Summary
In this Interview I speak with Lynn Renshaw, a member of Santa Cruz Together, a grassroots organization formed to fight the establishment of rent control in the city of Santa Cruz. Renshaw explains that Measure M, a ballot measure on the November 2018 ballot, would establish rent control in the city. She argues that there are several flaws with Measure M, including the just cause eviction provision, the creation of a rent board with little oversight, and the potential for lawsuits and financial burdens on the city. Renshaw also discusses the potential negative impacts of rent control, such as a decrease in rental housing supply and an increase in rents for single-family homes. She suggests that there are alternative solutions to the affordability crisis, such as building more affordable housing and encouraging the construction of accessory dwelling units (ADUs). Renshaw encourages listeners to oppose Measure M and join Santa Cruz Together in their efforts.
Transcript
Hello and welcome to episode number 25 of the Beta Bay Podcast. I’m your host, Seb Fry, and it has been a little while since our last podcast, episode number 24 came out on June 22nd, and here we are in the first week of September. My apologies for the big gap between episodes. I try to get one out every single week, but this summer has been pretty busy for me. There’s a lot of bellyaching, I guess, in the real estate community anyway, about the sudden softening in the real estate market but hasn’t really softened for me. So that’s my excuse. Anyway, but I am back on the case of putting out new episodes for the Beta Bay Podcast. I do have a lot of great guests planned, so stay tuned for more episodes. This episode is going to be an awesome episode for you. Listen to, I do have an amazing guest, Lynn Renshaw, and she is with Santa Cruz together, which you may not have heard of if you don’t live in the city of Santa Cruz.
But Santa Cruz together is a grassroots organization formed by citizens of the city of Santa Cruz to fight the establishment of rent control. There is a ballot measure on the November, 2018 ballot to establish rent control in the city of Santa Cruz. And a lot of people are all up in arms against it, and including of course, myself, I’m a realtor. A lot of people would expect that, Hey, you’re a realtor. You’re not going to like a rent control. But there’s actually a lot of very good solid reasons to be against rent control, at least as it is written for Measure M, specifically for the city of Santa Cruz. So if you are wondering why not rent control, you need to listen to this episode of the Beta Bay Podcast and to hear what Lynn Renshaw has to say. So without further ado, let’s get into the interview. Lynn, how are you doing today?
Great.
Well, thank you so much for making yourself available. I know you’re really busy, but here on the Beto Bay Podcast, I like to start every episode off by asking my guests to tell us a little story about themselves, to let us know who they are and where they’re coming from through a little story. Can you have a little story you could share with us? Sure.
Well, so I’m originally from Manhattan Beach, a beach town that was very much like Santa Cruz when I was growing up there. And my parents were engineers with the aerospace program there. So I was just kind of a nerdy beach kid growing up.
And then I came up to Santa Cruz for U C Ss C, and I can remember when I first came up to tour the campus thinking this is going to school at a national park, and even looking at the picnic benches in the redwoods with a view of an ocean, I was always drawn up here because of the environment. I’d grown up backpacking every summer with my grandfather up in the California and the Cascades in Washington. And what drew me here was the natural environment. I went to U C S C and then later on went to U C L A for an M B A, which was essential to my career in software marketing.
Okay. What did you study at U C Ss C as your undergrad?
Liberal arts and then marketing and IT at U C L A.
Okay. And when you were going to U C S C, were you in the dorms or where were you living?
The college five dorms is what they were called back then. That’s now Porter College
Porter. So you’re a Porter Porter student. Okay, good to know. All right, so you went after uc, Santa Cruz, you went down to la and then when did you come back to Santa Cruz to live permanently?
Immediately afterwards. So
My career has always been in technology and of course there’s a lot of, this is a place to be for technology jobs. So I started getting involved in politics after Trump was elected and was working on some things trying to help at the federal level. But then now I am finding local politics a lot more interesting and it’s a lot easier to move the needle. And there’s so many great people that I’ve met in the campaign. One of the best things about running a campaign I’m finding is meeting a lot of really interesting and talented and fun people.
Right. Well, oh, go on.
Go ahead.
Oh, I was just going to say that they say that all politics is local. So I guess if you want to change the world, you can start right here in town first, I guess.
Yeah, and the other thing that happened was I’ve got a family, I’ve got two daughters and this is the first year they’re both in college, so I had some spare time one of to work on politics and help make things better.
Alright, well that’s really cool. And real quickly before we talk about the politics stuff, you mentioned your background is in high tech, you do software marketing or what’s your professional background?
So at software marketing and to be detailed about it, software product management where you figure out what the global requirements are for software products and then lead teams to deliver product that meets the customer’s needs.
