San Francisco is perhaps one of the most difficult markets for a tenant to negotiate. With high demand in a city where six-figures can be considered low income (“In costly Bay Area, even six-figure salaries are considered ‘low income’,” The Mercury News, http://www.mercurynews.com/2017/04/22/in-costly-bay-area-even-six-figure-salaries-are-considered-low-income/), and where tenants have been known to carry resumes with them to viewings, landlords seldom have problems getting their asking price.
In major metropolitan areas like the San Francisco Bay Area, landlords fight to ensure that the rights of owners are not constrained by the rights of their tenants. The 1995 Costa-Hawkins Rental Housing Act, signed into law by Republican Governor Pete Wilson, was seen as an attack on hard-fought rent control measures of the 1970s in cities like San Francisco and Berkeley (Costa-Hawkins Rental Housing Act, Wikipedia, https://en.wikipedia.org/wiki/Costa-Hawkins_Rental_Housing_Act#The_Costa-Hawkins_legistlation). Costa-Hawkins effectively “limited” municipal rent control ordinances. One of its greatest impacts was to prohibit rent control over new construction and single family dwellings.
With or without rent control, some rent hikes are inconceivable. Take, for example, the case of Danielle Phillips and Paul Kelly who resided in a two-bedroom house in the Outer Sunset neighborhood of San Francisco. They paid $1,900 monthly, a steal in many Bay Area cities, and certainly in San Francisco. Last time I rented in the East Bay, I considered myself fortunate to find a one-level home within a couple blocks of the Berkeley city limits with a garage and an ethical Berkeley landlord who told me he gave one month’s rent to the campaign of Congresswoman Barbara Lee every year. Even then, back in 2006, a similar deal in San Francisco would have been nearly impossible to find.
Phillips and Kelly had a deal. Until February of 2016, anyway, when their new landlord, attorney Matthew Dirkes, notified them of a rent hike to $6,700, an amount that exceeded the then $4,600 median rent demanded by landlord owners of San Francisco’s single family homes. The couple understood the vast rent increase as a notice of eviction. And when they moved out, Dirkes moved in.
Kelly commented in a recent SFGate.com article, “Let’s be honest, any person could see that he was doing this to get rid of us” (“How one Sunset couple’s $4,800 rent increase could shatter eviction protections for Bay Area tenants,” SFGate.com, http://www.sfgate.com/bayarea/article/How-one-Sunset-couple-s-4-800-rent-increase-12165273.php#photo-10919168). Why create outrage with an astronomical rent increase when a simple owner move-in would have done the job? Because owner move-in is typically a form of eviction and, legal or not, it calls for the landlord to ante up and pay for relocation. In the case of Kelly and Phillips, relocation fees were estimated at somewhere around $20,000. Forcing the couple out by raising the rent beyond what almost anyone would pay, however, was not eviction. At least, not technically.
Phillips and Kelly filed suit, arguing that the rent increase was a direct attempt to evade the protections of San Francisco eviction law. When a San Francisco Superior Court judge blocked the lawsuit in May 2017, the pair appealed. The case will soon be heard in California’s First District Court of Appeal and is considered a litmus test on the strength of the few protections that remain for California tenants residing in single-family homes. The question is whether a rent increase, even in dwellings to which rent control cannot be applied, can be too big to be legal. In other words, can an exorbitant rent increase constitute illegal eviction. But what’s at stake isn’t just the affordability of thousands of single family dwellings that are rented to California residents, but the very availability of single family homes to those who rent. This is especially true in markets where single-family homes are scarce and can command prices tens and even hundreds of thousands over the asking price.
This is something I’ve noted in Seattle as The Seattle Times published articles over summer about the rising costs of rentals alongside articles about developers tearing down a 1940s house every day in this city. (“A teardown a day: Bulldozing the way for bigger homes in Seattle, suburbs,” The Seattle Times, https://www.seattletimes.com/business/real-estate/a-teardown-a-day-bulldozing-the-way-for-bigger-homes-in-seattle-suburbs/) When such houses are torn down and replaced, in a market where there is a shortage of homes to purchase, the homes built at three times the cost of the old ones quickly sell. And those that may be available to those who rent will likely be as unaffordable for those who rent as houses are for many of them to buy. This is commonsense, and it means that increasing numbers of tenants, in a market where fewer and fewer can afford to buy, will be excluded from living in single-family homes on any terms whatsoever. In my own case where at least some members of a northeast Seattle neighborhood watch are colluding with speculators in an effort to criminally harass me out of my rental home by “mobbing,” it is clear that real estate speculators and unethical neighborhood organizations see rented houses as little more than low-hanging fruit in their drive to flip houses and gentrify neighborhoods to make a buck.
Moreover, the trend to tear down and replace at much greater cost is part of a trend to corporate ownership of and speculation in the residential housing market (“Proposed Seattle taxes targeting foreign buyers, investment properties take fire,” The Seattle Times, https://www.seattletimes.com/seattle-news/politics/proposed-seattle-taxes-targeting-foreign-buyers-investment-properties-take-fire/).
According to the San Francisco Chronicle, if Phillip and Kelly win, their suit will “close the loophole for Oakland tenants who live in homes managed by corporations—a business model that proliferated in the wake of the foreclosure crisis as companies formed to buy up cheap renter-occupied housing.” Managing attorney of Centro Legal de la Raza’s tenants’ rights program Leah Simon-Weisberg observes, “If people are legitimately buying a house and moving, that’s great. What we don’t want is corporations that make a business model of buying up rental housing and displacing people.” (“How one Sunset couple’s $4,800 rent increase could shatter eviction protections for Bay Area tenants,” SFgate.com, http://www.sfgate.com/bayarea/article/How-one-Sunset-couple-s-4-800-rent-increase-12165273.php#photo-10919168)
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