(and why I left property management...)
My recent exchange with JT (it would be great to hear more from you, since you're still intimately involved with the process) prompted me to reflect on my long-ago career in property management, and why I left the field. I think it's germane to the discussion.
Most rent ordinances in CA are local. San Francisco's was instituted (reluctantly) in 1979 by Mayor Feinstein when a North Beach landlord went bonkers and started jacking up rents. This creates an arbitrary red line: buildings built before June of 1979 are under rent control, and buildings built after that date are not. You can, therefore, have a situation where one person is paying $750 per month for a studio, and their neighbor is paying $3,000.
Arbitrary? Yes, for sure. Unfair? Well, it depends. The individual who has been paying $750 per month has probably been paying that rent for YEARS, so the owner has certainly received a good ROI. On the flip side, if you're a recent immigrant to SF, you had better have a six figure income to make it.
Rent control differs from "vacancy control" (AKA Costa-Hawkins) which is a state statute, and mandates that after a rent controlled tenant leaves, the rent can go back to "market rate." Costa-Hawkins was on the November ballot in CA last year. The attempt to repeal it failed. Which I think is a good thing. There are many small landlords who have all their savings and investments in a building. They (largely) play by the rules, and deserve a decent ROI.
Conversely, I think rent control is a good thing. I think it should be universally applied to all residential buildings in SF. In California, you do, after all, have rent control for owners. It's called Prop 13. You can't favor one class (owners) over another class (renters). That's unfair and discriminatory. Prop 13 has starved local coffers of revenue for years. Unfortunately, repealing it would have the same effect of repealing rent control … tossing many long-term residents out of their homes. So, I'm not sure what the solution is there.
Anyone unaware with how brutal the rent and affordability wars are in SF should familiarize themselves with the cautionary tale of Citi Apartments. Their reign of terror ended about a decade ago, but left a lot of carnage in its wake.
Helmed by a savvy, charismatic, and avaricious local son named Frank Lembi, Citi Apartments snapped up large residential buildings at an unprecedented rate in the late nineties and early aughts. In the wake of the first dot-com bust, many new building owners found themselves overleveraged and underwater. Citi Apartments swooped in and made them an offer they couldn't refuse: paying twice as much (or more) what their building was worth. At one point, Citi Apartments locked down almost all the new multi-unit (rent-controlled) buildings for sale.
But it was a Ponzi scheme. The only way to make their money back was to coerce and intimidate long-term (often elderly) tenants out of their rent controlled units. Their tactics were brutal and obscene.
Repeated and harassing phone calls offering a paltry sum to the tenants if they left. Shutting down elevators which would disadvantage elderly and infirm tenants who couldn't use the stairs. "Maintenance" on units at all hours which created a noise disturbance. Bundling checks for months and then depositing them all at once. When the checks consequently bounced, they would give the tenants a "Three Day Notice to Pay or Quit." Big, burly "security guards" who would hang out in the lobby, checking tenant IDs for "illegal" tenants. The list goes on...
When Citi Apartments bought the buildings I managed (the previous landlords were honest and decent people) I had a choice: leave the profession or work for the Devil. I choose to leave property management entirely. I couldn't countenance making my income from coercing little old ladies out of rent controlled units. Sadly, judging from the number of new hires I saw at Citi Apartments, many people were fine with that moral calculation. Before I left, I went door to door and told tenants who was coming, and to know their rights. Many tenants refused to believe that Armageddon was coming. Within a few weeks, they began frantically calling me for help.
Citi Apartments eventually dissolved under a flurry of class action lawsuits, including lawsuit against them from the City of San Francisco. But I think their story remains a cautionary tale of what happens when you have a severely impacted city with a dearth of affordable housing combined with an influx of astonishing wealth.
https://en.wikipedia.org/wiki/CitiApartments