Okay, right on. So nowadays this software development sort of moved all onto phones and the web, or are you guys doing desktop apps or what’s going on these days in the software marketing or software design? I guess
I’ve been doing work on cloud storage, so you’re correct. It’s not that it’s going to, well, the part I was working on was the fact that it’s going into cloud data centers is what’s a big trend in technology.
It’s all in the cloud, which
Is the backend, which is the backend so that you can have the apps and the data available on your phone and your tablets, et cetera.
Right. So I guess everything’s on Amazon and Microsoft Azure now, right? That’s basically where the internet lives these days. I guess to some extent.
To some extent. There’s a lot of open source technology and we have a lot going on. That’s the area that I was working on.
Oh, very cool.
I don’t want to get too nerdy about it because people get bored.
Well, there’s a lot of nerds that are listening to this, so trying to keep them interested as well, but enough about the software business. So tell me about Santa Cruz together. What is Santa Cruz together?
So we have a coalition of about 1500 community leaders, elected officials, homeowners, renters that are working together to defeat measure em.
Okay. And so how did that all get started? Who did you start it? Did somebody else start it? How did it sort of form? I mean, it’s pretty new, right? You guys only started in the last few months, is that right?
We’ve formed in February in response to the city passed temporary just cause eviction law. And that is a pretty extreme law. And the version of that and the one in the measure is deeply flawed. So a lot of people were concerned about something like that being passed out of nowhere. They passed it as an emergency ordinance, which is, if you look at the part of the muni code about, I’m not sure if it’s technically the muni code, but the way the city council’s supposed to work, they were using powers that are designed for things that would normally be like an earthquake or an issue of peace or a major health emergency. So they passed something without proper community input and came up with something flawed in extreme and a lot of people were concerned about that. So in February, right after that happened, there were actually three groups and then we combined the groups into one.
So I’m actually, I’m pretty interested to hear about that part about the city council. So my understanding is the city council passed this rent control and just cause eviction ordinance in response to a movement from somebody, I don’t know who to put this on the ballot measure. So they put this temporary ordinance, which is supposed to, I guess, mirror the ballot measure. Is that correct? So if the ballot measure Measure M is passed, we’ll get what we have right now. Exactly. Is that correct?
No, actually Measure M is more extreme and more flawed than what the city council passed. So there was a 10 minute discussion of the just cause evictions portion, and this is the problematic portion from most people’s perspective. And the city had a discussion identified about 12 areas where there were severe problems, fix those in their version and then passed it. So for example, ADUs are accessory dwelling units are not exempt from just cause evictions and the just cause evictions portions says that at the end of a rental agreement, like the end of the lease or a month or also with month to month agreements, the renters get to stay whether or not the owner wants them to stay. So if you had a problem tenant in an A D U for example, that is a difficult situation literally in your own backyard, let’s say eight feet from your family.
So the city council in discussing ADUs briefly said, oh, that’s a mistake, let’s take that out. So the city was able to, in a quick discussion, fix some of the major flaws, but the initiative was not able to fix those flaw because it is an initiative, it changes the city charter and not a single word of it can be changed. And the other thing about a citizen initiative is that it was a group of people who cobbled together provisions from other rent control jurisdictions, just kind of put them all together. There weren’t any public hearings or studies that would’ve revealed those flaws and allowed them to be corrected.
So I guess what I’m so interested in is this seemingly came up almost out of nowhere. How was the city council able to get this on the agenda, make it happen so quickly? It seems to me like there must’ve been some kind of coordination from the people putting the ballot measure together and the city council, right? I mean they didn’t just hear about it at coffee one day, right? I mean, there must be some kind of,
I will leave it simply as there was more coordination than there should have been,
Right? Yeah. It seems a little fast for the city to be able to jump on it that quickly when the public was only alerted about it maybe a week or two before the city council had its meeting where they just, was it in one meeting that the city council put this ordinance together? I mean it all happened very, very quickly
By using the emergency approach. They had public input and they just deemed that this was a sudden emergency and they needed to pass something instantly. Whereas of course, the reason that we have the affordable housing shortage, which everybody can see, that we have serious affordable housing shortage, that was not an emergency that came up like an earthquake. It’s something that’s been building because of local housing policy for 40 years.
Right, exactly. So Measure M basically would establish rent control in the city of Santa Cruz. And there’s a lot of people obviously who feel the rent is too high affordability, like Santa Cruz is famously one of the least affordable cities in the whole entire country. So what is wrong with rent control? Why are you fighting the idea of making this a more affordable place to live?
