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The McConnell Report • June 23, 2009

Building Bridges

 

I have been talking with BPOA’s incoming leadership about plans for greater involvement in local affairs. From my perspective, BPOA has allowed itself to become isolated as an organization committed mostly to discussing ways to end rent control and once a month Saturday morning social hours where members come together for support and fuss fests.
 
I understand that changing or ending rent control is very important to many members. I also understand that the rent control laws are very complex and owners need a group like the BPOA which can help them with compliance issues. So, for the record, I appreciate the Saturday morning meetings and the work that goes into advising owners, but those cannot be the sole issues for the group to focus on. 
 
BPOA members are small business people. They face many of the same issues that confront other business people in Berkeley. These include issues like good government, taxation and fair treatment of business people in Berkeley. In that regard, BPOA members have much in common with members of the Chamber of Commerce, Berkeley Association of Realtors, downtown and university area business groups, tax opposition groups and others who pay taxes, employ workers, and provide services that Berkeley residents want and need.
 
Like every other California city, Berkeley is confronted with significant budget problems. It cannot provide basic services, much less the more aggressive social services that it has shown a propensity to try to provide without adequate revenue. And, there are really only two ways to get such revenues, either attract business and grow income, or try to tax people to cover ever mounting debt. 
 
Attracting business is better because, aside from the current recession, the only limits on growth are those that are self imposed. Increasing taxation has limited viability because at some point the willingness of business to invest in a city that over taxes will diminish and those who can will take their businesses elsewhere. (Unfortunately, this does not include landlords who cannot just up and move their buildings.)
 
As BPOA’s consultant/adviser, I have encouraged incoming leaders to look at the issues that confront BPOA members in the context of the larger picture in Berkeley. For example, I have encouraged them to talk about excessive registration fees in the context of the waste that occurs when these resources could be devoted to Berkeley’s larger needs. We all know dog gone well that if the rent board was not a separate entity and money from the general fund was used for the board, the City Council and the Mayor would never spend $3.5 million dollars regulating 20,000 rental units when this could efficiently be done for approximately $500,000 to $750,000.
 
By focusing our potential allies’ attention on the fact that registration fees are a taxation issue and telling them that this wasted money could go into the general fund for the greater good of the city, and reduce pressure on them for new taxes, we could build important bridges with other business groups tax opponents and homeowners. This is just one example of how building bridges could be important. 
 
Building Strategies
 
I have also encouraged the Board to be more strategic in advising owners on how to tell the story of excessive taxation to tenants. For example, in leases with new tenants landlords can set whatever rent they want under Costa Hawkins. Why not charge a rent that specifies that the tenant pays the registration fee? Tell tenants that the rent is $1,214.58 of which $14.58 (annual registration fee divided by 12) is a pass through of the rent board registration fees. Tell them that if that fee is ever reduced or eliminated you will reduce the rent by an equal amount.
 
If owners were to do that, in a few short years most leases will clearly specify that fees are paid by tenants and they will have an incentive to get rid of the waste at the board. Maybe then, they too, will agree to move rent control back into the city’s general find structure where it will be more efficiently and I believe fairly run.
 
If we continue doing things they way we have, we will continue getting the same result. I am recommending that we do change some of our approaches. My goal with business allies is to bring people together to create a pro-business vision for the city and to promote business interests in the city. A long time ago we moved landlords away from being ashamed of their businesses, now let’s tell other business people that we need to work together to promote business interests and create revenues in Berkeley.
 
The strategic goal with tenants is to let them know that they pay for rent control and to ask them to consider just what exactly do they get for the money they spend. If all they get is an annual general adjustment, why do they spend $3.5 million dollars on that?
 
We will be unveiling more ideas at the March “Building Bridges” dinner meeting where we have invited people from the business community, moderate political leaders, and campus groups. I am optimistic that new approaches coupled with more tactful operations will make a difference for Berkeley landlords and all Berkeley businesses.
This is just the beginning.
 
 
Greg McConnell is the principal consultant at The McConnell Group, a consulting and advocacy firm that specializes in housing issues and advises apartment and housing associations, property management companies, and individual owners throughout California. For more information please visit www.themcconnellgroup.com.
 
 
ã This article is copyrighted and cannot be republished without the consent of the author.
 
 
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