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The McConnell Report • June 23, 2009

High Energy at BPOA

At the February meeting of the BPOA, new Officers and Directors was elected by unanimous vote. These elections happen every year and sometimes they are greeted with a ho hum. Not this year! 
BPOA members are very fortunate to have an outstanding group of volunteers who are working on their behalf. The 2009 Officers and Board Members are Robert Cabrera, President; Johnny Davis, Vice President; Will Flynn, Secretary; Sarah Schoeneman, Treasurer; Albert Sukoff, News Editor; Don Holm; Sid Lakireddy; Mary Myers; Jim Smith; Jon Vicars; and, Claude Zamanian. Rounding out the team is Nancy Friedberg who serves as the Office Manager and The McConnell Group which is retained as Consultants and Advocates.
Robert Cabrera and his band of merry men and women promise to bring a high level of energy as they work to protect the interests of BPOA members. In this column, I will go over some of the issues that they have asked me to help them prioritize, but first let me digress.
Michael St. John held rent control workshops at the January and February meetings. I could not attend for the entire time, but during the time I was present, I found Michael to be thorough, candid, and, as usual, very informative about what owners could and could not do under the rent control law.
When it came time to discuss potential grounds to petition the rent board for rent increases, he said what most of us already know – forget about it! The board has so thoroughly stacked the regulations against owners that petitioning for Capital Improvements (and other rent increases) is a complete and utter waste of time.
In essence, what they have done is credit vacancy increases against other grounds for increases so that no increase is allowed. Say, for instance, an owner spends a couple hundred thousand dollars on a seismic retrofit, the regulations say that the owner is  entitled to Capital Improvement increases, but in the fine print, they offset the entitlement by income received for vacancy increases. The effect is that sitting tenants with low rents don’t pay a dime because new tenants have to absorb all the costs.
Nothing in Costa Hawkins allows for this backhanded way of reducing vacancy increases by eliminating other grounds for increases on sitting tenants. But the board has cleverly done an end run on the rules and nothing short of a quarter million dollar lawsuit will straighten this out. No individual owner is going to spend that kind of money and the rent board knows it. That’s how they get away with it.
So what happens? Properties, especially those with a lot of long term tenants, are not properly maintained and major improvements are not performed.
This is a big problem when it comes to seismic work because when the big one happens, and we all know it will, tenants’ lives will be in jeopardy, properties will be demolished and housing will be lost. 
Think this an overstatement? Check out the highly regarded San Francisco Planning and Urban Research (SPUR) Report. 
“What would happen if the 1906 earthquake were to happen again in the next five, 10 or 20 years? The answer depends on what we have done to prepare for the next big event. In one scenario — the most likely one at this point — not enough special preparation has been done. A few existing buildings were retrofitted by owners voluntarily, and a few others through attrition were replaced by newer structures. The newer structures have better seismic performance than the older buildings, and very few of these buildings collapse and kill occupants. The damage has cascading consequences for San Francisco. People are displaced from their homes, companies and residents are forced to move out of the area, small businesses fail, and reconstruction demands overwhelm the city's damaged infrastructure. Years later, San Francisco has failed to recover and is no longer seen as the center of the region.
In another scenario — the one we advocate — San Francisco has chosen to invest the time, energy, and political and economic capital in becoming a resilient city — that is, a city that can rebound quickly from a natural disaster. Enough homes have been retrofitted so that the vast majority of San Franciscans are able to shelter in place. Seismic Silver and Seismic Gold buildings, defined by a new voluntary rating system, perform so well that they quickly become a model for all new housing in the region. The entire city is back on its feet within four months.”
(SPUR: “The Resilient City” at http://spur.org/documents/020109_article_01.shtm)
 
Enter the New Board of Directors
 
The BPOA Board pledges to take this issue and similar ones head on. BPOA is considering lawsuits, ballot initiatives, and other actions to inform the voters of Berkeley about the deceptive, wasteful, and potentially dangerous shenanigans of the rent board.
A lawsuit could challenge the misuse of Costa Hawkins. It would argue that the right to increase rent on vacancy does not eliminate the duty of the rent board to pass through Capital Improvement costs for retrofits and other major improvements.
An initiative could overturn the regulations and ensure Capital Improvement increases for owners who perform major improvements that protect life and safety, prolong the useful life of a building, or make it green and energy efficient.
A different initiative could ask the voters to get rid of the separate quasi government that is the rent board and bring it back inside city government. Especially in a time of major budget problems, why is the city allowing the waste of $3.5 Million on a program that is not serving anyone’s interest and only perpetuating a rent holiday for long term tenants, most of whom are more than able to pay fair rents? 
An initiative could also bring focus to the question of why students, who make up the bulk of the new residents and who pay most of the vacancy increases, should support a program that makes them pay for the improvements that benefit long term Berkeley residents.
BPOA is also considering running candidates for the rent board if it is not able to bring the board back into the fold of city government.
 
What Do You Think?
 
My role is to serve as an adviser and consultant. The Board of Directors will make the ultimate decision on what BPOA will do. Nevertheless, I have some say in making recommendations and I am asking readers of my column to let me know how you would like to see BPOA proceed.
Please send your thoughts to gmc@themcconnellgroup.com. I will make sure the BPOA Board hears from you when it sits down to develop its game plan. Please don’t give a long lecture about the evils of rent control. We already know that. The question is how to prioritize solutions to the problem.
 
 
 
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 about The McConnell Group please visit www.themcconnellgroup.com.
 
 
ã This article is copyrighted and cannot be republished without the consent of the author.
 
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