So the portion that people object to kind of in order, there’s three pieces to this measure. So there is a limit to rent increases on apartments, only rent increases on apartments, not initial rents, not rents on single family homes. Then there is the just cause evictions portion, which I’ll talk about in a second in the rent board. And probably in order of problematic, it’s the just cause evictions that are the most problematic followed by the rent board and last, the actual rent cap. So the just cause evictions again makes it so that people can lose control of their property. So they can’t control how long people are living there, how many people are living there.
So it’s a very bad situation. So for example, there’s a provision that says that’s called family protections, but it allows renters to move in additional family members or undefined partners up to the occupancy limits that exist. So for example, the rental next to me that has two people in it, it could have 10 people in it without the owner’s permission. And so that is a case where, and the owners also don’t have a chance in that situation to do any background checks or approve or disapprove those people. So that’s the case where people are just really concerned about losing control of who is in their property. And I want to say that most of the people that we’ve met that are providing housing might just have one property. Let’s say they inherited their mom’s property and then they’re renting it out for a while, but they hope that when their daughter returns from college, maybe she’ll live there. So the just cause evictions would make it so that it’s very difficult to remove renters and use your property as you would like to, even family properties.
Another very typical example is people that have one house and an A D U. And sometimes when people are downsizing, when they’re older, they’re living in the A D U, but then maybe when they want to move back into the main house someday, just the flexibility to have those two units on your own property and be able to move from one to the other is extremely limited by these just cause evictions. So this is where people have the most difficulty. The other one is the rent board. And so the rent board is this new bureaucracy that doesn’t have oversight, direct oversight from the city council, doesn’t have legal or financial oversight, and they can hire as many people as they want, choose their own salaries, and then create new rules and penalties. And their emphasis is basically to enforce Measure M, which is tilted strongly and heavily tilted towards renters so that in other cities the rent boards can be very problematic and very expensive. And there’s also a case where this particular measure M says the rent board can draw from the city’s general fund, which is used for fire safety, parks and rec. And it doesn’t say for what purposes, and it also doesn’t say what the limit on drawing those resources might be. So this should be a concern for every taxpayer in Santa Cruz.
So how much do rent control boards cost? I mean they have them in other cities. Is there any kind of idea for what a rent control board would cost in the city of Santa Cruz?
Single digit millions.
Single digit millions. So say 5 million maybe. That’s quite a bit. Wow. I mean that’s a lot of money. I mean, how many people are going to be working on this rent control board? Are they going to have six people or are they going to have, gee, 30 people,
20 to 30 people.
Wow. And they’re not accountable to the city council. They’re independent agency, I guess you would say.
Right now they are elected, so our opponents would say, well, they’re accountable to the voters, but the voters aren’t going to do a financial audit or review the salaries or get into the details. Voters never vote at that level of detail. So they’re really just on their own creating legal penalties. There’s penalties. For example, if I were to rent my house to go take care of my aging parents for a couple of years, which I’m right about there, then come back, I would owe six months rent to move into my own house to tenants. So that would be close to $20,000. And if I didn’t have an extra $20,000 to give to the renters, I couldn’t move back in my house at all. So these penalties, the six months penalty is very high compared to other cities and the rent board can increase it further if they want to.
Right? Well, I mean, I guess only the board members would be elected. I mean all the bureaucracy, they would be unaccountable except just to the elected officials, I guess, right?
Well, no, the staffers work for the head of the rent board. So it’s the
Entire
Entity. This entire entity is regulating rental housing and determining the future of rental housing. And they have very little oversight
And
Not detailed oversight into how are we spending the money, what type of lawsuits are we pursuing and all of that.
There’s another part where the city and the taxpayers in the city are also open to this getting expensive. The city attorneys was speaking on Measure M and said he had identified six areas where the city would be open to lawsuits. So since this is an amendment to the city charter and it’s part of the city, the city will have to hire attorneys to defend it itself against lawsuits. And so there are quite a few flaws, and there might be some portions of this that are later found to be illegal. In general, these type of laws have stood up to the test of time and are found both constitutional and legal, but there could be components of it, like the relocation fees when you sell a house that could be found illegal. So the city might have to spend a few million dollars defending itself in court.
And isn’t the city already out of money? I mean, they have a deficit right now, right? Of several million as I understand it.
I could be wrong on this, I think it’s $5 million and it’s going to be building to $20 million. And they have that same type of deficit facing many cities and states, which is based on pensions and increasing healthcare costs.
And so then the rent board would be under considerable pressure to raise its own revenue, which would basically be passed on to landlords who would pass it on to tenants. Ultimately,
In the end, I guess I’m making the point that not entirely the rent board can pull from the city’s funds. They’ll get quite a bit of their funding from property owners, but they also can get funds from the city’s general fund, which is used again for fire safety parks
And then also
These legal fees for any lawsuits. And when 12 billion
Of property involved, I
Assume there’ll be some lawsuits that’ll also expose the city to additional costs.
