Item G-9 on the May 26 City Council Agenda would begin the process of giving the voters a choice about whether to continue operating the Rent Program set up by the Richmond Fair Rent, Just Cause for Eviction and Homeowner Protection full Ordinance.
This ordinance is the flagship accomplishment of the Richmond Progressive Alliance, and even the suggestion of walking it back sends them into fits of apoplexy. I harbor no hopes that this will garner a majority vote of the City Council, who embrace it without question, but it is past time to have that discussion.
The Rent Control and Just Cause measure was floated out at a time when the economy was recovering from the Great Recession, which in turn, was fueled by the subprime mortgage crisis. From 2007 to 2010, the cost of housing in Richmond, both rental and purchase, had taken a nosedive, dropping as much as 40% from previous levels. When recovery from the Great Recession began, rents started to climb. People were going back to work, and market demand for housing was growing.
While there were anecdotal tales of radical rent increases during this recovery, the fact is that the average market rent increased only 5.6% annually from years 2010 through 2015, the latter being the benchmark year for rent control. Despite the reality of modest but sustained rent increases, the RPA, ACCE and others whipped up an alternate reality of radical rent increases, greedy landlords and unjustified wholesale evictions. The Rent Control and Just Cause ordinance was adopted by a strong majority vote in 2016 behind a populist wave with renters dreaming that it would lower rents and end foreclosures. In fact, it did neither.
Figure 1 - the average market rent increased only 5.6% annually from years 2010 through 2015. From 2015 to January 2020, the average annual rent increase was only 2.3%.
From 2015 to January 2020, the average annual rent increase was only 2.3%. Some might argue that this was a result of rent control, but that doesn’t hold up. Rent control covers only 38% of Richmond rentals. If there were a dramatic difference between rent increases in rent-controlled units, and non-rent controlled units, the average increase would be much higher. Furthermore, the average rent increase hasn’t even kept up with inflation, meaning that the market is actually suppressing rent increases, not rent control.
The other part of the Richmond Fair Rent, Just Cause for Eviction and Homeowner Protection full Ordinance, is the eviction regulation. Based on the Rent Program 2018-19 Annual Report, there were 4,211 legal terminations of tenancy in the year reported, meaning that over 20% of total tenancies result in evictions, most for non-payment of rent. There is no evidence that the Rent Program prevented even a single eviction.
The Richmond Rent Program quickly became a bloated bureaucracy, with high-paid employees and overpaid consultants. Nicolas Traylor, Richmond’s Rent Program director, came to Richmond from the Berkeley Rent Program, which a 2012 Grand Jury Report found to be a “self-sustaining bureaucracy that operates without effective oversight and accountability.”
In Berkeley, Traylor was pulling down total annual compensation of $118,737. When he moved to Richmond, he took a 91% raise with total compensation in 2018 at $226,518. In 2019, he took another 9.4% raise to $247,864 total compensation. This is at a time when other Richmond employees had not benefitted from even a cost of living raise in several years.
Traylor was not reluctant to pass his good fortune along to his staff. His assistant, Paige Roosa, pulled down total annual compensation of $110,000 in 2017. In 2018, she enjoyed a 36% raise to $150,376 total compensation, and in 2019, she got another healthy bump of 20.4% to $181,376.
Neither the city manager nor the City Council have any control over the Rent Board budget or the compensation of its employees. The Rent Program operates only six hours a day, making a nice 36-hour week for its 21 employees and interns. The office has been closed since March.
The Richmond Rent Control and Just Cause Ordinance was hastily written and largely modeled after that of Santa Monica. With some Berkeley provisions thrown in, it included the most egregious content of both.
Santa Monica is not necessarily a great place to emulate. The city manager, Rick Cole, recently resigned, facing an unsustainable $300 million budget deficit over the next two years.
When Richmond adopted rent control and just cause, the city was somewhat of a neo-pioneer, with the first new rent control and just cause ordinance in the State of California in 30 years.
Since then, Governor Newsom signed AB1482, which went into effect January 1, 2020, imposing the first-ever statewide cap on rent increases and requiring landlords to provide a “just cause” when evicting tenants, thus rendering much of Richmond’s ordinance redundant.
With the State of California now in the rent control and just cause policy realm, the time has come for Richmond to transition out of a regulatory function that has never worked and move into actually helping to produce affordable housing and providing monetary assistance for renters.
Providing affordable housing for Richmond residents is more important than ever, but the Rent Program does not provide even a single unit of housing. We need to take the $30 million that he Rent Board will waste over the next 10 years and use it to actually provide affordable housing.
The Richmond Fair Rent, Just Cause for Eviction and Homeowner Protection ordnance should be repealed, except that the fee structure would remain in place and be used to:
- Provide emergency rental assistance
- Provide subsidies for development of affordable housing
- Fund a land trust
- Provide information and legal assistance to renters
- Administer the program with a limit of10% of revenue