Renewed calls for San Francisco landlords to report many details of their rental business

Landlords in San Francisco are already subjected to the most complex regulatory regime anywhere, but for some lawmakers, there is not enough oversight. Resilient tenants’ advocates have been calling for a citywide rent registry for years and with a new proposal gaining steam, they may finally get their wish.

San Francisco Supervisor Sandra Lee Fewer is the chief architect of legislation that would require landlords to report reams of information about their rental units, on an annual basis, to the Rent Board.

Fewer is convinced that the City needs more transparency in its housing stock and wants to give the rent board new fangs to “track landlord-tenant relationships, inspect and investigate housing services and rents, and better administer the rent ordinance,” she stated in this San Francisco Examiner article. The retiring Supervisor hopes that the law designed to more vigorously enforce rent control and eviction protections is passed before she leaves office in January.

An exercise in redundancy?

Although existing regulations prohibit exorbitant rent increases, the law has been sold as a mechanism to handle claims when a landlord imposes a bad-faith rent increase to coerce a tenant to vacate.

We hasten to point out that there are many ensconced layers of protections on the state and local level for tenants who are staring at a massive, improper rent increase. Certainly, there is a phalanx of tenants’ attorneys willing to prosecute these bad-faith cases. Indeed, tenants’ attorneys are salivating at the opportunity to sue landlords, so Bornstein Law is unclear why overlapping rules are necessary. Renters already have plenty of recourse to air out their grievances in front of the rent board or the courts.

The Budget and Legislative Analyst's Office notes that the overarching goal of escalated rent stabilization is the reduced likelihood of overcharging rent stabilized tenants through misunderstanding, miscalculation, or malfeasance.

We’ve seen this movie before

As San Francisco Curbed reported in 2019, the price tag for a citywide rent registry was estimated to be up to $3.6 million dollars. At least we can say that the city thought hard and long about the consequences of a rent registry. But its own findings are damning.

In a memo, the San Francisco's Budget and Legislative Analyst's Office published a cost/benefit analysis of implementing tenancy registration, and this analysis is instructive.

One of the first riddles to solve is what municipalities want to keep track of. 

If we were to play the devil’s advocate and articulate what might be a good set of data for cities to track, it would be vacancy control. These are policies that limit the ability of landlords to reset rents at market rates. Someone in a controlled unit moves out, another tenant comes in - the municipality might have a legitimate reason to establish a rental registry.

Yet voters have soundly rejected vacancy control at the ballot box twice by defeating Proposition 10 and in its reincarnated version of Proposition 21, with good reason. The reckless government overreach of eliminating vacancy decontrol would lead to property values being decreased overnight and stifle the construction of desperately needed new housing.

Ironically, if the agenda of tenants’ advocates came to fruition, maintenance and the quality of life of renters would fall to the wayside, as owners are disincentivized to make repairs or upgrades.

Without the need to enforce vacancy control, we pivot to another argument being made in support of a rent registry - misinformed tenants need to be apprised of their rights under the law.

Are tenants vulnerable? 

Broadly speaking, there are two approaches to the enforcement of rent regulation, the memo observes. One is complaint or petition-based, sometimes dubbed the "passive" approach. We find nothing passive about this. Our office is quite busy handling conflicts that are initiated by the tenant.

The memo goes onto say that there are "active enforcement" policies like those of Santa Monica, where the goal of a rent board is to "ensure compliance with the rent control law and take affirmative legal action where indicated." Under this model, a database would be required to register tenancy and property owner information. Taking centralized control, the rent board wants to pry into every aspect of the owner’s rental business in order to nip problems in the bud and preempt any excessive rent increases or displacement of the tenant.

Implicit in such an enforcement strategy is that tenants cannot fend for themselves or that somehow renters are somehow bamboozled or ignorant of their rights. We found this to be unfathomable then and it is especially hard to believe that now, in the midst of a pandemic and eviction moratoriums, tenants are kept in the dark. Tenants are savvier than ever, and they have access to a vast network of organizations and lawyers dedicated to preventing abuses and correcting wrongs. As well they should.