But wouldn’t the rent board have to request those funds? I mean, they don’t override every other department in the city and say, I get first dibs on all cash. I imagine they would have to ask for funds like police do or whatever.
There’s no process in this measure m. So more than one council member has said to me, they’re very concerned about its ability to draw down city resources.
I bet they are.
And this is supersedes. So it’s important to understand that this and amends the city charter. So it supersedes other laws. So the reason a lot of times we get questions about how can something like this supersede basic contract law? I just write a lease and have it be a lease for 12 months and then move back into my own house. And the answer is no, because this isn’t superseding that contract law. So we don’t get very many citizen initiatives. And I found that people are fairly unfamiliar with the process.
Right? Yeah, absolutely. I think most people are very unfamiliar with it. But let me ask you this, I guess, which is probably maybe the crux of the matter for people who are in favor of measure M is that won’t this, despite all the flaws with it, won’t it result in cheaper rent for people?
No rent. It doesn’t decrease rent at large. It rolls back rents to October, 2017 for apartments. Measure M does not regulate the rents on single family homes because it can’t, there is a state law, Costa Hawkins, which says that single family homes and condos prices can’t be controlled. So this is important because in Santa Cruz, 75% of people rely on rental houses and so they’re not getting any lower rent. And in fact, the fact of the high relocation fees actually creates an incentive where people are going to be needing to raise up to $20,000 should they have to pay relocation fees. So that creates more of an incentive to have higher rents on single family homes, not lower.
So you’re saying that if measure impasse that apartment rents will be rolled back to 2017 levels? Is that what you just said?
Which isn’t much of a rollback considering the rents were frozen on February of 2018, so it’s only people would get rolled back at all.
Right. So that’s a pretty small rollback. And then how about rolling forward? Does it cap how much people can have their rent increased every year?
So what Measure M does, it says that rent increases on apartments built before 1995. The rent cannot be raised more than C P I up to 5%. So again, the part that the rent control is pretty narrow, its rent increases on apartments built before 1995
And it can only go up basically with the rate of inflation. Now what about vacancy control? So once that apartment is vacated, then the apartment owner is free to charge market rent at that point. Is that correct?
That’s correct. Right. New tenant. So what will happen
If you’re a student and you’re moving to town and you want to rent an apartment, you’re going to be paying market rent regardless.
Yes.
Market rate for rent regardless.
And there’s going to be so rent control and just cause evictions have been well studied in many cities. And one of the things that happens is first the people that are in the rent control apartments are a little bit less mobile, not a lot. Like in Stanford study from 2017 in San Francisco found people stayed 20% longer. So the average stay in apartment in Santa Cruz is five years, so maybe people stay six years. But then these just cause evictions where people lose control of who’s living in their property and how many create an incentive for people to sell their properties and they’re converted to owner occupied properties because people are not going to want to own rentals. And so there’d be fewer and fewer places available. So you’re going to have more competition and then unlimited rent and unlimited initial rents. So that’ll push prices even higher. If you look at San Francisco and Berkeley that have rent control, those are not inexpensive cities. Those are very expensive cities.
They’re very expensive cities. And I think that one reason why they’re pretty expensive is because there’s obviously nowhere near enough construction going on to meet demand. And I think that’s what a lot of people who are against Measure M are worried about that it will sort of tamp down any enthusiasm, even though there isn’t much enthusiasm to begin with for creating more housing, which is ultimately what’s needed. Right? I mean, rent is essentially a bandaid, right? I mean, is there any rent control in Detroit? I haven’t heard about it.
Yeah, well, it’s a supply and demand problem. So
We
Have and supply, and then the thing that’s ironic about Measure M is that it’ll decrease the rental housing supply. And so it works on, it’s doing exactly the wrong thing. You have a supply and demand problems, they’re going to solve it by having less supply.
So not only is it going to tamp down new construction, it’s going to reduce the existing supply because homeowners and mostly homeowners I guess we’re talking about here, are not going to want to risk having to rent indefinitely to somebody they may not want to be renting to anymore. And so they’ll just say, you know what? I’m just going to cease operation as a rental and that will drive up the amount of properties available. Have there been any kind of studies that have been done, which show how much supply gets reduced when something like this comes into force?
