time to reflect upon last year and then create a new and improved plan for this year—not just a wish list, but sound goals that are achievable, and at the same time will stretch and grow us. When we do this with our own lives, we can do it in our businesses, communities and beyond. A great way to learn how to better plan and execute new plans in our own lives and communities is to get involved with our AACSC Committees that are run by our all-volunteer Board of Directors. Not only is this a great way to get plugged into the community and to help others as well as to really learn how to “preserve, protect, and enhance” the rental housing industry in Southern California, but also a way to show you how a focused group of people come up with and execute great ideas! Luckily, we are not trees who are stuck somewhere in the snow year ‘round, stuck in a constant lightning storm—or even stuck as a restroom for a pack of wolves in a forest—we are all here by choice in beautiful SoCal and each of us has a responsibility to leave everything better than how we found it, and we do that by becoming part of a great team complete with leaders and mentors.

One great lesson I have learned about uniting on the same front and becoming a team, is that as neighbors — especially in this country—we always want to do what is best and what is right, but we tend to differ on how we define that or get there. I want to reassure everyone that things that will make ourselves, and our industry, businesses and region better are your ideas, your courage to stand up and respectfully say something if it doesn’t feel right, and your involvement in your community.

We need you and we need your voice, your help, and your ideas. Please reach out and let us know your interests — we have so much to choose from. From our local and state legislative committees, trade show and membership committees, to education, golf tournament fundraising, and Political Action committees—we have a little something for all interests. Pick one of interest to you and let’s partner up. Everyone here will be heard, respected, listened to, and given a chance.

As a great help to your training, remember that there is no better way to school yourself and your teams than to get into the top of the line classes that AACSC offers. The prices are right, and the info is priceless. Learn how to keep compliant of the law and still be able to care for your residents and properties.

Regularly check AACSC’s website and your email for announcements on the upcoming courses.

Before finishing up here, we want to thank all of our vendors who continue to sponsor our events and continue giving us the best workmanship in the business — we could not do it without you!

Thank you so much for giving me this opportunity to lead the AACSC—please, come work alongside us — we can really help each other a lot in 2018!

Cheers!

Hard Work and Commitment

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Happy Holidays everyone! I’m writing you my last letter as Board President for AACSC. Contrary to rumors, it’s not because I’ve run out of ideas—I’ve just run out of time! My term ends in December and I’m excited to welcome our new President for next year, Michael Pollack.

Michael will do a great job, will bring us new ideas and new energy. I think it’s very important for leadership to evolve through the membership to get more people involved and to give us the opportunity to take advantage of the efforts and motivation that our members bring to this organization.

It has been both an honor and privilege to serve these past two years. I was fortunate to be part of a fantastic Board with many committed individuals that put in hours of hard work on your behalf. Our Staff, led by Executive Director Johanna Cunningham, has updated the operations of AACSC and pushed us forward with new ideas and more opportunities to reach and help apartment owners. Our State Lobbyist Ron Kingston spends hundreds and hundreds of hours every year analyzing countless pieces of proposed legislation and appealing to our elected officials to either promote or kill the legislation that affects us.

I wish I could tell you that after my two years as Board President that we had solved all our problems and that it’s never been easier to be a landlord, but I can’t. In fact, if anything, our issues and challenges are getting more complex and difficult to manage.
I did learn as a young man not to get panicked or stressed out when faced with a difficult problem. So I can tell you that our businesses will not be derailed by misguided threats like rent control, REAP, or just cause eviction if we take them piece-by-piece and work the problem. We didn’t become successful landlords without hard work and commitment. That philosophy will help us move forward. It will work for our new Board President, our new Board and Staff, and most importantly...it will work for you.

Thank you for these two years. Thank you to the AACSC Board and Staff, and most importantly — Thank You!

A Thanksgiving

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Over the years, I’ve seen Thanksgiving celebrated in a number of different ways. The Thanksgiving holiday was pretty traditional at our house when I was growing up. My parents or my aunt and uncle would host dinner, and between our two families plus grandparents, it was a pretty full house.

The dynamics changed when all the kids started to get married. There were new faces at dinner, and along with them came new foods and traditions. Things changed even further when friends joined and the meaning of Thanksgiving expanded beyond our close knit family. It also expanded past being just about the traditional meal and a nice visit when some friends would stop by after they had been to the local homeless mission to serve Thanksgiving dinner to people who were struggling in ways that we never had to.

I’ve come to see Thanksgiving as all of these things. It gives everyone a chance to give thanks for all that they have, whether it’s family, friends or food. It also gives us all a chance to give thanks by extending our hands to others.

Can we embrace this idea of being generous and giving to others as land lords? I think so. I think it’s just as important for us to be generous business people as it is for any local business. In fact, we have the opportunity to make our giving more personal than most businesses, if we direct our efforts toward our tenants.

However you choose to do it, I think you’re doing a wonderful thing any time you make the effort to give back to your community. That’s a tradition we should never change. To me, the Thanksgiving holiday is the low-stress holiday. It’s a day about family, friends and community with minimal commercialism. It’s my favorite holiday.

Upping Our Game

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As I start to wrap up my second and last year as President of the Board of AACSC, I have been doing a lot of reflecting on my term—what went well, what didn’t and what direction I’d like to see both the organization and our businesses as landlords move toward.

Our future depends on a couple of simple ideas really. We need to keep upping our game by becoming more professional as landlords. We need to unite as never before, to counter the organizations that are trying to use our tenants against us to promote their rental business-killing agendas.

We’ll have better, more successful rental property businesses if we run them like pros. Professional property managers do a great job and whether or not you use one to manage your properties, you need to be just as smart. Don’t use exclusionary language in your advertising. Don’t ignore your before and after property condition check lists. Don’t rent to anyone without doing your due diligence. Do send your last tenant their remaining security deposit with full accounting within the required time frame. Do document all communication with your tenants. Do take the time to educate yourself on a regular basis so that you stay up with any new regulatory changes.

I see the day coming when we’ll all be required to take continuing education classes as a condition of accepting rental payments for our properties. Don’t look at this as a negative. It will be a big positive for you if it keeps you from making a costly mistake due to ignorance.

Our need to unite as landlords is expanding now to include builders and Realtors because the tenant exploiter groups are trying to damage their business just like they are trying to do with ours.

We work in a wonderful industry. It’s hard work, but over time, we’ll do very well owning property. You can meet, and make friends with a lot of interesting people, from other landlords, property managers, service providers and yes, your tenants. Finally, if you do it right you’ll have something of great value to pass on to your children. Let’s make sure we do it right.

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