Disco Blast
On Monday, April 16 the San Francisco Apartment Association held its annual boutique tradeshow. The SFAA’s Monday Night Fever Disco Blast covered all facets of the multifamily housing industry, from three-day notices to bed bugs. Hundreds of apartment owners boogied down to the ‘70s-themed event to speak with professionals who provide San Francisco’s rental housing industry with top products and services, and take free property management classes.
San Francisco Urges an End to Foreclosures
The San Francisco Board of Supervisors unanimously passed a resolution calling on banks to halt foreclosure activities until state and federal protections are developed. Supervisor John Avalos introduced the resolution calling for a moratorium on home foreclosures and related evictions and auctions. “The foreclosure crisis has already devastated so many lives,” Avalos said in a statement issued after the resolution’s victory. “This resolution is an important step to support solutions to prevent millions of Americans from losing their homes.”
According to an audit commissioned by San Francisco Assessor-Recorder Phil Ting on nearly 400 San Francisco foreclosures over the past three years, 84% of those foreclosures were incorrect or illegal. Among the violations were missing documents, backdating and conflicting or inaccurate information.
Many San Franciscans who can afford to stay in their homes now find that they owe more on their mortgages than their homes are actually worth, a situation referred to as being “underwater.” Avalos said that he, like many homeowners in his community, is approximately $100,000 underwater on his mortgage.
The resolution urges Mayor Ed Lee to direct city lobbyists to support the California Homeowner Bill of Rights: several bills that would protect Californians against predatory lending practices and against robo-signing—the practice of signing large numbers of documents without verifying their information, and other bank servicing and foreclosure misconduct. Last month, state Attorney General Kamala Harris was among 49 state attorneys general supporting a $25 billion agreement reached between the nation’s five largest lenders, the federal government and the states. The joint agreement, which aims to address mortgage loan servicing and foreclosure abuses, is the largest federal-state civil settlement ever reached, according to the U.S. Department of Justice.
In other foreclosure news, Supervisor Malia Cohen has introduced legislation that would subject foreclosed properties to the city’s nuisance law, which allows for court abatement injunctions and fines. It would also triple the nuisance penalties for owners of 10 or more foreclosed properties.
The proposal is an attempt to address one of the lesser-known impacts of the foreclosure crisis: the blight that can arise when homes are no longer lived in and cared for by their owners. Cohen said that accumulated trash, graffiti and other nuisances often arise after a home is foreclosed.
There were 2,277 notices of default recorded for residential, commercial and industrial properties during the 2010-11 fiscal year, and 927 foreclosures, according to Cohen’s legislation. The legislation would require approval by the Board of Supervisors to become law.
Manager’s Lunch Focuses on Tenant Screening
In April, some of the top property managers in the city gathered at Absinthe for an elegant and delicious Managers Lunch. The topic of conversation at the event was new laws pertaining to credit reporting, with Kathy Parsons from Credit Bureau Associates as the featured speaker.
he next manager’s lunch will be held on Thursday, June 21. To attend, please RSVP to SFAA Deputy Director Vanessa Khaleel at vanessa@sfaa.org.
Rent Control Review Rejected
The Supreme Court rejected a constitutional challenge to New York City’s rent-control ordinance, which limits the rents of more than a million apartments. The court’s refusal to hear the case is a setback for property rights activists, who had hoped a more conservative court would protect landlords and a free market in rentals. For decades, critics have said rent control laws deny property owners the right to fully profit from their investments.
But the high court has been reluctant to second-guess zoning or property regulations unless they deny the owner all use of the land. The justices, four of whom grew up in New York City, turned away an appeal from James and Jeanne Harmon, who own a five-story brownstone building on West 76th Street in Manhattan. The couple said they had no choice but to rent three apartments on the upper floors for less than half of their market value. They also said that one of their longtime tenants could pay a $1,500-a-month mortgage on a Long Island house because he paid only $951 a month to rent a unit in the Harmons’ building.
In his appeal, James Harmon said the rent-control law violated the 5th Amendment, which says “private property [shall not] be taken for public use without just compensation.”
“Contrary to the popular myth, the Rent Stabilization Law is not targeted to help the needy,” Harmon wrote, representing himself in his appeal to the high court. “A person could make millions of dollars annually and still qualify for a rent-stabilized apartment. It is all about luck, a racket in which property owners and market-rate tenants always lose.”
The U.S. appeals court in Manhattan ruled against Harmon last year and said rent regulation was not a “taking” of private property. It requires the votes of four justices to grant an appeal. Without comment, the court said it would not hear Harmon’s case.
SFAA would like to thank all those who tuned in, submitted opinions and followed this important challenge to rent control.
Court Decision Favors Section 8 Tenants
The Appellate Division of the Superior Court of Los Angeles County recently ruled that Section 8 renters in Los Angeles are protected by just-cause eviction protections when landlords attempt to opt out of the Section 8 voucher program. This ruling will likely affect other cities with just cause for evictions statutes, such as San Francisco, Oakland and Berkeley.
In the recent case of Tobias Crisales v. Monica Estrada, the landlord received a total of $950 per month in rent every month from the local housing authority and the Section 8 tenant, Monica Estrada. In 2010, the landlord decided to opt out of the Section 8 program and gave the tenant a 90-day notice to terminate the lease. After the 90 days were up, when the Section 8 tenant tried to pay her usual portion of rent as was required of her under the terms of the Section 8 contract, the landlord refused to accept the rent payment.
The landlord then tried to evict the Section 8 tenant and filed an unlawful detainer action against her, but that was not a “good cause” reason to evict her, according to the rules of the Los Angeles Rent Stabilization Ordinance (LARSO) and the court ruled that she was to be allowed to remain in her housing.
he landlord appealed that decision and recently lost the appeal in the Appellate Division of the Superior Court of Los Angeles County. The court ruled that: “The general ground of a business or economic reason as stated in the plaintiff’s 90-day notice to defendant does not fall within any of the enumerated categories for eviction under LARSO. Accordingly, the plaintiff’s notice failed to terminate the Section 8 tenancy, and therefore the plaintiff’s subsequent three-day notice was improper, and the plaintiff was not entitled to possession of the premises.”
San Francisco #1 in Commercial Rent Growth
San Francisco is leading the country in commercial rent growth, thanks to demand from technology companies, according to a survey from Reis Inc. The U.S. office market had its fifth straight quarterly gain in net occupancy, with office landlords seeing a net increase in leased space of almost 6 million square feet in the three months through March 2012, compared with 6.1 million square feet a year earlier, the New York-based real estate research firm said in a report. The national vacancy rate dropped to 17.2%, compared to 17.6% in the first quarter of 2011.
Technology is growing faster than any other industry and those companies are willing to pay a premium for locations that will attract employees. San Francisco’s average office rent rose 6.8% during the past year, but it only had the eighth-lowest national vacancy rate of 14.2%. Washington D.C. had the lowest vacancy rate at 9.4%, followed by New York City at 10.4%.