So there is a great deal of evidence because the rent boards have to do an annual report. So they’re tracking all kinds of measures. In Berkeley, in the decade after they passed rent control, they lost 14% of their rental housing supply. 3,100 rentals were converted to other purposes like owner occupied housing. If that happened in Santa Cruz, that could be 2000 units. In Santa Monica, they’ve had this in place for a longer time and they have 9,000 units that have been withdrawn out of 36,000.
Wow, that’s incredible. That’s the first time I’ve heard these numbers. That’s a staggering loss to the rental supply.
So we have these links to these rent board reports on our website, which is Santa cruz together.com/resources. So this is very well documented phenomenon, and I’d like to point out that there is an even higher reliance on single family homes in our area. So they’re more liquid in San Francisco. San Francisco lost a similar portion of their rental housing, but there they had apartments and they had to be converted into condos. So that’s a harder process than for somebody to just list a rental and sell it to somebody from Silicon Valley.
Right. Wow. I can’t help but think if Santa Cruz were to lose 14% of his rental stock, I would think that rents would actually increase considerably more than 14% because the people who are going to get edged out are the people in the bottom part of the market. Those who can pay more, will pay more. So
I don’t have data on that memorized, but there is something else that’s interesting that I do have memorized. The Santa Monica Rent Board has a table that shows that between 1998 and 2016, 15,000 units were lost to low income people. So by 2016 there were only 4% of the people in the rental housing were low income. There’s also a shift to higher income people because it’s a more competitive market.
Right? So I think at the end we’re just going to have further gentrification really of Santa Cruz as a result of rent control, ironically enough, sounds like to me.
And the proponents of this measure are all about helping low income people not be displaced. And ironically, I found that table showing that over that not even decade, there were only 4% of low income people remaining in rental housing. I found that in a report that they were using to promote their side, which I found very ironic. So it’s a very shortsighted solution. So seem good if you’re desperate now and you live and you just want some relief, but the outcomes are well-studied, the evidence is there that this is a poor solution for renters.
So you just said that the people behind Measure M are interested in protecting affordable housing. I’ve kind of heard that a lot of the major backers, and this could just be hearsay or rumor, I don’t really know, but that a lot of them are basically slow growth people, that they view rent control as a way of slowing growth even further in Santa Cruz. Have you heard anything about that?
There are a lot of, not in my backyard, a lot of NIMBYs in town. I don’t think my sense of the proponents is that’s not primarily where they’re coming from.
So you think maybe that the folks behind measure arm, they are really well-intentioned people that their goal really is to help people have a more affordable place to live, but maybe they’re just going about it or the way it’s going to have the opposite result, I guess in the end.
Well, and remember, nothing is getting more affordable. So if somebody’s rent is 50% of their income now, which is a shame, and it’s happening all over the Bay Area and in various places across the country, if your rent requires 50% of your income now, it’ll be 50% of your income after this measure passes.
Right,
Exactly. So one of the problems is that for voters who think rent control, two words sounds good, rents the problem, let’s control it without understanding the details. So part of what we’re trying to do, and part of what you’re helping me do is help people understand exactly what it is, the cumbersome other parts that come with it. These just cause eviction. Now, I want to mention too that this is not should concern everybody in the city of Santa Cruz. It’s not just about renters. There are rentals distributed through nearly every street, every neighborhood in the city of Santa Cruz. So my concern, my primary concern is I like where I’m living now and there’s a rental on the left of me and there’s a rental on the right of me, and I probably won’t like it as much if there’s 12 people that move in and are creating problems and nothing can be done to change the situation.
We’ve certainly had our problems with party houses in the past, and now what is commonly done, if there’s a party house, the neighbors can complain, and then when the lease comes up, a good property owner would probably not renew to those same renters in deference to the neighborhood. That mechanism to manage what’s happening in our neighborhoods will be gone. So you could get these permanent nuisances or party houses or extra large households. And my neighborhood, every neighborhood has many rentals on it. So I’m not saying I believe that problem renters are few and far between. It only takes one in a neighborhood to change the character of the neighborhood.
So do you feel, are a lot of neighborhoods going to be at risk for this kind of thing? Every neighborhood. Every neighborhood. So I guess there’s a certain,
Oh, go on. There’s a map on our Facebook page that we got that shows graphically where all the rentals are. It’s based on the rental inspection database where all the rentals are registered in the city of Santa Cruz and it has a blue box around every property that’s a rental, and it’s literally every other house, every third house all over the city of Santa Cruz, with an exception of maybe three streets that don’t have any rentals on them. So that’s why this is an issue for everybody in the city of Santa Cruz and every neighborhood.
Right? Well, especially also, if we really do lose 14% of our rental stock, I mean, a lot of those people will end up doubling and tripling up. So I think you’re just going to end up having a lot of houses that are very crowded and crowded conditions oftentimes aren’t conducive to peaceful, quiet enjoyment.