Outdated information

Much of the information used to support the claim that tenants are deceived about their rights is derived from information from long ago. This was a different era. Rents were not so high, housing was not so politicized, and there was a much more relaxed set of regulations, so we would naturally expect tenants to be ignorant about their rights then, because it wasn’t so much concern at that point.

If we fast forward to 2020, tenants know their rights. Enter a profusion of organizations that offer free legal representation and we think that no cogent argument can be made that tenants are not aware of protections. On top of it, we have COVID-19 plastered in the headlines and the unique protections of Assembly Bill 3088. It is just inconceivable that tenants are unaware of their rights.

Statewide rent registry has failed

Assemblywoman Buffy Wicks, a Democrat from Oakland, has been adamant about establishing a statewide database of tenancies throughout the state. If we’ve learned anything from the laboratory of tenant protections in Sacramento, it is that even if ill-conceived bills can be killed, they come back in some form or fashion. The proposal to create a rent registry throughout California was not only defeated in 2019, but another iteration was shot down in 2020. We covered the debacle here.

The proposals for a statewide rent registry, then, shared the same fate as calls to repeal Costa-Hawkins. They both failed twice in the statehouse. Now the fight comes to local governments.

Odd bedfellows in opposing rent registries

Landlords and tenants’ advocates rarely see eye-to-eye, but there has been mutual opposition from both camps in putting their business on the streets. It seems that landlords and tenants alike do not want their private information broadcasted to the rest of the world to see.

We recall that in the heyday of tenant buyout agreements, there were many tenants, as well as prominent tenants’ attorneys throughout the city, who strongly objected to San Francisco’s database that recorded all of the transactions that listed the dollar amount the tenant received to voluntarily move out.

We can only conclude that in a time when privacy laws are put into focus, no one wants their information to be divulged, except for regulators.

Anyone in the Information Technology space? 

One of the most compelling arguments against rent registries is the herculean task of creating and maintaining a database. Regulators do not deny this. Just think about this for a minute.

San Francisco does not have a single repository of data that includes location and ownership of all rent-stabilized units, although the Assessors-Recorder does have a pulse on the number of multi-unit residential buildings by the number of units and year built. Using this information, regulators could make an educated guess on whether a building is enveloped by the City's Rent Ordinance, but it cannot be confirmed.

Perhaps the Planning Department's Information Management database can aggregate information, as well as the Treasurer and Tax Collector's business registration data. This is according to the City’s own findings.

Bornstein Law is not an expert in technology, but we can only conclude that implementing a rent registry is an IT nightmare, relying on the admissions of other people more versed in this space than us.

A different perspective and a word to our friends in the East Bay

Krista Gulbransen is the head of the Berkeley Property Owners Association and opposes rent registries, but she is a glass half full person. She says that there is some value to bringing rental properties into the light of day because it counters the narrative of tenants’ advocates.

Opening the books would reveal that landlords are not greed-fueled speculators, but show that there are significant expenses incurred in maintaining the rental unit.

The San Francisco’s Budget and Legislative Office’s dated analysis singles out Berkeley college students as being particularly ignorant to complicated rules surrounding rent and eviction controls because of their transitory status.

Gulbransen disagrees. There is no wool being pulled over the eyes of college students, she says, and added that “the rent board practically has a satellite office on their campus.”

Our parting thoughts

In the eventuality that a rent registry is passed in San Francisco, the timing is certainly impeccable. The ink doesn’t dry on new laws and regulations before more rules are instituted. As landlord attorneys, we have gotten indigestion trying to keep track of new guidelines and we can only imagine what it is like for other laypeople.

The only good news we can report is that a San Francisco rent registry, if passed, will not take effect until the summer of 2021.

Hopefully, by then, the vaccinations are effective and you/we will have fewer concerns in managing landlord-tenant relationships because courts will be firing on all cylinders, everyone emerges safely on the other side of COVID, employment is restored for a great many of renters who do not have the means to pay rent.

If this pandemic ends and everyone stays safe, we can deal with a rent registry. Let’s get over this hump first. We have more pressing concerns in the meantime.