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Real Estate Reporter

Limits to the market

City plans could return us to the good old days of 1864, when Market Street was totally clear of automobiles. Photo: Library of Congress

STATEWIDE RENT CAP

In early October, Gov. Gavin Newsom signed AB 1482, which limits increases in rent to 5 percent annually plus inflation. The bill also requires landlords to provide a “just cause” for evictions from buildings that are at least 15 years old for tenants who have been in their units for 12 months or more.

Los Angeles’s City Council voted unanimously in mid-October to invalidate all evictions in process at rental buildings that the new rent law will cover. The council made the move to punish landlords who looked to get the evictions (and presumably rent increases) out of the way before AB 1482 becomes law. The law will be in force as of Jan. 1, 2020.

Newsom at least didn’t appear to have succumbed to the supply-and-demand ignorance of many people seeking to reign in landlords and developers and real estate agents. “We need to build more damn housing,” he said before signing AB 1482. Let’s see if he finds a pro-housing bill that he’s willing to fight for and sign.

A WORD OF CAUTION

San Francisco is finally going to do it: It will close part of Market Street to automobile traffic, from 10th Street eastward, starting in 2020. The city promises utopian results with pedestrians dancing in the streets and unicorns escorting people across the barren street while the humans never take their eyes off their smartphones.

That’s a slight exaggeration, but nonetheless. It bears reminding that seven years ago, I wrote about this plan (“Car wars: The phantom menace,” Oct. 2012, Marina Times) and noted that a number of cities have been undoing their pedestrian malls for years. Most notably, Chicago closed its famous State Street to traffic in 1979. The promised unicorns and street dancers never materialized. Instead, store closings and empty buildings became the trademark of “that great street,” before Chicago finally undid its mistake in the 1990s and reopened the street to cars. State Street quickly became a thriving and busy urban street once again.

Apparently, God doesn’t answer the prayers of bankers, because I also quoted a vice president at Chicago’s La Salle Bank, who told the Chronicle’s Carl Nolte about the State Street auto-closure experiment: “We walked into it with our eyes wide open and it was just a mistake, an absolute mistake. God, don’t let them do that in San Francisco.”

BACK AND FORTH

Well, Google tried to copy Facebook with its ill-fated Google+ social media platform, so it’s only fair that Facebook is copying Google by promising $1 billion to address housing issues. According to San Francisco Business Times reporter Blanca Torres, the commitment would be split up to fund $250 million for mixed-income housing on excess state-owned land, $150 million for affordable housing production in the Bay Area, $225 million in land in the company’s hometown of Menlo Park for affordable housing, $350 million in reserve funds for other commitments across the nation, and $25 million for teacher and “essential worker” housing on public land for San Mateo and Santa Clara County school districts.

UP AND DOWN

Rents in San Francisco grew 2.6 percent on an annual basis, but they dropped slightly (by 0.1 percent) in August. Overall, rents in the Bay Area decreased half a percentage point between August and September. The cities in the Bay Area that had the most dramatic increase in rents over the past year include Oakland (which grew 9.5 percent), Foster City (7 percent), and Redwood City (6.9 percent).

QUOTE UNQUOTE

“While the legislature was very proud to bandy about the term, ‘Produce, Protect and Preserve,’ we would like to note that there was not a single substantive bill passed this year that addressed the ‘Produce’ portion of this mantra. . . . AB 1482 will add even more stress to small mom-and-pop rental property owners to keep their businesses afloat, will discourage further investment, and encourage annual rent increases.”

—Sid Lakireddy, president of the
California Rental Housing Association, quoted in the San Francisco Business Times

CONFIDENTIAL TO SOME SNEAKY LANDLORD

A young man of our acquaintance recently moved into a new apartment with his girlfriend. He’s in a nice location near the beach, within easy walking distance to Muni trains and stores and bars. Best of all, between the two of them, they could afford the monthly rent.

But in talking to someone who used to live in the multiunit building, he recently heard that his landlord typically started tenants with one-year leases, then went to month-to-month leases and jacked up the prices dramatically. My friend’s first year lease is nearing its completion, and maybe AB 1482 (see item above) will protect him.

But if not, let’s just say this: He knows some lawyers.

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