Or we could end up with a different phenomenon. So if a rental is sold to a new commuter, then you’ve got a commuter going out. And then the U C S C students don’t have anywhere to live, so they’re commuting in. So we could create a lot more traffic in town by making, reducing the number of rentals available.
Right. Well, people will head to the hills. There’ll be more people going up to Boulder Creek where rent control won’t initially be right, unless the county enacts some sort of rent control if and when the city of Santa Cruz ends up doing it. Well, let me ask you this. Is there any solution you think to the affordability crisis in our community? I mean, it’d be nice if there were sort of a more integrated approach to what they’re trying to do here saying, okay, let establish rent control, but at the same time we’re going to push the creation of 10,000 new housing units or something. Do you see any kind of viable way to get rents reduced in Santa Cruz without rent control?
Well, remember, rent control is not going to reduce any rents,
Right? That’s important to consider. Okay.
Yeah, there is no, yeah. So there is no reducing rents. They are what they are. So the city’s been doing some work on called the housing blueprint. Part of it led to their temporary just because evictions and they have plans like to build more affordable, encourage building affordable by design apartments downtown, keep the density limited to appropriate areas. And there’s some ideas like that. The A D U strategy is also an interesting one because as the person who gets the financial benefit from the A D U is also the one who’s experiencing the density impacts themselves personally. So it’s a balanced solution. These kinds of strategies though, will be dead in the water, should measure impasse. It’s not an environment for grading any new housing solutions. I do want to mention that the city is working on a less flawed, less extreme rent cap ordinance, and there’s a first reading of that on Tuesday at 7:00 PM at City Hall Center Street. And that is focusing on the rent cap portion without putting in the onerous and draconian parts about just cause evictions. So an alternate solution. And there’s an advantage to the city rating a regulation because they can change it and modify it as times change. Whereas this initiative all or nothing, every single word, unless to do another measure to modify it. So it’s a very inflexible way to create a law in general.
So the city council couldn’t override that override measure in if they want to, they’ll have to go back to the voters again to make any changes.
Correct. Right. But on the other hand, when we defeat Measure M, the city, we think highly likely to pass this alternative that will protect people against striking rents when we defeat measure M.
So what is this ordinance that they’re doing? Is it simply that they cap the rent increases or is there anything more to it like vacancy control or anything like that?
So the vacancy D control is in effect due to a California state law. So it’s focused on relocation fees being triggered if there’s a rent increase and renters move because unaffordable.
So how much
It still allows people to choose who’s renting their houses to choose how many people are living there to have some, the thing about problem tenants is that, again, I’m not saying the majority of renters are fine, but there are problem renters that are encountered. And so the ability to be able to manage people with the end of a lease.
Right. Do you have any sense for how much of a rent increased limit the city is going to be putting on people with their ordinance that they will enact or that will come into effect? I guess if Measure M fails, is it like, what is it? 5% a year? 10% a year is a maximum amount. You can increase rent or
10% for one year, 15% over two years. Those numbers have been used in other cities, like Portland has a rent cap ordinance like that. There are states that have outlawed rent control in its entirety, like Massachusetts after they had disastrous results with their rent control. Likewise, Oregon, we’re trying to put something in place that isn’t this whole extreme just cause eviction. I want to mention one other thing about why Measure M is so extreme. So first of all, passing any new rent control is extreme. Only three cities have done it after seen the results in the failed experiments in San Francisco, Berkeley, Santa Monica, cities that are very expensive to live in, even with this type of law. And then another way it’s very extreme is that it’s regulating single family homes and what ordinary homeowners can do with their houses and their ADUs, their ability to move in and out of their primary residence.
That is extremely rare. And there’s only a couple cities that have done that. And for example, Richmond is one, but they have homeowner protections that basically say if it’s your primary home, you can do with it what you like. This Measure M doesn’t say if it’s your primary home, you can do what you like with it. So that makes it very extreme. And then likewise, this part about regulating ADUs, most cities and measures have the foresight to go, that is going to be a problematic situation, not controlling who’s living in your own backyard, let’s exempt ADUs. Measure M has not exempted ADUs.
Go
On. That’s just some examples,
Which is why no one’s going to want to be building an A D U to take advantage of the newly liberalized regulations around building ADUs because they’re not going to want to be stuck renting to somebody who they might not want living there after a year or whatever.
And we don’t have that many, we have about 500 ADUs in Santa Cruz right now, but I’ve run into many more people who have an idea that for their retirement, they might build an A D U and have a caretaker there, or they might live in the little house and rent the big house as part of their retirement strategy or building an ADU as a typical place for your mother to live in. So a lot of people have a D u aspirations that don’t have ADUs now, but would not be building them under the circumstances.
Right. Well, a lot of people could build an A D U before the beginning of this year, but now the state of California is weighed in and the city of Santa Cruz has liberalized the construction rules for adu. I think a lot of people would want to do that, but now maybe not so much. So what does Mr. M have to do with Proposition 10, which is a statewide ballot initiative to repeal Costa Hawkins? Are they related in any way if one passes the other one is void, or what’s the relationship between those two, if any?
Well, so let me say what Costa Hawkins is first, which is, so Costa Hawkins was passed at the state level 10 years after the rent controls went in the eighties. So the batch of rent controls the same city, Santa Monica, San Francisco, Berkeley passed 79 80 back when we had double digit inflation. You could see why it would happen if you had the high, A lot of people may not be old enough to remember this, but we had double digit inflation, so prices were going up extremely fast. That’s when these all came in. So then what happened was totally, you were losing all these rental housing units, as I explained in Berkeley losing 3,100 rental units and then there was no construction. So it was clear that there was a problem was creating more housing problems. So cost of Hawkins came in to solve the problem.
So it said that new construction was exempt from rent control. That’s why it’s apartments after 1995 are not rent price control. So if of appeal of cost, Hawkins is called Prop 10. So if prop 10 passes, then all new construction will be subject to rent control and again, lead to who would be building under those circumstances. It also found it problematic to price regulate single family homes and condos. So it said single family homes and condos cannot be price regulated. And then vacancy D Control is an awkward title for something that says in between renters, vacant units can be priced to market and that’s making it a more reasonable environment for people to provide housing. So if these two measures happen, if measure impasse and measure 10 passes, then we will have extreme hard rent control over all the property in the city of Santa Cruz.
Right. So, okay, so Measure M will apply to single family homes as well, correct? Or no, measure M will not apply
To, so Measure M puts the just cause evictions portion on
Single income on single family, but not rent control itself. But a Proposition 10 passes, then they can do rent control also,
Right? Yeah. So Measure M by itself has this part where the just cause evictions makes it very unattractive to own rental property. And so those are lease sold and meanwhile the rents on them is still unlimited measuring ’em alone. It’s complicated. Our position is no on M and no on 10. If you think about Proposition 10, jumping in to solve the original problems of severe problems of rent control 10 years after it passed, it’s an important piece of moderating. And there’s this hierarchy of laws where when the state does something like that, it’s basically our observation that the cities are passing poorly done or unreasonable or flawed in extreme laws, and then the state will intervene and put something in at the state level which supersedes it. So that’s what Costa Hawkins is now.
So if Measure 10 passes and Costa Hawkins is repealed, we could see rent control established throughout Santa Cruz, throughout Santa Clara, Monterey, and the whole entire state, local jurisdictions would be free to do anything they want to with rent control. Right.
So now for another jurisdiction to get rent control, they would have to pass and measure themselves. But in Santa Cruz, every single family home condo, literally all residential properties would have the strict price controls. The Draconian just cause evictions. The limits on what you can do with your own home during an absence, get all of that at the same time.
Right. Got it. Alright, so there’s a lot of choices, very important choices that voters are going to be faced with this coming November. I guess the election day is November 6th, is that correct?
Yes. And I want to point out that if you look at our campaign, we have the Santa Cruz County Democratic Party, opposing Measure M. Again, there are people that might be for rent control, but not this version because it’s just so deeply flawed and ill-conceived and harmful to everybody in the city. We have other groups like the Democratic Women’s Club of Santa Cruz County, the electrical workers trades. We have mayors, former mayors, A lot of people that are deep into understanding the nuances to creating good laws are saying this is a bad law and we don’t want it.
Right. I think that anyone who listens to our conversation that we’ve had just now, it’s kind of, I don’t know, it seems almost irrefutable that Measure M is just a bad idea and especially considering that the city of Santa Cruz is passing its own ordinance, which will go into effect should measure M or when Measure M fails, which would be to limit the amount of rent increases, which when I hear about the sad stories that are out there and their genuine hardships where people do have their rents increased substantially in a short period of time, that does create a real hardship. And I think that’s a lot of the problem. And what the city council is going to do with this ordinance is really going to address a lot of the egregious things that are happening to some tenants out there. It does seem much more proportionate than what’s going on with Measure M and just cause evictions in particular.
Yeah. Again, we don’t disagree with there being a severe problem and a lot of hardship and some of that hardship is basically just that the housing shortage comes from the Greater Bay area. There’s a lot of money in our community from Silicon Valley, and that drives up housing prices. If a house costs a million dollars and you turn it into a rental, it’s not like that’s very expensive. So our property is expensive, so there’s a lot of external factors. We don’t have a lot of good jobs in town. There’s a lot of cool entrepreneurship happening. Something that damages our rental housing supply like this would, will make it more difficult to attract entrepreneurship. And some of the little companies, for example, all the cool ones in the Wrigley building for people who know the town pretty well, that kind of thing is going to be damaged if you can’t find housing for people to live in. So you can grow a company, and that’s why we have the Chamber of Commerce and the Santa Cruz Business Council opposed to this because they can see it’s just going to make it harder for the city to get some better companies and better local economy. That’ll address the other side of it, which is there’s a lot of people who aren’t earning enough money to afford the local housing. So it’s a complex ecosystem and pulling a bunch of rental housing out of it is going to have other effects beyond just what somebody’s individual rent is.
Right. Well, a very wise man once said that eventually a supply problem becomes a demand problem, right? If it just becomes so unworkable, unmanageable, unaffordable to live here, that businesses are just going to have to leave and they’re going to take that demand for housing with them because they literally won’t be able to operate because they can’t find people who are willing to pay what the going rate for property either buying or renting. And so we really do need to address that supply problem. And measure M is the opposite of addressing the supply problem. It’s worsening the supply problem in many ways. So if people wanted to become one with Santa Cruz together, do you guys have regular meetings or how do you guys meet new members if people want to come and join and help out with the campaign against Measure M?
So there’s a few things. So go to our website, Santa Cruz together.com, join our email us to find out what’s going on, including meetings that we are holding interested people can, they should read. We have a summary of the ballot measure. We have a link to the 33 pages if you want to read it all. We have frequently asked questions, and then we have some resources that show the evidence from other cities for people who want to dive in and understand that firsthand. For those that already can tell this is a bad idea for everybody in the city of Santa Cruz, they can look at the people who are publicly on the record as being opposed and endorsed. From our homepage, there’s a button to get yard signs. On our homepage, we have about a thousand yard signs already posted. You’ll see them. Anybody in Santa Cruz has seen them all over town. So join that effort as well.
All right. So you can go onto your website and request a yard sign right on your website.
Yeah, join the email request a yard sign, and if you want to join the four or 500 people that are publicly opposed to Measure M, you can do that off of our website as well.
Oh. So you can add your name to the list of people who are standing against Measure M and they’re standing with Santa Cruz together.
Right.
Alright. Very awesome. So looks like we need to be wrapping things up here. Before we do, is there anything that I didn’t ask you that I should have asked you?
I think you did a great job and demonstrate that you are quite familiar with this topic. I want to maybe close with a quote from Mayor Terraza who wrote very concisely quote, I cannot support legislation that will eliminate rentals, discourage construction of new rentals, protect problem rentals, reduce housing options for families, and make housing more scarce and expensive for the majority of renters.
Well, that’s it in a nutshell right there.
Yeah, that’s it in a nutshell. So I think that’s a good summary of our conversation.
That’s a good
Way to, I want to thank you for having me on to share this information with people. It’s important for everybody in the community and it’s worth the time to study the issue a bit.
Yeah, very much. Well, Lynn, thank you so much. I learned quite a bit. I thought I knew a lot about it, but you really filled in a lot of blanks for me, so I really appreciate it and looking forward to sharing this with all of our community.
Okay, great. Thank you.
Alright, that wraps up episode number 25 of the Beta Bay podcast. I hope you found it very informative and educational. I pay pretty close attention to what’s going on with the Rent Control Measure M initiative in Santa Cruz and the community’s response to it. But I have to say, talking to Lynn, I even learned a whole lot of new stuff that I didn’t really know before and it’s even worse than I thought it was. So please do us a favor, could you share this episode with anybody you know who is a voter in the city of Santa Cruz? Because this information really needs to get out. It’s very important. Alright, before I wrap things up, I do want to mention that the Beto Bay Podcast is sponsored as always by the sold book.com. That’s right. The sold book.com is where you can go to order a free copy of my book, get It Sold.
It’s all about how to sell your home quickly, easily for the very highest price possible and have a good time doing it. This book does cost, I believe it’s 12 bucks on amazon.com, but you can get it for free if you go to the sold book.com and order your copy there. And hey, get this, if you use the coupon code free ship at checkout, that’s F R E E S H I P. Use that coupon code at checkout. I’ll even pay for the shipping. So no reason not to get it. It’s a quick read. 110 pages shouldn’t take you more than an hour and a half or two hours. Alright, that’s it for this episode of the Beta Bay Podcast. We’ll catch you again real soon.
